Re: Where did the 40B go?
- From: BM <m-e-d-a-w-a-r@xxxxxxxxx>
- Date: Thu, 04 May 2006 00:28:03 -0400
You're talking about a real estate purchase credit (my example was
about a simple credit card account where the person doesn't have the
capacity to balance it and can't declare bankruptcy).
Credit card may not be a good example. Laws vary from country to country. For instance in this country interest adds to debt. The credit card company will not let you allocate your pay to the interest or the principle. They do it for you to maximize your liability. Let me take a symbolic example. Let's say you owe debt D in a given month M. In month M+1 you will owe new D = old D + I where I as interest on average balance for month. Last month's interest becomes next month's debt.
There is only one way to beat the credit card game: if able, pay your balance in its entirety. Don't incur any credit card debt because you will end up paying interest for the same debt over and over again.
This is not the
case with the government. In order to reduce the debt, a new economic
policy has to be adopted. Until so, only the debt service is paid (and
this includes paying interests and buying bonds on maturity with other
new emitted bonds).
Here is the funny part. When the government loans new money to service the debt, does that not mean that old interest becomes new debt? That's my same point restated with a refinement:
Debt = accumulated deficits + new loans + interest - payments
While this is true, a government will always impose its economic policy
and defend it against opposing economists / general public.
Sadly this doesn't work in Lebanon because the government does not represent a ruling party but is a hodge podge of nas b-roos w-bala roos. What do the following ministers have in common: T. Hmadeh, M. Hmadeh, Aridi, Fatfat, Sarraf, Mitri? Can these ministers taken for example unite behind a single economic policy? Not likely.
In the end,
the policy might work or not (even stable countries have their economic
problems especially when it comes to social services - health,
unemployment, etc. - budget) which would lead to a government change
and a new policy.
Due to the sectarian rather than democratic allocation of power, sadly government change won't work without new elections first.
So you mean they stole and stayed poor? :-)
Stole and spent..
Rich people have the possibility to transfer their funds and avoid
taxation while causing an economic problem (capitals flight). Again,
this has to be studied in the economic policy to be adopted.
I am not against studying. People who transfer their funds will lose the opportunity to invest their funds in Lebanon. Besides, taxing income (above some value), property (above some value), luxury items, etc. may be more effective than taxing fortunes. Fortunes can be taxed once (same Lira earned should not be taxed again). A person who transfers funds out to evade payments would remain liable and are subject to the law, property confiscation to pay tax liability, etc.
Between the concepts of paying fair share and taxing to death there should be a middle point. Right now the middle point favors the rich and burdens the poor. The wealthy must pay their fare share on earned wealth regardless whether the earned wealth is legitimate or not, a matter for a court venue to decide.
- Re: Where did the 40B go?
- From: DrSMITH
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