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Jay Currie

One Damn Thing After Another

6/23/2004

Tax Policy - check out Iceland

This choice makes a lot of sense. Iceland is a small, isolated country of less than 300,000 inhabitants. Like most tiny countries, it cannot compete with large nations on things requiring large infrastructure. Iceland would also have a hard time accommodating a large number of immigrants. On the other hand, there is plenty of legitimate capital looking for a friendly environment and Iceland is committed to grab it.

This is called tax competition. Thanks to the mobility of capital, today taxpayers have the choice about where to spend and invest their money but also about where to pay their taxes. When tax competition exists, politicians must exercise a certain degree of budget and fiscal discipline in order to attract jobs, capital and entrepreneurs instead of losing them to another country.
tech central station
As the Liberals, NDP and Bloc busily try to figure out how to maintain French levels of social services without raising taxes too much they should be looking over their shoulders at the competition. Iceland.