Regressive Taxation and Why The European Union is NOT in a good position to fight consumer price inflation – the euro saw consumer prices increase by an annual 5.1 percent in January – February 3, 2022

I’d pay very close attention to consumer price inflation numbers in the Eurozone if I were you, nobody is talking about this, but I write a lot about government regulations on the economy, being a hindrance to economic growth, well the Eurozone is all about protectionism and if inflation is beating 19 DIFFERENT Eurozone countries, this spells all sorts of unforeseen problems.

Government regulations create barriers to entry problems, this is one of the reasons why you don’t see too many innovations coming out of Europe, it’s simply to expensive, it’s not that Europeans aren’t innovative people, it’s just that regulations that exist in Europe, incentivize innovators to innovate within the confines of existing business structures. Meaning that I might innovate something for the benefit of BMW, but I won’t innovate something like a Tesla as an example to compete with BMW, because the cost to do it in an EU country is simply too great and risky based on the regulatory environment that benefits existing businesses.
 

Furthermore, EU countries typically have income taxes combined with very regressive sales taxes. In America as an example there are several states that don’t have income taxes, sure they have sales taxes, but when you’re not being taxed by your State for labour, you’ll have more disposable income. In most EU countries you’re taxed on both ends, which during a deflationary economic cycle which is what consumer price inflation is, is extremely problematic

 

I comprehend that this story is being ignored now, but it wouldn’t surprise me if this leads to an unexpected recession in Europe that might rapidly deteriorate into a depression. The world is heavily dependent on the U.S consumer, which tends to have the most disposable income, well, currently let’s just say the current President of the United States Joe Biden, has some very strange economic policies.

What Joe Biden is proposing is for the government to spend money historic amounts of money while his economic policies simultaneously seek to make the cost of living more expensive for Americans? Without getting into specifics, sure this Joe Biden policy if implemented could have an immediate stimulative effect, but U.S dollars in Joe Bidens America will buy fewer goods and services in America, thereby making Americans and businesses dependent on the U.S consumer POORER.

At least for the foreseeable future, the U.S economy looks like it will face some challenges, which spells recession for the EU.

the euro saw consumer prices increase by an annual 5.1 percent in January | aljazeera.com
The 19 countries using the euro saw consumer prices increase by an annual 5.1 percent in January, official data shows.

Interesting times ahead