If you have not realize it yet, in 2008 the United States will be holding both Presidential and Congressional elections. This coming year is not just another election year, but an important one that will help chart the course of this country over the next 4-6 years. Like all elections the key campaign themes are terrorism, Social Security, education, health care, foreign policy, and of course everyone’s favorite — taxes.
Like the old slogan states – “nothing is guarantee in life except death and taxes” and that could not be truer. There are two fundamental philosophies in this country when it comes to taxes. The Democrats want to raise taxes, especially on the “wealth” to pay for social services and the Republicans would like to lower taxes to spur economic growth. Both philosophies have their fundamental pros and cons. However, I always find it rather interesting how Democrats determine who is the “wealthy” that will be tapped to pay for these higher taxes. So where am going with this?
Well, the International Herald Tribune had an interesting article on December 6, 2007 about the labor shortage in Denmark. Like many countries in Western Europe, the governmental philosophy has always been to levee higher income taxes to support enormous social programs. In Denmark’s case, income tax rate can reach up to 63% of a person’s salary. WOW!!!! If you make around $100,000 a year, you could be paying roughly $63,000 in taxes. Can you believe that?!
Due to this absurd rate, Demark is seeing an exodus of skilled, talented workers like engineers, programmers, etc. to other parts of Europe and the world where taxes are lower. What does this mean? Demark companies are finding it harder and hard to find skilled workers to fill employment opportunities, causing companies either to close up shop, move to other countries where workers are available, or import workers from other countries at possible lower wage. All of these options create an undesirable situation both economically and socially for any country.
If this could happen in Demark, could it happen in the United States? Yes, the ingredients are there for this to occur. Some would even say this is already occurring with the amount of off-shore outsourcing US companies have solicited over the last few years. The fundamental lesson I hope our politicians will understand is that taxes can not solve all our problems epically when it comes to social issues. Taxes should be progressive and should not penalize individuals for being successful. Isn’t one of the signs of being a successful Capitalistic country being wealthy? So, if we are taxed for being successful, where is the incentive to be productive (US has the highest productive rate in the world), to create innovation, or to get an education? If this philosophy does not change, this country could be following the dangerous path that Western Europe is already in.