> -----Original Message-----
> From: sawicky at epinet.org [SMTP:sawicky at epinet.org]
> Sent: Thursday, March 18, 1999 4:04 PM
> To: lbo-talk at lists.panix.com
> Subject: RE: Brad, Oskar, Noam
>
> >
> > Lafontaine had a few major policy goals: EU tax harmonization
> *upward*,
> wholesale reflation of the European economy, promoting capital
> controls
> internationally, and defending Europe's labor market
> regulations.>
>
> I too am skeptical of U.S. support for Lafontaine, but the tax
> argument is not one of the reasons. Tax harmonization in the EU
> means harmonizing the VAT. Harmonizing 'upward' makes possible
> the reduction of income taxes. This is supposed to improve their
> labor market, but I don't buy it.
>
> Harmonizing under any circumstances will be very difficult.
> Every country has a veto. From this standpoint, harmonizing is a
> relatively idle threat. It is not just the rates which are
> disparate; definition of the tax base varies grossly as well.
> Turns out that VAT's can be pretty complicated, contrary to some
> conventional wisdom about tax reform. Harmonizing income taxes
> is a much taller order, in my view. Harmonization in this realm
> could easily result in clipping the higher rates.
>
> I published a piece on this, if anyone is interested.
>
> mbs