New taxes not solution for worlds economic woes.

With many of the worlds economies facing slow growth or actual recessions, governments are looking for ways to maintain their budgets. Instead of making hard decisions on where to cut the size of their budget deficits, they are looking for ways to increase tax revenues. According to The Telegraph “advisors to Chancellor Angela Merkel are pushing for better off households to pay towards the cost of any future bailouts for the weaker members of the single currency.” This “raises the prospect of taxes being imposed on property in a country like Spain if its government was forced to seek a bailout. This comes on the heals of levies on bank accounts in Cyprus and the attempt by French President Francois Hollande to enact a top income tax rate of 75%. Amazingly that last measure was overturned.
These leaders seem to understand that their tax policies create incentives for evasion when an advisor to Mrs Merkel said ” levies on bank accounts are the wrong way of funding bailouts, because the rich are able to shift their money out of the country.” That is why we see them casting their nets even wider to less liquid assets hoping to catch the rich where they have less flexibility. This is occurring in the United States, where President Obama has already pushed through tax increases of 6% on top income earners. Knowing this wont be enough to maintain the amount of debt he has accumulated, he is now pushing for closing loopholes for those top earners and for Corporations. Perhaps most egregious was his proposal to limit the amount one could contribute to tax deferred IRA’s. the result of all these new taxes will not be more revenue but less and slower economic growth as the incentive for saving and investment is punished.
Instead of trying to maintain the Keynesian policy of taxing and spending the European nations should lower their tax rates to encourage investment and spending. Next they have to reform their overly unionized labor market, which makes it nearly impossible to fire workers in some countries. This would help to lower their abnormally high unemployment rate which would lead to faster economic growth and therefore higher tax revenue. Further, getting rid of all the Kyoto Protocol regulations of their energy sector would give their economies a shot in the arm with lower energy prices.
Here in America our number one driver of the debt are our entitlement programs. If we don’t reform them soon they will bankrupt us and leave millions who depend on them out in the lurch. Reforming our tax rates for both individuals and Corporations would take away some of the uncertainty our economy faces. Next we have to repeal Obamacare. This monstrosity is going to destroy jobs, increase healthcare costs and taxes and severely limit the quality of care in America. By deregulating one of the most regulated industries in America we will save our economy billions of dollars that will help our economy grow. Lastly we need to unleash our energy sector in America by allowing more drilling and fracking, approving the keystone pipeline and building more refineries. Doing this will create millions of jobs, bring in billions of dollars in royalties and taxes and keep billions of dollars we spend on foreign oil here in America. With new world leadership these things can be accomplished, lets hope we get it.


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