Welcome to European Tribune. It's gone a bit quiet around here these days, but it's still going.
You're not going to get me to defend Sarko's fiscal policy that's for sure, in particular his TVA sociale proposal, which in fact is quite similar to what Merkel did with German VAT, with the added bonus to Capital of turning around and reducing payroll taxes (on top of the already-instituted reductions) with the incremental receipts. If they did this of course, this would end up being regressive as hell - workers won't see increased wages when their employer's payroll tax bill is reduced, employers will simply pocket the increment, but workers will certainly pay more in consumption taxes, on everything (the proposal is, unlike in Germany, to increase all TVA rates, including medicines, not just on non-food items.)

I doubt this will actually happen, though, and I am today pleasantly surprised that his Economics minister, Christine Lagarde, refered to by many as the "Minister to Wealthy People," seems to be putting a damper on TVA sociale plans, saying the growth envirnment is not a good one for it. Can't say she's wrong.

OTOH, I think he's right to say that the ECB has been over-tight, and have said this many times in the past. The last few quarters under Trichet have been ok, but interest rates when Duisenberg was chief were way overtight, just like when the Buba dominated what came to become the eurozone was exceptionally overtight, and Europe has paid a price for this, including European workers.

As a general rule, any move away from progressive taxation is essentially a neolib race to the bottom, no matter how you do it. The FDR's increase of the VAT could hardly be described as progressive, in fact, it is the contrary. But it has had the predicted results - slowed consumer spending, increased trade surplus, and balanced the budget on the backs of consumers to the benefit of corporations and shareholders. I guess if German corporations started turning around and giving some raises, we could sya it might not be that regressive, but we are not seeing that yet (just like it won't happen in France either if they do TVA sociale, and for the same reason - rich people like to keep their money and only give it up if they have to).

The Hun is always either at your throat or at your feet. Winston Churchill

by r------ on Tue Sep 11th, 2007 at 03:46:16 PM EST
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