The Trap

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The 2016 budget that Barack Obama just revealed is characterized by the following ambition: if possible, reduce the harms caused by tax evasion to nearly nothing. Meanwhile, in Brussels, our dear Commissioners do the bare minimum on this subject.

Above all, there is this large number and of unspeakable brutality when we consider the socio-economic consequences that it creates: $2.1 trillion. This sum is the addition of tax defects that Google, Microsoft, Apple, Pfizer, General Electric and company have “hidden” in tax havens. And since the government’s budgets are being confused with the deficit fight, the American commander-in-chief decides that it’s time for corporations to pay what they should be paying. In short, to use his words, Obama wants to bring justice to the convoluted and complex tax universe.

To do this, the White House is considering more than ever the elimination of the benefit allowing corporations to pile up profits made abroad overseas. In this regard, it should be pointed out and emphasized that the financial engineers in the service of the companies mentioned have developed mechanisms for fostering the “relocation” of revenues from one country to another, depending on who offers the most tax advantages. In short, we should remember that some of them, for example, do not pay a penny in taxes on the sale of their products in Germany or France. What else? Obama proposes that a 14 percent tax should be imposed on the amounts brought back to the United States.

The amount that the government hopes to collect will be used, according to the plan agreed upon, to finance, in part, an ambitious infrastructure renovation plan that will go on for six years and will cost $468 billion. The president thus wishes to add to the momentum, the good momentum, achieved on the gross domestic product and unemployment front. On this matter, we should point out that in the context of the presentation of his budget backed by the economic growth, Obama allowed himself to criticize, if we dare say, those in Europe who support austerity, like Angela Merkel, by saying that he understands the choices made by the Greek voters who got crushed, or even suffocated by policies that go against … growth!

First of all, we would be inclined to believe that his ambitions will be destroyed by the majority that the Republicans have in Congress. It is very likely that they will reject some parts mentioned in the budget. But will they all oppose them? Nothing is less certain. In fact, this budget is also a trap for the Republicans. Here’s the explanation.

Since the midterm elections last November, Obama insists, like never before, on what constitutes the greatest challenge facing the United States: income inequality, which proves to be the most noticeable since the end of World War II. He keeps saying that it is necessary to combine economic policy with the middle class — Middle Class Economics — with the reduction of inequalities. In doing so, the injection of strong doses of economic justice in order to achieve his goals will be front and center of the presidential campaign that’s going to start this year.

Within the Republican Party, we know full well that if the wave of libertarians and tea party supporters violently oppose Obama’s plan, the chances that the Democratic nominee will win the presidential elections will increase because the restless of the libertarian branch have already convinced the majority of women and Hispanics to vote for the Democrats. And so, alienating the middle classes …