Source: Education at a Glance 2015, section 6.
HT: Donal McChaffery
I had borrowed a lot of money from scratch after 2007. Greece borrowed a lot of money of its own accord from 2010. Italy always owed a lot of money. Spanish do not know all that much money considering their dire financial circumstances.
Source: OECD Economic Outlook June 2016 Data extracted on 01 Jun 2016 12:57 UTC (GMT) from OECD.Stat
The Australia Institute has been running the line that cutting the Australian company tax rate just means more tax revenue for offshore tax departments. They will tax the larger after-tax Australian dividends in the home country of the foreign investor if Australia were to cut its company tax rate.
Source: David Richardson, Company tax cuts: An Australian gift to the US Internal Revenue Service How a cut to the Australian company tax rate would result in a windfall for the United States Treasury. Australia Institute (May 2015).
The Australia Institute obviously has not picked up on the relentless bullying that Ireland was subject to by the rest of the European Union over its 12.5% company tax.
The Irish company tax rate of 12.5% was initially on export profits. To finesse European Union member state complaints about that 12.5% company tax rate on discrimination grounds, the Irish government extended that low rate to all companies in 1995.
I am yet to see a minister of finance welcoming a company tax cut in a competing jurisdiction, rubbing his hands in anticipation of greater tax revenues on the foreign profits of companies headquartered in his country.
If there is no race to the bottom in company tax rates, you must wonder why there is substantial efforts within the European Union on tax harmonisation regarding company tax?
France and Germany are pushing plans to introduce a minimum corporation tax rate across the continent, it was reported today, in a move that could result in higher taxes on British companies.
European officials will debate plans to set a EU-wide floor on corporation tax in order to crack down on tax havens such as Ireland and Luxembourg, it emerged.
If there is an ounce of sense in what the Australia Institute said about foreign taxmen benefiting from low company taxes in Australia, high corporate tax rate countries such as Germany, France and the USA should welcome low company tax rates in destination countries for foreign investment originating in those countries but they do not. Rather than seek tax harmonisation, high tax country should welcome low company taxes in competing investment destinations but they do not.
About $2 trillion in profits is held offshore by American businesses because they do not pay company tax in the USA until they actually repatriate the profits to the USA. This is common. You wonder what the purpose of tax havens is if a company tax rate cut in Australia is so easily captured by the IRS?
Studies of the company tax in the USA suggest that a cut in that company tax would lead to large inflows of foreign investment into the USA boosting wages significantly.
Despite supposedly having stingy welfare states, both New Zealand and Australia have a lot of sole parents who do not work at all. There is no separate breakdown of full-time and part-time work status in the USA. About 72% of sole parents in the USA either work full-time or part-time.
Source: OECD Family Database.
There are large differences in the education premium between English speaking countries and also by gender. The tertiary premium in New Zealand is pretty poor compared to the USA, UK or Ireland and is still mediocre when compared to Australia and Canada.
Source: Education at a Glance 2014.
Source and notes: International House Price Database – Dallas Fed June 2015; nominal housing prices for each country is deflated by the personal consumption deflator for that country.
Figure 1 shows large contrasts in time path of equilibrium unemployment rates. For example, French and Italian equilibrium unemployment rates haven’t changed much since about 1986.
Figure 1: equilibrium unemployment rates, France, Germany, Italy, Ireland and Spain, 1968 – 2016
Source: OECD Economic Outlook June 2015 via OECD StatExtract..
Figure 1 also shows some fortuitous ups and downs in the German equilibrium unemployment rate. This estimate was available only from after German unification.
The equilibrium German unemployment rate rose from 6% to above 8% on the eve of the global financial crisis. Fortunately for Germany, major labour market reforms brought the equilibrium unemployment rate down as Germany moved into the global financial crisis.
The Spanish equilibrium unemployment rate had been terrible since about 1980, started to fall in the 1990s, then skyrocketed even before the onset of the global financial crisis – see figure 1.
There have been ups and downs in the Irish equilibrium unemployment rate – see figure 1. It was as high as 14% at the end of the Irish great depression of the 1970s and 1980s. The equilibrium Irish unemployment rate was 8% at the heyday of the Celtic tiger then slowly rose in the lead up to the global financial crisis.
Since 1844, the Bank of Scotland, Clydesdale Bank and The Royal Bank of Scotland have been allowed to issue banknotes in denominations of £5, £10, £20, £50 and £100. Only the Royal Bank of Scotland continues to issue a small volume of £1 notes. Two Northern Irish banks have similar prerogatives.
These Scottish banknotes are not legal tender in England. No banknotes have legal tender status in Scotland, whether issued by Scottish banks or the Bank of England. The Bank of England says:
Scottish and Northern Ireland banknotes are fully backed at all times by ring-fenced backing assets partly held in Bank of England notes and UK coin, and partly as balances on accounts maintained by the issuing banks at the Bank of England.
Consequently, holders of genuine Scottish and Northern Ireland banknotes have the same level of protection as that available to holders of genuine Bank of England notes.
The acceptability of any means of payment, including banknotes, is essentially a matter for agreement between the parties involved in a transaction in Scotland.
Bank of England keeps control Scottish bank notes in issue by stipulating that the issuing bank hold in their reserves the same amount of UK money (either in cash or on deposit at the Bank of England) as the Scottish notes they issue. These reserves could easily be converted to a currency board.
- A currency board issues local notes and coins anchored to a foreign currency (e.g. Sterling) backed by government bonds with 1 pound sterling pound sterling and British government bonds for every Scottish pound currency note issued.
- A currency board issues domestic notes and coins only when there are foreign-exchange reserves to back it. In the case of a Scottish currency board, there would be pounds Sterling reserves to back any Scottish pounds and currency notes on issue.
The Hong Kong currency board has operated successfully through 30 years of financial turbulence and radical constitutional change. There is no reason why a Scottish currency board could not do likewise, guaranteeing the convertibility of a Scots pound, initially at parity with the English pound sterling.
After independence, Ireland acted effectively as a currency board until the 1970s. Currency boards were commonplace throughout the British Empire and were highly successful.
- On the independence of the Irish Free State in 1922, the introduction of an independent currency was a low priority because 98% of exports and 80% of imports were with the UK.
- British banknotes and notes issued by Irish banks circulated (but only the first were legal tender) and coins remained in circulation.
Under the Currency Act 1927, the Saorstát Pound (Free State Pound) was created at parity with the British Pound Sterling. A Currency Commission kept British government securities, sterling cash, and gold to keep a 1:1 relationship between the two currencies.
Although a Central Bank of Ireland was created in 1943, the Irish punt remained linked to sterling with the central bank operated as a de facto currency board policy until joining the European Exchange Rate Mechanism in 1979.
A currency board has no capacity to act as a lender of last resort to a Scottish banking system.