James Pethokoukis explains the resulting -- and utterly predicable -- failure:
The anti-austerity crowd on the left just can’t seem to accept “yes” for an answer. Yes, austerity isn’t working in Europe. But for some reason, austerity critics decline to acknowledge that such a high-tax region probably shouldn’t have started cranking up taxes. Here’ s just a taste of the EU’s tax-hike mania:
Greece. In 2010 and 2011, Greece passed a bunch of tax hikes — including a 10 point, 77% increase in its value-added tax — meant to raise revenue equal to 3.4% of GDP. How did that work out? Not so good... tax receipts actually fell.
Spain. Heading into 2012, Spain had already increased its value-added tax, excise duties, and top income tax rates. Then last December, its new government, Reuters reported, “announced a slew of surprise tax hikes”... Thanks to those tax hikes, Spaniards will now be paying one of the highest personal income tax rates in Europe...
Italy. ...for the most part, the new austerity package is based on tax increases. It would reinstate a property tax on first homes... It would also impose a 1.5 percent tax on revenues brought into Italy... add taxes on cigarettes and gas, which is close to 1.70 euros per liter, or more than $8 a gallon... the measures would increase Italy’s tax burden to 45 percent, a level that businesses say is unsustainable.
...the fiscal reforms Europe needs are clear: Smaller welfare states, less intrusive regulation, and pro-growth tax cuts. Of course, just raising taxes is a lot simpler. Sure is a lot quicker. But it’s not working. I hope the Obama White House notices the tax-hike fiasco going in Europe since it is pretty much the exact path he wants the U.S. to follow.
Oh, that James! What a card. He works for the American Enterprise Institute, so he has to exhibit a modicum of tact. Let me put it this way: the odds of Obama noticing what's going on in Europe and course-correcting are roughly the same odds that Michael Moore will win a Mr. Olympia contest.
1 comment:
The large #s of unemployed in Spain, Greece, and Italy are the controlling voting bloc. Like the #occupy people in the U.S., all they want is to confiscate wealth from "the rich" for redistribution to themselves. The politicians who promise to deliver that get the votes. The politicians being elected will increase taxes even higher, and Europe will fall even faster. The wealthy are now leaving Spain, will leave France, are fleeing Egypt, and are escaping Greece. No one will be left to pay the taxes. It is over over here. And, if Obama gets his way, it will be over over here soon.
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