Californian? In the Top Tax Bracket? Move to Bavaria!
Suppose your federal government dramatically slashed tax rates for the well-to-do, all in the name of promoting economic growth. Suppose, too, that it is running a budget deficit and plans to do so for at least the next several years.</br></br>You might assume that you live in a country governed by a bunch of reckless right-wingers, willing to risk the nation's economic health for the benefit of a tiny fat-cat constituency. In fact, you reside in socialist Western Europe.</br></br>Though most of Europe's countries are ruled by left-of-center governments, taxes are coming down across the Continent. Not only are tax-loving countries like the Netherlands and Sweden cutting rates, but so are economic heavyweights like France (yes, France) and Germany.</br></br>Meanwhile, the only major industrial country that is running a large budget surplus, but where apparently respectable people still claim that it can't afford a major tax cut, is the U.S. Viewed from a European perspective, America's epic tax debate is strange indeed.</br></br>Of course, Europe's tax cuts aren't nearly as big as they might be, and opposition parties have vowed to push through bigger relief if they regain power. Yet measured by the standards of American liberals, countries like Germany are about to enjoy "irresponsible" tax relief. Indeed, the tax cut that Berlin started to phase in at the beginning of this year is bigger than President George W. Bush's controversial $1.6 trillion plan.