A lesson for @Tricord and the rest of the leftist provincials here who believe that supply side, aka trickle down, economics doesn't work even though there are decades of evidence all across the OECD prove otherwise. They are so in love with their 1930s economic theories. Too bad history continuously refutes them.
Europe Beats America
French and Dutch tax reforms raise the stakes for Washington.
The Editorial BoardOct. 30, 2017 6:30 p.m. ET
French President Emmanuel Macron delivers a speech on the European Union at the Sorbonne in Paris, Sept. 26. Photo: Ludovic Marin/Associated Press
By
The Editorial Board
Good news: Tax reform is still possible. Or at least it is in Europe, which is a challenge to America as Washington’s battles over credits and loopholes risk leaving the U.S. behind.
France is the happiest surprise. President Emmanuel Macron last week pushed a budget featuring substantial tax relief through the National Assembly. The top rate on corporate profits will fall to 28% by 2020 from 33.33% today, and Mr. Macron has promised 25% by 2022. Paris is rolling out a flat 30% rate on capital income such as realized gains and dividends, compared with rates as high as 45% on some gains today. The budget also eliminates the wealth tax on all assets except real estate.
Critics branded Mr. Macron “the President for the rich” for these overhauls, but the main effect will be to stimulate investment and job creation alongside the major labor-market overhaul Mr. Macron introduced this summer. The tax cuts are also a bid to woo businesses thinking of leaving Britain after Brexit. Even dirigiste Paris has figured out that tax codes can’t be confiscatory in a world of globally mobile capital and labor.
The Netherlands also is jumping on the bandwagon. Prime Minister Mark Rutte promises to cut the top corporate rate to 21% from 25% by 2021 in the coalition agreement he signed with other parties this month to form a government after the March election. The Hague will scrap its 15% dividend tax and simplify the personal-income tax to two brackets from four, with the top rate falling to 49.5% from 52%. Hey, it’s something.
Important features of both reforms are the focus on simplicity and lower rates. While the elimination of some credits and exemptions might lead to higher payments for some companies or individuals, both governments aim for tax systems that are easier to understand and administer, more efficient, and that distort their economies less.
Washington is often tempted to think none of this matters because companies inevitably will be drawn to world’s largest economy. For some that’s true. But a growing European economy under reformers such as Mr. Macron increasingly offers its own enticing opportunities for investors. Do American politicians really want to have to explain to voters why they let the U.S. trail even France?
Appeared in the October 31, 2017, print edition.
Europe Beats America
French and Dutch tax reforms raise the stakes for Washington.
The Editorial BoardOct. 30, 2017 6:30 p.m. ET
French President Emmanuel Macron delivers a speech on the European Union at the Sorbonne in Paris, Sept. 26. Photo: Ludovic Marin/Associated Press
By
The Editorial Board
Good news: Tax reform is still possible. Or at least it is in Europe, which is a challenge to America as Washington’s battles over credits and loopholes risk leaving the U.S. behind.
France is the happiest surprise. President Emmanuel Macron last week pushed a budget featuring substantial tax relief through the National Assembly. The top rate on corporate profits will fall to 28% by 2020 from 33.33% today, and Mr. Macron has promised 25% by 2022. Paris is rolling out a flat 30% rate on capital income such as realized gains and dividends, compared with rates as high as 45% on some gains today. The budget also eliminates the wealth tax on all assets except real estate.
Critics branded Mr. Macron “the President for the rich” for these overhauls, but the main effect will be to stimulate investment and job creation alongside the major labor-market overhaul Mr. Macron introduced this summer. The tax cuts are also a bid to woo businesses thinking of leaving Britain after Brexit. Even dirigiste Paris has figured out that tax codes can’t be confiscatory in a world of globally mobile capital and labor.
The Netherlands also is jumping on the bandwagon. Prime Minister Mark Rutte promises to cut the top corporate rate to 21% from 25% by 2021 in the coalition agreement he signed with other parties this month to form a government after the March election. The Hague will scrap its 15% dividend tax and simplify the personal-income tax to two brackets from four, with the top rate falling to 49.5% from 52%. Hey, it’s something.
Important features of both reforms are the focus on simplicity and lower rates. While the elimination of some credits and exemptions might lead to higher payments for some companies or individuals, both governments aim for tax systems that are easier to understand and administer, more efficient, and that distort their economies less.
Washington is often tempted to think none of this matters because companies inevitably will be drawn to world’s largest economy. For some that’s true. But a growing European economy under reformers such as Mr. Macron increasingly offers its own enticing opportunities for investors. Do American politicians really want to have to explain to voters why they let the U.S. trail even France?
Appeared in the October 31, 2017, print edition.
