(Global Tax Deal, in Bed with Mrs Market, Part 6)
by A. Irmanputra Sidin, PhD in Constitutional Law/ Constitutional Lawyer
Jakarta, February, 9, 2025
In other side, the politics who believe that, we could not make people only rely on the Government/ power of the state to pursue their welfares, wealth and happiness. If we still weighed the Government as the centre gravity of the people welfare, then not necessarily that the state could be fair to deliver it to the people. The state tend to corrupt, although no absolute power anymore its hold. At least some of them will spend the state budget or social program if they have political interests such as for their popularity even electability on the election race.
The government naturally are not created to be efficient users such as a businesses, government tend open jobs with the excuse as an opportunity for their people to serve his nation, but government’s organization getting bigger and governmental services becomes slower and inefficient. Government automatically need more money to pay its workers and the solution is levy and increase higher taxes to the individual or businesses.
It is different with the Businesses, they want to generate higher earning and keep increasing their revenue, the earning will be used to expand again their businesses and automatically would open opportunity jobs but all the jobs should be efficient. The more earning before tax its could recapture by the businesses , the more that businesses could expansion, the more job fields will open.
So that is why we could understand Mr President signed executive order on January 20, 2025, Establishing and Implementing The “Department of Government Efficiency”. The Purpose of this Executive Order establishes the Department of Government Efficiency to implement the President’s DOGE Agenda, by modernizing Federal technology and software to maximize governmental efficiency and productivity.[1] Elon Musk posted on X, his social media app, on Feb. 4. 2025 that “@DOGE is trying to STOP your tax dollars from being stolen for WASTE and FRAUD,” [2]
Let the people depend on theirselves to pursue their welfare, the states should support, encourage and ignite their creativity and innovation to produce goods and services that human being needs. The creativity and innovation would make human being lives more simple and easier day by day, and automatically the market thriving crowded, passionate and bright. Exchanging on the people would be growing intensively and it means would boost Gross Domestic Product and drive people welfare created.
The power of the state should not discourage the people with “threat” higher tax of their profit as an economic result from their creativity and innovation. Impose higher taxes actually will discourage business and worker to expand their creativity. Do not let the people die with the “fixed mindset” but ignite their “growth mindset”[3] to created people welfare. The people actually would not need free healthcare, free education or other social programs & relief, because the people could create and fulfill it by themselves in the market. Those social programs instead potential become the places of corruption and inefficiency.
In other words the state should ignite their growth with helping expedite the creativity and innovation of the people with less regulation, less bureaucracy and governmental efficiency. Lao Tzu (6th century B.C.): “The more artificial taboos and restrictions there are in the world, the more the people are impoverished…The more that laws and regulations are given prominence, the more thieves and robbers there will be…[4] Do not let people depend on the compassion of the government, make it all easier and encourage all creativity with lower taxes or even free taxes so other creativity would grow rapidly.
Those constitutional thoughts is one of the reasons why some countries invite other businesses or individuals to invest in their countries and do not require businesses to operate out of their country or the individuals to reside in their country to receive tax benefits. This popular mentioned as “a tax haven”, is any country or jurisdiction that offers minimal tax liability to foreign individuals and businesses. The intention behind tax haven is to ignite the market inside of the countries, to increase economic activity and automatically created job field, developing infrastructures of the countries and quality of life from their citizens. Tax haven is not evil, just a little bit “naughty & brave” that is why low-tax countries are often mocked by higher-tax countries.
Furthermore, although high-tax countries can lose tax revenue due to profit shifting, tax havens can indirectly facilitate economic growth in high-tax countries by reducing the cost of financing investment in those countries.[5] That is why President of Republic of Indonesia Joko Widodo, ever said Indonesia had capacity to develop a tax haven jurisdiction because Indonesia has many islands and one of the islands can be hold a tax haven jurisdiction, to be a more tax attractive country[6]
Caused by, this constitutional views about people welfare, don’t blame when some views mocked that global tax agreement from OECD, as a one of forms of the “sleepy countries“. The higher tax countries is unable and not creatively to expedite growing human creativity of their citizens, and they just want to hitchhiking to get money from other businesses, and the state back to “lounge around in bed”.
The countries could not compete each other to lower their taxes to foreign businesses, even their national businesses interest because most countries still want to make state income depend on collecting taxes over the businesses and individuals. The countries like that will remarked to that individuals and businesses as a tax evasion. And that is why they cooperated in OECD and shout they would keep “fighting international tax evasion.”
Moreover, If the market thriving crowded so the people could fulfill their welfare day by day without expecting much from the power of the state. The risk, politician would not be popular and may feel inferior and anxious, because the people could not remember them as a politician to be reelected. Because many campaigns or other ways to increase popularity from the politician whom incumbent (executive and legislative) which is accessible to the state budget and some of them usually would be playing a role as a “pipeline” of the state budget to the community in the forms of infrastructure development or other social programs and relief. This ways very potential corruption or other inefficiency zone.
To be continue…
Next
*Featured Photo, Source : Berkeley Economic Review*
[1] https://www.whitehouse.gov/presidential-actions/2025/01/establishing-and-implementing-the-presidents-department-of-government-efficiency/
[2] What is DOGE? Here’s what to know about Elon Musk’s latest cost-cutting efforts. https://www.cbsnews.com/news/what-is-doge-elon-musk-findings-trump/By Aimee Picchi. Edited By Alain Sherter Updated on: February 7, 2025 / 2:55 PM EST / CBS News
[3] Carol Dweck, 2007. Growth Mindset, The New Psychology of Success, Ballantine Books
[4] Jeffrey A Tucker, SUNDAY, FEBRUARY 26, 2017, What Is Laissez-Faire?, https://fee.org/articles/what-is-laissez-faire/
[5] A 2004 paper by economists Mihir Desai, C. Fritz Foley, and James Hines also finds a complementary relationship between haven and non-haven activity. They found that tax havens indirectly stimulate the growth of businesses in non-haven countries located in the same region. Elke, Good and Bad about Tax Havens August 1, 2019 https://taxfoundation.org/blog/tax-haven/
[6] “Jokowi: Indonesia Juga Bisa Bikin “Tax Haven”, Kita Punya Banyak Pulau “, https://nasional.kompas.com/read/2016/08/10/08193651jokowi.indonesia.juga.bisa.bikin.tax.haven.kita.punya.banyak.pulau..
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