Sunday, 09. March 2014
13. 11. 12. - 16:00
Super taxes on the West's wealthiest may destroy recovery from the Euro-crisis, writes Clem Chambers, the CEO of global investors' site ADVFN.com and author of the Amazon best-seller, ‘101 Ways to Pick Stock Market Winners’.
If a government doesn’t like something, it will tax it. Tobacco and CO2 emissions, for instance.
CO2 carbon taxes are clever because the tax that's collected can then be used to subsidise what we do want, which is sustainable energy.
So a tax on coal could become a subsidy on windmills, resulting in less coal and more wind power.
That’s the symmetry of the idea.
The flip-side is a government subsidises what it wants more of.
If you want more sugar, you subsidise farmers to grow more sugar. If the subsidies are large enough pretty soon you get a sugar mountain.
Europe was the master of farming subsidies and created many a mountain of food by subsidising its production.
In Austria, one such initiative is the Alpine Farming subsidy, paid to farmers not to harvest crops in mountainous areas to encourage bio-diversity – a scheme making headlines currently due to the EU's refusal to pay many farmers, after a few were caught farming the remote lands anyway.
It’s a simple dynamic and universal economic tool - tax what you want less of, subsidise what you want more of. You can have more butter and more art whilst reducing CO2 emissions and tobacco-related deaths.
It's up to each government to apply the correct incentive or disincentive and fund accordingly.
Yet here in the West we now find ourselves in an awkward bind. There is not enough money to fund governments.
According to those in power (on both sides of the Atlantic) one of the keys to the solution is to tax the rich, whilst continuing to subsidise the poor. Meanwhile, governments are struggling, nowhere near to balancing budgets.
Recovery remains out of sight.
President Hollande’s new 75% tax regime on France's wealthy citizens is most likely the beginning of a new wave in the West. It's an attempt to continue to subsidise the poor at current levels whilst punishing the wealthy at levels tantamount to confiscation.
Confiscation of gains, when they are considered above the socially acceptable level is, of course, nothing new. Even within the last 50 years or so it was common practice.
The 70s were packed out with 'super-taxes' and the wealth destructions they inflicted on Europe were colossal and poorly remembered. Confiscation has never been good tax policy. If a person smart enough to make such money can’t flee or avoid confiscation, they simply stop bothering. Who would blame them?
The sad thing is, the West has seen this all before. It signals there is still a further road of dislocation and recession ahead.
Unless Europe plans to erect barriers to exit, those most capable of rebuilding the developed world’s economies will simply head to Asia, where the barriers and penalties of success are so much lower.
The question governments need to ask is, do they want a shot at recovery and the return of the good times of the last 20 years? Or do they want to slog into a brave new world of a global realignment where the old 'West' seems as ossified and archaic as the Eastern bloc was before the fall of its bloated, all-consuming and outmoded state system.
It is a choice : either celebrate success or tax it into oblivion. If you subsidise equality and tax overachievement, essentially forbidding individuals to excel, then the median result is a sullen and grey, an environment which still lingers in countries like Russia today.
The West is not yet doing the equivalent of subsidising vodka, but at this rate, that day may come.
- By Clem Chambers. Clem Chambers is CEO of leading investment site ADVFN.com and author of Amazon best-selling investment guides ‘101 Ways to Pick Stock Market Winners’ and ‘A Beginner’s Guide to Value Investing’ and the new financial thriller, ‘The First Horseman’.
~Visit www.ADVFN.com for free, real-time stock prices
~ Clem’s latest news and articles at www.clemchambers.com
~Follow Clem on Twitter: @ClemChambers
Another F1 Driver Hospitalised by Ski Accident
Austrian Formula 1 driver Gerhard Berger, 54, suffered a broken hip and has been hospitalised after suffering an accident very similar to that of fellow ex-driver Michael Schumacher.
Austrian Relieved To Only be Dead On Paper
Austrian man Christian Kozel, 29, discovered he was dead when uniformed police officers turned up at his home in Salzburg at the weekend.
What is on at Burg Kino this week (7 March - 13 March)
See what films are on this week at the Burg Kino on the Opernring.
Police catch graffiti-villain of Vienna
A graffiti sprayer, named "Puber" has been one of the main "villains" of Vienna for almost a year. He has filled almost the half of the city with his drawings. Now, a suspect, alleged to be the notorious sprayer himself is in the police custody of Vienna and may face up to five years in prison.
Apartment sales drop in Austria
According to the brokerage firm Re/Max, the number of the real estate sales in Austria has declined around 8.3% in the last year. The exact number of properties which were sold and bought accounts to over 80,000 units, which translates into 16 billion euros. Apartments were the most popular type of property sold last year, accounting for 28,000 of the units sold, but there has still been a 9.3% decrease from the last year.
McDonalds boom in Austria
McDonald's in Austria generated 560 million Euros in sales in 2013 after introducing more branches and expanding it's product range.
Exhibition takes you on a journey with Sigmund Freud
To mark the 75th anniversary of Sigmund Freud's death, the museum dedicated to him in Vienna is holding an exhibition looking at Freud's journeys around the world, including his final one that saw him flee National Socialism in 1938.
Plastic replacing fish in the Danube
The Danube is so polluted that there are now more plastic particles than fish larvae in the water according to new research.
Ladies skiing offer at Stuhleck this weekend
In celebration of International Women's Day on Saturday 8 March, the Stuhleck ski resort in eastern Austrian is giving female skiers discount prices on ski passes.
Rediscovered 'degenerate' painting on show at Belvedere
A painting that was rediscovered in 2012, decades after it was seized by the Nazi's for being 'degenerate', is on display at the Belvedere Palace in Vienna.
The most popular stories –
last 7 days
|Veggies suffer more health problems say Graz researchers|
|Austria releases list of Ukrainians to have assets frozen|
|Terrifying high speed dash for British school ski group|
|Vienna first city to be granted personal domain name|
|Animal rights group protest against Burberry fur in Vienna|
Why suffer in silence. Let off steam by letting our readers share your troubles. File your complaints about anything and everything here.
Our ombudsman David Rogers will try and help solve some of the problems from lazy civil servants through to incompetent companies – and at the very least the worst transgressors will end up in our weekly special report.