Thursday, August 4, 2016

Wealth and Tax

One of the big political discussions that get dragged out into public regularly by the German Green the idea of a wealth tax.

The simple explanation of a wealth tax is that someone (you never really know who this is).....will make a determination of how much money is sufficient and how much is too much, thus triggering a special tax upon you, and that as you grow more wealth or income or increase the size of your company.....the wealth tax increases in nature.

The Green argument goes into a special ownership.

Most Germans, at least until the last decade.....had some belief that personally created business some family-run brewery, or a family-run butcher company, or a family-run roofing materials company.....ought to be something that you don't attack or screw-over when 'dad' dies or the company (locally owned and operated) profits.

Course, they would like for real Borsch or Siemens or pay the regular income tax.  But they've tried to treat these family operations in a different manner.

Naturally, you'd sit there and ask....well...shouldn't there just be a GDP-type formula that says you tax to such a level, and you spend at such a level, and not get into the "weeds" of tax creation?  You would think that.

The Green leadership has run into some divisions.  From Baden-Wurttemberg, the Green boss there (Kretschmann) thinks that there is a limit, and you have to respect some companies because of their unique nature.  Some Greens believe that the more success you have in life.....determines that you should pay your fair share (which in their more).

Who makes up this fair share idea?  Well....just about anyone these days.

Because this is a state idea (remember, there are sixteen states in German)'s possible that Baden-Wurttemberg may reach enough support to pass the wealth tax idea (they won the election). It'll be taken to Constitutional Court at the national level and spend two years under some review eventually.

What could happen?  If you were a company in might find some way to pack up and leave the state, if possible.  Or you might just sell off the company to some massive company and just say that the old fashion family method of operation won't work in Germany any longer.

Twenty years ago, without the internet, you never really had an idea about governmental wasted spending.  Today in Germany, there are weekly hints of waste and abuse.  There's tons of money being flushed around Germany, and no one really sits there doing audits or stopping the tax revenue feature of the run a competent operation (oh, I'd say the same of the US today too).

If you look around at several state elections in Germany.....this topic of wealth tax keeps coming up.  Various people would like to invent another tax gimmick which goes after rich people or companies, and use it as part of the society bucket of money.  Oddly, the same group never really explains how they'd use the money or change society.....they just want that money.  Call it redistribution or a simple tax.....but it just seems unfair for people to make money (at least in their mind).

So, when the topic comes up and it seems to be on some German associate's mind.....give him a moment of your attention and listen to the first five lines of their topic, and then ask them.....who gets to decide when there's too much wealth, and why them?  Maybe something will click in his mind after 30 seconds of thinking about your question.

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