Europe’s Next Tax Horizon


If they weren’t so snide, smug, and supercilious, you would almost be tempted to pity the wretched Europeans — you know, the culturally superior members of the human race. I mean, they are more or less bankrupt, what with their “generous” and “compassionate” welfare states now running out of tax money. And, brother, do they have taxes — in the matter of taxation, they are the wet dream of Obama-worshipers. They have confiscatory income taxes (in France, now set at 75% for the highest bracket), massive property and gas taxes, and national sales taxes (aka VAT taxes) in the mid-20% range that is standard in the rapidly declining continent.

The idea of cutting the sickeningly bloated welfare state is unpopular in these benighted regimes, and normal tax sources are now taxed to the max. So the challenge to the welfare statists is to come up with new tax sources.

The Germans — ever keen and crafty — may have solved the problem. It was recently reported that the more left-wing German political parties (the Social Democrats and the Greens) are now suggesting a wealth tax of 1% on total assets of 2 million Euros or more. So even if you are retired or otherwise unemployed, but along the way you and your spouse have managed to buy a nice home, jewelry, perhaps a portfolio of stocks and bonds, maybe some artwork — the total value will be assessed (at no doubt inflated valuations — remember, the entity doing the assessment will be precisely the one that pockets the money), and looted.

Anyway, that’s where it will start. Remember, the original American federal income tax started very low (top rate of 7%). So did the VAT tax in all the European countries cursed with it. What happens is that the burst of new revenue always results in not just the expansion of existing social welfare programs but the creation of whole new ones, which — like bay cockroaches — will only grow and multiply further.

Indeed, one German “thinktank” has called for a one-time tax of 10% on all wealth over 250,000 Euros. This would likely bring in about the equivalent of 9% of GDP, and an eager exit of capital from the country.

But again, who believes it would be done just once? The same egalitarian arguments for doing it once will be used to justify doing it (say) every other year, or even every year, or even every 6 months, or even . . .

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Fred Mora

France, that intellectual beacon of statism, already implemented a wealth tax. It starts modestly: with a net worth of 1.3 million E ($1.6 million), you owe 0.25% of your assets to the French IRS. The rate climbs to 0.5% above 3 million E ($4 million). That's per year.

Except that this year, to celebrate the election of another Socialist president, a special wealth tax has been set, on top of the previous one. It's only for this year, don't worry. If your wealth exceeds 800,000 E ($1 million, the price of an appartment in Paris or a nice house in the suburbs), you owe an extra 0.55% this year. And if you aren't able to come up with the $55,000 or more you owe, you can always sell your house. If you do, you might want to spend it all, since the wealth tax also applies on bank accounts.

If you dare being richer, you will be subjected to progressive rates, which go up to 1.8%.

So far, that tax has cost more to collect than it has brought, and it encouraged legions of French taxpayers to find refuge in less confiscatory countries such as England, to the great pleasure of foreign governments. But proponents of the wealth tax reply that its goal isn't to bring revenue. No, its goal is... social justice.

Whatever that is.

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