Voting with your feet
After an interesting and educational trip to Europe, I'm back in the US writing this week's column, and thinking about how great it is to live in this country. $3 gas (as compared to $6-$8 in Europe), cheap food (about 30-50% less than Europe), and low cost automobiles, comparably speaking, still make the US attractive. Housing costs are also much less in most areas (especially the Midwest) as US land is cheap, relative to Europe. I couldn't help but think about the comparison's that SAM farmers have to the US - and similar advantages to SAM than the US (the first being no grain embargoes yet from the SAM governments.)
One of my favorite economics professors used to say that people "...vote with their feet!" What he meant was that if we don't like something in the place we currently live, we simply move to a more attractive place. Since NDSU was on the border of MN and ND, usually the comparison was the choice of living in MN or ND. MN taxes were much higher, but also had a better public educational system and public services. ND had lower taxes, but less services. People 'voted with their feet' by simply moving to the area they liked better.
European 'systems' vary greatly by country - language, cultures, resources, building construction and architecture - as well as economic differences like taxes, gas prices, etc). But even in Europe, people are 'voting with their feet' - moving to the location they prefer. In this new global economy, even US businesses doing commerce internationally are 'voting with their feet'. Most are looking for 'off-shore' tax advantages, and most are finding them. Rumor had it that even Proctor and Gamble moved its headquarters to Geneva, Switzerland in the past year, moving about 4,000 management employees to Switzerland.
When I first heard about this, I was angry that large US business is taking advantage of 9% taxes in Switzerland, instead of 20-40% taxes in the US. This money goes now to the Swiss government, not the US government. Big business and the mega-rich are shifting the tax burden away from them to the working stiffs/farmers who aren't yet domiciled in Switzerland with their own 'holding company' shell. At first I was angry, but then I started to think "what's good for the goose, is good for the gander."
This has become an issue for the 2007 Farm Bill, as the House financed much of the farm bill with $4 billion in taxes collected by closing at least part of the off-shore tax loophole. The White House calls this an unacceptable 'tax increase' - they don't want to give more money to farmers/food stamp collectors by closing this tax loophole. Yesterday, again Ag Sec. Johansson stated this was unacceptable to the administration - calling it a 'poison pill' and also reiterated that the President might veto this bill. He also talked about the income cap for receiving subsidies, which the House lowered from $2.5 million to $1 million income limitation for farmers to get government payments - the administration wants it lowered to $250,000 income.