In Soviet Denmark…

The socialist opposition to the government has made a proposal for a dystopian governement. The proposal is dumb in many ways and dangerous in several others.

Some main points of the proposal are:

  • Remove planned tax cuts (that people have planned for)
  • Increase public spending, e.g., on building schools, hospitals, etc.
  • Create new tax on stock trades
  • Increased tax on companies
  • Increase tax on “polluting” cars
  • Tax on “unhealthy” stuff like alcohol, tobacco, sugar, etc.

This proposal is marketed as socially responsible with a focus on the environment.  It is all but.  It is just sucking up to their voters, naturally, but the impact will be dire for all of Denmark.  The proposal is said to mean higher taxes for around 50% of the danish population.

Removal of tax cuts, increased public spending

The fiscal crisis of course requires some action.  The government’s action is to give tax cuts which are not 100% financed in the beginning.  This will give citizens more money, which can be used to kick-start the economy.  All is good and well.

The socialist idea is to increase public spending, thereby benefitting the building sector, which is currently failing.  This is a very bad idea since the building sector is failing because it grew too big during the beginning of the 2000s when the economy was in good shape.  House prices were increasing, yielding increased construction.  This caused many young people to not get an education and instead start as unskilled mason or carpenter.  This inflated the building sector, and now reality and unemployment threatens.  This does not mean we should support a sick trend, but rather that it should be allowed to adjust itself and let a bunch of the unskilled workers get an education.

Furthermore, increased public spending in the building sector supports one sector, whereas general tax cuts supports all sectors.  Should we really rather support a artificially inflated sector solely rather than supporting all sectors?

Tax stock trades, tax on companies

Ok, so we know that the socialists hate companies.  But they really want taxes, so why drive them away?  Taxing stock trades will decrease stock trades (surprise).  It, of course seems like a good tax, because it hurts “nobody”, at least not any of the socialist electors…  Well, not so.  The tax will decrease stock trades, which will decrease the value of companies, which will decrease their ability to raise funds on the stock market.  This will drive companies out of the danish stock market and to be listed on international stock markets.

Apart from driving the companies out of Denmark, this will also cause retirement funds to be smaller, as we have to pay tax for stock trades.  At a time when newly educated people enter the working force with barely any retirement funds due to the fiscal crisis, this is just plain stupid.  Do you really want to exploit your children like that?

Taxing companies even more is also a horrible idea.  Companies, that are already struggling due to the fiscal crisis, will have two options to handle the extra expense: increase profits or decrease expenses.  Increased profits can only come from increased prices (either directly or transitively), which makes this another tax on the working force.  One way to decrease expenses, when all your prices are increasing, is to fire people.  This seems like a good idea in a near-recession: tax people to decrease their spending and as an added bonus, increase unemployment.

Feel-good taxes

Tax on “polluting” cars and “unhealthy” products is nice, because it is a feel-god-tax.  It taxes people, so we can feel superior.

The socialists argue that tax on “polluting” cars is not really a tax, as people can just switch cars.  Well, cars are not made in Denmark, so increased investment in foreign cars will yields another deficit in the balance of payments.  The proposal is already under-financed, so they propose to send even more money out of the country.  This is yet another way to leach off of the young people, because the money has to be paid back at some point.  We’ve just gotten rid of Anker Jørgensen’s over-spending from the 70s.  That’s 35 years to pay back some socialist debt.

The increased tax on unhealthy stuff, I can more or less get behind, as this causes increased health expenses.  Of course, I’m for liberalizing the health system anyway, but as long as we are stuck with a socialist system, it may as well be sort of fair.  The funny thing is that this tax primarily hits the socialist voters, as “poor” people (we don’t have poor people in Denmark) are the major consumers of candy, cigarettes, and beer.  Higher-income people usually compensate by quality and not by quantity, so any fair tax would be relatively lower for them (a bottle of scotch contains as much alcohol as a bottle of vodka – more or less – and so should be taxed at the same level, but a decent bottle of scotch is priced at around DKK 500 whereas a bottle of vodka is around DKK 70).

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