Are you watching Greece implode?

[Howard]

bread and circuses, gotta love it

 

[lsquare]

http://news.bbc.co.uk/2/hi/europe/8667836.stm

I feel sorry for Angela Merkel. It doesn't matter what she does, she's damned if she helps Greece, and she's damned if she doesn't.

 

[HGC]

With a low flat tax you'd get much less tax evasion.

 

[HGC]

Erm, you really only see what you want to. As i said, they DON'T pay their taxes. Apparently only a few thousand out of 11 million even bothered to claim they had more than 132k on their tax forms lol. The rich have so much untaxed money the state should be rich as hell from all their extra spending power by your logic.

Sorry, I misunderstood you point. I thought you were talking about tax rates, not tax evasion.

Still, I don't think many tea partyers would be a fans of the Greek system. Massive government spending on politically active groups and high tax rates help incumbent politicos, not the economy.

Greece should cut out wasteful spending altogether, cut everything else by 10-20% (as any over budget family or business would), delay retirement benefits to an age consistent with current actuarial tables, then get more revenue by growing the economy. How? Drop the VAT, drop the corporate tax, and drop the income tax rate to 20% or less. Low flat tax systems are working well across Eastern Europe.

 

[IGBT]

Which side of the barricades in Greece would Obama be on? I'd love to hear him tell us where Greece went wrong that led to this unrest.

 

[HGC]

Our corporate rate is 35% (although it is actually much less in reality because of all the loop holes that corporations exploit). I'm not sure what our top income tax rate is but it's roughly around 40%. We have not VAT tax but we have a sales tax in most states which is much lower than 21%.

I would say in terms of rates, Greece and the US are roughly the same with Greece a little higher. However, with all their tax dodging, Greece's effective tax rate is probably only a little higher than the US's. The reason Greece is in this mess is because of all their deficit spending and their lack of reserve currency status that the US has. Also, joining the Euro caused all sorts of structural monetary level problems for them. It made their exports higher priced but made buying debt cheaper. Result: less income, more debt.

Those are good points. I don't think low tax rates and effective low rates due to non-compliance have the same economic benefit, though. Tax evaders have to worry about hiding their income. It's an incentive to hoarding, not investment.

I think the main problem with adopting the Euro was that monetary policy decoupled from fiscal policy. With Greek spending higher than Western Euro countries with the same currency, something had to give. Instead of bringing entitlement spending into line with France and Germany, they cooked the books until the whole charade blew up.

 

[HGC]

It's probably not on the same level as a % of GDP. The US is not turning into a socialist state. Greece is in my opinion a socialist state.

You need to stop your issuing your partisan rhetoric. The growth in government spending cannot be blamed solely on the Obama Administration. During the Bush Administration which lasted 8 full fucking years, we had massive growth in government spending and fighting 2 wars, in which one of them was base on dodgy evidence.

Tax revenue as a percentage of GDP is 34.4 for Greece, 28.3 and climbing fast for the US. We're getting there.

Bush Jr and congressional Repubs legitimized the whole phony "stimulus" idea. Same for corporate bailouts. He took war off budget. He launched the massive drug entitlement. Massive increase in federal education spending. I could go on, but it's making me a little queasy.

Obama, though, is much worse. He's Bush on fiscal steroids, throwing away trillions, making the health care industry a government utility, and trying to force through as much permanent spending increase as he can before the Dems get tossed out in November.

I mainly took a partisan angle, though, to defend the tea partiers from the poster's sarcastic cut. I think their ideas are by and large are very reasonable.

 

[lsquare]

With a low flat tax you'd get much less tax evasion.

There's no need to make such rhetoric in this thread. I doubt you can prove that a flat tax will resolve the issue of tax evasion.

 

[lsquare]

Tax revenue as a percentage of GDP is 34.4 for Greece, 28.3 and climbing fast for the US. We're getting there.

Bush Jr and congressional Repubs legitimized the whole phony "stimulus" idea. Same for corporate bailouts. He took war off budget. He launched the massive drug entitlement. Massive increase in federal education spending. I could go on, but it's making me a little queasy.

Obama, though, is much worse. He's Bush on fiscal steroids, throwing away trillions, making the health care industry a government utility, and trying to force through as much permanent spending increase as he can before the Dems get tossed out in November.

I mainly took a partisan angle, though, to defend the tea partiers from the poster's sarcastic cut. I think their ideas are by and large are very reasonable.

Where did you get that number for Greece? The OECD doesn't have any data on Greece's tax revenue as a percentage of GDP.

I'm pretty sure 8 years of Republican rule has caused as much waste as you claim the Democrats have wasted. Some of the increase in government spending is necessary. You're telling me that educational spending needs to be cut? Are you crazy?

Well just to give you a reality check here, the Tea Party ain't going to be winning the congressional elections of 2010. It's still not a mainstream party so don't celebrate like as if it's a party that has mainstream appeal.

Furthermore, the Democrats will still have control of the Presidency regardless of what the outcomes of the Congressional elections later in the year. I'm surprised you're making such predictions already. It's not election time yet and there's still plenty of time to go before we have an idea who's going to leave or enter Congress.

 

[lsquare]

Those are good points. I don't think low tax rates and effective low rates due to non-compliance have the same economic benefit, though. Tax evaders have to worry about hiding their income. It's an incentive to hoarding, not investment.

I think the main problem with adopting the Euro was that monetary policy decoupled from fiscal policy. With Greek spending higher than Western Euro countries with the same currency, something had to give. Instead of bringing entitlement spending into line with France and Germany, they cooked the books until the whole charade blew up.

It's not just that. Greece went on a borrowing spree over the past decade. I don't think it's policy alone that brought Greece to its need. You also have to look at Greece's irresponsible borrowing habits in addition to their poorly executed fiscal policies.

 

[StageLeft]

http://news.bbc.co.uk/2/hi/europe/8667836.stm

I feel sorry for Angela Merkel. It doesn't matter what she does, she's damned if she helps Greece, and she's damned if she doesn't.

Kind of. Hopefully she can lay blame on having consulted a LOT of people with any decision she does but she is definitely between a rock and hard place.

 

[StageLeft]

EU agreed to a 750 euro aid package to preempt future issues. I read it was 500 on another link, though. Really throwing money at this.

http://finance.yahoo.com/news/EU-mi...tml?x=0&sec=topStories&pos=main&asset=&ccode=

 

[lothar]

Interesting, what is the percentage in the US?

20.98%.
http://i42.tinypic.com/2zoayie.png
Keep in mind "Government" in those numbers include federal, state, city and local municipalities.
That 20.98% figure is a little bigger than I expected...So 1 in 5 Americans work for the government in some way or fashion...Interesting to say at least.

In the case of Greece, I don't know if that 33% figure is for the Feds alone, or government at all levels.

 

[HGC]

There's no need to make such rhetoric in this thread. I doubt you can prove that a flat tax will resolve the issue of tax evasion.

This thread is about Greece failing. Tax evasion is being touted as a cause. Why is suggesting government policy to deal with tax evasion unneeded "rhetoric"?

I can't prove anything, in the scientific sense. Does that mean I can't bring an idea up?

One of the main ways corporations and wealthy individuals evade taxes is by throwing money at legislators in exchange for tax preferences. With a flat tax there are no deductions, so this kind of corruption is short circuited.

Also, with a low tax rate, it is easier and less dangerous to just pay the tax rather than engage in complicated and illegal avoidance schemes.

This is not just theoretical. It's the experience of countries who've tried it. Greece should give it shot. It has a better track record than IMF hair shirt "austerity" programs.

 

[HGC]

Where did you get that number for Greece? The OECD doesn't have any data on Greece's tax revenue as a percentage of GDP.

I'm pretty sure 8 years of Republican rule has caused as much waste as you claim the Democrats have wasted. Some of the increase in government spending is necessary. You're telling me that educational spending needs to be cut? Are you crazy?

Well just to give you a reality check here, the Tea Party ain't going to be winning the congressional elections of 2010. It's still not a mainstream party so don't celebrate like as if it's a party that has mainstream appeal.

Furthermore, the Democrats will still have control of the Presidency regardless of what the outcomes of the Congressional elections later in the year. I'm surprised you're making such predictions already. It's not election time yet and there's still plenty of time to go before we have an idea who's going to leave or enter Congress.

I got the data from a Wall St. Journal/Heritage Foundation site that creates an "index of economic freedom" and ranks countries. http://www.heritage.org/index/Explore.aspx?view=by-variables

In 20 months Obama increased the national debt by over $3 trillion. It took Bush 8 years to increase it by that amount. His budget, already approved by congress, doubles the national debt in 5 years and triples it in 10. More than Bush. Also more than any government in human history.

Am I against spending for education? Of course not. Am I for any and all education spending increases? No. Education spending has skyrocketed in recent decades with little improvement in outcomes. Money is not the problem.

I don't know how big an influence tea partiers will have in the election, but I'm hopeful. Media portray the movement as a few mean racist right-wingers, but they are very wrong about that.

 

[lsquare]

This thread is about Greece failing. Tax evasion is being touted as a cause. Why is suggesting government policy to deal with tax evasion unneeded "rhetoric"?

This was in regards to your flat tax idea. I also doubt a flat tax will resolve the issue of tax evasion in Greece.

I can't prove anything, in the scientific sense. Does that mean I can't bring an idea up?

No, it just mean that you can't be taken seriously.

One of the main ways corporations and wealthy individuals evade taxes is by throwing money at legislators in exchange for tax preferences. With a flat tax there are no deductions, so this kind of corruption is short circuited.

Also, with a low tax rate, it is easier and less dangerous to just pay the tax rather than engage in complicated and illegal avoidance schemes.

This is not just theoretical. It's the experience of countries who've tried it. Greece should give it shot. It has a better track record than IMF hair shirt "austerity" programs.

Which countries are you talking about here?

 

[totalnoob]

Soooo..how much of this massive bailout are we paying for?

 

[StageLeft]

Soooo..how much of this massive bailout are we paying for?

Actually, I was going to post just on this. I do follow the market ticker (and yes, I realize Karl is partially off his rocker) and his post this morning is saying that the US funds 17% of the IMF, which means that it's on the hook for many billions for the larger backing agreed to yesterday.

 

[Slew Foot]

Crank up the printing press boys, weve got work to do.

 

[Atreus21]

What would happen if the EU did absolutely nothing to help Greece?

 

[StageLeft]

What would happen if the EU did absolutely nothing to help Greece?

Greece has a depression, which probably they're going to have now anyway.

 

[Atreus21]

Greece has a depression, which probably they're going to have now anyway.

So why does the EU not allow this to happen? It seems to me that a market correction will be better long term than a bailout.

Although, I'm setting myself up for "In the long term, we're all dead."

 

[Schadenfroh]

So why does the EU not allow this to happen? It seems to me that a market correction will be better long term than a bailout.

I assume for the same reason we bailed out so many of our failing companies. Greece's citizens are so highly dependent on their government, it is almost like the country itself is a corporation owned by politicians. If Greece defaults, other countries in the EU will likely default and the crisis will spread. The Euro will plummet and then people will think the US is next.

That being said, I say let them fail. Like all companies and governments, they should live and die at the invisible hand of capitalism.

But, that is only my opinion, thankfully people that know far more than me are making decisions.

 

[EightySix Four]

http://online.wsj.com/article/SB10001424052748704182004575055473233674214.html

15b Euro or $20.5b/year in tax evasion compared to the U.S's estimated $100b in tax evasion, but Greece's GDP is only 2.5% the size of the U.S's

Greek tax evasion as % of GDP: 6% or every Greek citizen avoids $1796 in taxes a year.
U.S tax evasion as % of GDP: .7% or every U.S. citizen avoids $321 in taxes a year.

It's not just a problem with a few very rich either:

ATHENS — In the wealthy, northern suburbs of this city, where summer temperatures often hit the high 90s, just 324 residents checked the box on their tax returns admitting that they owned pools.

So tax investigators studied satellite photos of the area — a sprawling collection of expensive villas tucked behind tall gates — and came back with a decidedly different number: 16,974 pools.

That kind of wholesale lying about assets, and other eye-popping cases that are surfacing in the news media here, points to the staggering breadth of tax dodging that has long been a way of life here. Such evasion has played a significant role in Greece’s debt crisis, and as the country struggles to get its financial house in order, it is going after tax cheats as never before.

this is a problem with the general populous. A flat tax doesn't encourage corrupt people to be less corrupt. Putting them in a pound-them-in-the-ass style prison does.

 

[Atreus21]

I assume for the same reason we bailed out so many of our failing companies. Greece's citizens are so highly dependent on their government, it is almost like the country itself is a corporation owned by politicians. If Greece defaults, other countries in the EU will likely default and the crisis will spread. The Euro will plummet and then people will think the US is next.

That being said, I say let them fail. Like all companies and governments, they should live and die at the invisible hand of capitalism.

But, that is only my opinion, thankfully people that know far more than me are making decisions.

My only hangup is banks. Bailing out normal banks (as opposed to investment banks) is wise to stave off runs on the banks, which is a death spiral.