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View Diary: Iceland Solves Banking Crisis by Indicting Bankers, Forcing Mortgage Relief (191 comments)

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  •  Yes (1+ / 0-)
    Recommended by:
    Dr Stankus

    Tax evasion is the way of life in Greece. No one pays what they should pay, not even members of Parliament, as reports in the newspapers confirm. Civil servants often do not ever show up for work, but collect paychecks until they collect pensions. Government-owned companies provide employment to the relatives, friends, and hangers-on-ers of the politically connected. Etc.

    Upthread someone was worried that the Value Added Tax is regressive. Maybe, but it has its advantages, one being that it is more difficult to evade than income or property taxes, for example. Another merit is that VAT is rebated on exports. This works like a huge subsidy to exports, allowing countries like Germany and Sweden to remain export powerhouses despite their high standard of living.

    And however regressive the VAT, it is probably not nearly so regressive as the American system, where we do not have a VAT, but we do not have single-payer health insurance, quality education for all, a strong safety net, etc.

    •  VAT is extremely easy for the idle rich to (0+ / 0-)

      evade, since it isn't charged on the purchase of financial instruments.

      Fear is your only God.

      by JesseCW on Fri Feb 24, 2012 at 08:16:10 PM PST

      [ Parent ]

      •  Let me think about it (0+ / 0-)

        Of course the VAT is collected when they buy a Bentley or even a Benz, or titillate their third wives with stuff from Tiffany & Co. But on financial instruments. Hmmn. You want a VAT on all transferring of titles to real estate, like private homes? That'll be a tough sell.

        And for stocks, it would apply to real people and corporations-are-people-too, and then would it apply to the California state pension funds and the Harvard Endowment? Hmmn.

        I definitely do favor a tiny transaction tax on all financial moving of money, stocks, bonds, checques, the ATM machine. It would be a nice tax collected on the banks and oil price speculators. And yes I would collect it on stocks, bonds, and futures contracts bought or sold by pension funds, endowments, churches, foreigners, speculators, day traders, everybody.

        But a financial transaction tax would be like one tenth of a penny on every dollar's worth of transaction, or 0.1%. Not 1%, not a penny on the dollar, but a penny on $1,000. The banks and brokers would collect it. It would be almost unnoticed: watch how many people don't hesitate to pay a users fee at ATMs that can be $1 on a $20 withdrawal, with all of that going to the bank, none to the government. But it would add up to billions of revenue.

        The VAT rate in Europe and South America is typically 10 to 15% iirc, a totally different kind of tax.

        In fact, in that case the VAT on financial transactions would be much like a capital gains tax. I believe it is not at all easy to evade the capital gains tax, which is already lower than the tax on income via a paycheck. If it were easy to evade, the super rich wouldn't be crying to get it reduced even further.

        Meanwhile, to collect a VAT on financial transactions and an income tax on capital gains surely would be double taxation.

        Guess the reason I'd never heard of VAT on financial transactions by any country anywhere is because it is just not a very good idea.

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