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rich or poor country

there are poor countries where people are struggling for good and basic needs. there are then devolping countries where they are getting more of what the folks in the developed nations get.

now, even the developed nations are told to have trillions of debt. what is the point- the debt does not determine which country is rich or poor?

thanks
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>>I don't really have a point to make, just thought I would share this because it seems appropriate to your topic.

maybe you have the point.. the businessman still is floating in the 325k mansion.. the fancy lady still is the 'owner' of the 17k worth of cosmetics. taxi driver is the owner of business and a fleet of vehicles.. and the homeless person enjoys 0.35 waiting for a few more cents to go and get something..

is the first 3 representing the developed and developing countries and the last one showcases the 10/40 window - the poorest of the poor among us..

but with respect to countries their loans are way more than 325k,17k etc. At least the businessman may pay it off in 30+ years - the lady may take a few years and pay off her load too.. then at least they are free.. but we can't say the same with trillions of dollars, can we ?
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>>Their GOVERMENTS have the debt.

how long will it take for the gov to pay the trillions back? what will its impact be on the citizens?
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BigRat, do you believe, at the same rate things are happening, at one point, that (increasing) taxation itself can break the equation?
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Who's talking about more tax cuts?  The "simple fact" I was talking about is that INCREASING taxes would stifle growth in a weak economy.  I think I've been very clear about that.

I never suggested that tax cuts that happened ten years ago went only to corporations or rich individuals, so not sure why you are bringing that up.

Are you suggesting that INCREASING taxes at this time would have a positive affect (or even no effect) on the economy?
>>The reaction to similar situations in other countries is to raise taxation

which countries have taken that path are OK for doing that, especially if the economy is weak anyways? do you have some examples.
>>which countries have taken that path are OK for doing that, especially if the economy is weak anyways? do you have some examples.

Britain, Ireland and Greece have already followed this path. I expect Portugal, Spain and also Italy to follow sometime this year. May I also remind you that Germany raised its value added tax

KnigthEKnight is failing to understand that the US has been living on borrowed money for years - right through the Bush terms and now well into that of Obama. Certainly the excessive borrowing over the last three years is due to the crisis in the banks, but let us not forget who exactly caused the crisis in the first place - by lending money to those who could not repay for properties which were overvalued.

The demand to "cut government spending" is one one hears often but has no substance because most of the spending is not discresionary - that is, it is committed spending. To cut such spending requires an electorial mandate to do so, and in fact, most of the opposition must also be convinced that things will have to change. This requires above all a consensus. In places like Greece, Ireland and the UK, there is such a concensus of opinion which makes things easier. What is also important, for universal acceptability, is that the cuts must be see to be fair - that is why taxation for the better off is raised.

There is no consensus in the US and until people like kEk and the tea-party wake up to the fact that they must also contribute, the Democratic left will defend the social security spending to the last man.

The US economy is weak, but far worse the economy is not making the goods which foreigners will buy, which is why the US has a balance of payments problem for ten years. The external debt is so large it is unlikely that the Reagan trick of borrowing one's way out of the recession will work again - in any event that'll cost even more in the long term. It is also wishful thinking that somehow the government can cause jobs to be created, jobs which will in fact create wealth instead of service jobs which disappear as soon as the economy dips again.

There is only one solution, that of overhauling government spending and raising taxation for the well off. That's the sort of thing which will convince the international community that America is willing to put its house in order and will ensue confidence in investors, because, like I said previously, the American labor market has a lot of advantages over many, many others.
>> KnigthEKnight is failing to understand that the US has been living on borrowed money for years - right through the Bush terms and now well into that of Obama. Certainly the excessive borrowing over the last three years is due to the crisis in the banks, but let us not forget who exactly caused the crisis in the first place - by lending money to those who could not repay for properties which were overvalued.

failing to understand?  Have you not read anything I've posted above?

>> The demand to "cut government spending" is one one hears often but has no substance because most of the spending is not discresionary.

I meant it more generically than that, so apparently it is you that is failing to understand me.

>> There is no consensus in the US and until people like kEk and the tea-party wake up to the fact that they must also contribute, the Democratic left will defend the social security spending to the last man.

In all the threads you and I have substantively participated in, you have a very annoying habit of attributing to me thoughts that I never expressed, opinions that I do not hold, and words that I never said.  

As for the remainder of your thoughts above, I agree with some things and not with others, but it's beside the point I was making.  What ever you or I may agree or disagree about on the structuring of a long-term debt solution, it is still a fact that raising taxes at this time will stifle economic growth and job creation, which in no scenario would be good for the debt problem.


>> it is still a fact that raising taxes at this time will stifle economic growth and job creation, which in no scenario would be good for the debt problem.

It is not a fact. Where is the evidence that raising taxation on those who can well aford it will "stifle economic growth and job creation"? What actually makes America attractive for investment? heavy debt and balance of payments problems suggests loss of value for the dollar.
specifically define "those who can well aford (sic) it".
Can I just throw into the above to and from a book called "The Shock Doctrine" by Naomi Klein that goes into some depth and very interestingly into the two views of stimulus versus cutting, particularly in times of economic hardship.

http://www.amazon.com/Shock-Doctrine-Rise-Disaster-Capitalism/dp/0805079831
>>specifically define "those who can well aford (sic) it"

Ask Obama - he did not rescind the Bush tax cuts.

macuser777: She's quite right. Although I am not in favour of more government, I firmly believe that the government must be the referee on the pitch, the policeman on the street. I detest the way in which government (ie: public officials) get involved with industry and commerce - it distorts the market place and preferentially favors certain people.
Well, I really don't want to make assumptions about your position.  At least you finally challenged the notion that raising taxes now would not stifle economic growth.  

>> Where is the evidence that raising taxation on those who can well aford it will "stifle economic growth and job creation"?

Where is the evidence that making any significant change (up or down) in taxation has little or no affect on the economy?  You are clearly well read on this subject generally, so I assume this principle from economics 101 class has not escaped you.  

I acknowledge that there are times when tax rates can be raised and the impact mitigated -- specifically when the economy has significant growth momentum to absorb the impact.  But generally I think that tax rates should not be used as a tool for steering the economy.  To summarize:  when changing tax rates - "do no harm" (or as little as possible).

There is concrete evidence from historical trends that significant changes in tax rates can indeed affect the economy, in addition to the self-evident nature of the principle.  But this is why I ask you to well define who you think should have their taxes raised (assuming you intend no significant impact on economic growth).  I suppose if you choose a specific segment of the taxable population, you may be able to raise their taxes with minimal economic affect -- but it's hard to see how doing so would significantly help the debt problem, since this group would necessarily be very small (again assuming no significant economic impact).

Do you mean people with high incomes?  If so, how high?
Do you mean corporations?  If so, do you mean only ones with large profit margins?
Do you mean multi-millionaires who live on the interest income?




>>Where is the evidence that making any significant change (up or down) in taxation has little or no affect on the economy?

I never suggested that raising taxation would have "little or no affect on the economy". Quite the reverse. I claimed, like the IMF, that raising taxation AS PART of an austerity program to bring government expenditure and income into balance WILL have an effeect - namely - to bring government and expenditure into balance, which in turn will make the ecomony attractive to investment and growth. The continual reliance on borrowing and unfair - and to the population unacceptable - social welfare cuts (which the US has been unable to implement for years) will not solve the problem, only make it worse, and besides the cuts have always been non-specific.

>>But generally I think that tax rates should not be used as a tool for steering the economy

It is a mistake to believe that a government CAN steer the ecomony, particularly in these days of globalisation and common currency. In the old days one could inflate the currency at an acceptable rate of domestic inflation. The foreign investor lost out. These days that is no longer so simple - as the Chinese have already made clear to the US. What is important is that a government provides those services which the nation requires - and no more than that - and raises enough income to maintain those services, with the proviso that, in these days of welfare states, any extra will be put away for future contingencies.

>> But this is why I ask you to well define who you think should have their taxes raised (assuming you intend no significant impact on economic growth).

Well there is no or little ecomonic growth. This is the usual idea that somehow by economic growth, financed by borrowing, we will be able to pay back when the good times arrive. There is virtually no historical example for this Keynsian idea - practiced first in the thirties by Rooseveld and repeated by Reagan, none of this debt was repaid. It was mostly inflated away - hence the worries of the current holders of dollar bonds.

Now I have little experience of the US tax laws and economic regulations, since my main interest is in Europe, but the senario runs basically like this (which may not apply in detail, but definitely applies in spirit) :-

1. Raise sales tax  by a couple of points
2. Raise the income taxation on the top third of payers proportionately
3. Raise most fees for government services
   (This needs to be looked at on a case to case basis, since some fees are already large, others ridiculously low)
4. Remove social welfare payments to people on higher incomes
   Example in Britain no child benefit is payable to people with combined taxable incomes over 40,000 pounds.
5. Remove medical payments to pensioners who are over some limit (eg: the medicaid/medicare program)
6. Increase retirement age
7. Review and possible cut civil service pay and pension plans and of course pensionable age.
and a host of other minor things, which come up only when one undertakes a real;ly thorough review (for example flowers, farmer's tractor fuel, books etc.. have a reduced VAT (sales tax). Why such exceptions?

These things will cause intense lobbying on behalf of the loosers which is why consensus is important. In fact this week in Greece there will be a general strike due to such cuts. Once again the Greek government has probably not made the rich suffer enough to placate the poor. But that's their country and so long as they put government expenditure and income back on the rails so that the currency, which is the Euro, remains stable it's not my concern.

What exactly should be done in the US is their concern. Obama has announced a few cuts, but they don't amount to much and, as one can see, aren't controversial. The real horse trading has to come, and you won't get by without increasing government income and reducing government expenditure.
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thank you for your well thought out points.