It is summertime and everyone is happy to take a brake from what has been a terribly tormented spring. Many of our European politicians and policy advisers (IMF) feel satisfied—or at least claim to be—that they have done the right thing and kept the boat afloat. Now, they say, we just have to consolidate the job to make sure that a new big financial crisis, spurred by disastrous public finance in many EU countries, will not blow in our faces.
The Negative Consequences of Government Expenditure – Jeffrey Miron, Mercatus Center, 2010
Does Government Spending Stimulate Economies? – Veronique de Rugy & Jakina Debnam, Mercatus Center, 2010
For getting out of the public finance crisis it is a good thing to cut on spending. To reform the public sector is even better. But is it also necessary to increase taxes? With few others, Jean Philippe Delsol, administrator of IREF, had developed the conviction from past experience that one should instead decrease the tax burden.
Question: Mr. President announces that, starting in 2011, there will be a sharp increase in tax rates. What do you think individuals and businesses will do in 2010? Using basic economics, Arthur Laffer in a Wall Street Journal article dated June 6 gives us a very plausible scenario: Individuals and businesses will do their best to transform the wealth and income to be taxed in 2011 into wealth and income to be taxed in 2010.
In an interview for the German Handelsblatt, the French Minister of Economy Christine Lagarde suggested that European countries that do not respect deficit limits should be punished. Lagarde proposes that…
This is the payroll tax paid on wages in Greece. 28% of it is born by employers and 16% by employees. It is not surprising that the unemployment rate in…
A few years ago, the so-called Tobin tax, designed to hit financial operations, was called-for by anti-globalization groups such as ATTAC. Today, in Europe, some parties claiming strangely to be liberalist, including heads of State, support the introduction of this new compulsory levy. Of course, politicians vie currently in the art of proposing new taxes and increasing those already existing. As though the ills which befall the European Union were not due precisely to the excessive taxes which feed obese and insatiable states.
A recent study by Duanjie Chen and Jack Mintz, School of Public Policy, University of Calgary is estimating the effective corporate tax rates in 80 countries. These effective rates are taking into account statutory rates plus tax base items that affect taxes paid on new investment, such as depreciation deductions, inventory allowances, and interest deductions.
The Commission’s proposal, which amends Regulation 1060/2009, will now pass to the EU Council of Ministers and the European Parliament for consideration. If adopted, the new rules would be expected to come into force during 2011. The Commission has already compelled CRAs that would like their credit ratings to be used in the EU to apply for registration.
In the recent past, many States resorted to public spending increases in order to boost their shaky economies. At present, they have to face great deficits. They believed, no doubt, that there is no need to obey to financial constraints, but the market reminded them that any debt has to be reimbursed some day. Indebted and weakened governments are now forced to cut on spending and increase taxes. Hence an urgent need for a scapegoat. Fortunately enough, there are still some places to turn to for a credible alternative. Analysis from Jean-Philippe Delsol.