Where Wealth Thrives and Innovates
Written by: U.S. Global Investors
Tickers in this article: SBUX WMT MCD AAPL FDX
There are so many limits in countries across Europe that there's a "dearth of the sort of entrepreneurial successes which would serve to inspire others; very few people think that going to work for a loony in a garage offers a long-shot at millionairedom." In other words, companies such as Apple(APPL) , Fedex(FDX) , Wal-Mart(WMT) , Starbucks(SBUX) and McDonald's(MCD) aren't as likely to be created in Europe. The barriers to entry are too high. Read The Economist article here. In The Wealth Report, Buiter believes there will continue to be a greater leaning toward socialistic tendencies. He says, "Government may use more taxation instruments and globally there may be a further attack on tax havens. Recent governmental and intergovernmental activity in these areas is not a passing phase." The latest example making headlines these days is the proposed 75% tax increase on the wealthiest people in France in order to "pay for one of Europe's most generous social welfare systems and a large government." This tax increase is causing many individuals and businesses to consider relocating. The New York Times indicated that "many companies are studying contingency plans to move high-paid executives outside of France." Start-ups -- those businesses that are especially sensitive to any added cost to business -- are also said to be delaying plans of investing in the country, says The Times. If this proposed tax rate is approved, it would put France on top for having the highest individual income tax margin, surpassing Sweden, Japan and Britain, all with tax margins of 50% or more.
How does this affect global investors and hard-working Americans? I believe that when governments pursue overly stringent policies that discourage profitability and innovation, wealth leaves. And with the money goes the capital to create jobs and improve conditions for all.
This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.
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