Recently in Taxation Category

How to Make Me Your Enemy

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Here's the original.

Solomon has made a preliminary ruling: not 50/50, but 96/4

Next-Day Update: Solomon has put away the sword; instead, he will use other policy levers to achieve his goal of 96/4.

"Tax Rebates" are Low-Cost Payday Loans

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Folks. Those $300+ "tax rebate" checks Uncle Sam will be sending you. They're loans. Forced loans. Not rebates. Not refunds.

Loans.

Granted, they're loans that won't be paid back in full for a very long time. But either you will repay them with taxes, or somebody else will repay them in taxes, or we'll all repay them with inflation. And whoever holds the debt will be collecting the interest.

But more important than noting that the rebates are loans, is noting the size of the loan is VERY close to the size of the average payday loan, but with a far lower interest rate.

I don't know the best national data to check, but according to this 2005 Washington State report, the average Payday loan there in 2005 was $385, and the average fee was $48. Since the average length of a payday loan was 18 days, this comes out to an APR of about 500%. The Federal Government borrows at considerably lower rates of interest.

Needless to say, I doubt stimulus advocates want to tell you that they're using the Federal Government's long term paper to bring you a low-cost payday loan, but that's precisely what they are doing.

[Later]: I'd be curious to see if people who cash their checks at Wal-Mart spend a quarter of them there, like they did in 2001.

[Even Later:] I'm not sure if I want to read this article, as the headline...


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... leads me to believe the authors won't be applying occam's razor or his diligence in using it. Why isn't it plainly obvious to everyone that politicians LOVE pretending to save the economy while giving money directly to voters?

[Update]: I read the article; boy am I sorry.

IMF Criticizes U.K. Tax Policies

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O.K., The title I really wanted to put up there was IMF gives Brown a smackdown, but that would be over the top. However, it is interesting to note this news article I saw about the IMF warning of tax increases have negative economic effects. Quote:


Gordon Brown has lifted taxes to the highest level for more than 20 years, the International Monetary Fund declared yesterday.

In a hard-hitting assessment, it said the Chancellor's record of hitting families with aggressive tax increases was putting the nation's economic future under threat.

The Washington-based group said taxes must not rise any further, otherwise businesses will be driven away and households could be put under intolerable pressure.

It also warned that property was overvalued and that there may soon be a slump in the housing market.

The IMF pointed out that Britain's tax to Gross Domestic Product ratio - an impor-tant measure of the tax burden - was now at almost 38 per cent, a level it last hit in the mid-1980s.

Though, to be honest, I can't find the actual report on the website so this will have to do.

How Egypt implemented a flat tax

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"Since 2005 all businesses have paid a 20% corporate income tax – rather than 32% or
40%, depending on the sector. All sector-, location- or business-specific tax holidays and exemptions were eliminated, about 3,000 in all. Businesses can file and pay taxes electronically. As a result two million Egyptians filed taxes in 2005, double the number in 2004."

- Paying Taxes- The Global Picture

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