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...discovered that local taxes in the city have been rising at three times the inflation rate. Last year his group won a landmark court case against the city and Rhône regional authorities, which forced officials in both bureaucracies to work longer hours. "They're not spending because of need, but because they have the tax revenue," fumes Vergnaud. The pressure on governments to revamp their tax policies isn't just coming from activists. In a key ruling last September in a case involving Dutch automotive supplier Bosal, the European Court of Justice argued that national tax rules must...

Author: /time Magazine | Title: Escape From Tax Hell | 7/11/2004 | See Source »

...France, Germany and some other nations are trying to resist such pressures by calling for a "harmonization" of E.U. taxes - in other words, raising everyone else closer to their higher levels. But there's no majority in Brussels for tax harmonization, and swimming against the tide is hard, especially given the heavy impact of taxes on Europe's economy. In 1970, total tax revenue measured as a percentage of the economy was roughly on a par in Western Europe and the United States. Today, it's far higher in Europe, at about 40% of gross domestic product...

Author: /time Magazine | Title: Escape From Tax Hell | 7/11/2004 | See Source »

...Unlike the U.S., Europe has a powerful, Continent-wide tax instrument at its disposal: vat. (Sales tax in the U.S. is administered by states, and thus can't be coordinated for economic effect.) Many economists argue that consumption taxes such as vat are inherently fairer than other types of taxation because you only pay the tax if you buy something. Some even argue that vat rates - which are now largely aligned in the E.U. - could be raised and lowered depending on how the economy is doing, just as the European Central Bank raises interest rates to prevent overheating, and lowers...

Author: /time Magazine | Title: Escape From Tax Hell | 7/11/2004 | See Source »

They're not spending because of need, but because they have the tax revenue...

Author: /time Magazine | Title: Escape From Tax Hell | 7/11/2004 | See Source »

...point where 1 in every 4.3 French citizens now works for the government and the salaries of these fonctionnaires now eat up 43% of the national budget. Finance Minister Nicolas Sarkozy says reducing government employees is "a major objective," and has already announced plans to axe 5,000 tax inspectors. For an élite group of French men and women, the most egregious tax is the "solidarity tax on fortunes," probably the world's broadest tax on wealth, rather than income. Enacted in its current form in 1988 under François Mitterrand, the tax is a levy on anyone...

Author: /time Magazine | Title: Escape From Tax Hell | 7/11/2004 | See Source »

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