Sunday, May 1, 2016

Economics 101 – Taxation

In order to run its own affairs, a country must collect from its citizens.

Taxes and other revenues help do this. This income includes personal and corporate income taxes, value added taxes, excise taxes, and tariffs.

There are also other revenues that include social contributions - such as payments for retirement and health care costs; also counted are grants, plus the net revenues from public enterprises. In theory, a country must tax just enough to run its government and have no deficit. Sure, a surplus would be nice, but please, don't hold your breath!

If you need a good social safety net, it may cost you a bundle as you chose to live in Scandinavia, Finland or France. All take about more than half of what you make. On average the European Union is tad less greedy at about 45%.

The sweet spot is probably found in Australia, Japan and Switzerland that only takes around one-third of the total income while some “good deals” are found from Mexico to Hong-Kong.

Even though its politicians are clamoring for lower taxes yet, the United States still stands below the 20% threshold, along with the Bahamas and Russia, so the good news is that we, Americans, have some taxing room to balance our budget and repay our humongous debt!

This said, I have no appetite to move to India or Iran on account of taxation alone!

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