The general feeling around the USA and Europe for that matter are that the year 2013 is going to be a tough one, at least economically. Already countries like Spain have changed their tax policies and the effects of these changes have started showing various contract negotiations being halted. In Spain for instance, football players like Ronaldo are in contract negotiations with their clubs. In a bid to keep the player, clubs such as Real Madrid are forced to offer to pay the taxes on behalf of the player if only to retain his services. Such options are normally available to the rich clubs such as Real Madrid; however, much poorer clubs may not be able to follow the same pattern, in essence losing some of their best players or assets. In the USA, the trade of R.A. Dickey the N.L. Cy Young winner is being held up by the tax implications of his move to the Blue Jays. We can see the trend spreading across Europe and North America affecting various organizations and individuals. The changes in the tax policies of the different countries seem to be having a biting impact on the way in which business is being conducted. Various governments have resorted to increasing their tax bases as they try to make ends meet in the face of a harsh economic period. The effects of the recession may have passed, but the impact that the recession had cannot be ignored whatsoever. As such, in a bid to do away with the budget deficits that they acquired during that period, different governments have resorted to various ingenious ways of cutting off their bills. Considering that the government is a representation of the people, then the people can be expected to bear the brunt.
The tax implications of the different tax changes have gone as far as the capital gains and the dividend taxes. In most countries like Greece, the tax on capital gains has been increased by almost 200% with the tax on distributed dividends being reduced by a smaller margin. The result is that it gets more expensive to make money on the stock market, with the margin of profits reduced considerably. However, some people hold the opinion that this increase in taxes may in effect actually increase the amounts of money that investors get from the stock market. This thinking seems to rely on the psyche of the stock market investor. In most cases, the stock investor is a long term investor who waits for real money. As such, this investor looks at the long term trend instead of the short term implications of laws. The historic relationship between the taxes shows that an increase in taxes often has the net impact of an immediate decrease in the earnings of individuals coupled with a resurgence of the prices and an eventual increase in returns. It is this line of thought that seems to have some people very optimistic. The long term seems to be the solution for the current mess.
