Although the debt ceiling crisis playing out in Washington is an American concern, it is an issue with huge ramifications here in Canada and across the world.
American historian Bernard Berenson is credited with this famous quote:
"Governments last only as long as the under taxed can defend themselves against the overtaxed".
The wisdom of that statement is playing out right now as the U.S. rushes head long with August 2nd when they will hit their legislated debt ceiling of $14.3 trillion. The Obama administration is putting pretty much everything on the table in terms of cuts to government and social programs to bring the debt under control. That's the carrot for the so called Tea Party element of the Republican party, champions of the Libertarian ideal of smaller government.
The stick is increases to taxes paid by the wealthiest Americans and a closing of loop holes that allow both individuals and corporations to avoid paying taxes they would otherwise incur. Somehting to which Tea Party advocates are adamantly opposed.
That is the beauty of the Tea Party movement. America's über-rich have trailer park conservatives convinced that asking the wealthy to contribute their fair share is somehow un-American. The argument is the affluent already do their bit by contributing to wealth creation through investment and hiring. Increasing or requiring taxes on the wealthy will discourage investment and job creation, that's the argument being put forth.
I for one don't buy it.
Increased taxation on those most able to afford it would likely mean lower bonuses, decreased dividends, a trimming of massive net worths for a very small percentage of those most able to afford it. The benefits of increased taxation on millionaires and billion dollar companies on the other hand would be enormous.
For the economy it would signal to the world that America's wealthy elite are serious about helping their government get itself on solid fiscal footing. But sadly I don't think the über-rich are that patriotic. Its been said by many before me that money knows no nationality, the same can be said by those who possess it.
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