I'm a masochist. I'll never leave the food bank.
Ed Weick
----- Original Message -----
Sent: Thursday, May 29, 2003 3:09
PM
Subject: RE: [Futurework] Exit ramp for
Europe
Have
it your way Ray. But when the gas tax was first proposed it was fought
by vested interests (autos and highway lobbies). The feds wanted to
introduce it first but backed down under pressure. It was
first introduced, I believe, by Oregon and later by the federal
government.
An
indirect tax, a stealth tax on network activities if you will, can go a
long way to monetize much of the productivity that is currently taking
place but is not counted anywhere in our system of national accounts. So
we feel poorer than we actually are. If we could monetize some of this
productivity, tax it in the form of a bit tax and use it to help provide a
Basic Income, then Ed Weick can leave his thankless tasks at the food bank
(some pun on "bank") and can produce his delightful essays for his web
site.
arthur
No, the people who would pay the bit-tax are
the people who now only have the internet for their lives because the rest
of the world is too expensive. It is the poor who always pay the
taxes, whether in rising prices or in sales tax. Anything
else is just sleazy. When will you reconsider the meaning
of the word "productivity" in terms of mega thinking rather than
minimalism. Do you always want to listen to the same
wallpaper music all of your life? That is why Philip Glass
and Steve Reich are so correct and that is also why most people either "get
it" and listen for personal understanding or can't stand the fact that it
shows how transperent their pants are. In short, you
either listen and say, "That's right" or you say they are just too dumb to
stand and they say, "You got it and I got it from
you!"
REH
----- Original Message -----
Sent: Thursday, May 29, 2003 8:57
AM
Subject: RE: [Futurework] Exit ramp
for Europe
This is why we need a tax system which is congruent with and takes
advantage of a networked economy. I have argued for such a system
with the "bit tax" There are other approaches but the bit tax would
be a good first step at getting at the productivity of networks for the
public purse.
As to tax havens, there is slow, very slow move reform these
places. The political will is lacking since, I guess, the rich who
contribute to political parties have given the slow down signal to
politicians. Too bad, since the tax havens know that a crackdown is
in the works. And have known for some time. Reforms just seem
to die in committee.
arthur
A
French think-tank, the Institut Francais des Relations Internationales,
thinks that, for Europe, "A slow but inexorable movement onto history's
exit ramp is foreseeable." At the same time, those who want a United
States of Europe have brought forth a Constitution which is now being
fiercely debated. This is the background for an excellent article by
Hamish McRae, the economics editor of The Independent. For those
interested in Europe or of the likely scope of government welfare
spending generally in the future, the following article from yesterday's
paper will be well worth reading.
<<<< EUROPE
CAN'T BUCK THE MARKET
Hamish McCrae
When economics and
politics clash, economics usually wins. Whether or not the proposed
European constitution means that Brussells will have a say over British
taxes -- and there is so much obfuscation that I don't think it is
possible to know at this stage -- economic pressures seem likely to push
down Europe's taxes to UK levels, maybe beyond. The politics may be for
higher taxes but the economics are for lower ones.How so?
Well,
the pressure on governments across the whole of the continent will be
huge for the next two generations. Government will be under tremendous
pressure to spend more but also will find it harder and harder to raise
revenue.
This is the result of the clash between two forces,
demography and mobility. The first story can be told quickly.
Continental Europe will become, after Japan, the oldest region in the
world in terms of the proportion of people over the age of 65. The UK
becomes older too, but at a rather slower rate. The effect of this is
that, whereas there are currently just under three workers for every
pensioner in Germany and France, in another decade there will be only
two and a quarter. In 2050, when young people now entering the workforce
are drawing their pensions, there will be fewer than one and a half
workers for each pensioner. In Italy and Spain the ratios are even
worse, for there will be more pensioners than workers by 2050. In
the UK they are rather better: we are, as a country, getting older, but
more slowly than the Continent.
European governments are well
aware of the implications of these changing ratios on their finances
for, not only will the bulging ranks of pensioners need their
state pensions, they will also be a charge on health and care
budgets. However governments find it hard to make even modest changes.
The present bout of French strikes is one response to minor revisions
to pension entitlements. If the protesters knew the extent to which
their benefits would have to be cut, they would be rioting, not
striking. The big fights are still to come -- and if the pressure is
serious in France it will be greater still in Germany, Italy and
Spain.
If demography adds to the cost of government, mobility
cuts its revenues. One form of revenue, company taxation, is already in
serious decline, as corporations have started to move their activities
to low-tax countries. For the winners this has been wonderful. Ireland
has transformed its economy by attracting mainly US companies with tax
holidays. It does not get revenue directly from the firms, but it does
from the people they employ locally.
The next stage looks like
being the movement of company headquarters. There have been examples of
German companies moving to Switzerland and US ones to Bermuda. But the
greatest gainer may well be the States, with this administration's new
plans to cut tax on dividends.You can see why the European Union is
anxious to have a reasonable measure of company tax harmonisation to
stop Ireland scooping more than its share of Europe's pool of foreign
investment. But the big game is not within Europe; it is between Europe
and North America and it is hard to see much tax harmonisation there.
For a firm such as DaimlerChrysler or GlaxoSmithKline, the legal
headquarters could rationally be on either side of the Atlantic. If
the tax advantages became big enough, they could move.
Over the
past 10 years there has already been a sharp fall in company tax rates.
This, I suspect, is a trend that has only just begun. Company taxes
are, however, only a small proportion of government revenues. Here in
Britain the rate is less than 8 per cent. The big money comes from
income tax (including social security contributions) and consumption
taxes, in particular VAT. So what matters is where people earn money,
and where they spend it.
For the very rich, the choice of where
to live is already very largely determined by tax. Tax havens including
Monaco and the Channel Islands do a great business. There are people who
live in the Channel Islands but work, in effect, a full week
in London without, technically, ever being there for tax
purposes.
Much more significant is the mobility of the young. You
can see this best in London, which has become a magnet for young
professionals from all over Europe and indeed North America. The
South-east of England has the largest expatriate professional community
on the globe. Continued professional inward migration is one of the
reasons why me UN now expects the population of me UK to grow by 12 per
cent over the next half-century. This compares with a rise of 8 per cent
in France and falls of 4 per cent and 22 per cent in Germany and
Italy.
Tax is not the only reason for professional mobility but
it is a significant one. Young professionals are a hugety attractive
proposition for any country They bring skills, they create growth, they
pay tax both on their income and their spending -- and they are not big
burdens on social security systems. I suspect that one of the main areas
of competition within Europe will be for just these people and, of
course, with the EU's single job market they are free to move
anywhere.
If that is great for Britain, it is not so much fun
for, say, Italy or Germany. The nigh-eartimg young move out, leaving an
even greater burden on the taxpayers who stay. The only way to keep them
will be to cut taxes. And the more the European economy becomes like the
American one, the greater the mobility of labour.It follows that if
Europe is to become a more dynamic economic region, the result will be
population movements that force down tax levels everywhere.
You
can see early signs of this already. In Sweden, the highest-taxed
country in the world, spending has afready fallen from its 1993 peak
of 67 per cent of GDP to about 52 per cent. The top marginal tax rate is
down to about 60 per cent (it varies depending on where you live), me
same as Britain in the 1980s.
In a more or less closed economy,
countries are free to choose the size of the state sector -- if they
want to pay higher tax and get better services they are free to vote for
that But in an increasingly open economy this choice closes off. It is
already, in effect, closed for company taxation. It is starting to dose
for personal taxation too.
So whatever the provisions of the
European constitution on tax powers, the reality will be set by the
market. Of course it can try to buck that market. The result could then
be rather on the lines suggested by the Paris think-tank, the Institut
Francais des Relations Internationales. In its recent report World
Trade in the 21st Century, it warned that the EU, even after
enlargement, might shrink by 2050 from its present 22 per cent of the
worid economy to a mere 12 per cent. "A slow but inexorable movement
onto history's exit ramp is foreseeable." It painted other somewhat more
optimistic scenarios -- but it makes a sombre backdrop to grand ideas
about the European
constitution. >>>>
Keith Hudson, 6
Upper Camden Place, Bath, England
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