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February 13, 2007

Insane Sentence of the Day

Tax competition is the badge of a failed state.*

February 13, 2007 in Taxes | Permalink

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"GDP per capita in Luxembourg, expressed in terms of purchasing power standards (PPS), was more than twice the EU25 average in 2005, while Ireland was about 40% above the average. The Netherlands, Austria, Denmark, Belgium, the United Kingdom and Sweden were between approximately 15% and 25% above the average. Finland, Germany and France recorded figures about 10% above the EU25 average, while Italy and Spain were around the average."

Eurostat 166/2006
18 December 2006

Tim adds: Yes, we know that Luxembourg is an outlier. There are plenty of other areas of Europe with 400,000 people in them that are twice the EU average. Parts of London for example.

Posted by: Bob B | Feb 13, 2007 2:57:48 PM

I've said it before on this site but it bears repetition: increasing "co-operation" and "transparency" between the majority of EU members' tax collectors is bringing about tax harmonisation by stealth. The OECD's policy against "Harmful Tax Practices" amounts to little more than a bully-boy cartel. Still, I guess if I were an official or politician with my snout buried deep in the trough of public largesse, I'd want to do everything to keep my milk cheque coming in. We need tax competition to make government responsive, efficient and on its toes.

Posted by: MarkS | Feb 13, 2007 3:01:29 PM

The plan is to make a world where there is no where you can escape state slavery.

Our plan must be to oppose extortion and state slavery wherever we find it.

Posted by: AntiCitizenOne | Feb 13, 2007 3:25:50 PM

And how can we oppose slavery? Why are the political classes and elites so for out of tune from the people they govern?

Posted by: MarkS | Feb 13, 2007 3:46:53 PM

"Why are the political classes and elites so for out of tune": because we don't hang enough of them?

Posted by: dearieme | Feb 13, 2007 4:25:55 PM

I'd not thought of it that way before. You're quite right. It's about time a few of them were strung up in public. We've been too decent and tolerant. It's time the worm turned.

Posted by: MarkS | Feb 13, 2007 4:34:22 PM

Yup - a competetive (i.e. lower) tax environment really finished off Ireland, didn't it.

I can't wait to see what happens in Macedonia.

Posted by: Barry Bethel | Feb 13, 2007 5:23:50 PM

The reason they're not more responsive is that they know the broad majority believes in the State and its power to make things better for a majority of those it rules. Their only real opposition is from others similarly convinced but believing themselves to have a better program for delivery (or at least one a mite better for themselves).

Nothing really important will change and even minor improvements will be easily reversible until that (above) belief loses its hold on mens' minds.

That one believes that to be a pessimistic appraisal or not, it is realistic.

Posted by: gene berman | Feb 13, 2007 5:36:19 PM

Of course, just possibly Ireland's splendid affluence compared with almost all other EU countries, as measured by per capita GDP at purchasing power exchange rates, may have less to do with tax competition than with the impressive scale of the subventions Ireland attracts through the EU budgetary process - try this for Ireland's net *receipts* from the EU budget from 1973 through 2004:

"Irish top per capita beneficiaries in EU15 at €396"
http://www.finfacts.com/irelandbusinessnews/publish/article_10003360.shtml

Posted by: Bob B | Feb 13, 2007 9:06:07 PM

I loved the comment about Ireland's riches being the result of EU money......I know I was there......

I'm sure that lots of other people who were also there have different opinions.

Its interesting to note that Ireland received lots of our cash prior to the advent of the Celtic Tiger, with very little to show for it. Other countries such as Greece have shiny new infrastructure, courtesy taxpayers in Germany, Holland and UK, but no accelerated growth.

Only when Ireland discovered capitalism did its growth accelerate.

Posted by: Serf | Feb 14, 2007 7:16:49 AM

Irelands boom was built solely on handouts and tax breaks. The special finance zone in dublin allowed European finance companies to move assets to ireland(ie set up a small office with 3 people in the zone) and benefit from a 10% corporation tax. German banks moved stuff there en masse, reducing their use of the Luxembourg tax haven, with landesbanks the biggest beneficiaries. So you had german state owned banks moving to ireland to avoid paying tax to the states that owned them! Ireland was chosen for a referendum on expansion because the EU assumed that as a major beneficiary they would support others joining.

Having seen the reality of handouts they voted against!

The EU is a wealth transfer mechanism and nothing more.

Posted by: Oriental Orator | Feb 14, 2007 7:29:13 AM

"Irelands boom was built solely on handouts and tax breaks."

Such a statement, implying that the ingenuity and hard work of her people had nothing whatsoever to do with the boom is surely erroneous.

Why are people up in arms at Ireland profiting from tax breaks, revenues from mulitnationals etc.? That moral high ground is surely an untenable position in this capitalist world...

Posted by: Kgburke | Aug 8, 2007 11:08:35 PM