Wednesday, November 28, 2012

Cuba Misses the Boat

As Cuba struggles to achieve peace and prosperity, it is studying systems in other countries.

"The experiences of China, Vietnam, Venezuela, Brazil, Spain and Mexico were taken into account, but they were refined to the particularities and conditions of the island," the new agency said.

Can you see who is not on that list?  OK, hint: Deng Xiaoping studied it closely for how to reform China's economy.  Yes, Hong Kong.  Cuba is not studying the one place that has an ideal system for Cuba.

Reuters offers this delusional point:

The recently published code constitutes the first comprehensive taxation in Cuba since the 1959 revolution abolished just about all taxes.

Hang on, when all enterprise gives all proceeds to the state to redistribute, is that not a 100% tax, as opposed to no taxes?

The government also envisions replacing subsidies for all with targeted welfare, meaning that the largely tax-free life under a paternalistic government is on its way out.
A sliding scale income tax - from 15 percent for earnings of more than 10,000 pesos (about $400) annually, to 50 percent for earnings of over 50,000 pesos, (about $2,000) - adopted in 1994, remains in the new code for the self-employed, small businesses and farms, but it also includes a series of new deductions to stimulate their work.

Wheeeee! More errant nonsense.  Is not a drop from 100% to 50% a tax cut?  In his book on Flight or Fight of Fraud Charles Adams recount Moslem victors who granted Jews tax-exempt status.  The Jewish elders begged to be taxed, because if not, soon enough, they'd be killed.    Protection money is baked into safety, even if there is no protection.  50% of something is a whole lot better than 100% of nothing.

Now this is headed in the right direction:

A labor tax of 20 percent will gradually be reduced to 5 percent by 2017, and small businesses with five employees or less are exempt.

But wait, if 20 down to five is good, how about even better by going to zero?  If it is good for biz with five or less employees, how about for all businesses?

Cuba has 11 million people on 110,000 square kilometers.

Hong Kong has 7 million people and 1000 square kilometers.  Since people make your country rich, automatically Cuba has the advantage.  There is real estate too, so Cuba could easily become one of the most peaceful and prosperous countries on earth if it were to adopt the Hong Kong government system.

And hey, since in Hong Kong there is no private ownership of land (except for one church), El Jefe Castro and his crew can control real estate and claim to be doing so in compliance with Communist Governance, while all the while maintaining control the good old fashioned capitalist way.

We need a Hong Kong in the Caribbean.  Go Cuba!

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