America is a country of “predatory capitalism”, as German Chancellor Helmut Schmidt used to call. Most Europeans celebrating a state of social justice and solidarity would agree. But if Europeans weren’t so suspicious of America, they would happily appreciate the cornucopia of a $3.5 trillion spending program and $1.2 trillion infrastructure that makes its way to Congress.
President Biden’s tax plans could make Europe a capitalist haven relatively soon. He wants to increase the long-term capital gains tax from just 24 per cent to 43 per cent. There is no such tax in Switzerland. In Great Britain, inventor of the welfare state, it is 20% and in Germany 26%. When it comes to income taxes, the United States may soon be climbing the ladder. Biden only wants a marginal income tax rate of less than 40%. Add in state and local income taxes, such as California’s 13.3% for the top earners, and wealthy American taxpayers may pay more than their European counterparts.
The New York Times is right: Biden’s budget promises to “reshape the role of government in the economy.” Don’t worry about the bill. The 10-year Treasury bill nominally reaches about 1.25%, but with an inflation of 5%, the net yield drops to below zero. Serving a mountain of public debt with depreciating dollars is theft. Nowadays garbage is a virtue, not a vice. Why bother? It’s a free ride, as long as central banks keep pumping money for free.
Someone is always paying. The laws of economics still apply today. Why is inflation rising on both sides of the Atlantic? The same saying: Too much money for too little wealth. Plus wage pressure due to harmful government programs that pay the most generous income ever, and you have millions of unfinished jobs. Why look for work if your unearned money matches your after-tax pay? This is rational thinking, although it is not responsible.
The middle class will introduce the bill. Inflation eats away at savings, although the wealthy avoid the trap by investing in assets such as stocks, art, and real estate, whose prices tend to rise more than the rate of inflation.
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