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Originally Posted by Tinordi
Well first off the debt ceiling is a political limitation not a market limitation. Which is why we're here. Without this procedural impasse then the markets would still happily keep lending money to the U.S.
One of the main reasons that the U.S. can't afford it is because they made a policy decisions 8 years ago to significantly reduce the amount of revenue the government was taking in in heavy tax cuts. That's a spending decision as well. They government couldn't afford to cut taxes based on their future income outlays, which is why we're here but I didn't hear people railing against that and I don't hear them talking about how they can't afford such low taxes now.
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Its not a political limitation if the US is having problems recovering. Much of the talks have been about tax reform, or more specifically, closing the loopholes to create a level playing field for all businesses alike, not just the big ones like GE. Many people say small businesses are a driving point in the economy, and right now they're not driving anything. Canada has a much more simple tax code, with a lot less loopholes, and a lower overall corporate tax rate. When we talk about lowering the corporate tax rate, we're talking about lowering it from 17% to 16%. The US is talking about lowering it from 35% to roughly 23%.
You can possibly claim that such a change to the system is political. The change in the business community would be HUGE.