Arguably the single largest threat to freedom in the world is the "harmonization" of tax rates. Of course politicians like to use euphemisms so the ignorant masses can continue on watching their Lady Gaga or the latest professional sports competition, but trust me it is a threat. The reason why is if tax rates are "harmonized" then there is no incentive for business, investment or labor to go to one country versus another. And if tax rates are moved in conjunction with one another, then the governments essentially form an OPEC-like cartel ensuring that labor and capital are more or less trapped at their home country. Since there is no advantage to moving investment and labor to one place or another, governments (if working together) and implement whatever policies they want on their people because "where you going to go? Every place is the same."
Of course this is very boring economics stuff that is no where near as exciting as watching "The View" or "Glee." So, as is a principle of mine in economics, I like to simplify things so people can understand.
Thank God for Canada.
The above comic strip was drawn by Chris Foleen, one of the respondents to my request for a political cartoonist.
You WILL visit his site.
Hence the decades long RAGE of Eurocrats and the USA against Switzerland and "tax havens" in the Caribbean& elsewhere.
ReplyDeleteIt has been said (and I subscribe to this principle) that one of the strengths of the West is our multiple heads nature, and possibly the key factor leading to the Renaissance (besides western morals creating a fertile ground): if your idea did not fly in an Italian principality (e.g. Florence), you could go to the next one (Milan), to Venice, to the King of Spain, to England, etc...
ReplyDeleteWatch how the artists (we still had real artists producing beauty , back then), professionals (e.g. sea captains, administrators) and scientists would move around Europe depending on where the thinking climate was suitable... many, many examples, and notice how the title for best country for thinkers moves around Europe (Italy in the 1400s, Spain and Portugal in the 1500s, France in the 1600s, etc.)
Columbus himself (probably a Genoese, but who knows) knocked on a few doors (Spain, Portugal) before getting support for his project to India (2nd or 3rd time asking in Spain). Giovanni Cabotto (a.k.a. John Cabbot) was eventually appointed by England (rather than Genoa or Venice) to explore North America...
The XX century was not that different, notice how scientists would leave opressed countries (Poland, Russia, Jews from eastern Europe) to go to better thinking climates (UK, USA, France)... and later on, scientists would flow from Asia and elsewhere to North America and Scandinavia... (still happening)...
The worst thing that can happen to the West is a unified government, we have never had it (in a fully implemented manner, as the Roman Empire was a federation, to some extent), and neither should we have it... the last time it happened it killed Roman ingenuity and ambition and led to utter collapse and to several centuries of misery.
In the case of China, it led to 500 years of navel gazing (ca. 1450 AD, the Chinese government decides to look inwards) and eventually a revolution (in the 1930s) followed by 70 years of dictatorship...
We (the West, regardless of colour) must be allowed to have the opportunity to do as we wish, rather than be told how to from the top.
The Spartans (and later the modern Greeks in the 1800s) did not fight the Persians for fun or territory, they fought for their right to retain their individualistic culture over a foreign one that demanded minions and compliance all the way to the top.
Where would you rather live:
1)a western country (yes, even Greece and Italy... horrible economies, but better than most outside Europe and nice food... plus freedom)
or
2) a top-down country (i.e. a Communist regime, an abolute monarchy, a theocracy, an Asian satrapy?) NOTE: if you do not know what a satrapy is, look it up; you may need to use the word sooner than you thought
Captain, you would like the mindset in Alberta, even Saskatchewan; it would even appear to be changing (for the better) in Ontario (Toronto said no to politically correct mayoral candidates, we now have a mayor who does not take active -any- part in Gay Pride Parades), but who knows. Quebec always surprises me, because what I hear in the media and what see their government do... bears no resemblance to the Quebecois I have met and worked with, or my business trips to la 'Belle Province'.
The pendulum is swinging away from singing kumabaya and barefoot farming, although I fear (I know) it is too late for the move without soon to be 'interesting' consequences, as the pendulum did swing too far
I agree that the harmonization of tax rates would pose a huge problem for productive citizens everywhere. With that being said, though, the only way I could see it happening is through coercion. There will always be some opportunistic country looking to poach business investment and high-skilled labor from its neighbors by undercutting their personal and corporate income tax rates. Other countries, tired of seeing their businesses flee, might put diplomatic and economic pressure on the low-tax nation to get it to raise its rates in such a situation.
ReplyDeleteTax rates could also harmonize themselves between countries in a different, more beneficial way. With the extreme mobility of both labor and capital in the modern global economy, companies are beginning to look at countries as competitors in the struggle to provide the best business environment. Nations that tax and regulate too much will see businesses flee, growth stagnate, tax revenues drop, and bankruptcy ensue, while those with a pro-business climate will prosper. This race to the bottom might eventually establish an "equilibrium tax rate" among nations that is low enough to entice businesses but still high enough to keep the government running.
They better harmonize labor rates, regulatory burdens, tort burdens, and all the other goddamn costs of doing business while they're at it.
ReplyDeletehttp://www.martinarmstrong.org/files/Spending%20v%20Systemic%20Reform%2007-14-2011.pdf
ReplyDeleteThis is something you should be interested in.
The harmonization of tax rates will be followed by competitive subsidies for popular industries.
ReplyDelete