I am not talking about US politics here, I am talking about how to organize the economy. As a starter, Europe is said to have a much better social and medical system, but is this really true ? Can we even compare both systems as a social system is related to culture, history and specific local conditions? In their book "Sverige versus USA" two Swedish economists Fredrik Bergström and Rober Gidehag come to the conclusion that contrary to common belief, Europe has more poor than the USA. The GNP per citizen is 36 % higher than in Europe (EU15). Unique to the study is that they not only compared at the federal level, but also at the USA state level. A country like Belgium has a similar output as Alabama, the fifth poorest state in the USA. And Belgium itself is placed in the middle league of Europe. This higher GNP per citizen results in an average higher income as well. E.g. in Sweden 40 % has a lower income than 25 000 $, in the USA less than 30%. Hence, on average it's better to be poor in a rich country than in a poor country. For detailed figures see eurostat.

Another interesting finding is that that Sweden, the European country with perhaps the highest taxes and elaborated Social Security system, people work more in the unofficial circuit than in the official one. To some extent, this is to be expected. At higher tax rates, the Laffer curve plays and people take more risks to reduce their average tax rate. Hence tax avoidance is not a crime but a sign that things are out of balance. In the end, they even keep economies alive because the money spent keeps on circulating. Why is Europe lagging behind? Europe has an excellent educational system and is often the seat of fundamental innovations. The report summarizes it simply: de high tax rates on labour make it less rewarding to work while the excessive redistribution policies and resulting large government sector make the economy as a whole less efficient.

Economy is a dynamic process and it can only work efficiently if actors can swiftly adapt to changing conditions. Social Security systems that keep people in e.g. unemployment because the financial gain to start working again is too small or negative, are not efficient. Social Security systems that do not provide guaranteed survival income because the administration is hopelessly complex, are not stimulating for people to change jobs or to start a new venture. Companies that must spent three times more on salaries than the employees receive will also think three times before they decide to take on new people. If still in doubt, just take a look at Forbes' Tax Misery & Reform Index [b]Fair Tax reform will give US a major competitive advantage versus Europe[/b]

One of the things that should put Europe really on red alert is the Fair Tax movement in the USA. It is best illustrated by what can be read at www.salestax.org. Why is this important ? Because it applies the free economy principle on the scale of the USA as a nation. The Social Security idea in Europe might be a noble idea, but it is hopelessly inefficient because it is based on a redistribution scheme by taxing labour and using government bureaucracy to redistribute the wealth. In most cases, this redistribution costs as much in administration as money is given out. As a result, labour tax is twice as high as needed and the bulk of the government finances are spent on salaries. In Belgium this amounts to a tax rate that on average is 200 % if one takes the labour cost versus the net spending income. To quote from www.fairtax.org, "Simply put, the FairTax replaces the way we're currently taxed - based on our annual income - with a tax on goods and services. The FairTax is a voluntary “consumption" tax: the more you buy, the more you pay in taxes, the less you buy, the less you pay in taxes. It's simple. Everyone pays their fair share of taxes, and with the FairTax rebate, spending up to the poverty level is tax free. The Federal government is fully funded, including Social Security and Medicare, and you don't need an expert to determine your Federal taxes. The FairTax is now before the U.S. Congress. The House version is HR 25 and the Senate version is S 1493. Listed below is a summary of the bill and a link to the bill on the Library of Congress web site. Additionally, any national retail sales tax proposal will need to be accompanied by a proposal to repeal the Sixteenth Amendment to the Constitution. The proposal is significant and has far-reaching consequences. It replaces almost all form of tax by a single 23 % sales tax. In particular all forms of labour and income tax are abolished. In the light of the above listed tax rates, this will make the US economy even more competitive. Not just by abolishing these taxes but also by drastically reducing the administrative burden. Mind you, US citizens have their share of it as well, but less than European citizens.

[b]Summary of HR 25 - S 1493[/b]

- Imposes a 23% (tax-inclusive) sales tax on the purchase of new goods and services in the U.S.

- Lets workers keep their entire paycheck and retirees keep their entire pension.

- Abolishes the IRS and ends all audits of individual taxpayers.

- Replaces the federal income tax. Frees individuals from ever filing a tax return again.

- Replaces all payroll taxes including Social Security and Medicare taxes. Current Social Security and Medicare benefits would not change.

- Replaces corporate and self-employment taxes.

- Eliminates all hidden federal taxes.

- Provides a universal rebate equal to the sales taxes paid on essential goods and services to ensure that no American pays taxes on necessities.

- Replaces all estate, gift, and capital gains taxes.

- Dramatically lowers tax rates for low- and middle-income Americans. -

Closes all tax loopholes.

- Brings accountability to tax policy.

- Lets American-made products compete fairly.

Bright minds were there before us.

[i]"The hardest thing in the world to understand is the income tax" (Albert Einstein)

[i] And did you know that Income Tax was unconstitutional until 1913 in the USA ?

"It is a signal advantage of taxes on articles of consumption, that they contain in their own nature a security against excess. They prescribe their own limit; which cannot be exceeded without defeating the end proposed, that is, an extension of the revenue. When applied to this object, the saying is as just as it is witty, that, "in political arithmetic, two and two do not always make four." If duties are too high, they lessen the consumption; the collection is eluded; and the product to the treasury is not so great as when they are confined within proper and moderate bounds. This forms a complete barrier against any material oppression of the citizens by taxes of this class, and is itself a natural limitation of the power of imposing them." - Alexander Hamilton in Federalist No. 21, December 12, 1787

Work For All is a think-thank with a single focus. Finding the model of society that provides work to all its citizens. In particular in Europe this is a serious issue.

Taking Belgium as a case study, only a quarter of the population is at work in the private sector and is highly taxed on its labour. We believe that economic models like those proposed by the Fair Tax movement are appropriate models of society for the 21st century. It effects reach way beyond this economic measure. It will free the citizens again and give them back their freedom they have lost in a society that is overly organized with inefficient administration and bureaucracy. Belgium is a good case study because it is a small, nevertheless complex country in the middle of Europe. And it even has a small political party, created first as a citizens movement (Vivant) reaching for a similar goal. It will be an interesting exercise to see if the established political power groups will open their mind and for once put aside their short term interests in view of a prosperous future for the current and next generations.