Cheat-Seeking Missles

Tuesday, October 17, 2006

Caution: Europethink!

Innovation, competition, standing out -- all fine American values, but don't try to go down that route in that part of the world Bush brilliantly called "Old Europe." Such concepts are anathmas to the European Social Democratic ideal.

Consider tax competition as a case in point. Writes Valentin Petkantchin on TCS Daily:
It gives the opportunity to escape fiscal pressure from your own government by eventually "voting with your feet" to other jurisdictions with more favourable tax regimes. And it gives strong incentives for governments elsewhere to lower their own taxes.
Stateside, Nevada is an example of a state that's using tax competition to woo businesses away from other states, notably the Social Democratic state of California. In Europe, the example is Luxembourg, which has established itself as a tax haven to the benefit of its economy ... and the folks who use its economy.

Shame on them! Petkantchin continues:
[S]ome governments are trying, through the European Commission, to impose tax harmonisation across Europe. For example, Brussels has issued a sanction against Luxembourg for its preferential tax regime pertaining to holding companies. Luxembourg is being called to task essentially because companies there can be exempted from income tax, which is not the case in other EU member states.

The Commission says the scheme "distorts competition and trade by altering the level playing field". Brussels also regards this as "state aid" and as "a harmful tax measure". In its view, tax systems in Europe have to be harmonized in the name of free competition.

What would you expect from a country where they eat french fries with mayonaise? Obviously, the better approach for Belgium would be to come up with a way to make Belgium more attractive than Luxembourg. Something other than "our food's better" or "we're better drivers." Neither will work.

Nevertheless, there must be some some spark of innovation the leadership in Brussels can come up with in order to ... dare we say? ... compete. Anything would be better than their grand concept of beating Europe down to a lowest common and highest priced denomenator.

Some might say the EU should spread Luxembourg's tax relief across the continent, but that's just as horrible idea since any form of stifling competition leads to downward spirals.

Why is this important to we fries-with-ketchup folks? Because, my friends, the Dems look to Europe as an example of a place where it's done right. They love the place,w ith its state-sponsored health care, big governments, high taxes, strong unions and a great dependency on the master class of bureaucrats that run it all.

So what will it be this election day? A vote for mayo or ketchup? Apple pie or brussel sprouts?

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