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Page 6: Politix
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Britain
61.5% Tax, Ouch! The politics behind Britain’s tax changes are ugly. - Obama's Blueprint?
JEAN-BAPTISTE COLBERT, Louis XIV’s finance minister, famously said that the art of taxation was like plucking a goose; the aim was to get the most feathers with the least hissing. But tax policy should aim to do more than smother protest: it should also seek to raise the most money with the least distortion to economic activity.

By this measure, Britain’s attempts to fill the fiscal gulf created by recession are a dismal failure and a lesson to cash-strapped governments everywhere. Take marginal income tax rates, announced in the British budget of April 22nd. Once national insurance is added in, effective marginal rates will climb from 31.5% to 41.5% through to 61.5% on those earning just over £100,000 ($147,000), thanks to the withdrawal of the personal tax allowance. After that, the rate will fall back to 41.5%, before rising again to 51.5% on incomes over £150,000.

The bizarre incentives of income tax are only the start. High earners also face the withdrawal of tax relief on their own pension contributions and a tax charge on the “benefit-in-kind” provided by employers’ payments into their schemes. Depending on how much the employer contributes, this will push marginal rates well above 50%. It will also discriminate against employees in defined-contribution, or money-purchase, schemes where employers match what workers put in. But the effect is not uniform; the convoluted rules will mean some high earners will get more tax relief on their contributions than they did before. What a mess.

As recently as 2006, the government drove through a reform of the pensions rules that simplified a notoriously complex system. Employees could, in effect, make pensions contributions when they felt flush and still get tax relief. Those reforms were a much-needed incentive for employees to build up their pensions at a time when many employers were abdicating responsibility for providing a decent income in retirement. The new rules return pensions to the complexity of string theory.

The best tax systems combine low rates with minimal exemptions. Businesses and citizens should be making decisions based on their economic opportunities, not the advice of their accountants. But Gordon Brown is too clever by half. He introduced a sliding scale that made capital-gains tax highly complex, and then reversed himself, introducing a single rate of 18%. The effect was both to raise the tax rates for sellers of small businesses and to introduce a vast discrepancy between the tax rates on capital and income. An attempt to introduce a levy on foreign workers (known as non-doms) was botched, and may yet drive many high-earners out of the country.

These wheezes were designed chiefly with politics in mind: all those nasty plutocrats deserved a hammering. By putting economics second, Mr Brown has made it harder to balance the books. Waste and lower growth because of poor tax policy will only make the fiscal hole harder to fill. The new tax will do little to reduce Britain’s budget deficit. On the government’s own forecasts, which assume the wealthy will not change their behaviour, the assault on the rich will raise just £7 billion. With avoidance, the tax will raise still less.

Brown’s goose cooked
Although higher taxes would be a mistake in a recession, they are inevitable when growth returns. The rich should pay their share, but governments cannot repair their finances merely by plugging holes or using stealth taxes. The sums are too great. They will have to raise money from the majority of citizens and they should do so in a clear and open fashion.

The aim should be to reform and broaden the tax base. During the boom, the British government became too dependent on financial services, raking in money from income taxes on bonuses, capital-gains taxes on rising share prices or corporation taxes on bank profits. One reason its deficit has risen so quickly is that those revenues have evaporated. They may not return again for some time.

Governments will need new sources of revenue, just as value-added tax, introduced in Britain in the 1970s, became a counterpart to income tax. Carbon taxes are one possibility. The lingering tax privileges of residential property could also go. The need is for decisive action, rather than fiddling. Meanwhile, the Treasury says that it is still “consulting” on the new pension rules. It should consult the book of common sense.
Posted by: GolfBravoUSMC || 05/07/2009 12:36 || Comments || Link || [0 views] Top|| File under:

#1  What do we pay in taxes in the U.S.? There are local and property taxes. State income tax. Federal income tax. Car registration taxes. Telephone taxes. Gasoline taxes. Cigarette taxes. Alcohol taxes. If you are self-employed in a sole proprietorship, you have a tax for the right to work that is fairly steep. Death taxes (inheritance tax). There are capital gains taxes. There are fees for professional registrations levied by the State, e.g. the professional engineer's and physicians annual fee paid to the State. There are charges that you pay when you buy batteries or replace your tires for hauling away the old batteries and tires. There are probably other taxes which I have not listed. In our State as most states you have to have automobile insurance by law or at least be able to show financial responsibility capability. A lady whom we know down the street was told she couldn't buy a house unless she had homeowner's insurance. Since these financial responsibility laws are required by law they function like a tax.

We are all becoming insurance and tax poor.

I think I read where by we all work for the government up through April to pay our taxes.
Posted by: JohnQC || 05/07/2009 13:53 Comments || Top||

#2  Many of us in the upper middle class already pay 55-60% once state, local, property, sales and "employer contribution" of FICA is included. Serfdom only took 1/8th or 1/7th of productive labor.
Posted by: ed || 05/07/2009 15:20 Comments || Top||

#3  Serfdom? With Obama's system, they are going to need to make us slaves to make it worth our while to work. Already they are trying to take away our right to defend ourselves. If you think about it, that is the definition of slavery. Slaves had to let the slave owners beat them, rape their women and take away the fruits of their labor. In exchange, they were provided only substandard food and housing. Weren't they talking about compulsory participation in Obama's America Corps? The way things are going, it's not that far of a leap.
Posted by: Jumbo Slinerong5015 || 05/07/2009 15:46 Comments || Top||

#4  Ed:

Don't forget Britain has other taxes also, including a Value Added Tax of 15% (Temp down from 17.5%), very heavy fuel taxes (about $.75 a litre/$2.50+ per gallon)and they even tax television sets.
Posted by: GolfBravoUSMC || 05/07/2009 15:57 Comments || Top||

#5  "they even tax television sets"

If Bambi really wants a revolt on his hands, he ought to try that here.
Posted by: Barbara Skolaut || 05/07/2009 19:01 Comments || Top||

#6  Televisions and radios. They did the same in Germany.
Posted by: trailing wife || 05/07/2009 22:31 Comments || Top||


Home Front: Politix
Obama's Specter coup has quickly morphed into a gigantic political headache
A series of odd incidents that have proceeded from Pennsylvania Sen. Arlen Specter's party switch last week have raised questions about whether the newest Democrat has permanently damaged himself in the eyes of the state's voters.

The White House is concerned enough about the developments that deputy chief of staff Jim Messina and Ron Klain, a senior adviser to Vice President Biden, traveled to Capitol Hill on Wednesday and huddled with Specter to try to iron out the problems, according to informed Democratic officials.

Those problems -- in brief:

  • Specter pronounced that he would be keeping his seniority when he announced his party switch last week -- maintaining that his ability to deliver for the state would not be diminished in any way shape or form by his move across the aisle. Except, that wasn't exactly right. The Senate's approval of Specter's junior status on a series of committees led to a "he said, he said" between Senate Majority Leader Harry Reid (Nev.) and the newest member of his caucus. Asked about the back and forth by CNN's Wolf Blitzer on Wednesday, Reid stood his ground saying simply: "He is a person who's been in the Senate since 1980. I think he should be able to handle himself."

  • In a sitdown with the New York Times' Deborah Solomon, Specter said he was hoping that the Minnesota courts would do "justice" and declare former Republican Sen. Norm Coleman the winner in the contested 2008 election. Whoops! Specter tried to walk the comment back told Reid that he briefly "forgot what team I was on."

  • Specter has done little to back off his initial assertion that his decision to switch parties was based almost entirely on political calculations and had little to do with ideology. While most party switchers are almost certainly guided by personal political concerns (what politician isn't?), most don't come right out and say it because it is a turnoff for voters who want to believe that their politicians believe in, well, something.

    For Pennsylvania voters -- especially Democratic primary voters -- this triptych of recent events is likely to be deeply troubling.

    "His actions over this past week have done nothing to curry favors with either party," said Penny Lee, a former senior adviser to Pennsylvania Gov. Ed Rendell (D) and now a Democratic consultant. "He needs to show some willingness to be a Democrat."

    Another Democratic strategist who follows Senate races closely was more blunt about the damage Specter has done to himself over the last week. "Do you think that any right-minded local Democratic elected official is going to stick his neck out for Arlen?" the source asked rhetorically. "Or any member of the Democratic Senate caucus?"

    Even those Democrats who believe that Specter has done himself no real long-term electoral harm with his actions over the past week don't exactly give him rave reviews. "The pride swallowing can't be easy but he had no choice if he wants to get reelected, and he was honest about that," said one senior Democratic strategist.

    Despite all of that criticism, Specter still has a number of things going for him heading into next year -- most importantly the support of an exceedingly popular president who commands massive loyalty particularly among the Democratic base and a campaign war chest bulging with nearly $7 million.

    And, average voters are not likely to be following every jot and tittle of the Specter saga -- especially so far from an election. Still, insiders are paying very close attention and, if Specter's stumbles over the past week encourage Rep. Joe Sestak to run in the primary, then the damage will have been done.

    What once looked like a huge coup for the White House -- and from a governing standpoint remains one assuming Al Franken eventually wins in Minnesota -- has quickly morphed into a gigantic political headache that almost no one saw coming.

    Politics is great, ain't it?
  • Posted by: GolfBravoUSMC || 05/07/2009 09:59 || Comments || Link || [0 views] Top|| File under:

    #1  I wonder how long it will take the Donks to discover Arlen was a plant?
    Posted by: Besoeker || 05/07/2009 10:25 Comments || Top||

    #2  I wondered why the Dems were so happy about this when it happened. It's not like they were getting the cream of the crop.
    Posted by: tu3031 || 05/07/2009 10:47 Comments || Top||

    #3  As we used to say as kids: "no tag backs!"
    Posted by: Grenter, Protector of the Geats || 05/07/2009 10:59 Comments || Top||

    #4  Specter has done little to back off his initial assertion that his decision to switch parties was based almost entirely on political calculations and had little to do with ideology

    The guy is an empty suit who doesn't stand for anything. He certainly doesn't give a damn about his constituents. He is a political opportunist who wants to hang around Washington forever--sucking up taxpayers money. This is Washington welfare at its worst.
    Posted by: JohnQC || 05/07/2009 13:35 Comments || Top||


    India-Pakistan
    Washington’s Misguided Pakistan Policy
    Some chickens are coming home to roost.
    By Alex Alexiev

    President Obama sat down yesterday with the presidents of Pakistan and Afghanistan to seek a way out of the existential crisis now facing those two nations. As reported by the press, Obama secured commitments from them for greater cooperation in the struggle against the “common threat,” as well as assurances that Pakistan’s nuclear weapons would be secure — in other words, the same promises and commitments that every White House meeting with Pakistan’s leaders since 9/11 has invariably delivered. One thing that almost certainly was not discussed is the real nature of the problem facing the three countries and Washington’s decisive contribution to it. As a result, whatever putative solutions were agreed upon will remain putative; and, even if the Pakistani army makes temporary headway against the Taliban in Swat and elsewhere, the problem will continue to fester and undermine the viability of Pakistan and Afghanistan alike.

    Put simply, the Taliban, murderous as it is, is not the problem. The problem is the Pakistani military and the stubborn refusal of Washington to comprehend this basic reality. We need to remind ourselves that Pakistan is not a sovereign state with a military, but a sovereign military with a state at its disposal to use as it sees fit. And it has been that way almost from the beginning of Pakistan’s existence, despite an occasional short interlude of civilian rule. To maintain its undisputed dominance and its claims to a huge chunk of the national treasure, the military needed the specter of a powerful enemy and an ideology capable of mobilizing the largely illiterate masses behind its self-image as savior of the nation. It found the former in India, the latter in radical Islam.

    Implacable hostility to India (and to civilian politicians suspected of seeking a modus vivendi with it) and a de facto alliance with radical Islam thus became the hallmarks of the Pakistani military ethos and its institutional self-interest. This led to active military involvement in the setting up of jihadist and terrorist groups to be used as proxies against India and Afghanistan, the creation of the Taliban, and the creeping Islamization of Pakistan under military auspices beginning in the late 1970s. One early outcome was the emergence of the extremist Deobandi school of Islam as the dominant Islamic idiom in the country, aided and abetted by a huge network of jihadist madrassas funded generously by Saudi Arabia. How far this process has progressed in the military itself is not known, but it is worth noting that several top generals and heads of the Inter-Services Intelligence (ISI), the military’s main organ for jihadist outreach, were revealed upon retirement to have been zealous Islamists. What is known is that the ISI aided and abetted Taliban anti-Indian terrorists in Kabul just a few months ago.

    Faced with this reality, the Bush administration sought, after 9/11, to secure a modicum of logistical cooperation from Pakistan’s military dictator, Gen. Pervez Musharraf, in return for billions in aid to our new “strategic ally” — while turning a blind eye to General Musharraf’s duplicitous policies. It is easily forgotten now that it was Musharraf who allowed both the Taliban and al-Qaeda to find sanctuaries in the North-West Frontier Province (NWFP) tribal belt after they were routed by American troops, and then claimed publicly that he had been able to solve a “critical situation . . . without any damage to Afghanistan and the Taliban.” It is further forgotten that it was this same “strategic ally” who made possible the 2002 electoral victory of the NWFP’s religious fanatics, who in turn provided political cover and essential support for the revival of the Taliban.

    Which brings us back to President Obama. Pakistan, some may remember, was the one foreign-policy issue on which Obama took a tougher stand than McCain in the election campaign — complete with threats to invade Pakistan, and go to the gates of hell to find Osama bin Laden and defeat the Taliban. None of this is much in evidence any more. Instead, President Obama now tells us that there is no military solution in Afghanistan, and Defense Secretary Robert Gates thinks that Islamabad’s capitulation to the Taliban in Swat — a deal conceived and executed by the military — is an acceptable compromise. Further in the same line of enlightened analysis, Obama’s key political appointee at the Pentagon, Michele Flournoy, opined that 70 percent of the Taliban were “reconcilables,” only to be contradicted by Vice President Biden, who sees only 5 percent of the fanatics as “incorrigible.” Lastly, as if to provide some comic relief, Secretary Gates shuttled to Riyadh to plead with the Taliban’s long-time Wahhabi supporters and paymasters for help against the Taliban.

    Instead of such wishful thinking, what needs to be done without delay is to start the process of transforming the Pakistani military back into an instrument of the state from its current status as a state within the state. The military must be denied once and for all the role of political kingmaker it has long exercised, as well as the inordinate influence it has in the economy. Further, the ISI must be either closed down or put under strict civilian control. Islamabad must also seriously consider doing away with the special status of the Federally Administered Tribal Areas, which has contributed to the prevailing lawlessness that the Taliban has exploited. A reconciliation with India is an essential precondition to the success of all of these measures and is very doable; a reconciliation with the Islamist thugs is not. This is the only kind of Washington agenda that would offer real hope of stabilization in Pakistan and the eventual defeat of the Taliban across the border. Unless some progress is made along these lines, Congress should refuse to provide even one more penny in aid, regardless of what Pakistani president Asif Ali Zardari promises.

    But time is of the essence. The Taliban may not be at the gates of Islamabad yet but the ongoing radical Islamization of the country may be reaching the tipping point. The North-West Frontier Province is, for the most part, no longer controlled by the government. The greatest immediate danger lies in the huge inroads made by the fanatics in the Punjab heartland, especially southern Punjab and the key urban areas (Lahore, Multan, and Karachi). If the Punjab becomes ungovernable, Pakistan will not survive long as a unitary state.

    — Alex Alexiev is an adjunct fellow at the Hudson Institute.
    Posted by: john frum || 05/07/2009 13:03 || Comments || Link || [0 views] Top|| File under:

    #1  Put simply, the Taliban, murderous as it is, is not the problem. The problem is the Pakistani military and the stubborn refusal of Washington to comprehend this basic reality

    Best post i have read in a while stating the truth the biggest enemy in Pakistan is the Army/ISI.Taliban are just a tool/proxy!
    Posted by: Paul2 || 05/07/2009 13:40 Comments || Top||

    #2  Agreed.
    Posted by: Grumenk Philalzabod0723 || 05/07/2009 21:45 Comments || Top||


    Besieged by the Taliban, but thinking only of India
    by Irshad Manji

    Today, Pakistan's President drops in on America's. There will be forced smiles and fine gifts, but stern words must also be exchanged.

    Pakistan's Asif Ali Zardari seems more interested in demonizing India than in defeating the Taliban. Barack Obama can't afford to humour such misplaced priorities. How difficult will it be for him to extract serious change out of his Pakistani peer, fair-weather ally and duly elected, deeply compromised pain in the neck? I got a taste of the odds stacked against meaningful change myself when I confronted Pakistan's former president, Pervez Musharraf, at a recent gathering.

    General Musharraf, retired from both electoral politics and army service, owes no fealty to anyone. And he has never held a candle to the corruption that plagues his successor. That's precisely why our encounter proved so revealing - and so damned depressing.

    Two months ago, India Today, the news magazine of record in the subcontinent, invited me to address its annual conference. On the final night, delegates convened for a gala dinner where Gen. Musharraf was the keynote speaker. I sat at the head table, mere feet away during his address. He called himself a "man for peace," and, to everyone's surprise, he acknowledged the link between religious extremism and terrorism.

    Given these statements, I had to ask him about women's rights. Standing up, I began with salaam alaykum (peace be with you) - assuring Gen. Musharraf that I was posing my question as a fellow Muslim, and a faithful one at that. He got the hint. He smiled.

    Then, he soured. I asked if he would consider a postpresidential role "supporting the many Pakistani human-rights activists who are working against the epidemic of honour killings in your country."

    After a pause, he replied, "Would you like to ask another question?"

    "No," I responded. "Honour killings are an important issue, and this is a golden opportunity for you to declare before an august audience that you mean what you say."

    "Sit down!" he ordered. Turns out that even retired generals never really hang up their uniforms. For the sake of results, I did as he decreed.

    Gen. Musharraf launched into a dissertation about women's inequality being a problem all over the world, not just in Pakistan. He then insisted that his government did take steps to end discrimination against women. (He's right. Facing a robust campaign by Pakistani civil society, Gen. Musharraf did more to loosen the grip of strict sharia than the late Benazir Bhutto ever dared.) But to those women who remain dissatisfied, Gen. Musharraf said: If you try to climb a ladder too fast, you will fall off.

    (Perhaps he should read Letter from a Birmingham Jail, in which Martin Luther King wrote: "For years now I have heard the word 'Wait!' It rings in the ear of every Negro with piercing familiarity. This 'Wait' has almost always meant 'Never.' ")

    Imagine the impact that Gen. Musharraf's independent, out-of-office voice could have. A high-profile Muslim man with authoritarian credibility, publicly protesting against honour crimes, would give other Muslim men permission to ally with activist women.

    If that seems like a pipe dream, consider this: Months after 9/11, Gen. Musharraf famously spoke about the need for a Muslim enlightenment. By visibly opposing the abuse of faith that honour crimes brutally and blatantly represent, he would do his stated vision of Islam a huge service.

    Instead, we get prickly defensiveness from the promoter of religious moderation and the self-declared "man for peace." Now what can we expect from his far less competent, less compelling and in many ways less confident successor?

    True, Mr. Obama has a way of charming snakes. But charm won't cut it this time. Mr. Zardari's hold on power is more slippery than Mr. Zardari himself. Before he gets tough with Pakistan's real enemy - the Taliban - he'll reach deeper into the well of anti-India sentiment merely to hang on.

    I've glimpsed how nourishing that well can be, even for educated Pakistanis. India Today's broadcast arm aired my encounter with Gen. Musharraf, sparking reactions like this one from a physician: "It is hard for me to express in words how outraged I was when I saw you on TV [with Gen.] Musharraf and questioning how you can help him change the customs that trouble not just Pakistan, but India as well ... [S]top acting like India is the crème brûlée when it comes to women's rights. They should fix their own problems first. The best part of that segment was when Musharraf told you to 'sit down.' "

    Perhaps Mr. Obama should pull a Musharraf and instruct Mr. Zardari to sit down, and then to listen up. And finally to stand up - stand up to those who are decimating the secular ideals on which Pakistan was founded. Better an unpleasant conversation than unchecked thuggery in a nuclear neighbourhood.
    Posted by: Steve White || 05/07/2009 00:00 || Comments || Link || [0 views] Top|| File under:

    #1  Someone say fine gifts?
    Posted by: .5MT || 05/07/2009 5:50 Comments || Top||

    #2  CHINA???
    Posted by: JosephMendiola || 05/07/2009 23:50 Comments || Top||



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    Two weeks of WOT
    Thu 2009-05-07
      Sufi Mohammad's son killed in Lower Dir shelling
    Wed 2009-05-06
      Mashaal: Hamas wants 10 year cease-fire
    Tue 2009-05-05
      Pirates captured after attacking the wrong ship
    Mon 2009-05-04
      Khaled Mashaal re-elected Hamas political leader
    Sun 2009-05-03
      64 civilians killed in Lanka hospital attack
    Sat 2009-05-02
      60 Taliban killed in Buner offensive
    Fri 2009-05-01
      Taliban hold Buner town people hostage
    Thu 2009-04-30
      U.S. missile strikes kill 10 in South Waziristan
    Wed 2009-04-29
      70 militants killed in Pak operation
    Tue 2009-04-28
      TNSM suspends talks with govt
    Mon 2009-04-27
      Suspect in Bat Ayin attack in custody
    Sun 2009-04-26
      North Korea reactivates its nuclear program
    Sat 2009-04-25
      US may use daisy-cutters 'if Pakistan shows reluctance'
    Fri 2009-04-24
      73 killed in twin suicide blasts in Baghdad
    Thu 2009-04-23
      Abu Omar al-Baghdadi nabbed

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