Publications

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.

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.

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.

As a long-standing critic of the concept of a single European currency, I have not rejoiced at the current problems in the eurozone that threaten the very survival of the euro. Before discussing the events surrounding the Greek debt crisis further, I must provide at least a working definition of what the word “collapse” means. In the context of the euro, there are at least two interpretations that come to mind. The first one suggests that the eurozone project or the project establishing a common European currency has collapsed already by failing to bring about positive effects that had been expected of it.

IREF is presenting for the third consecutive year a unique report on taxation in Europe. You can find here expert analysis of the fiscal policy in 22 european countries, the most recent data and forecast for future developments. Summary by Professor Pierre Garello.

The disaster everyone feared for several months finally occurred yesterday – Greece’s credit rating was reduced to junk status and financial markets slumped. Moreover, Portugal’s debt has also been downgraded, Spanish stocks plunged more than four percentage points and in Italy it was difficult to sell government bonds.

Last week, Eurostat published the statistics on GDP growth for 2009 and it is without surprise that we read in the data a slowing down of economic growth for OECD countries. The average decrease in GDP points for EU countries is -4.2%. But this average is hiding some astonishing disparities.

Traditionally in France the rich are suspected to be responsible for every bad thing happening within the economy. The current crisis is no exception to the rule and many voices are heard saying that the rich should pay more taxes to redeem themselves from their sins that brought the crisis.

In the Boston Tea Party (Dec. 1773) local patriots dressed as Mohawk Indians and dumped the containers of tea into the harbor. The British parliament had passed the Tea Act to establish officials in major American cities to collect the new tax on tea (Americans had been buying tea from Dutch merchants outside of customs). The English East India Company had gained control of Bengal, and in taxing it caused a famine which destroyed the income of the company and depressed the stock value in which many members of parliament had invested.

Constant attacks on tax havens and hedge funds by some politicians and statesmen is at least inappropriate. As a matter of fact, it is thanks to “speculators” that we have learnt about the pitiful state of public finance in several states (for example in Greece). On the other hand, international financial markets are the unique source of liquidities for troubled States. This is the point of view of Nicolas Lecaussin, Director of Development at IREF.