Europeans want to invest more in green energy – especially on credit.
(Photo: dpa)
The EU is literally looking under every stone to see if there is still money to be found somewhere that can be put into the green economy. The credit lines of existing programs are to be exhausted as fully as possible, the rules for state aid are being extended and new debts at EU level are also being discussed. All of this is supposed to provide an answer to the IRA, the US “Inflation Reduction Act”.
The USA, however, does not incur any debt for this IRA, but even saves. Despite the massive subsidies, the bottom line is savings of $238 billion. While Europe borrows money that will weigh on government balance sheets for decades with interest and compound interest, Washington is reorganizing the budget. In the European debate about the IRA, this is usually lost.
Part of the IRA is more than $450 billion in tax increases. A new minimum tax of 15 percent on book profits from companies with profits above a billion dollars will bring the greatest gains. Because many companies are adept at calculating poorly, they only pay taxes on a small part of these book profits.
President Joe Biden is also rebuilding the federal tax agency that his predecessor, Donald Trump, bled dry. This is expected to bring in an additional $100 billion.
It will also be expensive for companies buying back shares. The US government plans to raise $74 billion from a 1 percent tax on the buybacks. Biden also wanted to tax wealthy private individuals more heavily, but was unable to get his way in the Senate.
There are also crisis winners in Europe
Tax increases are more obvious in the US than in the EU. Because in America, the crisis triggered by Russia’s attack on Ukraine is not nearly as present as in Europe. The Americans are fighting rising inflation, the Europeans have to deal with inflation and recession concerns at the same time.
Christoph Herwartz, correspondent in the Handelsblatt office in Brussels, analyzes trends and conflicts, regulatory projects and strategic concepts from the inner workings of the EU. Because anyone interested in business needs to know what’s going on in Brussels. You can reach him at: [email protected]
Taking money from companies can exacerbate an economic crisis, and there have also been fears of slipping into recession in the US. However, the tax increases are aimed more or less precisely at those companies that are coming through the crisis well.
>> Read here: 350 billion euros – von der Leyen wants to keep companies with subsidies in the EU
There are also in Europe. In many companies, especially in the energy sector, substantial profits were made. The oil multinationals report record results. Others, on the other hand, suffered so severely that the growth of the European economy as a whole came to a standstill.
The EU lacks the powers to respond to the tax portion of the IRA. Even the common debt in the EU is highly controversial. Joint taxes are an even bigger taboo. Taxes are a matter for the Member States and that is not being changed at the moment.
So far, the national finance ministers have not dared to approach the winners of the crisis either. At the moment, the focus is on keeping the damage caused by the crisis to a minimum. For the time being, this is being financed at the expense of future generations.
More: The economists Lars Feld and Jens Südekum argue about climate protection, the answer to the “Inflation Reduction Act” and EU debt