Jan 08

Govt taxes workers and small companies (henceforth SMEs)  these taxes go into a fund to pay welfare and subsidise selected large business and pay down interest on Govt debts.

These subsidies lead to profit for large corporates and the taxes on that are paid offshore as the local balance sheet in a so called advanced Western Country has debt loaded on it – see almost all big corps.

Young workers come along but with no union power and lots of more of them than jobs they take low wage jobs that need Govt subsidy – see Wal Mart, Tesco. They contribute little tax as much of their consumption is rents and loan repayments often to people who pay little tax.

Older workers wages go down in real terms and their debt is rising again too.

Now suppose interest rates rise on Govt debt and hence student debt and SME debt. Or even the debts grow for another 10 years even under Zero Interest Rate Policy.

You don’t have to be a genius to see the mass subsidy and Beggar Thy Neighbour tax strategies of so called wealthy nations is unsustainable. Indeed even the big Banks and Corporates are cutting their own throats long term as without consumers of products (wage earners) what is there?

The prevailing Western Government meme will not work.

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