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Comment by missing_cipher | Hacker News Reader

A big problem is the lack of regulation, IMO. That owner who is doing things "en negro" hurts the rest of the country and should be fined accordingly. Since no one takes a big step forward to stop it, people see their colleges do it and the trend continues.

Inflation is also pretty bad, but I don't think it falls completely on the shoulder of the Government. Some items are simply overpriced. I'm not talking between a big store and a simple corner store, I mean between two big chains you can see price differences of 50% or more sometimes. Again, taking advantage of the lack of regulation.

And we don't all see the U.S. as THE economic model, far from it.

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"That owner who is doing things "en negro" hurts the rest of the country and should be fined accordingly". This is a chicken/egg issue. People try to avoid taxes also because past governments confiscated their savings.

Speaking from the entrepreneurship perspective, there is a big issue having employees, if you fire them you need to pay a salary for each worked year. So a employee with 10 years of work receives 10 salaries if he's fired.

This is a very good point, entrepreneurs have a lot to loose and history has taught them to be wary of the Argentinian government. Can't say I blame them. I suppose it's up to the government to "show" them that they can be "trusted" again.

The way the system is set up is that, overwhelmingly, it was (still is?) impossible to run a private business in large compliance with the law. The alternative to non-compliance is death (businesswise). The aggressor here is the state and not the private individuals.

I'm not Argentinian, but based on the article it seems like there is plenty of regulation as it is.

The problem is that these regulations change like the direction of the wind, and are unevenly enforced, and easily dodged via bribery.

Bribery is also something of a safety valve. When the state stands in the way of (otherwise peaceful and voluntary) exchange, paying a bribe may be a better outcome than not having these productive activities happen (indirectly as well, the state may benefit from increased tax revenues later on). Of course, some bribery can be evil, but the problem is not corruption itself, rather the power that fosters it is.

At least part of the issue, from what I can tell from the article, is that the majority of the people cheat on their taxes, so the Argentine government has to raise taxes in order to get enough revenue to pay operating expenses, which leads people to cheat on their taxes more, which...

yes, you couldn't be more right with this.

I am from Argentina and I found this disturbing: "taxes on commercial profits in Argentina add up to an effective maximum rate of 108 percent"

But also very true.

I wonder what would happen if the Argentina government reduced the taxes (because for the past 10 years I feel they've only gone up)

Would that encourage businesses to pay taxes instead of doing everything 'en negro'? It would encourage me.

As an entrepreneur I want to pay taxes but they are extremely high, punishing me for the corruption that surrounds me

Who would do the fining?

Hint: The people who run the government make their living by taking bribes and other acts of corruption that are a result of their regulations.

In the US, corruption on the transactional level (ie. lobbying congress, etc is out of scope here) is an exception that ultimately results in a government official going to jail. In a place like Argentina, corruption is a hidden tax that is reflected on nearly every transaction.

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