Sunday, January 30, 2011

Beltrones Wants Less Taxes, More Cash

In what seems like an uncharacteristically populist speech, Manlio Fabio Beltrones calls for "a fiscal reform that directly benefits those who have the least, with less taxes and better collection". This idea that the effects of lower taxes can be fully compensated for through more efficient tax collection strikes me as fantasy.

But even if you could do so, looking at Mexican government spending as a proportion of GDP compared to the rest of the OECD, lower taxes doesn't seem like it should be at the front of any Mexican fiscal reform:For those of you missing your specs, Mexico is last on the list at 23 percent, ten points behind Switzerland, 20 points or more less than all but four nations on the list. Beltrones hits a lot of sympathetic notes, and I don't think that increasing spending on the backs of the poor is a good idea, but I think the first order of business is to make the wealthy pay more, not to make anyone pay less.

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