Thursday, 20. June 2013
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
Admont – where culture and nature meet
The region of Admont, in Styria, once a popular holiday destination for walkers and lovers of the great outdoors, is undergoing something of a revival.
Niemetz takeover deal sealed
The Romanian Meinl subsidiary Heidi Chocolat will take over the insolvent Viennese Schwedenbomben manufacturer Niemetz.
Building firm Alpine goes into admin
Over 7,000 jobs are at risk after struggling building firm Alpine failed to come up with a restructuring plan for the company.
Huge counterfeit money gang nicked
A money printing gang was busted after police carried out a series of raids on illegal printing factories.
43 year old found dead by one night stand
The body of a 43-year-old man was found in an appartment in Graz, Styria, yesterday (Tuesday).
Three children saved from over-heated cars
Parents have been urged to keep their babies safe after three babies trapped in overheated cars had to be rescued.
Five children rescued from raging river
Five children were rescued after being swept away by raging river currents in Salzburg, Austria.
Viennese museum displays bits of the moon
Three tests samples of moonstone are now on permanent display from NASA at the Natural History Museum in Vienna.
Man bites man over attempted puppy theft
A man who sold a puppy was arrested after he tried beating up the new owner to get the animal back - and was then bitten by the new owner.
Airpower air show damaging the environment, says Green Party
The 2013 Airpower air show due to take place later this month in Aichfeld (Styria, Murtal district) has come in for criticism from environmentalists.
The most popular stories –
last 7 days
|Facebook Tracks Down Dog Killer|
|Flights to France cancelled due to Europe-wide protest|
|Fly Niki plane loses part of its panelling|
|Bottle explosion: toddler get 90,000 Euros|
|Red Light Process starts again 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.