Jyrki Katainen is right - Part 1
@ 9:11 am …but he’s also wrong about a few things.
The Minister of Finance, Jyrki Katainen, is sparring righteously with opposition members in Parliament over a review of the European Union’s stability program for Finland. On his mind are pressing issues, such as the aging population, quality of schools and funding of general healthcare. In Katainen’s words:
Väestön ikääntymisen myötä laadukkaiden ja kattavien hyvinvointipalveluiden - päiväkotien, koulujen ja terveydenhuollon - järjestäminen on jatkossa entistä haasteellisempaa.
A challenge indeed. To ensure future viability, Katainen addresses a problem that has plagued Finland since time eternal: Investment capital leaves for foreign shores or becomes diluted internally. In the past, it was due to plunderings by Sweden and Imperial Russia. In current times, it is due to falsely conceived ideologies.
An obvious step in the right direction has already been taken by eliminating the unpopular wealth tax. Now Katainen aims to chop the equally unpopular inheritance tax. Each of these have been major incentives for keeping money out of Finland. At this point in the economic cycle, it is extremely important that investment capital stays intact, and in the country. Otherwise it will only cause the impending economic decline to become worse, and employment to soar.
Unfortunately, the usual band of opposition naysayers only offers scathing criticisms. The SDP’s Jukka Gustafsson, Eero Heinäluoma and Kari Rajamäki, along with the Left Alliance’s Martti Korhonen, see fit to continue diluting Finland’s dwindled wealth. In all fairness though, they probably believe it to be helping the lower strata of society.
However, taking one person’s wealth is not going to make another person less poor in the long-runâ€â€in fact, the opposite is more likely to be true. That’s why I’m surprised to read that the Greens’ Anne Sinnemäki, one of my favorite parliamentarians with whom I wouldn’t mind a short romp if the lighting were right, unexpectedly broke ranks with Katainen:
Heinäluoma is right in saying that the combination in which there is no wealth tax, and in which the aim is to lift the inheritance tax on corporate wealth, is a bad one.
Upon first reading, my impression was: Apparently she’s been brainwashed by comrad Heinäluoma, a student from the marxist school of class envy. But after thinking about it, I now see where Jyrki Katainen is completely wrong. What I didn’t tell you above—and to what Anni alludes—is that he favors eliminating the inheritance tax on “corporate assets and farm and forest land.”
I’ll admit that it’s a logical approach. After all, nobody benefits if Finnish corporations are divested by their owners and assets delivered offshore to avoid the tax; jobs get lost that way. And paying subsidies to farmers just so they can pay their inheritance taxes also makes no sense; Finland doesn’t really need to continue that Ponzi game.
But to really make things right and convince us that he’s not just a tool for the upper crust of society, he should seek to eliminate inheritance taxes for EVERYONE. Not just for those who can afford to restructure their holdings to avoid them. So Jyrki, if you want to attain god-status among the Finland for Thought crowd, then koita uudestaan!
Of all the taxes you people complain about, inhertiance tax is surely the one that has most justification. What on Earth harms equality of opportunity more, and acts as a greater disincentive to earn a living, than getting money someone else earned.
This argument made by the same people that say progressive taxation is bad because it discourages people from working longer hours.
Comment by Finnsense — Wed, Dec 19th, 2007 @ 10:47 am
Finnsense: “same people that say progressive taxation is bad because it discourages people from working longer hours.”
Ah, since you favor taxing the working class, I must assume that you are an aristocrat
Comment by Kristian — Wed, Dec 19th, 2007 @ 10:53 am
To be fair, Kristian has made it clear that earning a living, otherwise known as running on a treadmill, is to be avoided at all costs. Certainly that noble goal will be achieved by thew majority of Finns if we just implemented wise libtard policies.
Comment by Freeridin' Franklin — Wed, Dec 19th, 2007 @ 10:53 am
Socialism stems from poverty. That is what social democrats know extremely well, thus it is in their interest to keep the poor poor. Not starving, as that would make them revolt, but in a good standard of living-no accumulation of wealth type of situation.
Best defence agains socialism is to make a poor man wealthy. That’s exactly what was done in Finland at 1920’s with the emancipation of tenant farmers.
I couldn’t agree more. The inheritance tax should be abolished. And in general, there should be more concern about the wealth of the poorest, in contrast to current situation where focus is in their income. One idea to increase the wealth of people could be to distribute shares of state enterprises to people instead of selling them, with sale limitations to prevent turning this wealth into luxuries.
Comment by T — Wed, Dec 19th, 2007 @ 12:07 pm
Oh god, does the “part 1″ mean he’s going to write yet more?
Comment by Rich — Wed, Dec 19th, 2007 @ 12:28 pm
Inheritance taxes on businesses can cause the following:
1. Business needing to layoff, cut back, or sell things in order to pay the tax. In some cases, can even cause the owner to close the business.
2. Ownership of business is transferred to offshore tax haven where the identity of the owners of the business are kept confidential. (ie. The Cayman Islands.) The same family goes on running the business as before and avoids the inheritance tax. The business is now in a position to avoid a lot of other taxes as well. There is already billions of Finnish money going through these places. The government looses a lot more than just an inheritance tax.
This inheritance tax is very badly thought out Jante Law legislation, aimed at getting quick cash here and now with no view of the long run and the long term damage it causes.
Comment by Sirkuspelle — Wed, Dec 19th, 2007 @ 1:44 pm
Kristian - If you edited your post, so that it was more structured, then it would be easier to follow the points you are making; which I’m sure are all valid.
Comment by Andy Campbell — Wed, Dec 19th, 2007 @ 2:13 pm
Maybe if you spent more time working and less complaining, you’d be less frustrated.
Comment by Anonymous — Wed, Dec 19th, 2007 @ 2:57 pm
Maybe if you spent more time working and less complaining, you’d be less frustrated.
If I understand correctly, Kristian is some kind of small time businessman. I guess his frustration stems mostly from not being able to use the Cayman Islands bank option, or to get government provided corporate welfare as big corporations do.
Comment by N. Siinistö — Wed, Dec 19th, 2007 @ 3:12 pm
What on Earth harms equality of opportunity more, and acts as a greater disincentive to earn a living, than getting money someone else earned.
How is this any different than the number of social programs available through KELA? Where does that money come from? If you really believe what you say, KELA should be axed.
You contradict yourself between your first and second statement as well. If you use your inheritance to live the good life and not work, that only gives more opportunity for someone else to have a job. Plus, the money spent supporting the “good life” goes directly into the pockets of businesses, creating more jobs.
Finns build some of the finest yachts in the world, it’s to bad that poor taxation policy prevents them from being bought by Finns themselves.
Kristian, Great post. Nice that you left purchasing power out of it this time, that gets a little old.
Comment by Anonymous — Wed, Dec 19th, 2007 @ 3:17 pm
It was me at #9
Comment by Unit — Wed, Dec 19th, 2007 @ 3:18 pm
Unit,
Frankly, farcical points both. How does unemployment benefit act as a disincentive to work? If you really believe that €400 a month is living the good life then you might think that’s some kind of argument but I don’t. I think it keeps you alive.
Your second argument that rich people choosing not to work helps equality of opportunity is also farcical. Equality of opportunity means that everyone has the same chances to succeed in life. That doesn’t happen when the priviledged few pass on their wealth to their children.
I don’t even know why I’m bothering with this. You’d have been better off staying anonymous.
Comment by Finnsense — Wed, Dec 19th, 2007 @ 4:52 pm
Well said Unit with #9. I do think you took Finnsense apart, lets hope he has the balls to try a comeback. That will be funny to see.
By the way Jimmy Carter taxed the heck out of the USA yacht industry, as his hit on wealthy taxpayers. Guess what happened. He killed the industry in South Florida, putting thousands out of work. Another liberal failure, with a huge impact on the poor.
Comment by winter, "Yea, Proton Power, now in remission" — Wed, Dec 19th, 2007 @ 4:58 pm
Finland is about the only western country that is going to abolish both the inheritance and wealth tax for the rich, and it’s a shame, something that was not planned to begin with. It’s just that Kokoomus wanted to give back something to those who finance their campaigns. The Centre opportunistically joined the band wagon and made farms too tax free, a typical centrist lehmänkauppa. And no, according to studies made in some states in the USA, the tax-free inheritance doesn’t make the slightest difference, it’s just extra money to those who already have more than the rest. Truly a shame, and Kokoomus will pay for it, let’s just see.
Nice that you left purchasing power out of it this time, that gets a little old.
Yes indeed, particularly because he has referred to it 346 times and still thinks it’s about the purchasing power of the Finns
Comment by Anonymous — Wed, Dec 19th, 2007 @ 5:18 pm
winter: “By the way Jimmy Carter taxed the heck out of the USA yacht industry”
What really killed it, was the wealth/boat tax levied by Maryland in the early 1980’s. Everyone moved their boats to Virginia. I even helped someone move theirs—what a beautiful bay! It was eerie to see the empty docks in Maryland. It would be like seeing the entire coastline of Finland empty. Lots of workers lost their jobs by that stupidity.
“Finland is about the only western country that is going to abolish both the inheritance and wealth tax for the rich, and it’s a shame”
Yeah, you have to eliminate them for everyone. I, personally, don’t have anything to lose or gain by Finland’s decisions on these matters. But I do think it makes sense for society to eliminate them.
Countries like Sweden, Germany, Switzerland—and many others—either have tiny inheritance taxes or really high exclusions (Germany’s is about 205K per adult, IIRC), and 0% for business if kept operating for 10-years.
It saves the house and business in many cases, but Germany has the same condition with capital (above the exclusion amount) going abroad for safer shores. That condition will always exist until wealth and inheritance taxes are eliminated completely.
The existence of Inheritance and Wealth taxes is a significant factor which keeps the ultra-rich in power and prevents those at the bottom from ascending.
Comment by Kristian — Wed, Dec 19th, 2007 @ 6:14 pm
Been to a kokomus mixer today.ahhhh the life
Comment by born there — Wed, Dec 19th, 2007 @ 6:35 pm
13. With out the rich, you aint got a job. Kokomus is doing great. And as an Ameriacn, I lovem. and as a european, I lovem.
Why should the rich be taxed or the poor for that matter on passing of to their children they were already taxed for. You want my money ? or my parents hard earned money that they have already been taxed on ? jump off a high cliff my commie friend ! head first.
Comment by born there — Wed, Dec 19th, 2007 @ 6:38 pm
jump off a high cliff my commie friend ! head first.
The problem with you guys ! is that you ! ‘re all sociopaths
and can’t write properly.
Comment by Anonymous — Wed, Dec 19th, 2007 @ 7:06 pm
Tax the rich is a good political line, until you see the results. Wealth leaves the country, economy declines, and more poor folks to feed with welfare.
So unless your political future is tied to keeping poor fools poor, you want these taxes to go away and have the rich, um, can we say Billionaires, create jobs.
Its that simple, unless you need the poor around so you can keep saying “I will tax the rich” to get elected. That in a nut shell is the current left wing agenda. When one gets a large middle class and they all vote for wealth preservation, vrs wealth distribution, the left wing becomes unhappy.
Comment by winter, "Yea, Proton Power, now in remission" — Wed, Dec 19th, 2007 @ 7:18 pm
Part 2
As I posted above, wealth preservation, vrs wealth distribution is the key topic on this thread. I actually think, Finland, of all places, is a good model of this in action.
For example, Finland (And my history is not that good), was a very wealth distribution managed country. But I see good indicators of that changing to the wealth preservation model.
Am I right, do others here on FFT see this trend?
Comment by winter, "Yea, Proton Power, now in remission" — Wed, Dec 19th, 2007 @ 9:24 pm
Tax on business profit is 26%. Companies have to move their profits around or otherwise they are penalized. But where profits go is a black area. Can we redirect profits back into the domestic economy? Well a lot of profit is redirected into the domestic economy but then do really know this? What i do know is that there are no obvious reasons why I should keep my company’s money in Finland. If we are talking mutual funds then a lot of these funds are heading eastwards. If we are talking property then well yes maybe property will provide a good return. I notice a few british companies buying up ‘mall space’ here in Finland.
The thing is that what I’ll do with my company’s profits is either send it out of the country or invest in property. Mostly this is where Finnish money goes. If anyone has better ideas on how to invest profits then please let me know.
Comment by Andy Campbell — Wed, Dec 19th, 2007 @ 11:03 pm
born there:
“Been to a kokomus mixer today.ahhhh the life ”
Getting drunk with taxpayer money? Yeah, that’s the kokoomus way.
Comment by Freeridin' Franklin — Wed, Dec 19th, 2007 @ 11:14 pm
The problem with Kokoomus is that it doesn’t promote market economy but the capitalist class. In a way it is anti-marxian instead of pro-market, lobbying for an interest group and not for a better process.
Comment by Mara — Wed, Dec 19th, 2007 @ 11:46 pm
To Mara - interesting comment - please tell more about ‘better process’.
Comment by Andy Campbell — Wed, Dec 19th, 2007 @ 11:57 pm
The Kokoomus-style crony capitalism shows most clearly in the housing policy. The problem with Jan Vapaavuori — our minister of housing and an ex-local politician of Helsinki — is that he seems still most interested in preserving Helsinki’s higher status w.r.t. the surrounding cities. He (and Kokoomus en masse)is fighting tooth and nail the evolution of Helsinki metropolitan area. Somehow they have twisted the concepts and languge so that ordinary citizen already believe that there cannot be a metropolitan Helsinki without administrative merger, i.e. joint zoning & transportation policy. And that if the cities are not going to cooperate, they should be forcefully made to “co-operate”. And that metropolitan Helsinki would mean an even denser Helsinki with countyside/suburban-image towns around it. That’s crap!
As a resident of greater Helsinki I now have real and tempting possibilities to live in Vihti and work in Vantaa, or live in Lohja and work in Espoo. That’s what the Helsinki bureaucrats are afraid of: residents and business could actually make the cities *compete* for their tax-euros by voting with their feet. As many have lately done. This possibility is fairly new for many households, the Helsinki metropolization started en masse just after the 90’s depression. And Helsinki was a net loser of population for the first time in its history for some years during the current decade. Even on the years the population actually grew, most of the people moving out were middleincome taxpayers and the people moving in were students, pensionaires and foreigners (to the eastern side of Helsinki). This change of democraphics set a dimmer on the city accounts, and was the main reason for the 75sq-meter average apt size requirement for new apt buildings. Kokoomus even turned into a rail supporter, in hopes of forcing the metropolitan structure to stay unicentric (and in other words keeping Helsinki in a near-monopoly status as a provider of housing and business environment).
The absolutely best way to lower housing costs for the masses is to build roads and to zone the metropolitan subcenters to grow with a wide variety of services. What Helsinki has been traditionally doing has been to oppose the building of subcenters and lobbying for restriction on the variety of commercial activities allowed in those subcenters. So that everybody will have to squeeze into Helsinki and to repeat the mantra “There is no land, we have to take the train and live in small flats”.
Comment by Mara — Thu, Dec 20th, 2007 @ 12:28 am
Mara - Thank you for this very informative reply. There is a lot of information in your post - it’s very interesting. I will read it a few times.
Comment by Andy Campbell — Thu, Dec 20th, 2007 @ 12:49 am
Unit: “Kristian, Great post. Nice that you left purchasing power out of it this time, that gets a little old.”
Thanks, not everyone is a regular reader, so I mention purchasing power often so they understand the context. For regular readers, sorry for the repetition.
Andy Campbell: “If you edited your post, so that it was more structured”
Anyone else think so? I appreciate the feedback.
Andy Campbell: “Tax on business profit is 26%.”
Yes, it attracts foreign corps. But taxes that individuals pay (income, inheritance, vat, monopoly etc.) are astronomical. Finland is surely winning the so called “race to the bottom.”
winter: “But I see good indicators of that changing to the wealth preservation model.”
It depends. Sweden recently made changes that benefited mainly the ultra-rich because it needs to preserve wealth. But its actions inherently preserve existing class structures.
Mara: “In a way it is anti-marxian instead of pro-market”
Exactly. It’s like they proclaim “we’re anti-marxian because we say so.” But their actions on this issue indicate that the lower classes can remain marxist, while the privileged class gets all the good breaks.
Comment by Kristian — Thu, Dec 20th, 2007 @ 12:53 am
#23 I see a functioning market as parallel processing search process. I’m pretty big on Hayek.
Say if Kokoomus actually believed in the market dynamics and power of incentives, it would lobby for the same and equal rules for everybody and every type of income. In case of inheritance tax, Kokoomus would promote inheritance tax abolishment for all. It would pay more attention to setting the legal environment a level playing field and would keep out of picking favored players.
Now, what it does instead, is to provide perks for the funding supporters (mainly EK). It carefully designs the tax cuts for those people that it perceives have an opportunity to avoid the tax, and keeps it high on everybody else. It picks and chooses among people, not ideas, and thinks that a government can “manage” the economic activity by collecting enough economic information and cranking the old IS-LM model forecasts, and adjusting its policies accordingly. I consider that a major flaw in understanding the life of an information society.
The same obtuseness showed in their fighting the nurses. They duped the nurses and lost credibility with the vast masses of radish-women (white in, red on the cheeks) working in the public sector. People who had already demonstrated that they do have options. I myself am now putting my hopes in the nurses activity to finally clear way for better health care organizations. Kokoomus should have helped the nurses in getting the motion on. Now its action signaled the old Lennon song “woman is the nigger of the world”, but not in the good way.
Comment by Mara — Thu, Dec 20th, 2007 @ 1:00 am
Kristian - I really like your posts - just wished they were more structured for dullards like me. Also in my company the average take from the workers pay packet amounts to 34% or there abouts. In Finland companies pay insurance (TEL) and so on on behalf of the worker. In the u.k the worker pays their own ‘national insurance’ on top of taxes, so I’m not sure the deductions from a workers salary in Finland are that much more than the deductions from a worker in England.
Mara - which party in Finland actually believe ‘in market dynamics and the power of incentives?’ There seem to be a lot of ideological rhetoric from all sides, but does any party have a ‘vision’ of where it wants Finland to be in 5 years? Or is it just about managing a stable economy. In other words do politicians here lead or do they just manage and play with ideology like bureaucrats? Is there any party that you identify with and why?
Comment by Andy Campbell — Thu, Dec 20th, 2007 @ 1:19 am
Andy Campbell: “just wished they were more structured ”
Ok, point taken. I’ll remove the paragraph “The supply of housing should never be constricted…” as it probably goes too indepth for this topic. I was blurry-eyed and in a hurry this morning (yesterday actually). Self-editing function must have been turned off.
In any case, my point there was to express that land/housing should be divided relatively equally, irrespective of income. But investment capital should not be diluted in the same way. In that sense, Kokoomus is going in the right direction, but maybe needs some nudging.
Mara: “Now, what it does instead, is to provide perks for the funding supporters (mainly EK). It carefully designs the tax cuts for those people that it perceives have an opportunity to avoid the tax”
Maybe we just don’t understand Kokoomus’ genius. Lower-income people want socialism, whereas the rich ones want tax cuts. So they give everyone what they want. A political party for all people
Comment by Kristian — Thu, Dec 20th, 2007 @ 1:51 am
28: Five year plans don’t work. The Finns learned it the hard way during the USSR regime and especially when it collapsed. The same is happening in the US housing bubble bursting right now. The worst off are the construction companies which did their projections 5 or more years in advance. They are now facing the full brunt of the economic downturn and unreasonable growth expectations:
http://www.bloomberg.com/apps/news?pid=20670001&refer=&sid=a4qa.rYTWyYA
Comment by Fat Bastard — Thu, Dec 20th, 2007 @ 2:12 am
Kristian: Finland is surely winning the so called “race to the bottom.â€Â
LOL! About the fastest growing economy in the world leads the race to the bottom! Have you ever considered joining a circus? Your ability to twist facts is almost unnatural.
Eleven richest countries and their growth rates in 2006:
1 Luxembourg 81,511 4.42
2 Ireland 44,676 4.00
3 Norway 44,648 2.61
4 United States 43,223 2.37
5 Iceland 40,112 2.81
6 Switzerland 38,706 2.46
7 Netherlands 36,937 2.40
8 Denmark 36,920 2.66
9 Qatar 36,632 4.49
10 Austria 36,368 3.11
11 Finland 35,559 4.75
Comment by Anonymous — Thu, Dec 20th, 2007 @ 12:33 pm
Green League has a pretty radical vision regarding such things like citizen’s income and environmental taxes. The big three battle for the middle ground and are pretty conservative. Then again, it’s understandable: why change a system people tell they like and at the same time produces a very strong economic growth, rapidly rising incomes and stable society.
This makes it possible to make “managerial” decisions (contrary to “populist” decisions that plague most of the rest of Europe much more). In other words, Finland can be lead like a firm, more ore less.
What Katainen says must be seen in this light, too. People who don’t understand the Finnish system, like Kristian, thinks that he’s speaking as the head of Kokoomus, while in fact he’s more like doing what every minister of treasure always does: playing the part of ministry’s front man, echoing the views of those who’s main task is to keep the finances in balance.
Comment by Anonymous — Thu, Dec 20th, 2007 @ 12:48 pm
Kokoomus or National Coalition Party has many wings. I guess you guys are looking after the free market wing, which is represented by those youngster called Kauppakamarinulikat (’Chambers of Commerce brats’) by Aarno Laitinen. The Finnish-speaking Old Money wing is pro market as long as it suits their interest but doesn’t mind a little taxpayer’s intervention if that happens to be for their benefit. There are also the farmer wing (better-off farmers than KePu’s), urban liberals (maybe with a shade of pink) and socially conservative nationalist wing (Kari’s cartoon of priest with a helmet) with slightly authoritarian tendencies (remember Ilaskivi as Helsinki mayor).
OK, why they try to be a political party for everyone, as Kristian says at #29. Sure they have these wings with conflicting interests in various issues, but they are not promoting marxism for lower class people. It is (or was) more about promoting public services for not-so-well-off people to prevent them turning into marxists (or marxist-leninists to be precise).
One of the main welfare state ideologists in Finland was Pekka Kuusi. As a former memeber of ultra-nationalistic Academic Karelia Society he was certainly not your usual punaviherpipertäjä. One may say that originally the whole welfare state was a nationalistic project to defeat communism and that goal was very convenient for the social democrats also.
Open promotion of discarding public services in Finland is a political suicide. You are instantly painted by the left as a greedy mulquist babykiller. In Kokoomus the urban liberals would not like you and the geriatric faction of the socially conservative nationalists certainly wants some respect for the older people in form of decent healthcare.
Kokoomus aside, only way to do the public service ramp-down is drive the system into crisis and then point out that it is not working. This has been happenning for a long time now. The High Noon of the welfare state was in the beginning of the 80’s. They are just keeping up the appearances so that the zombies voting their grandparents parties won’t be upset.
Comment by Antti rn — Thu, Dec 20th, 2007 @ 12:59 pm
Kookomus has a trade union wing too, TEHY anyone, and teachers’ wing who probably don’t realise that Kokoomus was strongly opposed to the whole peruskoulu thing they now want to preserve. The welfare state is approved also within Kokoomus, so strongly that Zyskowicz could say a while ago that there lives a little social democrat in every Finn without having to fear for political consequences.
American-style conspiracy theories apply poorly to Finland anyway. Besides, people are strongly pro welfare state, so where’s the alleged crisis? More money is put into social services, schooling and health care now than ever before.
Comment by Anonymous — Thu, Dec 20th, 2007 @ 1:42 pm
When Finland tries to have a Social Welfare state without the economy to back it up, it can become like an Eastern European country as they were just after getting independence. They had hospitals and schools and so forth, but the people working in them were not being paid enough to live in the economy.
Finland needs to strengthen its economy. It looks like this is happening. Taxation needs to be fair and based on laws and correct judicial process, not opinion. (not “You look like you are not paying all your taxes, now pay!”) The OECD taxation guidelines are a good source of information.
Comment by Anonymous — Thu, Dec 20th, 2007 @ 2:03 pm
#29 Kristian, Kokoomus positions itself assuming that it is “the only choice†for many of it’s traditional voters. But it’s not. My prediction-of-the-day is that quite many of the nurses, who along with their engineer-husbands voted Kokoomus, will reconsider their options. Kokoomus is driving their ultra-loyal voterbase to the arms of sos.dems and maybe even perussuomalaiset.
#28 Andy, I agree with you about the political parties - there is no-one that has a vision, they all believe in the management approach. Implicit in that belief is a belief that the government can have all pertinent information to make informed judgments in order to conduct optimal policy. And that the government actually does that.
The problem is in their hubris. It is increasingly impossible to predict an increasingly complex economy. Hayek said that a long time ago. The big macro models never worked very well, and have always done lousy in predicting turning points. Now they are doing even worse. The “official forecasters†(banks, VM, ideologically branded research organizations) have solved the forecast problem by increasing the frequency of forecast publications. That way the discrepancy between forecasts and realizations stays in tolerable limits. There used to be a time when forecasts were published only once a year. Those were the Soviet times, when Finland’s economy was even more concentrated than now. Fortunately we are out of that era now, but unfortunately the domestic politbyro is still nostalgic about it.
I liked the Nuorsuomalaiset, but obviously very few others liked it. Maybe time was not right for it, there has probably been too much grinding of the management ideology for people to even start to think of anything else. The discussion seems to bounce inside the box called “The public sector should mimic the effective and efficient methods of the private sector â€Â. There are very few publicly presented ideas outside the box. I just hope that the reason for silence is self-preservation, not genuine lack of ideas.
I’d like a party that actually said: “The private party should do the directly productive & consumptive activities, the government’s duty is to provide the legal environment enabling the productive & consumptive activities in a welfare maximizing way. Let’s take full responsibility of the arrangement of public institutions in such a way that the markets can function effectively, and then stay out of the operations.†This means that I would prefer vouchers over government provision in education, eldery care, health care (through insurance), housing and transportation. I would not leave people without necessities, but I would let them choose and carry the consequencies of their choices. Obviously this is a very unpopular view and there are no parties vouching for it (pardon the pun
).
And obviously it is not in the interest of our local politbyro to admit to the public that the average taxpayer would be better off with dramatically reduced public sector and government take on the GNP.
I simply do not believe that 1) the politbyro has better information on any individual’s true preferences than the individual, 2) the politbyro should have any right to twist that individual’s preferences, 3) the politbyro is fully benevolent and works to maximize the individual’s welfare without any agent-principal problems, or that 4) the politbyro is even cabable to maximize the welfare by it’s own managerial level decisions, even if it wanted to.
Comment by Mara — Thu, Dec 20th, 2007 @ 2:07 pm
Finland needs to strengthen its economy.
Yes, at the moment Luxembourg has a stronger economy than Finland within the EU.
Honestly, if one of the strongest economies in the world, Finland, can’t preserve the welfare state (or what’s left of it), then nobody can.
Comment by Anonymous — Thu, Dec 20th, 2007 @ 2:09 pm
And obviously it is not in the interest of our local politbyro to admit to the public that the average taxpayer would be better off with dramatically reduced public sector and government take on the GNP.
Because that is not true in all likelihood. Finland’s overall strength seems to be it’s welfare structures and financial discipline. It’s not easy to find an economist in Finland who would disagree on that outside the hihhuli circles.
That is not to say that the total tax “burden” would be exactly at the right level right now. But lowering it dramatically would be very risky business, and thus not wise at all in the view of an average tax payer.
People are not stupid like you people think.
Comment by Anonymous — Thu, Dec 20th, 2007 @ 2:20 pm
“There are very few publicly presented ideas outside the box. I just hope that the reason for silence is self-preservation, not genuine lack of ideas.” (#36)
“Finland’s overall strength seems to be it’s welfare structures and financial discipline. It’s not easy to find an economist in Finland who would disagree on that outside the hihhuli circles.” (#38)
Q.E.D.
Comment by Mara — Thu, Dec 20th, 2007 @ 2:36 pm
Your idea is like putting a McLaren motor into a Ferrari and then hoping that everything goes well. That, you think, is responsible politics. Grow up like Penttilä already did.
Comment by Anonymous — Thu, Dec 20th, 2007 @ 2:42 pm
@40 Whose idea are you referring to? And who is Penttilä?
Comment by Confus — Thu, Dec 20th, 2007 @ 3:18 pm
Ferrari is the Finnish economy or the society in general. Lowering taxes dramatically (or implementing other neoliberal pölicies) is like importing an alien motor from a different system (car … or am I talking about a country here?). A forceful analogy anyway! No? Well, if you just realised that the Finnish Ferrari is among the fastest but perhaps only because it’s been fine-tuned so that all parts work together well.
Penttilä, Risto J. was the leader of the Nuorsuomalaiset (a market-liberal poppoo) during the depression. Nowadays he’s the boss of EVA, pretty market liberal still, but in a responsible way.
Comment by Anonymous — Thu, Dec 20th, 2007 @ 3:40 pm
The inheritance tax shouldn’t be aimed at property. There is no point in forcing a family to start digging in their pockets when they inherit their parents’, say, factory which employs 30 people and then have to lay it down or sell it off as they can’t dig up that sort of money from anywhere and it wouldn’t be economically viable to take loans to pay that tax. Instead are 30 workers’ jobs in danger.
I’m strongly in favor of a system with equality of opportunity but taxes should be aimed at the right things and not endanger workplaces.
Comment by Mikael — Thu, Dec 20th, 2007 @ 4:24 pm
Instead are 30 workers’ jobs in danger.
That’s Kokomuus propaganda. The tiny tax put no jobs in danger.
Comment by Anonymous — Thu, Dec 20th, 2007 @ 4:30 pm
31: “LOL! About the fastest growing economy in the world leads the race to the bottom!”
The ‘race to the bottom’ is a phenomenon in Europe, that is currently being studied. It means that countries compete to attract big corporations by lowering corporate taxes drastically, and then they raise taxes on individuals to cover the loss. Generally, the practice benefits shareholders (capitalists) and hurts wage earners.
Finland’s ‘racing to the bottom’ results in Finland not benefiting from its own high productivity and growth. Instead, foreign shareholders (since Finns themselves don’t own many stock shares) benefit disproportionately from Finnish labor.
Compare that with Luxembourg. It is also racing to the bottom. But at least the shareholder resides within Luxembourg. A small consolation perhaps, since the wage-earner still doesn’t benefit in direct proportion to his own efforts, but at least the standard of living is high for everyone. Again, not as high as it ’should’ be for the wage earner, but higher than the Finnish wage earner’s, nonetheless.
32: “People who don’t understand the Finnish system, like Kristian, thinks that he’s speaking as the head of Kokoomus, while in fact he’s more like doing what every minister of treasure always does: playing the part of ministry’s front man”
Or we can interpret it this way…
“Katainen antoi tänään eduskunnalle pääministerin ilmoituksen Suomen vakausohjelman tarkistuksesta ja talouspolitiikan haasteista.”
http://www.hs.fi/politiikka/artikkeli/Katainen+vaati+malttia+menoihin/1135232652009
Antti rn: “It is (or was) more about promoting public services for not-so-well-off people to prevent them turning into marxists (or marxist-leninists to be precise).”
Yes of course. But I was referring to their willingness to give ‘rich’ people inheritance tax breaks, while ignoring everyone else. My assertion was that they gave the lower-income people what they wanted: marxism (i.e. high taxes).
Anyway, I completely favor providing welfare for the not-so-well-off. But as Mara described above (#36), there are other ways in which to do it, which maximize choice for everyone.
Comment by Kristian — Thu, Dec 20th, 2007 @ 4:46 pm
Hi,
Sorry, I have a question and I’m hoping someone might know the answer to it:
I’m a Swedish citizen living in London since about 10 years. I recently inherited some money from my father, who was a finnish citizen. Part of the inheritance was a house in Spain. They’ve sent letters to my mothers address in Sweden saying I have to pay tax on it, and I’d like to know if anyone knows whether I actually have to pay this? In the UK you are not taxed inheritance tax for the sum I received at all…..
Super thanks!!!
Comment by Lola — Fri, Dec 21st, 2007 @ 4:43 am
oh, just to clarify, this is the finnish tax authorities wanting me to pay..
Comment by Lola — Fri, Dec 21st, 2007 @ 4:45 am
“Your idea is like putting a McLaren motor into a Ferrari and then hoping that everything goes well.”
Especially as there is no such thing as a McLaren engine. The engines are from Mercedes-Benz. But ideologues are not bothered by puny details such as whether their silver bullets actually exist.
Comment by Freeridin' Franklin — Fri, Dec 21st, 2007 @ 8:01 am
“here is no point in forcing a family to start digging in their pockets when they inherit their parents’, say, factory which employs 30 people and then have to lay it down or sell it off as they can’t dig up that sort of money from anywhere”
Sob stories like this are often told when griping about the Paris Hilton tax. A little scratching of the surface reveals them to be completely imaginary. Mommy, it’s not fair!
Comment by Freeridin' Franklin — Fri, Dec 21st, 2007 @ 8:06 am
Except that Paris Hilton doesn’t pay inheritance tax, because her inheritance is safely secured in a Trust Fund.
Comment by Anonymous — Fri, Dec 21st, 2007 @ 12:32 pm
@49 sob stories like this do exist. A neighbour’s father died. The neighbour had been living in the house and farming there. When the father died, the siblings would have needed to sell some of the farm to pay the tax. It ended up that the farm got partitioned, the house, barn ,etc. sold to a non-farmer family, and the neighbour ended up with a little piece of forest from it all. When people should be grieving their lost parent or spouse, they are instead having to worry about stupid tax issued. And it is not a Paris Hilton tax. It hits the average person in Finland, like this farmer’s family. The very wealthy obfuscate the ownership of their assets behind corporations and other entities, so they end up paying proportionally little of nothing.
Comment by Confus — Fri, Dec 21st, 2007 @ 2:10 pm
Lola,
I suspect you do have to pay, but you should really contact a specialist. You could call the Finnish Veronmaksajat (= “Tax payers’ Association”) help line. It costs a couple of euros per minute for non-members, but the advice is given by a certfied expert. They might or might not be able to speak to you in English, but most likely at least in Swedish. Here is a link to their English page, where you could find some useful info.
http://www.veronmaksajat.fi/fi-FI/inenglish/
Comment by Mara — Sat, Dec 22nd, 2007 @ 2:07 am
Paris does not pay the tax, her Parents estate will. End of the day, its the same. Double and even tripple taxs paid for work one did in a lifetime.
Comment by winter “Yea, Proton Power, now in remission†— Sat, Dec 22nd, 2007 @ 4:56 am
winter: “Paris does not pay the tax, her Parents estate will.”
Think again!
There will be NO inheritance or estate taxes because all that Hilton money is owned by the Conrad N. Hilton Foundation, a charitable trust.
http://www.hiltonfoundation.org/
Technically speaking, Paris and her parents own nothing aside from a few million in pocket change. But the trust owns nearly 2-billion dollars in assets. She/they will always receive a few million each year in income from the trust.
Only wage-earner Finns pay inheritance tax.
Comment by Kristian — Sat, Dec 22nd, 2007 @ 11:23 am
Then let’s make that kind of loophole impossible by law. Either outlaw the arrangement where Paris gets regular income from the trust or just tax the foundation directly. The idea of taxing inheritence is not the problem here, only the execution, no?
Comment by Pave — Sun, Dec 23rd, 2007 @ 12:44 am
Pave—good luck trying
Politicians know that economies don’t function without the resources of business savvy rich people; so politicians will always protect the rich. If not, the rich will take their money and talents elsewhere and jobs of ordinary people will be lost.
Every country in the world knows it and makes “loopholes”, as you call them (they aren’t actually loopholes). Even Sweden formally recognized it, and eliminated inheritance taxes.
The only solution to ‘challenging’ the rich, is that YOU demand the same privilege for yourself. Inheritance taxes only keep the wage-earner Finn poor.
http://www.thecelebrityblog.com/2005/09/paris-hilton-family-donated-6-milion-to-katrina-victims/
Comment by Kristian — Sun, Dec 23rd, 2007 @ 3:03 am
Oh those politicians. They rule us and there’s nothing we can do. Boo hoo. You sure sound Finnish now.
Comment by Pave — Sun, Dec 23rd, 2007 @ 5:58 pm
Oh, there’s plenty that can be done. Stalin proved that. However, the outcome wasn’t so good. Ultimately, the USSR had to rely on selling oil and resources to rich western free-market economies just to survive.
Finland is the same way; it also relies heavily on western consumers. Furthermore, it relies on the liquidity and investment capital of rich people in free-market economies. That’s because Finland can’t generate its own.
Unfortunately, inheritance and wealth taxes promote strategies of ‘tax avoidance’ rather than ‘productivity.’ And considering that class envy will never be a globally unifying principle, tax avoidance in Finland is rather simple: just move away. And people do.
I would much rather see a society with ample liquidity and investment capital than one forced to rely on the limited capabilities of economic collectivism.
Comment by Kristian — Mon, Dec 24th, 2007 @ 1:40 am