Posted May 2, 2014 by Martin Armstrong
The future of the City of London is under serious threat after the European Union’s highest court threw out a British legal challenge against plans for the new EU Financial Transaction Tax. This is most likely the final nail in the coffin of Europe for when this tax is implemented, it is hard to see how investment capital will survive.
Lawyer-politicians just do not understand that they may possess the power to write a law, yet they cannot comprehend the power to avoid the law. The Japanese evaded the tax increase with what people call the “hamster” approach. The Japanese used the last month before the VAT increase for massive hoarding. The tax was increased from 5 to 8 percent in April. Therefore, the Japanese bought many refrigerators and vacuum cleaners in March so much so it reached a 400% increase over the year before.
This is what government does not grasp. Raising taxes does NOT always lead to more revenue. The IRS data itself demonstrated that lowering the tax rate like lowering the price of computers, leads to higher sales volume and guess what – they made more money. If you want more money – lower the taxes and you will also create more jobs.
Socialist are all about punishing people who have more than they do. Placing a transaction tax on all financial transactions will simply reduce the number of transactions and lower investment even further. Unemployment in Europe as a whole is about 11.8% and among the youth (25 or less) it is over 60%.
While government blames the people for not paying more, they never blame themselves for being greedy, stupid, and the world’s worse managers.
This financial transaction tax may push Britain out of the EU for it will lose its financial market base. Already, volume in Singapore is starting to surpass that of London. The shift to Asia is in play and the higher these people keep raising taxes, the faster they will propel China to the number one economy in the world reducing the USA to number two. That seems to be what it will take to shock at least Congress into beginning to ask why.