Taxes

The economic crisis could present an opportunity to harmonise taxation policy across european states, according to a major report on the future development of the EU published by the European…

There has been a rising academic debate on the sustainability of deficit spending and accumulated debt in governments across the globe. This correlates with a growing concern that excessive government deficits and accumulated debt will lead to unstable financial environments and a devalued quality of life for future generations. Varying economies with varying fiscal behavior have increased incentives to work toward more responsible fiscal behavior through reining in deficit spending and debt accumulation. The authors of this report seek to understand the process these economies undertook, the procedures they used, and the resulting effectiveness of those procedures on achieving fiscal stability. This paper takes a broad, case-study view of 26 countries and some of the plausible factors and motivations that have led them to aim for fiscal prudence. While case studies like this cannot be definitive on causation, they are certainly suggestive. The report is looking for for policy reforms that may cause better long-run fiscal performance.

In a joint report from the National Research Council and the National Academy of Public Administration, its authors, including AEI’s Joseph Antos, describe the United States’ fiscal outlook, asserting that the present budgetary path is unsustainable. If today’s policies, particularly those regarding entitlement programs, are left unchanged, Americans will face either a substantial erosion in their standard of living or an extremely severe crisis. The authors propose a choice of four policy paths that the United States could and should pursue to get itself back on track.

The Obama administration has just proposed a new fee — otherwise known as a tax — on the country’s largest financial institutions. The tax aims to recover the difference between the bailout funds provided to these institutions a year and a half ago and the amounts ultimately returned to the Treasury. In so doing, the tax will allegedly reduce the federal deficit by some $90 billion.

In a new Working Paper published by the American Enterprise Institute, Kevin A. Hassett and Aparna Mathur provide a brief overview of U.S. tax policy in relation to other Organisation for Economic Co-operation and Development (OECD) countries and in relation to world averages. They describe trends in ten different tax rates between 1981 and 2007 across all thirty OECD countries. The U.S. tax code emerges, in their analysis, as exceptional in many regards. Most countries have gradually moved toward collecting a large share of their revenue from value-added taxes.

The French Constitutional Council pronounced a negative opinion on the cherished by President Sarkozy and his government carbon tax project.

The carbon tax was meant to apply on products related to high emissions of CO2, like petrol, gas, coal, fuel oil, LPG (liquefied petroleum gas) when used as combustible. It was supposed to be imposed to every physical or moral person, except those already subject to the European Emissions Trade System (ETS).

Because of the “Tobin Tax”, Professor James Tobin has involuntary become the spearhead of numerous anti-mondialist organizations. A tax synonymous of “compulsory charity” from “rich” (countries) (executing several billions of financial transactions) to “poor” (countries) (victims of the “law of the strongest”). The principle is a systematical taxation of all financial transactions. A simple and ethical principle? It is not that obvious… Numerous scientifical voices clearly explain why this kind of project is not applicable. First of all, such a principle implies an unanimous understanding between countries all over the world; if not, some new “Fiscal Eden” can appears. Next, who can prevent a government to increase the tax rate as high as it wants, even if this destabilizes all exchanges? James Tobin himself explains that some organizations have highjacked his name and his scientifical production to try to defend their ideals.

The tale tells that Arthur B. Laffer sketched his famous curve on a napkin during a lunch with Jude Wanniski, Donald Rumsfeld and Dick Cheney. At that time, he surely did not imagine the renown that will follow this day of December 1974. The Laffer curve relates for each tax rate the expected total tax revenues. For low rates, tax rate and tax revenues move in the same way. But, as rates increase, this relation works in the opposite direction: higher tax rate produces smaller tax revenues. Hence, beyond this “maximum tax rate” the disincentive” effect of taxation is overwhelming. Nonetheless, this maximum rate is not empirically defined: it depends on place, time, circumstances, etc. The following file does not pretend to be exhaustive. Its goal is to introduce key arguments about Laffer Curve.

The existence of tax havens is more than ever a subject of controversy. While the European Union, as well as the USA and the OECD countries are trying to put pressure on the governments of States considered as tax havens, the understanding of what is at stake is becoming more and more obscure. We are trying here to help you to form an objective opinion about this issue.

You can find here links of interest on wordwide taxation and international comparisions.