The national debt is about $14.5 trillion, and each person’s share is about $45,000. If someone proposed taxing each individual $45,000 to pay off the debt, nobody would think this a fair proposal. We expect those who have more to also pay more taxes. But in many other areas, everyone has to pay the same amount. The equal dollar in the legal system creates numerous injustices.
Finland fines people for speeding based on their income, so very rich people can pay over $100,000 for a single speeding incident. Some are worried that other EU nations will refuse to enforce Finnish fines, breaking the European Union. The idea is controversial and is unlikely to be applied here in the U.S., but it deserves consideration. If we cannot make fines fair based on income, perhaps we can base them on the price or class of car.
Even the tax system is not as fair as many believe.
Continue reading ‘Money Does Not Equal Fairness or Justice’ »
French banks are feeling the pain today. Some CNBC commentators say that France should have been downgraded before the USA. Marketwatch says that France might be the next downgrade.
Another commentator noted that France is a lynchpin of Euro rescue efforts. If France were downgraded, it might not be able to contribute to the European Financial Stability Fund, or EFSF. That might explain why S&P does not want to downgrade France: doing so might break the Euro. For the English commentator, the current markets are reminiscent of the breaking of the pound out of the European Exchange Rate Mechanism in 1992.
The treaty of Maastricht, signed in 1992 called for governments to maintain an annual deficit of 3 percent or less and to have debt no higher than 60 percent. Although Japan leads the league in government debt as a percentage of GDP at 225 percent, EU members Italy and Belgium are at close to 100 percent. France is at 83 percent. These countries have violated the rules of the treaty for years, and as a a result, they cannot call on today’s problem nations to be forced to adhere to the terms of the treaty.
Continue reading ‘Financial Markets on CNBC Look Like Storm Stories’ »