Sen. Barack Obama’s idea is very rational

Senator Christopher Dodd told the New York Times that public anger at banks’ refusal to disperse credit could lead to a “revolution".

 

He said,” if it turns out that they are hoarding, you’ll have a revolution on your hands. People will be so livid and furious that their tax money is going to line their pockets instead of doing the right thing. There will be hell to pay,”

 

But the Governments are now spending a lot to bail out the sinking economies. It seems that they are spending much higher than they budgeted for in this year.

 

The British Prime Minister Gordon Brown defended this course. He said: "The responsible course is to borrow now to maintain growth and output, and to reduce borrowing as a proportion of GDP as the economy recovers and tax receipts rise again."

 

In the UK, it was announced in March that the Government would borrow about £43 billion. But they now borrowed more and it reached to £65 billion,- about 4.5 per cent of GDP.

 

This is much higher than the EU's recommendation of a maximum deficit of 3 per cent. Currently each taxpayer in the UK is in debt-the figure coming closer to £2,000.

It's unavoidable. The governments have to spend in order to save the financial system. At the same time, they have to tackle the problem of increasing debts.How to do it?Just by increasing their incomes through higher taxes from the wealthiest.

In this context,the US Presidential candidateSen. Barack Obama’s approach is more prudent. He wrote: "If we kept the payroll tax rate exactly the same but applied it to all earnings and not just the first $97, 000, we could eliminate the entire Social Security shortfall." So he rightly targets the roughly five percent of Americans who earn more than $97,000 per year."

In the US, the rich are now exempted from paying contributions on all personal income over the $97,500 cap. In the case of a CEO paying himself $4,000,000, he is exempted from paying Social Security tax on $3,100,00.Considering the fact that he is able to draw such a great remuneration because of the infrastructure of the country, Obama’s idea is very rational.