Tag Archives: taxes

Budgets and Austerity

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The Italian coalition government (interesting in its own right, consisting as it does as a teaming up of the far left 5 Star Movement and the far right Liga) has decided to increase government spending and decrease taxes.  This has been projected to produce a 2.4% budget deficit.  For a government already badly in debt, this deficit isn’t good.

Cutting taxes has been decried by others as being the cause of such deficits and debts.  Spending cuts cannot be allowed, say the same folks, because that would be an austere measure.

They’re wrong.

Cutting taxes leaves more money in the hands of the citizenry, the folks best positioned and best suited to make decisions concerning how their money should be used.

Cutting spending—a necessary measure to stay within the taxes collected—far from being an austerity measure, would enable Italy’s economy to burgeon. Getting the government out of competition with the citizens and businesses of the Italian economy for that economy’s resources will reduce price pressure, and it will leave those resources more available to the private actors, who will use those resources more efficiently than any government can achieve.

Italy’s move to cut taxes and increase spending is a half measure.  Spending needs to be cut to fit within the revenue the taxes will produce. Make no mistake on a related matter, too: the burgeoning economy will produce a net increase in revenue to the Italian government.

Ignorant Voters

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Recall the erstwhile tax on job creation that the Seattle city government passed a while back, and then repealed.  The tax would have charged businesses making more than $20 million in annual revenue a per employee tax of $275.  Although, in response to business and public outcry, the city repealed the tax a couple months later, the commentary of the tax’s chief supporter is illuminating.  Seattle City Councilwoman Lorena González, the lead proponent of the jobs tax:

Sadly the policy is right.  Our timing, however, was off. It’ll occur but we need to socialize people to what we’ve done, what we could do, the need and the real lack of resources.
A replacement may be in the cards but not now. We need to get rid of this albatross and then quietly work to figure out what takes its place. I’m thinking this is a November 2019 strategy.

Yep.  Business owners are just being greedy when they object to being taxed for hiring people. Those people are just too ignorant to understand that having their jobs taxed out from under them is good for them; they need to be socialized.

And the Progressive-Democrats on the Seattle City Council now will work secretively to slip this…tax…by the city under cover of a noisy city election.

Foolish

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Senator Bernie Sanders (I, VT) has offered legislation, in coordination with Congressman Ro Khanna (D, CA), that is his latest bit of socialism.  His legislation would hit large businesses with a tax equal to 100% of the welfare payments any of their employees might receive while working.

Sanders and Khanna say—and they’re actually serious—that this would pay for the welfare programs involved.

Andy Puzder has a different view of such legislation.

[T]he first step on the path to financial self-sufficiency is finding a job. A tax on employing welfare recipients would discourage employers from hiring them. It would increase the cost of employing such people without an offsetting increase in productivity or employee satisfaction, since the extra payment would go to the government rather than the employee. Companies could avoid the tax simply by hiring people not on welfare, reducing job opportunities for the people most in need of jobs and opportunity.

This is the anti-business—worse, the anti-poor, the anti-single mom, and the anti-just-starting-out youth—position of the Progressive-Democrat Party and their Socialist confreres.

But, hey—votes.  Our youth, our single mothers, our poor, they aren’t human beings needing a start a or hand up in the eyes of the Party.  They’re just votes to be kept trapped in the Progressive-Democrats’ welfare cage.

A Change in Tone?

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Recall the start of President Donald Trump’s response to the People’s Republic of China’s economic conflict with us, when he began imposing tariffs on PRC goods over their continued theft of American companies’ intellectual property.

Vice President Wang warned US business chieftains there would be corporate casualties. President Xi told others that Beijing would “punch back” at the US.

Now we’re getting sweet words.

Liu He, President Xi Jinping’s economic-policy chief, told visiting American business representatives that US companies’ China operations won’t be targeted in Beijing’s trade-brawl counterattacks. “We won’t allow retribution against foreign companies,” Mr Liu said[.]

We promise.

Sure.

No, this is not a change in tone.  It’s smoke-blowing and just a change in tactics.  The PRC still is requiring foreign companies—especially American companies—to take on a majority partner as a condition of doing business in the PRC.  Sure, the government is making noises about only requiring a minority partner (49% ownership), but they’ve enacted nothing.

The PRC still is requiring foreign companies—especially American companies—to install backdoors in their operating system software and their software products so the government can enter and poke around to its heart’s content.

The PRC still is hacking into American businesses and our government facilities to steal our companies’ and government’s secrets.

On the other hand, that last may indicate that the change in tone is serious.  The PRC may have gained enough confidence in its hacking chops that it doesn’t feel the need to demand the surrender of our secrets; it may be confident that it can steal them at will.

Either way, there’s no reason to take Liu at his word.  Actions matter.

Greece and Austerity

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Greece finally is out from under its EU/IMF bailout yoke, and now it wants give its citizens relief from the austerity measures it implemented during its years-long crisis.

[Prime Minister Alexis Tsipras]…announced ambitions to cut taxes as well as increase spending to boost employment and on welfare programs.

Reducing taxes is consistent with reducing austerity—provided the government also tightens its tax collection regime.

Increasing spending, though, increases austerity: it crowds out private businesses as government, which doesn’t have to worry about the cost of money, outcompetes businesses, both for sales and for the resources needed for production. That increased spending also drives up the cost of money for those private enterprises.