How Costa Rica Gets It Right :
"With inequality still a problem (though nowhere near as acute as elsewhere in Latin America), more progressive and comprehensive income, capital gains, and property taxes are essential. The rich receive a disproportionately large share of their income through capital gains, and to tax capital gains at rates lower than other forms of income exacerbates inequality and leads to distortions. While economists differ on many matters, one thing they can agree on is that taxing the revenues or capital gains derived from Costa Rica’s land won’t cause the land to move away. That’s one reason why the great nineteenth-century economist Henry George argued that the best taxes are land taxes.
"With inequality still a problem (though nowhere near as acute as elsewhere in Latin America), more progressive and comprehensive income, capital gains, and property taxes are essential. The rich receive a disproportionately large share of their income through capital gains, and to tax capital gains at rates lower than other forms of income exacerbates inequality and leads to distortions. While economists differ on many matters, one thing they can agree on is that taxing the revenues or capital gains derived from Costa Rica’s land won’t cause the land to move away. That’s one reason why the great nineteenth-century economist Henry George argued that the best taxes are land taxes.
The biggest challenges are political: a presidential system like Costa Rica’s works well in a polity divided into two main parties, with rules designed to ensure that minority views are adequately respected. But such a system can quickly lead to political gridlock when the electorate becomes more fractured. And in a fast-changing world, political gridlock can be costly. Deficits and debts can explode, with no path towards resolution."
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