Sunday, August 14, 2011

Americans should pay more taxes to finance the war!

I quote from The Economist:
America is far less inclined than many of its rich-world peers to use taxation and redistribution to reduce inequality. The OECD, a think-tank, reckons that taxation eats up a little less than 30% of the average American’s total compensation, compared with nearly 50% in Germany and France. America’s top federal income-tax rate of 35% is lower than in many other advanced economies (although most Americans also pay state taxes). Britain’s top tax rate is 50%. Swedes and Danes acquiesce to tax rates that would outrage many Americans: Sweden’s top rate is 57% and Denmark’s is 55%. Unsurprisingly, the American state is also less generous to the poor. Unemployment benefits in the United States replace a smaller share of income, and run out more quickly, than in most European countries.
The deficit is due to a decade of war, implying a $4 trillion cost due in part to the use of expensive contractors (often foreigners) rather than a draft (which would have solved a lot of our employment problem), the Bush tax cuts, and the stimulus packages to reduce a threatened depression to the Great Recession.

We should tax the rich more over the next decade, while cutting spending, ending the wars, growing the economy and allowing a reasonable level of inflation to get the federal debt to GDP ratio down to a level that will not freak out the financial markets. It would not hurt to provide a temporary tax holiday to allow companies to repatriate profits that are being held abroad.

If wars hurt the affluent and comfortable more, perhaps we would fight fewer of them!

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