Running out of other people’s money

France’s Socialists are running out of income to tax:

France’s Socialist government has admitted that the country cannot cope with any further tax rises and promised no more hikes just days ahead of the country’s largest ever tax bill.

 In an unfortunate piece of timing, however, the pledge came just as the environment minister announced the creation of a new “carbon tax” and amid reports that the overall tax pressure on French households will rise even further next year.

Returning from their summer break, the French are about to discover stinging rises in tax bills in their letter boxes – the result of a series of new levies enacted by President François Hollande as he seeks to plug the French deficit and bring down public debt – now riding at 92 per cent of GDP.

But the extent of the hikes has apparently even shocked the very Socialist ministers who implemented them. The total tax pressure (taxes and social security contributions) will account for 46.3 per cent of GDP this year – a historic high – compared to 45 per cent in 2012.

The Keynesians have the solution, of course.  Instead of taxing anyone, the government can simply print or borrow the money. In fact, if we follow Keynesian logic to its full extent, there is no need for any government to tax its citizens at all. That’s not an option for France, however, since it turned over its authority for determining its money supply and public debt limits to the European Commission.

It’s fascinating to see highly educated people with the benefit of decades of Socialist economic policy, Keynesian fiscal policy, and Monetarist monetary policy continue to keep insisting that there is no such thing as economic gravity and all an economy has to do to fly is to think positive thoughts.  It doesn’t seem to matter how many times they witness an economy crashing and burning, because as long as it is in the financial interests of the elite to fail to understand that there are limits, they will continue to ignore them.