Saturday, May 4, 2013

More Taxes?

This week, Die Welt (one of the big national newspapers of Germany)....went out and did a poll and reported the results.  Germans, in the range of three-quarters of the public, believe that tax ought to be increased onto those who make pay for government programs in Germany.

There's a political thing brewing in this election year....where parties need some magic to draw people to their cause.  So the push is on to makes taxes on the rich....higher.

There are some observations that an American can see out of this.

There's a strong effort by the German government and German companies to keep salaries concreted down.  You don't see much movement....a percent here....a percent there.  Unions typically stay fairly strong because strikes are the preferred method to get attention and force contract negotiations.  This has been the standard since WW II.

When you go and look at the taxation methods of Germany....between the nineteen percent VAT (sales tax), the twenty-five to thirty-five percent income tax, the gas tax, etc.....the public generally sees almost half their income gone (tax, health care tax, pension, church tax, etc).  Most Germans all grumble about this and continually look at who is skipping out on taxes.

While the public wants the companies and rich to pay more....few ever connect the dots to realize the risks of running a small business or a medium-sized company.  If you drive around most large metropolitan German start to notice store-fronts shut buildings with 'for rent' signs in them....and empty industrial yards.  Someone took risks....attempted a business venture....and failed.  The fifty-odd employees will likely never fully understand their bosses failure or where things went wrong.  Few Germans ever go back and analyze their own companies risk and eventual spiral.

So we come to this magical element of an election year.  If people can cry long enough and hard enough....maybe the public will make increased taxes on the rich a big element of the fall election.  Course, this might all lead onto a recession in two years....but someone needed to stir the pot.

Suggesting to cut government costs?  I'd be the first to admit that you just never hear any German political figure suggest that.  Typically, the most used phrase is "reform".  This comes up in taxes, pensions, medical insurance, schools, etc.  Everyone gets peppy when reform gets mentioned, and this consumes the public's attention for at least three or four months.

In the end?   Someone will come to invent an additional tax of some sort....that only affects the wealthy, and then the wealthy folks figure a way to get around the tax or just sneak more money out of the country.  It's a pretty standard reaction, and generally....always works. Everyone, from the public, to the political parties, to the rich.....are all happy in the end.

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