ravel30 wrote:How can you be so sure that this is what is going to happen? We pay higher taxes in Canada and we are still innovative. So are other countries of the world.
No disrespect, Matt, but Canada has a population of about 33 Mil. We have a population 10 times that. Similarly, America, not Canada, has been the engine of world prosperity for 60 years. Only within the last 10 years, as globalization has kicked in, raising millions of around the world out of grinding poverty to greater prosperity, have other consumers begun to assume the burden of buying other nations' exports. Everywhere you look, nations that once had little hope of ever being anything but wards of international generosity have thrown off top-down managed economies for the prosperity that comes from bottom-up free markets and harnessing individual self-interest and imaginations.
Until very recently, European-style welfare states, which includes Canada, have had confiscatory taxes that eat up capital investment to pay for millions of non-producers. A few states, including Britain and Ireland, embraced a freer market capitalism and reduced taxes to allow for more capital formation and investment in their own countries. About 13 years ago, Canada began to reduce their income taxes which were near 60% and their corporate taxes to achieve the same results. Capital goes where it is treated best. In 2001, the Euro-zone had much higher corporate taxes than it does now to pay for the welfare state, and they spent a deal of energy trying to force the US to "harmonize" its tax policy with theirs to make investing in the US as unattractive, or more unattractive, than investing in their own countries. The US refused to be suckered into that ploy to increase European competitiveness at our expense, so the Europeans began lowering their corporate taxes rates so now they are below that of the US (which I think is around 34%). As a result, European goods became more competitive, but Europe still basically exports to other nations in the Euro-zone. Germany is heavily dependent on exports to the southern periphery, which is one reason it is even considering rescuing Greece. The other reason is German banks are principle owners of Greek bonds (debt).
Unfortunately, the Euro-zone resisted lowering its unemployment rates, which the nations use to control inflation, to deregulate their ossified labor market, or to deregulate their punishing business start-up regulations. The result is virtually stagnant economies except for Germany, which at the moment is the Golden State in Europe: higher savings, and lower spending, comparatively. Labor in Europe is so expensive, businesses rely heavily on temp workers (mostly immigrants), who have little or no protections against firing, to prevent having to assume crippling obligations to permanent workers (e.g., payment at full salary and benefits for a year after firing). Europe's need for immigrant labor to pay for the welfare state raises a whole nother issue I won't go into here. Similarly unfortunately, the financial meltdown required states to increase spending, and thus borrowing, which increased the requirements for taxes, which can't be raised in a recession. A real dilemma. Now, after a year of recession, comes Greece (aka a banana republic whose debt last year enjoyed a AAA rating, and this year revealed that its "off the books" debt was 100% of its published debt). It is a proxy for the profligate southern periphery of the Euro-zone, amusingly referred to as the P.I.I.G.S. for the nations - Portugal, Italy, Ireland (no offense, Seán - I didn't make it up), Greece, and Spain. Greece requires a bailout of at least some $80 BN dollars and appears to have violated most every fiscal rule imposed on members by the EU central bank. Welcome to the wonderful world of NGOs. The only people solvent enough to help Greece are the Germans, and they don't want to not only because Greece's profligacy and corruption are not Germany's fault and because the rest of the P.I.I.G.S. stand with their hands out for similar rescue. Of course Germany will eventually bail out the Greeks, over the howls of protest from the German voters, but then the EU is not known for its democratic conduct. Like I said, its all very complicated and likely to be our
Taxes do not forbid people to have good ideas.
Right you are! They do however prevent capital formation that would otherwise be free to invest in good ideas. No money=good ideas never get to production and market.
I don't understand how you can say that unemployment will continue high because of that program. Is it me or it is not the goverment's job to create jobs ?
See above. Expensive workers depress hiring. They are a negative incentive. Unemployment is used in welfare states to fight inflation. But I'm curious why you think creating jobs is the government's responsibility. Wherever did you get such an idea?
Identifiable consequences ? Again, this is where you know things better than me so I trust your judment entirely.
Well, I appreciate the vote of confidence, but don't. Don't take my word for it. I'm telling you things that you should look into on your own, you know, in your copious spare time, because your comments demonstrate that you have the liberal view down in it's most salient features, i.e., don't be mean, share bounty with the less fortunate, a little tax never hurt anyone, we have to take care of those who can't take care of themselves, etc.
I have listened to a lot of the arguments of both sides, honest I have, and that's what I have gleaned from years of reading, particularly about the Euro-zone in comparison to the US, free-market capitalism vs. state-controlled managed economies, what makes the conditions for prosperity and what makes the conditions for poverty. You probably have guessed, I'm strongly opinionated on the matter, partly because the law of unintended consequences stalks every political decision. The more major and comprehensive the decision, the greater the unintended consequences. People like me have been fighting with the left in this country for 40 years about a variety of issues and one thing I've learned from it all is that the left always has great sounding ideas (save the poor, share and share alike, don't be greedy, take care of the children, college for everyone, insurance for everyone, level the playing field, corporations and rich people can pay for everything, take care of old people, etc.) that often turn out to be highly destructive, and yet they always avoid responsibility for consequences by invoking their good intentions. There's an old principle in tax policy. Psychologists understand it very well: what you reward, you get more of; what you tax, you get less of. The welfare state rewards non-producers with the benefits of producers' work. There's no incentive for people to work when the state pays them not to do so. The more non-producers are rewarded, the more of them there will be. Small businesses in this country account for 66% of employment. Tax them heavily, make start-ups more difficult, double or triple core costs like energy (pending cap-and-trade legislation), and you will have fewer entities that actually create jobs, further depressing employment.
Franklin Roosevelt identified within a few months or years after Social Security that it was a fiscal disaster in the making if it wasn't fixed soon. But it never was fixed, and now it's an even worse disaster that has been joined by 3 other fiscal disasters, including health care. We can see the numbers now at usdebtclock.org. It's literally the bottom line, i.e., the unfunded libaility our grandchildren will have to face. My share at the moment is approximately $350,000. I can't afford that now. How are two generations away going to pay for their share?