“As they emerged from the deep 2009 recession, a significant number of EU countries have sought to rebalance their public accounts by increasing taxes on employers and individuals rather than cutting spending,” the report says. “Thus, the majority of EU member states avoided free-market policies to boost economic growth and stimulate business activity.”
However, 15 of the 28 EU member states have reduced taxes over the last year. This has rolled back Tax Freedom Day in Hungary, Luxembourg, Portugal, Ireland, Finland, Romania, Cyprus, Croatia, and Austria.
Employers also pay the price of expansive government. The average employer has to spend €185 to give an employee €100 worth of purchasing power in 2017. In France, an employer must spend €235 for the same €100.
It’s little wonder French businesses are averse to hiring new employees.
The report from the Institut économique Molinari, written by Economic Policy Center research fellow Giovanni Caccavello, was released on July 27 – Tax Freedom Day in Belgium, it notes.
The full list is as follows:
March 27: Cyprus
April 19: Malta
April 23: Ireland
May 9: United Kingdom
May 21: Bulgaria
May 29: Luxembourg
June 1: Denmark
June 8: Spain
June 9: Estonia and Slovenia
June 11: Portugal
June 12: Croatia
June 14: Poland
June 19: Finland
June 20: Lithuania, Czech Republic, Romania, The Netherlands, Latvia, and Slovakia
June 23: Sweden
July 5: Hungary
July 8: Italy
July 10: Greece and Germany
July 18: Austria
July 27: Belgium
July 29: France
The study shows the vast difference between EU nations but also the distance between the United States and the EU as a whole. This in part explains the EU’s all-consuming focus on combating “tax avoidance” and concern that Theresa May will reduce tax rates after Brexit.
But the report is important for the transatlantic sphere for more than merely comparative purposes for at least three reasons.
First, as Professor Richard Teather has shown at Religion & Liberty Transatlantic, high-tax and high-spending nations have lower rates of job creation. That makes it more difficult for young people to find gainful employment and launch into adulthood – including getting married and having children, even as the EU faces a demographic winter.
Second, a higher tax burden leaves families with less disposable income to spend on their priorities. Instead, their salary goes to causes chosen by politicians and regulators – often subject to corruption and cronyism. It means less money for private philanthropy, churches (for non-established churches), and less power in the hands of consumers.
Finally, these funds are often used to fund expensive social welfare programs that deplete initiative and entrepreneurship even further. As brilliant European once wrote, “the Social Assistance State leads to a loss of human energies and an inordinate increase of public agencies, which are dominated more by bureaucratic ways of thinking than by concern for serving their clients, and which are accompanied by an enormous increase in spending.”
Although on the same side of the International Date Line, economic policy means that the U.S. and the EU are worlds apart.
(You can read the full report here.)
(Photo credit: Peter Linke. Public domain.)