Andreas Hellmann: Big Government, Tax Policy & The Free Market

“In Europe you have people who want to break up big companies because they’re saying big is bad and that we need more competition and anti-trust enforcement is so important because we need competition. But then the same people say, when it comes to governments, big is great, no competition & global minimum tax. You can’t have it both ways.”

Automatically Generated Summary

Introduction

00:17

This section provides an overview of episode 37 and introduces Andreas Hellmann as the guest.

Introduction to Andreas Hellmann

• Andreas Hellmann is introduced as the director of Outreach, Tax and Regulatory Policy at Tholos Foundation, which is the International Arm of Americans for Tax Reform. 00:43
• He is a passionate advocate for free markets and criticizes big government and tax policies. 00:52

Size of Government

• Andreas discusses why governments keep getting bigger and questions what would be the optimum size for a government. 01:22

Implications of Intergovernmental Tax Harmonization

• Andreas reveals how large intergovernmental tax harmonization affects free city models. 01:38
• He compares ‘tax harmonization’ to a term from Orwell’s “Ministry of Truth.” 01:48

Cost of Governance

• The discussion concludes with a question about how much we should pay for governance. 01:54

00:02

This section concludes the episode.

• Listeners are encouraged to get in touch with Timothy Allen through social media channels. 00:02
• Appreciation is expressed for suggestions of new people to interview. 00:02
• Listeners are invited to sit back, relax, and enjoy the conversation with Andreas Hellmann. 00:02

02:40

This section continues the interview with Andreas Hellmann.

Introduction to Americans for Tax Reform

• Andreas explains that Americans for Tax Reform brings people from the center-right movement together. 03:02
• The key concept is that they don’t have to agree on everything but share the belief that government should leave them alone to reach their goals. 03:15

Examples of Different Perspectives

• Andreas gives examples of different perspectives within the center-right movement, such as religious freedom, gun rights, and homeschooling. 03:43
• Despite disagreements on certain issues, they can still come together based on their shared belief in limited government intervention.

Note: Timestamps may vary slightly depending on the source video.

04:42

The importance of teamwork and collaboration in a team, even if individuals don’t agree or like each other.

Importance of Teamwork

• Team members don’t have to agree or like each other, but they need to work together effectively as a team. 04:42

08:12

The role of government in solving problems that the free market cannot address, such as community policing, fire departments, and roads.

Role of Government

• Effective community policing is necessary for maintaining law and order. 08:12
• Certain areas where the free market cannot solve problems, such as fire departments and roads, require government intervention. 08:12
• However, there are instances where government interventions create new and bigger problems. 08:28
• Allowing people to be themselves often leads to better outcomes at a lower cost for taxpayers. 08:39

08:52

Common harms observed in the work of Americans for Tax Reform related to innovation regulation and job competitiveness with China.

Common Harms

• Excessive innovation regulation negatively impacts the economy and job opportunities. 09:04
• Job competitiveness with China is hindered by certain problems that could be resolved quickly if unnecessary government interventions were stopped. 09:15

09:46

Understanding why governments try to solve non-existent problems and whether it is due to the size of the government or other factors.

Solving Non-existent Problems

• Governments often attempt to solve problems that do not actually exist, leading to unnecessary regulations and bureaucracy. 09:46
• This may be attributed to a desire for governments to show their effectiveness and justify their existence. 09:56
• The European Union serves as an example of how government institutions tend to grow continuously without reevaluating their size or necessity. 10:03

10:24

The tendency for government institutions to expand in terms of personnel, powers, and regulations.

Expansion of Government Institutions

• Government institutions tend to grow in size, leading to more personnel, increased powers, and additional regulations. 10:24
• This growth is often driven by the perception that problems need solving, even if they are not significant or non-existent. 10:30
• Bureaucrats may feel the need to find new topics to address, resulting in further expansion of government departments. 10:43

Note: The transcript provided does not include any timestamps beyond 10 minutes and 43 seconds (10:43).

11:16

In this section, the speaker discusses the importance of job roles and the pressure to be seen as doing something. 

Importance of Job Roles and Pressure to be Seen (0:11:16)

• Some jobs may be more important than others, leading people to move up in ranks.
• There is pressure to be seen as doing something, even if it may seem ridiculous.
• The speaker understands the pressure but doesn’t agree with it.

18:07 Tax Policy Proposals and Coalition Building

In this section, the speaker discusses their work related to tax policy proposals and coalition building. They mention their focus on tax policy effects, regulatory policy, and forming partnerships with organizations worldwide.

Focus on Tax Policy Proposals

• The speaker’s work primarily revolves around analyzing tax policy proposals and their economic effects.
• They do not directly deal with trade policy but focus more on tax and regulatory policies.

Coalition Building

• Another significant aspect of their work is building coalitions with partner organizations globally.
• This helps expand their reach and influence in advocating for specific policies.

19:27 Success Stories and Boring Aspects of Work

In this section, the speaker briefly mentions success stories related to their work but emphasizes that they don’t need to delve into the details. They also mention finding some aspects of their work boring.

Success Stories

• The speaker mentions having success stories in their work but does not provide specific examples.
• They imply that discussing these success stories is not necessary for the current conversation.

Boring Aspects of Work

• The speaker acknowledges that certain aspects of their work can be boring.
• They do not elaborate on what those aspects are.

19:41 Digital Services Tax Imposition by the European Union

In this section, the speaker discusses a specific incident related to the imposition of a digital services tax by the European Union.

Digital Services Tax

• In 2017, the European Union attempted to impose a digital services tax.
• This tax aimed to levy a 3% tax on global revenue generated by certain companies.

Conclusion

The transcript covers various topics, including the impact of COVID-19 on public health and government response, tax policy proposals and coalition building, success stories in their work (without specifics), and the imposition of a digital services tax by the European Union.

20:32 High Tax Countries and Value Creation

The speaker discusses high tax countries like Germany and France, and the concept of value creation.

High Tax Countries

• High tax countries like Germany and France are mentioned.
• There is a discussion about how these countries try to fill their budget holes with taxes.

Value Creation

• The speaker gives an example of value creation using French wine makers.
• The value is created when consumers drink the wine at home, not when it is made by the wine maker.
• This concept applies to digital products and services as well.
• Products and services are invented and manufactured in the United States, but other countries try to grab the money generated from them.

26:35 Gray Area in Digital Nature of Products

The speaker talks about the gray area in taxing digital products and services due to their intangible nature.

Value Creation in Digital Products

• The digital nature of products creates a gray area for taxation.
• Google’s search results are produced on computers in Germany, but where should they be taxed?
• It is a new area that requires clear rules for taxation.

27:16 Shifting Value Creation and Cherry Picking Taxes

The speaker discusses shifting value creation and the issue of cherry picking taxes based on user location.

Shifting Value Creation

• Products and services may be manufactured in one country but create value when used or consumed elsewhere.
• Taxes should be based on where value is created, not just where products are made.

Cherry Picking Taxes

• Some governments try to cherry pick taxes based on user location or consumption.
• This approach can lead to revenue loss for certain countries if longstanding rules are changed.

28:40 Generating Revenue and State Functions

The speaker talks about generating revenue and the role of state entities in taxation.

Generating Revenue

• Governments have the power to think of ways to generate revenue, while individuals have to add value.
• State entities can come up with new ways to take value from digital products and services.

State Functions

• Big state entities have the function of thinking up ways to generate money.
• They can spread these ideas among other governments, leading to widespread taxation on digital products.

Note: The transcript provided does not include any timestamps beyond 0:28:40.

29:34 Digital Taxation and Compliance Costs

This section discusses the impact of digital taxation on member states and businesses, focusing on compliance costs and the shift of tax burden to customers.

Impact of Digital Taxation

• Some member states, like France, have imposed significant taxes on tech companies such as Google.
• The total amount paid by these companies in various countries adds up to over one billion dollars.
• Compliance costs for businesses increase when dealing with different taxes in different countries.

Burden on Customers

• Businesses do not directly pay taxes; instead, they pass on the cost to customers through higher prices.
• Consumers end up paying more for services like Amazon due to increased taxes.
• Despite this, many people still support these measures without realizing that they are ultimately paying the tax burden.

30:05 Public Perception and Trade Disputes

This section explores how public perception plays a role in supporting digital taxation measures and how it has fueled trade disputes between the United States and Europe.

Public Perception

• Many young people in Europe support digital taxation measures while wanting to keep free services like Gmail and affordable access to platforms like Amazon.
• However, their perspective may change when they realize that they are indirectly bearing the tax burden through increased prices.

Trade Disputes

• The imposition of digital taxes has led to a trade dispute between the United States and Europe.
• While some benefit from the revenue generated by these taxes, overall satisfaction is low.
• A solution is needed to address this issue and prevent ongoing problems related to digital taxation.

31:04 OECD’s Solution: Pillar One and Pillar Two Plans

This section discusses the OECD’s proposed solution for fair digital taxation through its pillar one and pillar two plans.

Reallocation of Taxation Rights

• The OECD’s pillar one plan focuses on the reallocation of taxation rights.
• It aims to determine how much revenue a company generates in each country and redistribute the taxation rights accordingly.
• This would prevent companies from solely benefiting from their headquarters’ location and allow for a fairer distribution of tax revenue.

Handling Companies without Headquarters

• With many companies operating globally without physical headquarters, the challenge lies in finding a fair way to handle their taxation.
• The pillar two plan aims to address this issue by proposing a comprehensive solution for taxing such companies.

31:53 Need for a Solution and Conclusion

This section emphasizes the need for a solution regarding digital taxation and concludes the discussion.

Need for a Solution

• The current situation of digital taxation is not sustainable, as it has fueled trade disputes and created compliance costs.
• A fair and comprehensive solution is required to address these issues effectively.

Conclusion

• Digital taxation poses challenges in terms of compliance costs, burden on customers, and trade disputes.
• The OECD’s pillar one and pillar two plans offer potential solutions to ensure fair taxation in the digital era.

32:18 Unilateral Measures and Compliance Costs

The speaker discusses the implementation of unilateral measures to reduce compliance costs.

Unilateral Measures

• Unilateral measures were implemented to reduce compliance costs. 32:18

37:33 Big is Bad vs. Government Competition

The speaker talks about the perception that big is bad and the need for more competition, but highlights the contradiction when it comes to government competition.

Big is Bad vs. Government Competition

• There is a contradiction in advocating for more competition while also opposing government competition. 37:33
• High-tax countries like Germany and France support the idea of big corporations, but they also want a global minimum tax to end the race to the bottom. 37:52
• These countries were less competitive before due to their high taxes, so they are now excited about this change. 38:06

38:18 Voting in the EU and Objections from Member States

The speaker explains how voting works in the EU and discusses objections from member states.

Voting in the EU and Objections

• In the EU, member states implement decisions, but if one state objects, none of them can proceed with it. This has happened twice before with Poland and Hungary objecting. 38:18
• Poland initially objected but later changed their stance after receiving a larger share of the COVID relief fund from the European Union. Hungary followed suit, wanting similar benefits. 38:56
• These objections may have been driven by a desire for fair treatment or a belief in tax sovereignty and competition. 39:25
• Eventually, the objections were addressed, and both countries agreed to join the deal. 39:43

40:03 Free Cities and Competing Governance Models

The speaker discusses the concept of free cities and competing governance models.

Free Cities and Competing Governance Models

• Free cities are opportunities for different governance models to compete. Taxation is one aspect of these models. 40:29
• Harmonization of taxes is seen as a negative idea for governance, as it limits individual sovereignty and liberty. 40:37
• Different jurisdictions offer different governance models, allowing individuals to choose what suits them best. 40:50

Conclusion

The transcript covers various topics related to unilateral measures, government competition, objections from member states in the EU, and the concept of free cities with competing governance models. These insights provide an understanding of the complexities surrounding compliance costs, competition, taxation, and decision-making within the European Union.

41:02

This section discusses the impact of taxation on people’s decisions to relocate and the competitiveness of countries with different tax rates.

Taxation and Relocation (0:41:02 – 0:44:31)

• High taxes can be a significant factor in people’s decision to move to another country.
• Countries with higher taxes tend to be less competitive compared to those with lower taxes.
• Businesses may choose to relocate to countries with lower tax rates, such as Hungary, in order to reduce their tax burden.
• The decision for businesses to relocate is influenced by factors like infrastructure, education system, and tax incentives.
• Lower tax rates in certain countries can attract high-paying jobs but may also create pressure on other countries to lower their taxes.

Two-Pillar Approach and Monopoly on Tax (0:44:37 – 0:46:07)

• The discussion touches upon the two-pillar approach proposed by the OECD regarding taxation rights relocation.
• There are concerns about giving up sovereignty through this multinational approach.
• It is questioned whether there will be any limits or reductions in taxes once this approach is implemented.
• The temporary freezing of stamp duty during COVID was seen as a stimulation tool for the economy rather than a permanent reduction in taxes.

Potential Challenges and Artificial Elimination of Competition (0:46:15 – 0:46:42)

• There are concerns about potential challenges that arise once a country adopts the multinational approach to taxation.
• It is argued that eliminating competition through higher taxes can have negative consequences for economic growth and competitiveness.

Note: The transcript provided does not contain enough information for further sections.

46:56(t=2816s) Concerns about Centralizing Forces

The speaker expresses concerns about centralizing forces and the lack of incentives for the government to discuss this issue openly.

Government’s Incentives

• The government is not incentivized to discuss the centralizing force.
• There are restrictions on what can be discussed openly.
• Agreement is required on sensitive topics.

Power of Centralizing Forces

• Centralizing forces are powerful and moving in a direction that may limit freedom.
• The speaker acknowledges limited knowledge in this area but recognizes its increasing power.

Personal Opinion on Taxation

• The speaker asks for the other person’s opinion on tax.
• They believe there is a cost to living together peacefully in a civilized society.
• Contribution should be based on individual impact rather than centralized control.

49:04(t=2944s) Governance Models and Tax Policy

The discussion revolves around governance models, personal views on taxation, and the need for better tax policies.

Manifestation in Governance Model

• How does the personal view on taxation manifest in a governance model?
• Questions arise regarding payment amounts, voluntaryism, or fixed percentages.

Liberal Friends’ Complaints

• The speaker mentions liberal friends who complain about taxes.
• They highlight the option to donate more voluntarily but note that most people don’t do it.

Cost of Government and Tax Policy

• There is a cost associated with government and certain services provided.
• Better tax policies are needed to ensure fair contributions from all income levels.

49:53(t=2993s) Limited Time for Discussion

Due to time constraints, the conversation needs to be wrapped up soon.

Time Limitations

• Both participants acknowledge limited time available for further discussion.

50:30(t=3030s) Maximum Freedom and Decision-Making

The focus is on maximum freedom in decision-making and the role of taxation in enabling this.

Maximum Freedom with Money

• The speaker believes taxation should allow individuals to have maximum freedom with their earnings.
• Personal decisions should not be heavily influenced by excessive taxes.

50:54(t=3054s) Donating to IRS and Personal Opinion on Tax

The conversation continues regarding personal opinions on tax and the option to donate more to the IRS.

Donating to IRS

• There is an option to donate additional money to the IRS voluntarily.
• The speaker questions why people don’t take advantage of this if they truly believe in higher taxes.

51:27(t=3087s) Cost of Government and Fair Contributions

The discussion centers around the cost of government, fair contributions, and tax policies.

Cost of Government

• Regardless of income level, there is a cost associated with government services.
• It shouldn’t matter how much one earns; everyone should contribute fairly.

51:48(t=3108s) Equal Cost for Everyone

The conversation explores the idea that everyone should pay an equal cost for government services.

Equal Contribution

• While some may need subsidies, overall, everyone should pay an equal share.
• Punishing individuals through high taxes is not justified.

52:00(t=3120s) Subsidizing Costs Based on Income

The discussion delves into subsidizing costs based on income levels while maintaining fairness in contributions.

Subsidizing Costs

• Some individuals who earn more may need to subsidize those who can’t afford certain costs.
• However, fairness in contributions remains important.

52:38 The Impact of High Taxes and Government Policies

In this section, the speaker discusses the negative effects of high taxes and government policies on various aspects of life.

High Taxes and Policy Impact

• Tax rates, similar to airplane surcharges, are excessively high due to government policies. 52:38
• A 15% increase in the cost of essential items is terrifying for individuals struggling to make ends meet. 54:26

55:04

Section Overview: The speaker reflects on people’s trust in governments to address climate change despite their track record of making problems worse. They express concern about the negative impact on economies and standards of living due to climate change policies.

Trust in Governments for Climate Change

• The speaker questions why people trust governments to solve climate change when they have a history of exacerbating problems.
• They criticize the obsession with addressing climate change while ignoring other pressing issues.
• The speaker expresses concern about destroying successful industries, such as the combustion engine industry in Germany, which contributes significantly to the country’s wealth.
• They argue that expecting emerging nations like India to follow strict environmental regulations while developed countries had previously polluted is unfair.
• The speaker raises concerns about wealth transfer and potential shifts in global power dynamics if Western countries destroy themselves for climate reasons.

57:45

Section Overview: The conversation concludes with agreement on the notion that governments often create more problems than they solve.

Final Thoughts

• Both participants agree with the idea that governments frequently mess things up.
• There is a shared sentiment regarding disappointment with government actions and policies.
• Despite the short duration of the conversation, they touch on the topic of a hypothetical year-long sabbatical and how it would be spent.

Note: The transcript does not provide enough information to summarize the entire conversation comprehensively.

58:42 Taking a Sabbatical to Travel with Daughter

Section Overview: The speaker discusses their plan to take a sabbatical and travel with their daughter to different places in the world.

Plan for Sabbatical

• The speaker wants to wait until their daughter is older before taking a sabbatical.
• They want to use the year off to show their daughter as many places in the world as possible.
• The speaker believes that exposing their daughter to different cultures and societies at an early age will create lasting memories and broaden her perspective.

59:07 Importance of Early Experiences

Section Overview: The speaker emphasizes the importance of early experiences and how they shape individuals.

Early Experiences

• The speaker reflects on their own childhood, growing up in a prosperous and safe environment.
• They express concern about how societies are currently shaping up, which makes it even more crucial for their daughter to see different places before things potentially worsen.
• The goal is to provide their child with a similar upbringing and ensure she has opportunities for growth and development.

59:32 Working Towards Freedom

Section Overview: The speaker acknowledges the importance of working towards freedom for a better future.

Responsibility for Children’s Future

• Despite not being overly optimistic, the speaker appreciates individuals like the person they are speaking with who are actively working towards more freedom.
• They believe that ensuring a prosperous future for children involves being part of movements that advocate for freedom.

59:55 Making the Most of Life

Section Overview: The speakers discuss making the most out of life while also striving for freedom.

Optimism and Enjoying Life

• While trying to be more optimistic, both speakers agree on the importance of seizing opportunities and enjoying life.
• They see being part of the freedom movement as a meaningful way to live.