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Donald Trump and Angela Merkel will join 2,500 world leaders, business executives and charity bosses at the World Economic Forum (WEF) in Davos, Switzerland which kicks off on 23 January. High on the agenda once again will be the topic of inequality, and how to reduce the widening gap between the rich and the rest around the world.
The WEF recently warned that the global economy is at risk of another crisis, and that automation and digitalisation are likely to suppress employment and wages for most while boosting wealth at the very top.
But what ideas should the great and good gathered in the Swiss Alps be putting into action? We'd like to know what single step you think governments should prioritise in order to best address the problem of rising inequality. Below we've outlined seven proposals that are most often championed as necessary to tackle the issue – but which of them is most important to you?
- Provide free and high quality education
- Raise the minimum wage
- Raise taxes on the rich
- Fight corruption
- Provide more social protection for the poor
- Stop the influence of the rich on politicians
- Provide jobs for the unemployed
Do you think these ideas are enough, or are there any better ideas to close this wealth gap ? You too can participate and vote for the idea that, you think, works best.
(Score: 2, Insightful) by Anonymous Coward on Saturday January 20 2018, @11:38PM (4 children)
Suppose your business purchases passenger jets, paints them to order, and then sells them. Each jet costs you $300 million, and you sell it for $310 million.
With VAT: You pay a percentage of $10 million, perhaps 30%. So $300,000 tax.
With this: You pay 2% of $300 million, and then 2% of $310 million. So $12,200,000 tax.
This thing, for the given business, is more than 40 times worse. Of course, no matter what kind of tax is imposed, businesses will restructure their operations to minimize it. In this case, the aircraft would simply never be sold by the manufacturer. They would lease it. That way, subsequent sales wouldn't get taxed again and again on the full value of the aircraft.
(Score: 3, Insightful) by Anonymous Coward on Sunday January 21 2018, @12:04AM (2 children)
"With VAT: You pay a percentage of $10 million, perhaps 30%. So $300,000 tax.
With this: You pay 2% of $300 million, and then 2% of $310 million. So $12,200,000 tax."
That's what the parent is trying to hide. The fact that under his small 2% rate, the cost for EVERYTHING will skyrocket. There's no way someone will buy and paint a jet with just a 10 million upgrade on the price in the new system. You would expect them to sell it at 330 million or more, minimum. The exact same thing happens with the groceries you buy, which in most sane countries not taxed at all (except junk food etc), the cost of the ingress tax will be passed along to the person paying the egress tax in the form of an increased price tag.
The bottom line is greed. The producers will not accept the additional cost. It will be passed along to the final consumer.
I'm not saying tax reform is long overdue (And in the opposite direction Trump pointed it in recently) but any new system that magically creates trillions of tax dollars DEFINITELY has a price that the consumer will pay in full. What you need is to close off ALL tax loopholes used by the rich (personal and business).
(Score: 2) by Thexalon on Sunday January 21 2018, @08:35PM
The claim that all taxes always fall on the consumer is an oft-repeated statement, but isn't actually true.
Who ends up paying the tax depends on the nature of the market where the tax is applied. Some of the many variations that you can learn all about in Econ 102:
- In highly competitive markets (enough buyers and sellers that no one player has the power to set prices) for a product that everyone can do without completely, the tax as an additional cost of production will push the supply curve upwards. However, because demand decreases with price, the sellers will typically find it's more profitable to take a partial hit on their profit margin in order to sell more product than it is to push the entire cost of the tax onto the buyers. That puts some of the cost of the tax on their owners / shareholders.
- In highly competitive markets for products where there's a viable substitute (e.g. pizza vs Chinese food delivery), and the tax is imposed on only one of those markets then there will be a shift from the taxed good to the un-taxed good, and again the sellers of the taxed good will consider taking a partial hit on their profit margins in order to compete with the untaxed good.
- In monopoly markets with viable substitutes (e.g. prescription drugs with not-quite-as-good generics available), again the monopolist will find it more profitable to take a partial hit to their profit margin to reduce the people who opt for the substitute.
- In monopoly markets for essential goods and no viable substitutes (e.g. prescription drugs with no generics available), the monopolist will indeed push the entire tax onto the customer, because they have absolutely no reason not to.
- In monopsony markets (one buyer), basically the entire tax will fall on the seller.
And the simplest example of why taxes don't always fall on the buyer: When income taxes go up, what pretty much never happens is the boss immediately giving everybody a raise.
The only thing that stops a bad guy with a compiler is a good guy with a compiler.
(Score: 1) by Kalas on Friday January 26 2018, @04:44PM
30% of 10M is 3M, not 300K.
(Score: 0) by Anonymous Coward on Sunday January 21 2018, @10:33AM
your business purchases passenger jets, paints them to order, and then sells them. Each jet costs you $300 million, and you sell it for $310 million
Where do I get some of that paint?
It sounds absolutely magical.
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