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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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