Sunday, 23. November 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
Mad About Mammoths At Vienna Museum
A unique exhibition in the Austrian capital Vienna has proved a massive hit after bringing together for the first time some of the most famous frozen woolly mammoth remains.
Controversy Over Advert For Fucking Hell Beer
An Austrian political party has defended a decision to promote a local beer named after the village of Fucking.
Luigi Restaurant Cooks Up Delicious Delights For Winter Season
Brothers Luigi and Leo Doci who own the renowned Luigi restaurant chain will be cooking up a storm in Semmering this winter.
Church Porn Star In Court
A Polish-born woman who made a video of herself masturbating in church is facing six months in jail after a viewer called police when he recognised the woman.
Hugh Grant Cuddles Lamb On Animal Farm With Mrs Glock
Hugh Grant led a star-studded turnout at Austria's animal farm project which unveiled its Christmas market this week.
Cheating Wife Buries Hubby Alive For New Lover
A woman who married her sisterís fiance and then attacked him with a knife before burying him alive so she could be with her new lover is facing life in jail.
Spate of Crimes throughout Vienna and Lower Austria Solved
Four men have been arrested after committing 113 break-ins, 21 thefts and causing at least 260,000 Euros worth of damage.
Dad Punished Child, 2, With Boiling Hot Shower
A two-year-old girl is in an artificial coma and fighting for her life after her father threw her into a scalding hot shower leaving her with severe burns at the family home in the Austrian capital Vienna.
Police And Firemen Get Cold Turkey
Flipping the bird was given a new meaning in Austria this week when a truck filled with plucked turkeys overturned, closing a busy motorway in the process.
Hotel Gets A Penthouse Without The Building Stress
A hotel in the southern Austrian city of Graz has gone upmarket with a five-star penthouse suite by simply having it lifted by a crane onto the top floor.
The most popular stories –
last 7 days
|Controversy Over Advert For Fucking Hell Beer|
|Half Naked Winnie The Pooh Banned From Playground|
|Explosive Flash In Russia Blamed On Meteor|
|Luigi Restaurant Cooks Up Delicious Delights For Winter Season|
|Greedy Panda Chews Through Weighing Scales|
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.