Marah was given a new cup of tea and the interview continued.

"The last page and the most important changes. The districts lose the right to determine the assessment rates for land transfer tax, property tax and trade tax. In the case of land transfer tax, an allowance of 1,000,000 S-Mark will be granted, provided the buyer is a natural person. There will be some critical changes to corporate taxes as well. At the moment, corporation tax is 16% and trade tax is 3%. Both will not stay that way. Corporation tax will be reduced to 12% and will be progressive with a maximum tax rate of 18%. Exactly how this will be structured will be decided until the fall. Trade tax will be abolished completely. There will be no direct replacement, but there will be a small additional assessment rate on corporation tax. Sales tax will remain at 10%. The exemption limit for sales tex will be increased to 100,000 S-Mark. The exemption from double accounting will be increased to a turnover of 1,000,000 S-Mark or a profit of 100,000 S-Mark. These are all the changes. I hope that is satisfactory. Overall, the burden on companies will decrease. All of this counts from next year onwards."

The man's eyebrows went down and his mouth was slightly open. He looked irritated. He had probably expected something else at the end.

"Would you like to abolish the assessment rates completely?"

"No, that's not the case. As mentioned, there will also be a new assessment rate for corporation tax. So they will remain in place, but in future they will be set by the tax court for the districts. Unfortunately, some of the districts are way too good at this. I can quickly summarize what the tax rates will look like. If there is little going on in an area, then the taxes are low. If there is a lot going on, then the taxes are high. The revenue from these three taxes all goes into one pot and is then distributed back to the districts on the basis of solidarity. Baele is one country. It is not acceptable for districts like Salzklippe to suck every last bit of life out of their surrounding areas because they can afford lower tax rates. So that will be prevented."

"That's obviously great for the people concerned, but aren't these new regulations, and especially a progressive corporation tax, also giving small companies quite a bit of an advantage?"

"Depending on how you want to look at it, you can of course see it as favoritism, but in reality it's a necessity. It must become easier for small companies to compete with large ones. It's too difficult at the moment. There are six supermarket chains that already have a 40% market share in the food trade. If nothing changes, there will be fewer and fewer of them, and together they will have more and more power. I want to counteract the formation of such monopolies. At the same time, it is also a reduction in bureaucracy. It simply doesn't make sense to demand sales tax and double accounting from the self-employed and very small companies. A high barrier to entry only reduces the competitive pressure for large companies."

"Nevertheless, what surprises me most, and probably many of our readers too, is that you want to reduce the tax burden for companies in general, or am I seeing this wrong? The changes to corporation tax will not compensate for the abolition of trade tax. In terms of revenue, this also looks to me to be the biggest cut of all that you have announced today. Normally you tend to stand up for the employee. Has there been a change of heart?"

"Well, first of all, I am the ruler of this country and therefore represent the interests of all citizens. That has always been the case and it has never changed. Companies are the most important pillars of a country. Companies produce wealth. If it is more profitable for companies, then the economy and wealth will also grow. So of course I am committed to making it worthwhile for companies."

"I'm pleased that you see it that way. Are you a believer in the theory that if you take the burden off the richest, the money will work its way down by itself?"

"Hahaha, do you think I believe that? That doesn't even work in theory. You don't invest to make it less. This may come as a surprise to some, but if you only shovel money onto the biggest pile of money, then only the biggest pile of money will get bigger. But leaving wealth distribution aside, just because you lower corporate taxes doesn't mean that companies will invest more if the situation hasn't changed otherwise. The fundamental principle is that you invest money so that it will become more. If there were investment opportunities that promised me growth, then I would have already taken advantage of them. I will still not enter into a risky business that I am unsure about, just because it potentially promises a little more profit due to the tax cuts, if that profit is still uncertain. It's not as if I'm looking for opportunities to sink my money. So where is the sudden desire to do this coming from? Is my treasury full? In the end you're only relying on people who couldn't afford to invest before because they didn't have the means themselves, nor could they get them from outside, in other words, only on people who can't handle money, but who have enough of a basis thanks to the tax cuts that they can now make their investments. So that's probably about five people, hahaha. Anyway, as someone who would be affected by such tax cuts, I can tell you that I would just leave the money in my account or put it in low-risk assets that I don't have to take care of, and that would be that for me. Securities, real estate, art and such. Most people who have too much money do it that way, and that's why these things that increase in value as a result will always have the greatest appeal in this scenario and that's where the money will mainly end up. This and any change to tax law in general can of course have an impact on all parts of the economy and all economic entities. I would not disagree with that. But it would of course be more effective to give more money to people who simply put it directly into the relevant economy. I relieve the burden on companies because we can afford it and at the same time I have created investment opportunities and imposed investment obligations, but I would never do something like lowering the top income tax rate in percentage for the benefit of everyone or other such shenanigans."

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"I had expected such an answer, but I still wanted to ask to hear your position. At the beginning of the conversation, I was still strongly expecting higher corporate taxes, with an increase of the inheritance tax, a wealth tax or possibly even cuts in social security payments to compensate for the reliefs you had listed. Now I'm asking myself, if you don't do any of that, how exactly are all these reliefs justified?"

"First of all, we still had a budget surplus of 80 billion last year. We have an export surplus and can export less or import more if necessary. We are abolishing deductions and increasing tax allowances. We are cutting jobs in the public sector, which means more potential workers are available and higher demand can be met in the future. We abolish an unfair tax and create a new tax. We are abolishing an unfair tax and abolishing an obstructive tax. This is all justified, but I can't explain all the economic background in detail today because I simply don't have enough time for that."

"Please explain it as much as you like. We can then restructure it later for printing so that it looks more organic."

"Although income tax will be due on capital gains again in the future, corporate taxes will also fall, which means that companies will have higher profits, allowing them to distribute more to investors or invest more themselves, provided there is potential to increase revenue. With the help of the state bank, people with low incomes will also be able to participate. Demand will remain the same, but companies will have more capital. Tax revenues will fall for the time being, but the bureaucratic burden and therefore the state's expenditure will also fall. It will not make a significant difference to the budget. More investment will certainly lead to higher tax revenues in the long term. At the same time, lower corporate taxes will also make Baele even more attractive as a business location. In the long term, all of this will compensate for the temporarily lower tax revenue, but even if it didn't, it still wouldn't really be relevant considering our position." Marah closed the file and handed it back to Reyji so that she could put it back in her bag. "I can also say something about your assumptions. It's not my approach to make the rich poor poorer in order to make the poor richer. That wouldn't work anyway. Let me explain it in simple terms. Assuming you levy a wealth tax and collect the money from the rich and then give it to the poor as social security payments, this automatically creates more demand for everyday goods because the lower classes spend all their income on these goods. However, demand for these goods among the rich has not fallen because a wealth tax is not a real burden for them. The overall demand for these goods has therefore increased. At that moment, there are several things that can happen. The companies could increase their production and make higher profits, maybe you could import more, but if all else is not possible, then the companies will increase their prices and you have inflation. If you still have production capacity or an export surplus, then you can usually increase social security payments without any problems as long as it doesn't hinder foreign trade. The only question is, why should I collect money first? You need a wealth tax if you want to destroy money, alternatively perhaps if you want to drive it in a certain direction, but certainly not to be able to distribute money. If the richest people were to distribute their money to everyone on their own accord tonight, we would have a problem tomorrow morning. - Delete the last sentence. - If you want to make the poor richer, you can just do it. The result is the same, an increased demand for certain goods. If you think you have to create a wealth tax to distribute the wealth of the rich to the poor, then you'd better keep your hands off everything. I had nevertheless considered a wealth tax for other reasons, but decided against it because it would be counterproductive in conjunction with the upcoming changes. Raising a corporate tax, like corporation tax, instead of a wealth tax for the purpose of redistribution–"

"Sorry to interrupt, but can you say more about the wealth tax? It sounds like one is already planned."

"I looked into it, but decided against it. There will be no wealth tax for the coming years."

"Will there be a wealth tax one day?"

"Yes, one day there will be a wealth tax or something similar. That is inevitable."

.../ End Part