In recent weeks, political folks at the EU and in the Bundestag have jumped on excess profit, and say they will micromanage this....taking the excess profit away.
So, lets say I run a bowling ball manufacturing plant in Mainz.
Each year, as the owner, I generally took home around 1,700,000 Euro profit.
Lets say that the excess profit crowd came to the building and announced that the 1,700,000 Euro profit was over their agenda amount. Their feeling? They'd take a cut of the 1,700,000....probably around 50-percent....leaving me with 850,000 Euro instead.
Maybe I was accepting this....but I think most would not accept it.
So I would start to re-build my business. The actual bowling balls themselves? Instead of making them in Mainz, I'd go to a country like Poland or Czech....believing that they would never allow the EU to get deep into this business.
I'd make the balls there, and ship them by truck over to Mainz....to drill the holes. I'd dismiss 90-percent of my Mainz employees in the process.
I'd also plant my business headquarters in a country like Cyprus. The German name would still be on the ball, and it'd say 'finished in Germany' (while made in Poland).
What would happen? About two years into this great campaign to take excess profit away in Germany.....politicians would wake up and realize that 2.5-million jobs disappeared from companies shifting to the east.
Suddenly, the excess profit agenda would be halted. But by then....it's too late, and the companies won't move back.
So a year or two will pass....with tax revenue lessening and political folks appearing on public TV to explain what happened. They'd eventually beg for forgiveness, and create 'tax credits' for new companies to move into Germany....taking the money for this....from regular tax-paying citizens.
To be blunt, I'm not worried about the excess profit chatter. It will lead to a evolution in Germany where you have lots of people on unemployment and no real employment landscape for them to thrive or work. Less tax revenue....means less money being funneled into public projects. In a decade, Germany would be made into another 'Italy'.
My bowling balls? They'd still be around. And yes, I'd still have my 1.7-million in personal profit off the business.
2 comments:
You really need to watch some videos that explain the concept of 'windfall'/'excess' profits. It's not merely a made up arbitrary judgement performed by some pencil pusher bureaucrat sitting isolated in an office.
It's factoring in the initial forecasts of these businesses. Even the head of BP said that a windfall tax wouldn't discourage their investment in any country that imposed it. It's merely them profiting from a situation that's beyond their influence. The shareholders didn't foresee it either, and rather than purely benefiting them, the concept is that some of this money could go towards easing the burden on the society that they actually need functional to operate.
Re-read some western constitutions if you get a chance. You'll often find a line similar to this:
"Public and private economic activity should be oriented to the common good."
And often a similar one about ownership of property.
If the society gets reduced to corporations operating from tax havens and benefiting from the stable society that the workers create through their taxation, why shouldn't the corporations occasionally contribute when they benefit from social stability? Or is it just all disaster capitalism for the win?
Various countries have gimmick. In the US, Senators/House members write the tax code, and the companies heavily influence lesser tax rates. In Germany, companies will go and have various parts of the assembly of some item....made outside of Germany and the EU.
My chief issue? I don't want a bureaucrat who never attended an economics class in his life....deciding what is profit or too-much profit. I also question that a ton of money is spent by state, federal and local folks in Germany...with 'waste' written all over the extra cash.
It's like offering up 10-million Euro a year to each German state for statues, and you know that they will spend the money in some manner for a statue which has little meaning or effort.
Go look at the Hamburg opera house, or the Stuttgart-21 project...no one ever kept things under control on cost. BER (the airport) is another example.
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