Black & White dog Borry Originally uploaded by andzwe Two years after being elected, the Swedish coalition government is planning a raft of tax reforms. There are to be reductions all round and “black” work is to become legal. Sweden spends a lot on public services, over 50% of GNP being in the public sector. If it is going to improve its defences as well, it is going to have to spend a lot more. So how is this going to work? Presumably somebody has been reading Laffer, who devised the famous Laffer curve which shows that tax yields reach a maximum at a certain rate of tax and decline if tax rates are higher. There is some truth in the argument; it would be expected on theoretical grounds, as most taxes give rise to a deadweight loss, consisting of production that would take place were it not for the tax. The effect takes place at the margin, in that taxation at locations close to the margin has the effect of knocking enterprises at those sites out of production by rendering them...
POLITICS ∙ ECONOMICS ∙ RELIGION ∙ MUSIC