Greece hasn’t lost its nerve in its steady march towards third-world status. Lawmakers there passed new tax legislation – to meet the requirements set by the Troika (European Union, European Central Bank, International Monetary Fund) for access to the next round of bailout funds – which includes:
- Reducing the number of tax brackets from eight to three, with a the top taxation rate at 42% for individuals who earn €42,000 (~$55,000) or more a year. While I declare no expertise on the Greek tax code, in general the number of deductions a filer can declare usually rises with more income, thus the tax burden has increased for those whose incomes fall in the lower range of this 42% tax bracket. In short: The assault on upper middle-income brackets (no doubt many are small business owners) has just increased.
- While individual tax burdens grew for the middle class, corporate taxes moved in the opposite direction, with the corporate tax rate dropping from 40% to 32.8%.
- There was a 20 percent capital gains tax passed, but only on Greek stocks, thus investment in native Greek businesses will decline while, in harmony with the new corporate tax rate of 32.8%, foreign corporations should flourish on Greek soil. Flourish, that is, until these same foreign corporations realize the Greek middle class has been eradicated, with no money left in circulation at the middle-income levels to buy foreign goods. In fact, bartering is increasingly taking hold in Greece, and besides what right-minded McDonald’s or Wal-Mart would try to pursue business in places like Mali, Afghanistan… or the future Greece?
While Bloomberg News states “The changes place more of the payment obligation on businesses,” the story quickly follows up on this statement with the qualifier, “especially the self-employed.” So for Greeks who were interested in taking their employment needs into their own hands to provide for themselves and their families, forget about it. And for those who already had family businesses, the above linked article on bartering lays that middle-income avenue to waste:
“In March I had to close the grocery store I had kept going for 27 years because I just couldn’t afford all the new taxes and bills.” – Christina Koutsieri
And the European Central Bank is surprised there is no economic growth in the EU because…?
Greece, welcome to the Third World.