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Posts Tagged ‘Gordon Brown’

U.K Tax Increase of 25%: A Sign of Things To Come?

Posted by Larry Doyle on April 22nd, 2009 1:36 PM |

If you think things are challenging here in the U.S., be thankful you do not currently live in the United Kingdom. Given the massive deficits in both countries, the debts are already sizable and GROWING.

How does an individual, a company, or a government pay a massive debt? Pay it, borrow more, decrease headcount, scale back services, and increase the price of admission–as in higher taxes!! Actually, most private and public entities are utilizing a combination of these tactics – if not all of them – to combat outstanding debts.

In the face of rising deficits and soaring government spending globally, we are also witnessing significant social frustrations. The frustrations here in the U.S. were evidenced by the number of Tea Parties on April 15th.

Across the pond in the U.K., the deficit relative to GDP is off the charts. Some have speculated that the U.K. may need financial assistance from the IMF. Before the Gordon Brown led government does that, though, it will utilize all the other tools in the bag. To that end, the tax rate on the upper income will be increased by 25%, from a 40% level to a 50% level!! That increase is being accelerated from a 2011 implementation to 2010.  A U.K. government promise of “no new taxes” just went the way of George H.W. Bush.

The BBC sheds light on the massive fiscal problems facing the U.K., Tax Rise As U.K. Debt Hits Record.

While I thought our fiscal problems were bad, the current U.K. fiscal situation is a nightmare.  Given the similarities in our fiscal policies, is the current reality in the U.K. a sign of things to come here in the United States?


Let’s Revisit Europe: The Weakest Link

Posted by Larry Doyle on March 17th, 2009 5:15 AM |

I thank our loyal reader in Michigan, Mr. Fiscal Liberal, for sharing with us a piece written by Simon Johnson, the former chief economist of the International Monetary Fund, a professor at the MIT Sloan School of Management, and a senior fellow at the Peterson Institute for International Economics.

Mr. Johnson writes about the growing problems in Europe. I am hard pressed to see how the European situation, both in the East and West, can not end badly. There are too many economies that are effectively insolvent or on the brink of insolvency. I believe this is the region of the world which will experience increased economic strife leading to social unrest and political change. Can the problems in Europe be contained given the massively interconnected world of global finance? 

Thank you again FL for sharing this very enlightening piece from Simon Johnson!!   

G-20s Real Agenda Should be Saving Europe from Itself
By Simon Johnson
Last Updated: 10:28AM GMT 16 Mar 2009

The media coverage of the G20 finance ministers meeting this weekend was dominated by the apparent battle between those who support more fiscal stimulus and those who want to impose more regulations on the financial system.

This, we are led to believe, is the big debate facing the full G20 heads of government summit early next month: the US is pushing for a bigger global fiscal stimulus (2pc extra government spending from everyone, to be monitored by the IMF), while the continental Europeans are holding out for greater regulation. Gordon Brown is trying hard to cast himself as the broker for any apparent deal.   (more…)

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