Castro's New Shakedown

Wednesday, November 28, 2012
From Investor Business Daily's Editorial Board:

New Cuban Tax Just Same Old Communist Expropriation

The media praised Cuba for slapping taxes on its impoverished citizens for the first time, calling the move "market-oriented" and "modern." In reality, it's just a new kind of theft from the same old dictatorship.

To hear Reuters tell it, you'd think that Cuba, a brutal communist dictatorship for 53 years, has been a tax-free haven for all its lucky citizens.

"Most Cubans have not paid taxes for half a century, but that will change under a new code starting Jan. 1," the news-wire chirped, noting that the new taxes on private profits begin in the 35% vicinity.

They're new all right, but hardly the first: Last September, the regime initiated punishing customs taxes at $4.55 a pound in excess baggage fees on Cuban expats bringing in supplies for their relatives with businesses.

"The government's free-market reforms, introduced over the last two years, are designed to encourage small businesses, private farming and individual initiative," Reuters wrote. "Under the new tax code the state hopes to get its share of the proceeds."

Its share? Cubans earn about $19 a month, slave wages by any standard. They do the same work as other Latin Americans, often with more skill. But to the state, their sole employer, their wages are worth just $19, an implicit expropriation of their true market value.

Make no mistake, that's how the government sees it: Cuban dictator Fidel Castro even told one prominent medical professional, Dr. Hilda Molina, that she was not free to leave the country because her state-paid training made her "brain the property of the state."

Reuters helpfully points out that taxes have been all but nonexistent in Cuba because wages are low, so as to keep social services "free."

But that's just the point: The money workers could earn if free to choose their employers at wages that reflect their worth now all goes to the state and its "free" programs. Officially or not, it's a tax well beyond 99%.

And what a surprise, the Castro brothers just happen to have personal fortunes in the billions of dollars, according to the last Forbes estimate. That's a lot of taxes.

The Castro dictatorship is looking to take cash from the supposedly independent new businesses it's permitted to set up shop, originally as a way of cutting the bloated state employment rolls.

Far from being a market liberalization or modernization, the Castroite tax hike is nothing but a shakedown of businesses that are struggling to grow, and an effort to reassert the power of the state over its citizens.

It's communist in the extreme, and won't work.