Welcome to European Tribune. It's gone a bit quiet around here these days, but it's still going.
Taxing either wages or business profits in a slowdown nips recovery in the bud.

That assumes a uniform recession across all industries, and a uniform recycling of all personal income as consumption (or investment). In addition, in a country suffering from trade deficits, there could be import taxes; though those could be problematic for other reasons.

BTW, I forgot to write: beyond more debt, savings and taxes; debt restructuring and temporary capital controls might also work in a mild recession. (And in a heavy one, there is default.)

*Lunatic*, n.
One whose delusions are out of fashion.

by DoDo on Thu Jun 10th, 2010 at 10:22:02 AM EST
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The problem with import taxes, debt restructurings and capital controls is that the serious trade imbalances are intra-EU, debtors and creditors tend to be on opposite sides of national borders, and both tariffs and capital controls are against EU internal market rules.

Either we're in it all together, or we're not. Apparently we were in it all together only as long as the going didn't get too rough. Now tha name of the game is class war and nationalism.

By laying out pros and cons we risk inducing people to join the debate, and losing control of a process that only we fully understand. - Alan Greenspan

by Carrie (migeru at eurotrib dot com) on Thu Jun 10th, 2010 at 11:34:17 AM EST
[ Parent ]


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