Tag Archives: economics

German Intransigence

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Last Tuesday, the British Parliament voted to send Prime Minister Theresa May back to Brussels to renegotiate the status of Great Britain’s Northern Ireland border with the Republic of Ireland, which is part of the Brit-EU exit agreement that the Parliament had earlier rejected.  The same day, the Parliament also rejected an attempt by Labour to delay by nine months the actual departure of Great Britain from the EU, leaving the date set at 29 March.

European Council President Donald Tusk said through his spokesman

The backstop is part of the Withdrawal Agreement, and the Withdrawal Agreement is not open for renegotiation.

That’s standard fare for the EU, which never has negotiated in good faith and which has all along faced a negotiator, in May, whose heart never has been in leaving the EU.

It’s Germany, though, that not only refuses outright to renegotiate a small aspect of that failed departure agreement, now is directly interfering in the domestic affairs of Great Britain.  The nature of the current “agreement” would

keep Northern Ireland (and by extension the UK) in the EU customs union in order to avoid a hard border on the island of Ireland.

A hard departure would take all of Great Britain (and by extension Northern Ireland) out of the EU and its internal free trade/free movement of goods and people zone altogether.  That might necessitate customs checks and border entry stations.

Germany’s Foreign Minister Heiko Mass:

We will not allow Ireland to be isolated on this issue.

Never mind that the only ones isolating the Republic of Ireland on this issue are Germany and the EU.  It gets worse, though.  Jürgen Trittin, Co-Chairman of Germany’s Green Party’:

It’s clear that we won’t accept a militarized border in Ireland[.]

Leaving aside the cynically constructed straw man nature of this claim—no one is talking about militarizing any border, only of the possibility of setting up customs stations—whether Great Britain chooses to “militarize” any of its borders is strictly a domestic matter for the Brits to decide.  They cannot, after all, station troops anywhere along any of their borders except on their side of them.  Trittin knows this.  (Beyond that, this ban also is a blatant interference in the internal affairs of the Republic of Ireland for the same reason.)

Aside from that, Trittin’s bar would result in…what, exactly?  What does Germany, or the EU, propose to do were the Brits to decide to “militarize” its border with the Republic of Ireland?  What concrete steps is Germany implying it, or the EU, would take to enforce its bar on the “militarization?”

Plainly, it’s an empty threat, intended only to intimidate and, worse, to meddle in the internal affairs of a sovereign nation—and so vindicating that nation’s decision to leave such an entity as the EU.

Germany’s Cost of Going “Green”

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Germany is moving decisively to eliminate coal-fired plants as a source for its economy’s energy.

Germany has already banned nuclear power, which was a singularly stupid thing to do—that source of energy already had no CO2 emissions. Nevertheless, the destruction of that industry already is ongoingly expensive.

Merkel’s decision in 2011 to dump nuclear energy by 2022 and to accelerate the build-out of renewable sources such as wind and solar power is already costing them €27 billion [$31.8 billion] each year in the form of a renewable-energy tax.

Despite that, Germany’s Commission on Growth, Structural Change and Employment has laid out the requirement, and the Merkel government seems willing to take it up.

[T]he coal commission advised the government to pay around €50 billion [$57 billion] to the three regions hit by the shutdown of lignite mines to make sure new jobs are created. It also recommended that the government should pay €32 billion [$36.5 billon] to compensate consumers and business for higher electricity prices [annually] and an unspecified amount to indemnify coal power plant operators for the lost value of their assets.

That’s just the inner bound of the cost of “green.”  With black coal mining already shut down—at a cost of €240 billion ($273.7 billion)—this will put coal-fired energy plants out of business.  It’s not just the immediate coal-based energy industry that will suffer.

Biblis, in the Hesse State, used to have a nuclear power plant.  The closure of that plant cost the city 50% of its corporate tax base.  That cascades up the political jurisdiction hierarchy and across the nation.  The increased cost of energy also is hammering German industries that are users, not producers, of energy.

Manufacturing companies, from chemicals maker BASF to carbon fiber producer SGL Carbon, have shifted investments abroad, where energy costs are often a fraction of Germany’s.

Consumers have to pay the higher energy prices, too, and that’s money they can’t spend on other goods and services—which hurts producers of those other goods and services.  All of that is lost revenue for Government, and it’s lost jobs and German prosperity.

What’s the value of changing energy sources if the energy becomes prohibitively expensive and so stunts economic growth and development?

Some Tax Data

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These are via the Tax Foundation and are from 2016, which happens to be the last year of the Obama administration and so represent the culmination of Obama’s tax policies.

  • The share of income earned by the top 1% of taxpayers rose to 20.6% in 2014. Their share of federal individual income taxes also rose, to 39.5%.
  • In 2014, the top 50% of all taxpayers paid 97.3% of all individual income taxes while the bottom 50% paid the remaining 2.7%.
  • The top 1% paid a greater share of individual income taxes (39.5%) than the bottom 90% combined (29.1%).
  • The top 1% of taxpayers paid a 27.1% individual income tax rate, which is more than seven times higher than taxpayers in the bottom 50% (3.5%).

Progressive-Democrats argue, and they’re actually serious, that this isn’t enough.  The rich still aren’t paying “their fair share.”  Cynically, those same Progressive-Democrats refuse to say how much, or what per cent, is the rich’s fair share, beyond saying, “More, more, more.”

Progressive-Democrats’ only principle, when it comes to OPM, is Gimme, Gimme, Gimme.  They have no limiting principle.

It’ll be interesting to see how those data compare with the data for 2019, the first year of the Republicans’ tax cuts and reform.

Increase Spending, Taxes?

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Americans seem to favor that, according to a Fox News poll released last Thursday and discussed on Fox Business Online.

[T]here is broad support for increasing taxes on the wealthiest families. Voters support tax increases on families making over $10 million annually by a 46-point margin (70% favor-24% oppose), and support a hike on those making over $1 million by 36 points (65-29%).
There is less support for a broader tax increase: 44% favor raising rates on those with income over $250,000, and a small minority, 13%, approves of an increase on all Americans.

What would have been interesting, though, and which Fox News chose not to do, would have been to break those preferences out by age group (the poll had only two categories: under/over 45), by income level (again, the poll only had two categories: under/over $50k), by income taxes actually paid in the prior year, and by welfare payments/tax credits received in the prior year.

Trends in those categories might seem too obvious to bother collecting data for, and trends indicated in the last two categories would have been skewed by willingness of respondents to divulge that information, but until data actually are collected, that “obvious” can only be speculative.

The poll itself can be seen here.

“Proper Tax Rates”

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According to the EU.  Or at least the European Parliament’s Green Party.

An investigation by the Greens in the European Parliament has shown big companies throughout the bloc are failing to pay their statutory taxes. The party has called for more social responsibility.

I’m always amused by claims that studies—statistics—show anything.  At most, they can indicate, even strongly indicate, something, but showing—proving?  Not so much.

Be that as it may, and it really is more sloppy elocution than it is factual error in this sort of context, what really interests me is that “failure to pay,” and “social responsibility.”

The Greens presume to be the arbiters of what is social responsibility.  Not the citizens, not their aggregate as the society at large.  No, it’s these Green Know Betters who will define the term and set the criteria for its satisfaction—for our own benefit, of course.

And that statutory claim?

Luxembourg stood out in the study, where the official tax rate is 29 percent, but corporations paid only 2 percent on average.
Hungary, the Netherlands and Austria were also highlighted as states where actual taxes paid were significantly lower than the official rates.

The study’s authors, at least as summarized by Deutsche Welle, which was citing Süddeutsche Zeitung, show a broad misunderstanding of anyone’s tax code.  It’s easy enough to get the total tax paid below a statutory rate, and do so entirely legally.

That’s what deductions, tax credits, tax subsidies, and the like do.  What starts out as top line taxable income—before deductions, credits, etc—also does not include some forms of income—income not earned within the taxing jurisdiction, for instance, which is the big player in Luxembourg’s code.  All the nations of the EU have their own suite of these, but in essence, these all reduce the income actually subject to tax by large amounts, and then the subsidies pay back into the tax payer other monies—like, for instance, subsidies for setting up “green” energy facilities.

And we arrive at a realized tax rate substantially less than the official yet mythical statutory rate.

Maybe the Greens will reach the point where financial success is socially irresponsible, too.