Europe's left makes Dubya's tax cut look small:
April 22, 2001 4:13 AM   Subscribe

Europe's left makes Dubya's tax cut look small: Based on Congressional Budget Office projections, Mr. Bush's tax proposal would provide American taxpayers with an accumulated relief of about 3.6% of gross domestic product between 2002 and 2006. Compare this with the plan from Germany's coalition of Social Democrats and Greens: Finance Minister Hans Eichel will hand back 4.1% of GDP of the world's third-largest economy between 2001 and 2005.
posted by frednorman (2 comments total)
and what does the left of center government provide by way of social services for its citizens? The WSJ implies the Democrats would do squat but that Bushies are not doing enough, compared to Germany. Maybe if we did not throw so much of our money into our military (example: how much of our tab for our forces in Europe is picked up by Germany?) we would have more to put into servies and to give back.
posted by Postroad at 5:24 AM on April 22, 2001


Of course, taxation of individuals in Germany and the rest of Europe will continue to be higher than in the U.S. That's because Europeans pay higher sales and energy taxes, and because high marginal tax rates kick in at a lower income level. Still, the gap is shrinking.

For instance, like most of Europe, Germany has a high fuel duty, and 16% sales tax. (The UK has 17.5% VAT, with exemptions on food, children's clothing and other "essentials".) One could argue that shifting the burden of taxation from direct to indirect taxation is politically expedient, rather than driven by some nascent conservative ideology: it certainly allows you to deliver high-publicity cuts in the base and higher rates of income tax while recouping some of the cost from indirect sources. (What the Tories in Britain call "stealth taxes".) It's smart politics: you give people more money in their pay packets, and take it back when they spend it.

That said, Gordon Brown is rejigging British policy towards tax credits, rather than direct provision, emphasising a workplace-based solution rather than one delivered through benefits. But then again, one thing you can't deny is that Labour have put more people in work. And Brown is definitely working with what Americans would call a budget surplus, as he continues to pay off national debt even when some on the left (including myself) would appreciate a more Keynesian attitude towards funding the country's infrastructure.

As for Germany, it has a generally better health service and school system than Britain, is finally easing itself out of the economic retrenchment of unification, and has a flourishing Green party in its ruling coalition. Can't argue.
posted by holgate at 6:00 AM on April 22, 2001

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