lunedì, aprile 30, 2012

A "refresher" for Mister Monti

The economist Monti will no doubt read and studied the fundamental work of Adams Smith's "Wealth of Nations", but as time passes and unfortunately they forget many things. I read Smith in his youth and the reinterpretation of these days is very enlightening.
Monti should review some pages and then advise him on the fifth book, "The revenue of the King and the Republic", in particular I want to mention just a few paragraphs: 
"The high taxes, sometimes by reducing the consumption of taxed goods and sometimes encouraging ' evasion, often give the government an entry for less than it could obtain from more moderate taxes.When the decrease in the entry is the effect of reduced consumption, there can only be a remedy, to reduce the tax.When the decrease in the entry is caused from encouragement given evasion can be remedied in two ways: either by reducing the temptation evasion, or increasing the difficulties. The temptation evasion can only diminished by reducing the tax, and evasion of the difficulties can be increased only by establishing the most appropriate management system to prevent it. 

"Taken from: The great classics of economics - The Wealth of Nations - Adam Smith - Vol 2 - Il Sole 24 Ore - 2010, p. 1065
So should reflect Monti. If the tax increase reduces consumption too may get a lower yield. It is true that mainly affects the sting house and so this property is difficult to remove from the controllers, but if tax evasion is very high increases.
Smith says as well the appropriate approach is prevention, so if the IMU is too high the phenomena of evasion or disobedience "type Lega" though still very questionable and reprehensible may give rise to a much lower revenue than expected.
With the IRS could not make 2 plus 2 equal 4.
Dear Monti your work is valuable, but do not pull too tight a rope too, may be broken.It would be a total disaster!

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