It's true but it leads to massive deficits if you don't get the money from somewhere. The conflict between "I want more services" and "I want to pay less taxes". The rich and largest corporations should be taxed higher but it runs the risk of course that they'll just use tax loopholes or take their business elsewhere (along with the jobs). The province I live in has basically been owned by a single company for over 100 years (Irving). They own everything and account for the majority of jobs. They even own all the major newspapers.
Which is strange because you never hear those fears when it comes to military spending, saving banks or large industry sector - like coal here in Germany. Then you suddenly see programs of 40-50 billion flying around. No problemo! Deficit? What's that?
It's also funny that you hear nothing of the Cum-Ex Deals where some people stole aprox. 50 Billion in taxes from the German governments. The amount of money the EU is loosing each year due to tax holes and tax evasion goes probably in to the trillions.
But it's true. We have not enough money ... if we keep repeating this myth maybe one day it might become true.
Well, do it like the Germans. Increase taxes, drive out industry, stagnate social security, make Pikachu face in ten years when the recession somehow won't end.
Germany has right now a surplus of 30 billion in it's budged - more or less.
But first things first. Taxes like the business and income tax have dropped in Germany actually since at the 1960s. In fact, you could even say that Germany is in some cases a tax heaven:
Germany is not considered to be a low-tax jurisdiction. However, under certain conditions foreign companies may profit from favourable tax regulations. This is due to the fact that Germany’s income taxes for corporations are fragmented.
https://zoll-recht-steuern.de/blog-beitraege/germany-a-tax-haven.html
Some people often say, in Germany you pay high taxes! But that's not completely true. Because I say. It depends who you mean. It's (a lot more) complicated. Yes. If you don't use some of the countless loop holes, you pay high taxes. For example, medium incomes and smaller companies pay relatively high taxes. However, we have also what we Germans know as "Grenzsteuersatz" (marginal rate of tax). We have a progressive tax which means the more you earn, the more taxes do you pay. However only to a certain limit. Once you get over that limit, your tax rate doesn't grow further than 42% and then again 45% as the so called "Wealth tax". Which I am sure you're aware about. But I am trying to explain this also for the Non-Germans here.
Some accurate numbers :
9.168 Euro income between 9 and 42% in taxes.
55.961 Euro - 42%
265.327 Euro - 45%
And that's it.
And now let us take a look at how the Income Tax changed over the years.
1958–1964 - 53 %
1988–1989 - 56 %
From there on it continued to drop till it reached 42% respectively 45 for the wealth tax. Oh man! 56% income tax! Who could ever forget all those Millionaires and Billionaires standing at the food banks in the 1950 and 60s! What a terrible sight that was.
So you're talking about disappearing industries. Why have they disappeared? Are you sure they disappeared due to the taxes or because someone was driving them out? I would rather believe they did it because many companies lost their subsidies ( See Nokia in Bochum, where they moved to eastern Europe )and in places like China a worker costs just a nickel and a dime. People often really neglect what effect the collapse of the "Iron Curtain" and the more open economy of China and Eastern Europe to the global market had on labours in western Europe and the US. If you had a company in the 1960s or 70s, there was very little reason and chance of exporting production and plants in to foreign countries that had neither the infrastructure nor the desire to support you there. Or could you imagine Siemens opening a plant in the Soviet Union at the height of the cold war? Yeah. Me neither. However lowering taxes, particularly the business tax isn't going to get those production jobs back anyway - despite what some people on the Center right/conservatives believe as long as we still have hourly earnings between 8 and 15 Euros per hour. We can not compete with China here. Never. They have work ours between 12-14 hours 6 days per week in their production jobs with what, 1 $ per hour? They are catching up here, but not even nearly as fast enough. Not to mention that the main reason why many of the industries disappear today is actually due to Automation and not foreign workers or production lines changing their locations. Which would actually mean that we have to invest a hell of a lot more in to educating the population and creating high paying jobs. But how you want to achieve that while we we're not investing in a modern infrastructure and education system? Beats me. The economy won't fill that job so much for sure they will at some point simply move to those locations that has the necessary infrastructure - We have many historical references for it, every larger technological evolution and infrastructure project over the last 100 to 150 years was pushed and financed most of the time by governments, not large companies. Like the space race which gave birth to a whole lot of new industries or if you want to get further back, the first Transcontinental Railroad (...)
was built by three private companies over public lands provided by extensive US land grants.
onstruction was financed by both state and US government subsidy bonds as well as by company issued mortgage bonds.
People also often say, Germany has a high business tax! Which is true. But again. Only if you do not know where the loop holes are! Siemens, Mercedes Benz, VW they don't pay 29% business tax in Germany. On Average the German DAX-Companies - the largest Companies in Germany bundled together - have paid in 2018 on average 24,9% of business tax. Which means some companies paid less than 24%. Which when you look at the global average is just a moderate business tax. In Europe a company in Slovenia pays only 17%. But I am not seeing our companies fleeing to Slovenia any time soon. Probably because they don't offer the same kind of infrastructure and legal compliance. Something people often forget. Not having to worry (to much) about corrupt government officials is very nice! Some companies regret moving to China exactly because of this. Add to that also that many companies are not paying the added value tax either, and you can see how companies, the large ones, surely whine a lot but at the end of the day they also earn a lot and smaller business pay much more than they do as they have no chance to avoid taxes. Not to mention the large corporations also managed grow each year despite of the business taxes. If they are "loosing" so much money, it begs the question, where is it going to? A black hole called share holder value? We might never know ...
Or take another example. Estate Tax. If you're a billionaire and owner of a large company you know how much you pay? Relatively little compared to smaller incomes and wealth. The richer you are, the lower it is. Even our Bundesverfassungsgericht (Federal Constitutional Court) complained for years that it is against our constitution and changes are in order. Nothing happend so far.
When we look at all of this at the end of the day the truth is that as far as Germany goes lower and particularly medium incomes are paying less taxes, albeit due to inflation and growing prices, particularly because of the privatisation of former publicly owned sectors, they have less money and financial pressure has grown a lot - the middle class is practically disappearing. In the US it is virtually not present anymore. At the same time though the wealthiest Germans managed to increase their wealth and large companies managed to grow financially - each year they release reports and if you look at BWM for example they consistently managed to increase their margin. The burden for high and particularly very high (top 1%) incomes has dropped over the last 20-25 years. This is also backed up by the so called "Elephant Chart". Which shows that globally very low incomes have grown, the medium incomes have dropped.
So let us recap. Taxes have been lowered. Social services and infrastructure defunded over the last 20-30 years. At the same time we saw huge privatisations in the infrastructure.
Quite often politicians which defunded those social sectors and infrastructures can be found in positions in exactly those companies owning the former publicly owned infrastructure which was sold to the same companies for a nickel (bassicaly ...).
I know that this is a long post and probably no one is going to read it anyway. But I am afraid the things we're looking at are simply not easy to explain.
