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European Countries Should Contemplate Default

Discussion in 'Political Discussion' started by PatriotsReign, Feb 27, 2011.

  1. PatriotsReign

    PatriotsReign Rookie

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    So all those loans the EU gave to struggling countries like Ireland may never get paid back. At least some are calling for that to happen.

    If it happens, won't that be like not honoring a CONTRACT? Aren't contracts holy documents that should never, ever be violated? I mean these loans were funded by taxpayers throughout Europe. Weren't they promised to be paid back? But hey, the leaders of Ireland signed these deals without the approval of the people of Ireland, right? ...Sound familiar?

    Read more....

    German academics push for EU sovereign default plan

    "We call on the German government to take measures in event of a failure of the European rescue mechanism and to quickly establish with European partners a detailed plan to manage the bankruptcy of heavily-indebted eurozone countries," said a text published by the Frankfurter Allgemeine Zeitung daily."

    German academics push for EU sovereign default plan - *Latest news around the world and developments close to home - MSN Philippines News
    Last edited: Feb 27, 2011
  2. Real World

    Real World Moderator Staff Member

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    I don't think people realize how bad the debt problem is in the western world.
  3. PatriotsReign

    PatriotsReign Rookie

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    That and they're oblivious to the fact the people don't want to pay more taxes. That is what is at the core of most socio-economic issues around the developed world tody. "We'll just raise taxes" is no longer an option. At least regarding the average citizens of these countries.
    Last edited: Feb 27, 2011
  4. Patters

    Patters Moderator Staff Member PatsFans.com Supporter

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    I don't think there are any tax movements like those in the US. In most advanced nations, the people accept the high taxes, but they also expect the government to perform. Naturally, in tough economic times there's more pressure to keep taxes low, but a lot of that is coming from efforts organized by the wealthy since they are the likeliest targets of any tax increase.
  5. shirtsleeve

    shirtsleeve Rookie

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    You cant income tax the rich. Its physically impossible.Their money is no longer being earned in the conventional sense. Its all invested, either in equities, bonds, commodities or in their corporations. All shelterd, all moveable to foreign entities. Or if on the earnings of the corporations, passed onto the consumer. Taxing the rich is a myth. The only tax that would work is a VAT.

    Its counter productive and difficult to income tax the wealthy, trying to get rich. Many of the same apply to them, and they can hide much of their standard income in their fledgeling corporations and entities. Besides, these people are the engine that produce jobs.

    The people who take it up the can with income tax is the middle class. Any tax hike will really need to be made against us. For different regions of the country and the world, the numbers vary, but anyone over the working class status, here. Someone who owns a home, has decent furnishings and fixtures, has solid dependable automobiles, can afford to send the kids to sports camp or catholic school. Yet the middle class largely still relies on earning wages and salaries every week to do these things. This spans the spectrum from tradesmen to doctors. We pay the freight for everyone elses free ride.

    The working class and the poor have been tax recipients, not payers for decades.

    Those are the facts. So unless you want the government to seize property of the rich and trying to be rich in a communist power and wealth grab, stop pretending we can "tax the rich" outta this.

    End the income tax. End the current corporate tax structure and install an across the board sales and VAT. The more you consume, the more you pay. Yet if you try to pass off too much of the VAT, you lose a competitive edge. Hence it becomes truly equitable.
  6. Patters

    Patters Moderator Staff Member PatsFans.com Supporter

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    Why can't you tax the rich? To sustain their standard of living, they must have income, and whether they, as Romney's wife put it years ago when referring to her struggles to get through college, have to "chip away at their stock" or get income off their stocks, they are going to pay tax. In addition, many of the wealthy do in fact get high salaries and have to execute options (or lose them) each year, which represents significant income in some cases.
  7. shirtsleeve

    shirtsleeve Rookie

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    The Rich can and do move their money to protect and shelter it, and reconfigure their distributions to exempt themselves from taxation.

    American Government and Politics Today - Google Books

    The higher the marginal rate, the fewer tax dollars/earned dollars the government recieves from the rich. Its counterproductive.
  8. PatriotsReign

    PatriotsReign Rookie

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    Although I agree with much of your post, I'm not sure about the above statement. How has the middle class been tax RECIPTIENTS and NOT payers for decades?
  9. shirtsleeve

    shirtsleeve Rookie

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    I didn't say middle. I said working. The class above the poverty line that pinches every penny just to stay in a crummy apt, but works for a living. They recieve benefits, find themselves in no tax status and recieve tax distributions such as the earned income credit. Yet they struggle on, trying to earn more and become independent of government subsidy. That is not the middle class.
  10. PatsFanInVa

    PatsFanInVa PatsFans.com Supporter PatsFans.com Supporter

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    Patters, I believe when shirtsleeve says it's impossible to income-tax the rich, he means you can have as high a marginal rate as you like, but they won't show up as earning that income. That is to say, they won't just generate a paycheck that says (dr. evil impression) "one million dollars." Instead they'll get stock options, for example. And that's the "working rich," rather than the majority of the rich who have their money work instead.

    This observation is easily met by the taxing of capital gains as income. Just because they don't work to get money, does not mean they don't get the money.

    He adds the VAT as another alternative to tax the rich, although again, buying, getting lots of gains, and selling at the top, would only get pinged at a flat rate, at the same rate you and I pay on a pack of cigarettes, for example. (Unless of course we retain sin taxes in the VAT structure.)

    So there are at least two strategies by which we could effectively get at taxing the rich, by taxing investment income the same way you tax sweat-of-the-brow income.

    PFnV
  11. shirtsleeve

    shirtsleeve Rookie

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    Well, yes, that is what I was saying. I had some data, lost now that demonstrates the higher the top marginal rate, the lower actual margin the rich pay in constant dollars, through history. I cant find the link.
  12. patsfan13

    patsfan13 Hall of Fame Poster PatsFans.com Supporter

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    The Flat Tax treats cap gains and dividends as income.
  13. shirtsleeve

    shirtsleeve Rookie

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    Yup. This ties in with the oil thread. A flat tax on everyone and everything. So a person gaining a billion dollars this year will pay sixty million dollars in taxes at the same 6% (just for demonstration reasons...) that the oil companies work with for their margin. Its a function of volume.

    At the same 6%, a middle class family earning $100,000 pays $6000 in taxes.
  14. patsfan13

    patsfan13 Hall of Fame Poster PatsFans.com Supporter

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    One small correction there is a personal exemption that is the same for everyone so say a family of 4 would pay on ~50k and only pay 3k in taxes. so it would be 'progressive' for the lower income and middle income workers whereas a person making 1M the personal exemption would make much difference.
  15. PatsFanInVa

    PatsFanInVa PatsFans.com Supporter PatsFans.com Supporter

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    Okay, I want to note that it's really hard to disagree with this, unless the numbers say it ends up advantaging the wealthy, once the design is tweaked. My guess is that getting rid of the marginal rate structure is more than made up for by the closed loopholes -- unless of course, we just re-open the loopholes at the wealthy end.

    I can see a number of ways this will happen: Complaints about inheritance tax (which absolutely should be part of this structure, but it also should be part of the current structure); various tweaks to encourage/discourage behavior (for example, advantages for getting married or buying a home); "Tax holidays" when we decide that we're poor as a society, so we have to give money to the wealth for them to supposedly create jobs; Ag subsidies, in the form of tax breaks; and all the other tricks we've become accustomed to.

    To the thread title - a quick driveby: What actually seems to be happening is that the wealthier EU countries are being urged to come up w/a strategy if the more indebted countries default on their debt. This is a different story from the idea that European academics are pushing for the entire continent to declare bankruptcy, as the thread title implies.

    PFnV
  16. PatriotsReign

    PatriotsReign Rookie

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    They are being urged to come up with a strategy because they know countries like Ireland are contemplating bankruptcy. Common sense tells us that you don't prepare for something unless you believe it's going to happen.

    My other point was, just like the public union contracts, many countries may/will violate a written contract because it's the right thing to do for their citizens.
  17. PatsFanInVa

    PatsFanInVa PatsFans.com Supporter PatsFans.com Supporter

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    It's a misleading thread title and you either didn't read the story you posted or are fear-mongering.

    The countries that may default are not the countries doing the contemplating here.

    You don't think people in the U.S. have contingency plans for Ireland defaulting? How about China? YOu really think nobody in the Chinese government has a plan for European countries defaulting?

    Then your headline would be "U.S. should contemplate default" or "China should contemplate default."

    PFnV
  18. PatriotsReign

    PatriotsReign Rookie

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    PFiVA....search the internets and you'll find that Ireland is contemplating default because their citizens are angry that their gov't allowed this to happen.

    Lending countries develop contigency plans in response to the very real possibility countries will default. If you lend me money when I'm in need at an extremely high interest that I'll likely never be able to pay, you can bet your bottom-dollar I'll be contemplating default (and YES, despite the fact we have a CONTRACT!)....AND you'll probably assume it's a likely possibility.
    Last edited: Mar 1, 2011
  19. Mrs.PatsFanInVa

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    #11 Jersey

    Why is it that you are always incensed on the threads about homeowners defaulting, saying you don't want the government to bail them out, you don't think they should get any special breaks, they bought the home knowing they could not afford it and therefore should suffer the consequences of breaking their contract with the bank because we all know that when we sign a contract to buy something that we are the ones responsible for it - and yet you have no problem with the government defaulting on the contracts it has with their workers or with private companies or entire countries defaulting on their word to their employees or their citizens?
  20. PatriotsReign

    PatriotsReign Rookie

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    Another well written question MrsP...and one which I can easily answer for you.

    First, I have absolutely no problem with the people who "Walk-away" from their homes. That is a very acceptable (and smart) option in my opinion for millions of people. If I lose my job and see few options, I'll walk away from my home just like them.

    When someone purchases a house, they know exactly what they are doing and getting. After all, it is they who are signing the deal with full knowledge of their responsibilities as well as their financial limitations.

    But with the union deals and with international loans, you have governments signing deals with unions at the state level or in the case of Ireland, federal gov't leaders signing deals with foreign countries without full disclosure to the citizens as to what their responsibilities will be.

    Yes, these citizens voted these people into office, but that doesn't mean they can't or don't screw their people over and leave them holding the bag (and burden) for what they did.

    So I see citizens of states and countries as having the same option as homeowners....they have the right to "Walk away" from deals that burden and handicap the majority of citizens too heavily.

    I hope that explains how I can rationalize and distinguish between the unacceptable option of responsible citizens bailing out those who have been irresponsible and just plain walking away from something you know you'll never get out of.

    Hell, maybe some people would even favor using our tax dollars to bail out people with extraordinary credit card debt too! Bought an expensive Hummer you can no longer pay for? That's ok, there's a gov't program that can help you out!:rolleyes:

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