The government, taxation, and banking

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The government, taxation, and banking

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Post by Gendarme »

This discussion has its genesis in this thread, but this post fits better in a new thread. However, anyone is welcome to join the discussion. This is more or less the actual start of the discussion anyway.

KoenigRother wrote:@Gendarme could you Show me examples of a working (in your Definition) Taxation structure? (in honest curiosity)
iwillspankyou wrote:question for you @Snuden and @Gendarme would you exploit this kind of making money. if you could not get healtcare for free, and your children would be without schooling. and there would be no maintenance of roads, brigdes or any infrastrctures? Would u? No defense either :ugeek:

I do not think our core values really differ. Our disagreements are mostly, if not completely, on facts. I do want to live in a society where even the poorest are thriving, and I am not opposed to government-funded (free) healthcare. I am in fact inclined to support government-funded healthcare, which is something I was against not too long ago when I was a semi-hardcore libertarian, blinded by naïveté. What we disagree on are the fundamental workings of the trinity that is banking, the government, and taxation.

There are three possible sources of income for a government to fund its activities. The first source is the printing of new money which the government then spends into the economy through its activities, such as healthcare. The second source of income is taxation. The third source of income (if it can even be defined as such) is borrowing money. A steady rate of moderate inflation is regarded as ideal by every economist I am aware of except those of the Austrian school of hardcore libertarian economics that unconditionally worship the gold standard. I am not sure if this is true or not, or why this would be the case, but as far as I know there is empirical evidence to support this so let's assume that it is true.

In a healthy society the government would fund its activities (such as providing healthcare) through the printing of new money, and if not enough, through taxation as well. Of course, the government should spend the money in the interest of the people and not lobbyists. There are certainly several layers of corruption, but let's assume, for the sake of simplicity, that the government is for the people. In this scenario, an incredibly low tax rate would be enough to finance the government activities, because the taxed money would be redistributed to the people instead of going elsewhere, and the price of healthcare (among other things) would not be insanely inflated through corruption.

In today's world, the government does in fact keep a steady rate of inflation, but it is not done by the government printing new money. Instead the permission to print new money has been given to the banks from which the government borrows the money and goes into debt. This way the government goes deeper into debt each time it takes a loan and can only pay back the money through taxation or by taking another bigger loan (because there is interest to pay too, of course), as it no longer prints its own money. If this system goes on for long enough, which it certainly has, virtually all money would be debt-money, meaning that it would be mathematically impossible to repay the debt. The debt is not required to be repaid as the government can always take another bigger loan to pay back the loan (when the bond matures), but the interest that grows with every new loan has to be paid periodically, and this is where heavy taxation comes into the picture. Taxation is the means by which the interest is paid to the banks, and the end goal of this complicated scheme.
However, eventually a point where the people no longer can afford to keep up with the rapidly increasing tax rates is reached, and this is when the banks are forced to lower their interest rate to not cause an economic collapse. What we'd expect to see if we look at the historical data is an ever-increasing tax rate until a point is reached where the people no longer can afford it, at which point the banks would begin decreasing the interest rate.

Here is a depiction of precisely this:

[spoiler=Income tax rate in Sweden 1930-2017]Image[/spoiler]
[spoiler=Interest rate in Sweden 1994-2016]Image[/spoiler]

The banks can of course cause an economic collapse at any point by simply raising the interest rate - and surely enough, it has been done.

[spoiler=Sweden]The economic collapse of Sweden in the early 90's

The crisis started 1986-1990 and officially ended in 1994. This graph depicting the interest rate says it all:

Image[/spoiler]
[spoiler=USA]The oil crisis of 1973

The stock market crash of 1973-74

Recession of the early 80s

Recession of the early 90s

Recession of the early 2000s

The great recession of 2007

These all coincide with the rate hikes of the Federal Reserve depicted in this graph:

Image[/spoiler]
With every rate hike the wealth of the people is sucked out, just to be followed by a boom-period where everyone is happy that it is finally over. "What a great government we have that got us out of that mess!" However, this cannot go on forever as the people are continuously having to pay more tax and going deeper into personal debt. Disregarding these boom-bust cycles, the interest rate must continuously go down to keep the society functioning - which is what we see from the graphs. Today Sweden's interest rate is at -0.5% (yes, negative!), and USA isn't far off.

Some questions still remain: how?! why?!

Great questions. The history of the USA is a very interesting one as the fight against the bankers was at the heart of the revolution and the following post-revolution era involving people such as Thomas Jefferson and Andrew Jackson. The history of USA is a great topic in itself that I will leave for another day.
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Re: The government, taxation, and banking

Post by fightinfrenchman »

Gendarme wrote:Some questions still remain: how?! why?!


What is your proposed answer for the "why" here?
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Re: The government, taxation, and banking

Post by Gendarme »

fightinfrenchman wrote:
Gendarme wrote:Some questions still remain: how?! why?!


What is your proposed answer for the "why" here?
That is included in the vast discussion of USA's history that is both outside the scope of this thread and my current free time, but the short answer should be rather clear from my post.
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Re: The government, taxation, and banking

Post by fightinfrenchman »

Gendarme wrote:
fightinfrenchman wrote:
Gendarme wrote:Some questions still remain: how?! why?!


What is your proposed answer for the "why" here?
That is included in the vast discussion of USA's history that is both outside the scope of this thread and my current free time, but the short answer should be rather clear from my post.


You usually chastise me when I draw conclusions from your posts that you haven't explicitly stated, so I'm not going to assume here.

Another question: what would you propose as an alternative to this system?
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Re: The government, taxation, and banking

Post by Gendarme »

I did cover that at the beginning of the post:

In a healthy society the government would fund its activities (such as providing healthcare) through the printing of new money, and if not enough, through taxation as well. Of course, the government should spend the money in the interest of the people and not lobbyists. There are certainly several layers of corruption, but let's assume, for the sake of simplicity, that the government is for the people. In this scenario, an incredibly low tax rate would be enough to finance the government activities, because the taxed money would be redistributed to the people instead of going elsewhere, and the price of healthcare (among other things) would not be insanely inflated through corruption.
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Re: The government, taxation, and banking

Post by spanky4ever »

nice post you made there @Gendarme So many point of views, and you def have some knowlegde about the world economy.
I think Greece did what you suggest, for a long period of time. There was far to little tax coming in to the government, to pay for the demands in healtcare, pensions, infrastucture, schooling etc etc. So the Greece govermnent printed money instead - giving Greece a galopping inflation, and the money had less and less value.
Much easier to print money, than to be the unpopular politician that tax ppl? The politicians that tryed to do this, was voted out of office.
Then Greece joined the EU and switched to Euro instead of Drakmer. Now they cold not print money as before. Instead they BORROWED - oh boy did they borrow alot of money to keep up with the demands that a modern society have. We all know how that ended, they are in a debt that they cannot pay back - not in a forseable future anyway. Mind you, even under these harsh circumstanses, the socialist goverment in Greece, have issued legislation that gives health care for all - how is that for a shocker!

Im not sure how you see the sosiety you advocate for looking like with only the goverment printing-money-mashine, and a tiny little tax in addition (if needed?) could look like?

I agree to your arguments of the banks printing money, and the government going in to deaper and deaper debts. Take USA as an example. They recently issued another 700 billions of money, going to the military, with a full concensus. https://www.google.no/url?sa=t&rct=j&q= ... Ez2oW60bKQ
The Trump taxplan are estimated to grow the debt by 1,7 trillons of dollars over the next 10 years. This are debt that the taxpayers all share, and will pay interest for. The interest rates have to be kept artificually low, or else the USA economy would collaps under the burden.
Most of the tax reductions are going to the very wealthy ppl, who sertantly dont need it. They will keep on saving money, put it away in taxhavens, and it is all a scheeme to dry the USA economy for resorses.
How will this end? Imo the really dangerous thing in the here-and-now, is the grotesque inequality gap, and I can see no sane justifications for letting this go on. I hope that USA ppl will elect new kinds of politicians, that will work for the good of the majority, and not only for buisness interests and the super rich (donors) ppl.
https://youtu.be/qytbhMlXltI

There are lots of interesting movements/things happening in USA politics now, and I am looking forward to the mid term elections in 2018. That could give us a pretty good idea of how big the oposition have grown to the establishment, and we could have hope for "new rules" and a new kind of Potus in 2020. If that should not happen, I honestly cannot see any good ending to this story.
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Re: The government, taxation, and banking

Post by Darwin_ »

In my opinion, while high-tax/high-government spending structures clearly work in places like Northern Europe, the United States could never handle a tax system like that. Personally, I think that the United States should go back to the tax systems we had for the longest time, i.e. low taxes, low spending, and let the extra money people in every income bracket will have take the place of many of the government-run welfare systems. However, taxes on the wealthy should remain quite high, but I think they should manifest themselves differently than in just higher income taxes. Something like much, much higher taxes on extreme-value property or luxury goods, as well as a much more logical estate tax would solve a lot of issues in the U.S. I think.
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Re: The government, taxation, and banking

Post by spanky4ever »

Darwin_ wrote:In my opinion, while high-tax/high-government spending structures clearly work in places like Northern Europe, the United States could never handle a tax system like that. Personally, I think that the United States should go back to the tax systems we had for the longest time, i.e. low taxes, low spending, and let the extra money people in every income bracket will have take the place of many of the government-run welfare systems. However, taxes on the wealthy should remain quite high, but I think they should manifest themselves differently than in just higher income taxes. Something like much, much higher taxes on extreme-value property or luxury goods, as well as a much more logical estate tax would solve a lot of issues in the U.S. I think.


I think you have the most parts in place
but why would you think that the plan for nothern europe dont apply for you?
I do think your point of view for taxing the stinky rich ppl is a ok. WHAT ELSE WOULD THEY SPEND THEIR MONEY ON, another big ass floating village? another deposit in a tax haven? how much can you possible spend when you super rich and the money just keep on pooring in :?:
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Re: The government, taxation, and banking

Post by spanky4ever »

shhh- how about fair taxes. sorry, got carried away there
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Re: The government, taxation, and banking

Post by spanky4ever »

what you have, in USA, is some of the weathy ppl. want to pay more taxes for the benefit of all. some of them are afraid of the hayforkes could come out to pinch their rich asses. some of them actually think it is a good thing to do for the economics
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iwillspankyou wrote:what you have, in USA, is sine of the weathy ppl. want to pay more taxes for the benefit of all. some of them are afraid of the hayforkes could come out to pinch their rich asses. some of them actually think it is a good thing to do for the economics

Actually once I was stabbed with a pitchfork and had to get a tetanus shot and I'm not even rich so I'd say I'm afraid of them too.
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Re: The government, taxation, and banking

Post by spanky4ever »

deleted_user wrote:
iwillspankyou wrote:what you have, in USA, is sine of the weathy ppl. want to pay more taxes for the benefit of all. some of them are afraid of the hayforkes could come out to pinch their rich asses. some of them actually think it is a good thing to do for the economics

Actually once I was stabbed with a pitchfork and had to get a tetanus shot and I'm not even rich so I'd say I'm afraid of them too.

hmmm - strange, did I say pitchfork? dont even know that name. >I would say heyfork :biggrin: btw, I would not be surprised if they ................ :shock:
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Post by deleted_user »

Pitchforks are used for hay; I can see why it would be confusing. Though in my case it was being used for mulch and some uncoordinated middle schooler missed the mulch pile entirely and enthusiastically connected with my calf instead. The whole area went numb - I still have the scar!
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Re: The government, taxation, and banking

Post by lejend »

Many Europeans underestimate how rich America is compared to Europe.

Image

There's plenty of wealth in America, it's just inefficiently distributed due to taxation and government control over people's lives. These government programs are relics of an ancient era. In modern times for instance, there's absolutely no need for retirement insurance (social security), because practically any idiot can invest in the market with the click of a button and, in all probability, generate a higher income from dividends after retirement than any government insurance program. Not only that but after you kick the bucket, you could transfer your assets, and therefore the income from them, to your children, thus essentially ending hereditary and early-adulthood poverty.

But commies don't like that. They'd rather you live in poverty and reliant on a welfare check to survive.
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Yea, but you have to look at the costs of living too. Americans may make more money on paper, but they're getting milked more by corporations and landlords than any country on earth.

Look at how much a rented flat in Silicon Valley can cost you:
https://www.zillow.com/homes/for_rent/C ... ect/12_zm/

At least 2000 bucks for a basic apartment. Which may or may not include other charges. Internet is bad and expensive in America. Any type of food that is not hormone-pumped or genetically modifed costs a premium. Taxes are far from low, compared to some European countries (taxation levels vary a lot in Europe from Scandinavian countries to Eastern European ones).

What you should be looking at instead is life expectancy, because that tells you a lot more about the quality of life in a country than how much money you got on paper:

Image

Here the USA is only one rank above Cuba and below Costa Rica. All that money and they still die faster than Costa Ricans.
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Post by evilcheadar »

Dolan wrote:Yea, but you have to look at the costs of living too. Americans may make more money on paper, but they're getting milked more by corporations and landlords than any country on earth.

Look at how much a rented flat in Silicon Valley can cost you:
https://www.zillow.com/homes/for_rent/C ... ect/12_zm/

At least 2000 bucks for a basic apartment. Which may or may not include other charges. Internet is bad and expensive in America. Any type of food that is not hormone-pumped or genetically modifed costs a premium. Taxes are far from low, compared to some European countries (taxation levels vary a lot in Europe from Scandinavian countries to Eastern European ones).

What you should be looking at instead is life expectancy, because that tells you a lot more about the quality of life in a country than how much money you got on paper:

Image

Here the USA is only one rank above Cuba and below Costa Rica. All that money and they still die faster than Costa Ricans.

Well your first problem is trying to live in Silicon Valley, which sounds like a waste of time when there are many other great places to be, like Lancaster PA. Of course food that isn't genetically modified is going to cost more, growing food inefficiently like in organic agriculture for no reason whatsoever will cost that naive consumer a premium as it should. That life expectancy chart tells you very little about quality of life in my opinion, as it is a life expectancy chart and not a quality of life chart. Even then the US trails Japan by just over 5 years for women and less than 5 for men. Having a few extra years in the late seventies doesn't translate to some great increase in quality of life. Also, believe it or not when you are in the US you are not obliged to stuff yourself with sugar and red meat daily. You can choose your own health adventure fairly easily and quite a few people do!
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Re: The government, taxation, and banking

Post by Dolan »

With an emphasis on "few"!

And life expectancy is a classic measure of the quality of a country's health system. Been used as such for decades. And according to that chart, the US is barely above Cuba and below Costa Rica, in terms of average health outcomes. Coz life expectancy is the result of everything that happens in the health system, including how many newborns survive, not just how long old people manage to live.

I chose Silicon Valley as a term of comparison, because people living there make a lot of money, but they also pay insanely high rents. And very often they pay a lot for just a shoebox, single room flat. So, having lots of money doesn't necessarily equate with better quality life, that was the point of that example. Same for the life expectancy/health system example.
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Post by fightinfrenchman »

Dolan wrote:With an emphasis on "few"!

And life expectancy is a classic measure of the quality of a country's health system. Been used as such for decades. And according to that chart, the US is barely above Cuba and below Costa Rica, in terms of average health outcomes. Coz life expectancy is the result of everything that happens in the health system, including how many newborns survive, not just how long old people manage to live.

I chose Silicon Valley as a term of comparison, because people living there make a lot of money, but they also pay insanely high rents. And very often they pay a lot for just a shoebox, single room flat. So, having lots of money doesn't necessarily equate with better quality life, that was the point of that example. Same for the life expectancy/health system example.


Yeah duck is getting ripped off on his rent payments, he should move to OP Lancaster
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Flyover States have non-flyover (rent) rates.
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Re: The government, taxation, and banking

Post by KoenigRother »

dont Forget that the US is a high ressource Country compared to countries like Germany or denmark, otherwise id like to mention Katar as the optimal working Country on earth
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Post by lejend »

@Dolan: Very little of your post is on-topic. Seems like you consider this a pissing contest between Europe and America. But okay, I'll play.

Dolan wrote:Yea, but you have to look at the costs of living too. Americans may make more money on paper, but they're getting milked more by corporations and landlords than any country on earth.


The figures I posted above are all adjusted for PPP. America is still richer than Europe by quite a lot.

Look at how much a rented flat in Silicon Valley can cost you:
https://www.zillow.com/homes/for_rent/C ... rect/12_zm

At least 2000 bucks for a basic apartment. Which may or may not include other charges.


That's literally the most expensive neighborhood in one of the most expensive cities in the country, though. Not a fair comparison. 2000 is actually pretty cheap. 2400-3000 is more realistic.

In most of America an apartment costs 300-1200 dollars, depending on city, neighborhood, quality, etc.

Internet is bad and expensive in America.


When adjusted for income, Internet is actually cheap to average compared to Europe.

http://www.telecompetitor.com/average-r ... anks-13th/

Any type of food that is not hormone-pumped or genetically modifed costs a premium.


That's because only crazy environmentalists and conspiracy theorists buy that stuff. Businesses want to cash in on it. These are the same people who would pay 5 dollars for a cup of coffee, or a slice of cake, from Starbucks, when you can get the same thing for $1 from a supermarket or "ethnic" restaurant/cart.

Taxes are far from low, compared to some European countries (taxation levels vary a lot in Europe from Scandinavian countries to Eastern European ones).


Got any specific examples?

If you add up the total tax burden (social insurance, sales/VAT, income, etc.), European countries take more than 50% of the average person's income in taxes. It's practically serfdom.

What you should be looking at instead is life expectancy, because that tells you a lot more about the quality of life in a country than how much money you got on paper:

Here the USA is only one rank above Cuba and below Costa Rica. All that money and they still die faster than Costa Ricans.


It's more complicated than that. America is composed of numerous cultures and ethnic groups, whereas most other developed countries are fairly homogeneous. But if you compare an ethnicity in the US to their cousins in the old country, the American group generally ranks better.

For instance, Japan has the world's highest life expectancy. But, Asian Americans have a higher life expectancy than Japanese in Japan.

US life expectancy:
79 years, 31st highest

Japan life expectancy:
83 years‌, the world's highest

Asian American life expectancy:
86 years

If America is such an atrocious place for living, why do Asians in the US, live longer than Asians in the Asian country with the world's highest life expectancy?

How about another example?

Chile life expectancy:
80 years, highest among all Latino countries

Latino American life expectancy:
82 years

Seems like Latinos are similarly better off in America than in any Latino country. Hmmm.

https://www.kff.org/other/state-indicat ... ncy-by-re/

KoenigRother wrote:dont Forget that the US is a high ressource Country compared to countries like Germany or denmark, otherwise id like to mention Katar as the optimal working Country on earth


Even if you look at income instead of GDP per capita, America is still wealthier than Europe by quite a lot. Take note of Europe's poverty rates before the money redistribution (page 16, Table 1, Column D):

http://inequality.stanford.edu/sites/de ... erty-3.pdf

It shows that America's free market system results in less poverty in the first place, whereas Europe's socialist system results in lots of poverty that is then treated with more socialism, i.e. wealth transfers. It's a vicious cycle. The only people who gain from this system are politicians and other political activists, who make millions of dollars advocating for socialism.

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Re: The government, taxation, and banking

Post by Dolan »

@lejend

If your examples with ethnic groups having a higher lifespan in the US compared to their countries of origin were all true, then all ethnic groups in the USA would fare better compared to the average in their country of origin. Btw, this generalisation is yours:
But if you compare an ethnicity in the US to their cousins in the old country, the American group generally ranks better.


Which would make you wonder, how is it even possible for the USA to rank 31st in terms of lifespan, just below Costa Rica and above Cuba. One or some of those ethnic groups must be trailing behind their peers, otherwise it wouldn't add up.

How would the average of those higher-than-average lifespans come to be lower than the average of their countries of origin?

It's just basic logic.
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Re: The government, taxation, and banking

Post by spanky4ever »

would you be surprised to know that the Scandinavian countries + Finland (the sosialist in your way of seeing it?) all have median income above USA? https://www.google.no/url?sa=t&rct=j&q= ... 1d5Fz16LBC

In addition we all have free healtcare, and dont have to pay insanly amounts of our vages to insurence agencies. We also have very cheep kindergardens + +.
Average income is not a good figure to describe USA in general. due to the gross inequality you have.
In May 2017, new data sets from the economists Piketty, Saez, and Gabriel Zucman of University of California, Berkeley demonstrate that inequality runs much deeper than previous data indicated. The share of incomes for those in the bottom half of the U.S. population stagnated and declined during the years 1980 to 2014 from 20% in 1980 to 12% in 2014. By contrast, the top 1% share of income grew from 12% in 1980 to 20% in 2014. The top 1% now makes on average 81 times more than the bottom 50% of adults, where as in 1981 they made 27 times more. Pretax incomes for the top 0.001% surged 636% during the years 1980 to 2014. The economists also note that the growth of inequality during the 1970s to the 1990s can be attributed to wage growth among top earners, but the ever-widening gap has been "a capital-driven phenomenon since the late 1990s." They posit that "the working rich are either turning into or being replaced by rentiers.
https://www.google.no/url?sa=t&rct=j&q= ... xJC4Viiv7-
(these numbers are from 2014, and the gap between the "have" and the "have not" are even more grotesque now.

And here is your big problem, and the reason for stagnation: When so many of you citizens are one paycheck from bancrupcy, how can you expect growth? The "growty" you have seen lately, are due to credit, and printing new money from FED. Result: big debt, that your citizens are the owner of - BUT the benefit of that Credit have mainly gone to the top 1% mainly.

I would keep my economical system, over yours, every day of the week @lejend

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Re: The government, taxation, and banking

Post by Dolan »

lejend wrote:Got any specific examples?

Absolutely.

My country has 16% flat tax on income and profit. Next year, we will have a 10% flat tax on income and profit. Also social security taxes will be shifted from employer to employee, so that everyone will be able to pay social insurance as much as they want (or don't want to). Pretty far from socialist or Communist regimes of taxation.

Ireland is also known for having a low level of taxation. I don't know the specifics of their taxation system, but I know they kept taxes low on purpose, to attract big companies there.

If you want to look at a country with a high level of taxation, look at Australia. Their top income bracket gets taxed up to 49% (before deductions). I just talked to a friend from Australia who told me he pays more than 50% of his income on taxes:

10% is Goods and services tax
9.5% is superannuation (basically obligatory pensions payments)
49% is income tax (before deductions)


So singling out Europe for having a high level of taxation, just because some Nordic countries do, is an exaggeration and a meme.
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Re: The government, taxation, and banking

Post by Jam »

Dolan wrote:So singling out Europe for having a high level of taxation, just because some Nordic countries do, is an exaggeration and a meme.
In 2017, memes are the new truth.

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