Greece has a population of 11.3 million people, as opposed to the United States, with 314.1 million. That means the Greek population is 3.6% of ours (frankly, I was surprised). It also means that a similar US layoff of government sector workers, based on population, would be around 1.1 million. That would be a big slug.
But, this is against the background provided in the lede:
Latest data on Thursday showed the jobless rate climbed to 23.1 percent, with nearly 55 percent of those aged 15-24 out of work, a desperate situation that fed into the popularity of anti-bailout parties in Greek elections this year.Things are not going well in the EU. And the new French top bracket is a 75% income tax. And, with what is left over they buy stuff with a 21.1% VAT,♠ which may revert to a mere 19.6% (to be fair, some items are taxed at a lower rate and items from the pharmacy and some newspapers are taxed at a 2.1% VAT rate).
And bad as it is for Greece, what are the long term implications for the US?
Regards — Cliff
♠ Per Wikipedia, VAT "differs from the sales tax in that, with the latter, the tax is collected and remitted to the government only once, at the point of purchase by the end consumer. With the VAT, collections, remittances to the government, and credits for taxes already paid occur each time a business in the supply chain purchases products."
The problem with VAT in the EU is that it is subject to carosel fraud. Say you are a wholesaler. When you buy, you pay VAT. When you sell, you collect VAT on the, presumably, higher price. You net the two transactions and remit the difference to the .gov quarterly. If you buy and then sell to someone outside the country, you file a claim with the Revenuers for the amount.
ReplyDeleteWith carosel fraud, you may set up a few companies and move some "product" around between the companies running up the total value of the VAT. Usually you claim it is some sort of small, dense, high dollar item such as CPUs or iPhones. This lets you create shipping invoices pretty cheap that appear to document the last step which is to "sell" them off shore. Then you file your claim for the VAT. Basically, through not very much paperwork and some shipping labels, you have cause the Revenuers to cut you a nice checque for the fictious tax. As they are a bureaucracy, they typically will not catch up for 3-6 months by which time, the companies are TU and you are on to the next round.
Carosel fraud is costing the EU countries a fortune, and there isn't a clean solution in sight.