These are three books that I feel that everyone who want to expand their understading of the world we live in should read.
The Brief History of Time by Stephen Hawking, This book will explain astrophysics, the theory of relativity, the past, present and the future of the universe in a easily understandable format without MATHS. Quite an accomplishment and a must read if you want to understand physics and through it the great mysteries of the universe without having to go through tons of equations.
Guns, germs and steel by Jared Diamond, This book gives a pretty good anwser to why the world history took the course it did, why civilizations emerged where they did, why Philip II of Spain's representatives took Atahualpa the Inca emperor hostage and not the otherway around, why the decendants of farmers in mesopotamia invented the Helicopter and why the decendants of farmers in Papua New Guinea did not. The anwsers might shock you.
The Ascent of Money by Njall Fergusson, This book tracks the financial history of the world and how financial innovation has improved our lives. All of this is again explained in an audience friendly manner. He explains how banks and credit systems are necessary, how the first stock market in the world was a better investment than the largest silver mine in the world and why the people living in the safest part of the world the most insured.
maanantai 27. joulukuuta 2010
Taxation - The part of Government spending that isn't discussed very often
Taxes, the nasty things that the goverment uses to take money from you for uses may or may not approve, but lets face it they are a necessary evil that pay for all those good things in our society, like education, health care, the police, social benefits etc. We could continue this list ad nauceam.
In discussions about government finance taxes, atleast here in Finland, take the sidelines to government spending. Everyone has a clear idea on what money should be used or not used on, but no one rarely talks about how our taxation system should work. Its all too technical, its full of unfamiliar terminology, legal jargon and when you try to read the tax code or let alone try to understand it, tears of frustration will eventually flow. Its actually so complicated that there are thousands of people making obsene amounts of money from giving advice to people how to navigate the tax jungle. Taxation it seems is too complicated, even for the politicians, let alone for us, to understand.
Fuck this is shit! In the same way as how the public funds are used, how they are collected, is an ethical question, not a complex technical issue only understood by few experts. Here are few hard and fast rules that I have for a taxation system, with usual ranting about how fucked up things are at the moment.
1) Equality: The same amount of income should be taxed at the same rate. Period. This isn't happening at the moment in Finland, where for some completely insane reason, salary income is taxed progressively and capital income is taxed with a flat rate. This leads to the following situation, if I made 100 000€ in a year, as a lutheran living in helsinki, my tax rates for salary and capital gains would be as follows
Salary tax rate: 37,5%
Capital Income tax rate: 28%
Does this system look fair to you?
2) Proportional: The greatest tax burden should be placed on the people with the greatest ability to pay for it. This means that income taxation should be progressive, whích for those who don't know what it means, is a system where the tax rate increases the higher the income is. Flat tax rates have the big problem of not being able to generate as high revenue as progressive taxes.
3) Tax income, not consumption. This goes with the point above. When you tax consumption, it allows those with income above their needs to "escape" taxation, by not consuming. This means that the people with low levels of income, who spend all of their income on the necesseties, pay taxes on all of their income while the unspent income of the rich are not taxed. In response to the recession the government of Finland, in all its wisdom, decided to increase the VAT from 22% to 23%. What the fuck!!!
4) Tax are tools to raise funds, not tools for social engineering. Tax are the means for the government to finance the all important public services, not to control our behaviour. If something is harmful enough for the society to eliminate it, then make a law against it, don't use some half assed tax solution to manipulate people, largely because they don't really work. These include all kinds of taxes on harmful stuff, like tobacco and alcohol, UK has high taxes for tobacco, which has lead to a massive black market of smuggled cigarettes controlled by organized crime. Green taxes to penalize unenvironmental forms of energy production and the most recent insanity here in Finland, the candy tax, does the government really think that a price increase of 10 cents is going to have any impact on underaged obesity? I think not.
5) Simplicity: The system needs to be simple enough to be understood by the layman. In this the tax administration in Finland is doing suberbly well. While the system is not exactly what I would call "simple", they make an admirable effort in trying to explain all of it, in three languages no less and the website looks good as well. There is a fairly easy to use browser based tax calculator you can use to calculate your taxes, its easy to find important information and there are in-depth step by step guides on how to fill the various forms. Plus the ability to file most of the stuff ONLINE.
Check it out here
http://www.vero.fi/?domain=VERO_ENGLISH&path=488
Now how would you handle taxation?
In discussions about government finance taxes, atleast here in Finland, take the sidelines to government spending. Everyone has a clear idea on what money should be used or not used on, but no one rarely talks about how our taxation system should work. Its all too technical, its full of unfamiliar terminology, legal jargon and when you try to read the tax code or let alone try to understand it, tears of frustration will eventually flow. Its actually so complicated that there are thousands of people making obsene amounts of money from giving advice to people how to navigate the tax jungle. Taxation it seems is too complicated, even for the politicians, let alone for us, to understand.
Fuck this is shit! In the same way as how the public funds are used, how they are collected, is an ethical question, not a complex technical issue only understood by few experts. Here are few hard and fast rules that I have for a taxation system, with usual ranting about how fucked up things are at the moment.
1) Equality: The same amount of income should be taxed at the same rate. Period. This isn't happening at the moment in Finland, where for some completely insane reason, salary income is taxed progressively and capital income is taxed with a flat rate. This leads to the following situation, if I made 100 000€ in a year, as a lutheran living in helsinki, my tax rates for salary and capital gains would be as follows
Salary tax rate: 37,5%
Capital Income tax rate: 28%
Does this system look fair to you?
2) Proportional: The greatest tax burden should be placed on the people with the greatest ability to pay for it. This means that income taxation should be progressive, whích for those who don't know what it means, is a system where the tax rate increases the higher the income is. Flat tax rates have the big problem of not being able to generate as high revenue as progressive taxes.
3) Tax income, not consumption. This goes with the point above. When you tax consumption, it allows those with income above their needs to "escape" taxation, by not consuming. This means that the people with low levels of income, who spend all of their income on the necesseties, pay taxes on all of their income while the unspent income of the rich are not taxed. In response to the recession the government of Finland, in all its wisdom, decided to increase the VAT from 22% to 23%. What the fuck!!!
4) Tax are tools to raise funds, not tools for social engineering. Tax are the means for the government to finance the all important public services, not to control our behaviour. If something is harmful enough for the society to eliminate it, then make a law against it, don't use some half assed tax solution to manipulate people, largely because they don't really work. These include all kinds of taxes on harmful stuff, like tobacco and alcohol, UK has high taxes for tobacco, which has lead to a massive black market of smuggled cigarettes controlled by organized crime. Green taxes to penalize unenvironmental forms of energy production and the most recent insanity here in Finland, the candy tax, does the government really think that a price increase of 10 cents is going to have any impact on underaged obesity? I think not.
5) Simplicity: The system needs to be simple enough to be understood by the layman. In this the tax administration in Finland is doing suberbly well. While the system is not exactly what I would call "simple", they make an admirable effort in trying to explain all of it, in three languages no less and the website looks good as well. There is a fairly easy to use browser based tax calculator you can use to calculate your taxes, its easy to find important information and there are in-depth step by step guides on how to fill the various forms. Plus the ability to file most of the stuff ONLINE.
Check it out here
http://www.vero.fi/?domain=VERO_ENGLISH&path=488
Now how would you handle taxation?
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