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Taxes, Taxes, Taxes

FT: The US must rethink its China policy. NYT: As emerging nations move forward, the US moves backward. China Post: Japan evaluates how to reengage ASEAN.

The US must rethink its China policy

Thomas Wright, executive director of studies at The Chicago Council on Global Affairs, writes in the Financial Times that the United States must rethink its China policy as it recognizes that the country’s growing economic might is not leading to democratization. The US has recently established deeper ties with China’s neighbors and has not been reluctant to oppose Beijing when necessary.

QUOTE: The US needs to build new geopolitical partnerships and alliances; Indonesia and India are good candidates … It should give more influence to nations willing to take on greater responsibilities in tackling shared problems – including South Korea, and on certain issues Vietnam and Turkey – and pressure those who do not.

Reform US tax system to account for the super-wealthy

James Surowiecki writes in the New Yorker that the fight in Washington over whether or not to extend the Bush tax cuts is really about the definition of who counts as rich. He argues that the US tax system should have more income brackets so the super-wealthy pay higher taxes than the wealthy.

QUOTE: This would make the system fairer, since it would reflect the real stratification among high-income earners. A few extra brackets at the top could also bring in tens of billions of dollars in additional revenue.

As emerging nations move forward, America moves backward

Columnist Paul Krugman writes in the New York Times that communities across the United States are being forced to drastically cut back on electricity services, infrastructure projects and the education system. He argues that local and state governments should raise taxes to provide more services and help the economy.

QUOTE: Everything we know about economic growth says that a well-educated population and high-quality infrastructure are crucial. Emerging nations are making huge efforts to upgrade their roads, their ports and their schools. Yet in America we’re going backward.

Japan evaluates how to reengage ASEAN

Kavi Chongkittavorn writes in the China Post that Japan is worried about its position with its regional partners and is rethinking its role in regards to ASEAN. Japanese leaders are looking at how to reengage with the region.

QUOTE: Japan will continue with this approach — to broaden the regional network of production base, stretching from India to the whole archipelago over here—that would also benefit Japan's investment and economic progress. But it will no longer be one dimensional as before.

China’s IMF move does not reflect change in policy

An editorial in the New York Times welcomes China’s move to submit this year to the International Monetary Fund’s annual review of exchange rates. But the piece warns against being fooled that China’s move signals a dramatic shift in policy.

QUOTE: The new openness means China is more comfortable that it can get away with the manipulation. It agreed to the review only after the fund softened its standards for determining whether countries are manipulating their exchange rate to boost exports, in violation of IMF rules, and to give countries like China “the benefit of any reasonable doubt” when evaluating their policies.

US must raise taxes to restore fiscal control

Columnist Clive Crook writes in the Financial Times that it is impossible for the United States to rely on spending cuts alone to reduce the deficit and restore fiscal control. He argues that the government must at some point raise taxes.

QUOTE: You cannot hold Medicare and social security unscathed, oppose all tax increases and close the fiscal gap. The big entitlements plus defense and interest amount to some 80 per cent of federal spending. With those off the table, there is not enough left to cut.

Irrational market holds back reforms in China

Michael Kurtz, head of Asia strategy for Macquarie Securities, writes in the Wall Street Journal that the biggest problem with the over-supply of housing in China is not a potential property bubble bursting but the holding back of economic restructuring.

QUOTE: The true risk may be that by having allowed a potential property overhang to come into existence, Chinese policy makers paint themselves into a corner where essential reforms such as financial liberalization and fiscal restructuring seem too dicey to implement.

Why American businesses can’t afford to rehire

Michael Fleischer, president of Bogen Communications Inc. in Ramsey, NJ, writes in the Wall Street Journal that American companies are unlikely to begin rehiring anytime soon. He argues that it is too expensive in the United States to hire a new employee because an employer’s costs to the government increases substantially with each one.

QUOTE: As much as I might want to hire new salespeople, engineers and marketing staff in an effort to grow, I would be increasing my company's vulnerability to government decisions to raise taxes, to policies that make health insurance more expensive, and to the difficulties of this economic environment.

Russia will face greater opposition as public frustration grows

Masha Lipman, editor of the Carnegie Moscow Center's Pro et Contra journal, writes in the Washington Post that the Russian government has been successful at identifying small pockets of political activism and quashing it before it develops into a broader movement. However, Lipman argues that dissatisfaction in Russia is growing, and the state will soon face difficulty silencing dissent so easily.

QUOTE: Public frustration has grown in the past year. Increases in tariffs and some taxes sparked protests in winter and early spring. Online reports of lawlessness and injustice, police violence, corruption, and impunity of the bureaucracy have provoked outbursts of anger among citizens, whose Web use is rising fast. Low quality of governance exposed during crises, such as the fires caused by the unprecedented heat wave in central Russia, add to the disgruntlement.

Italy’s Berlusconi might bounce back again

Adrian Michaels writes in the Daily Telegraph that Italian Prime Minister Silvio Berlusconi faces a political crisis, but he might still be able to bounce back from it. He argues that much of the population still believes that Berlusconi is the victim of a left-wing conspiracy, and would vote for him again.

QUOTE: Snobbish derision of Mr Berlusconi does not amount to much in Italy. It is Italians who have returned him three times as prime minister. It is Italians who enjoy or ignore the pervasive portrayal of women as sexual objects. And it would be risible to call the country with the world's greatest assembly of art and architecture, with its deep love of opera, a cultural wasteland – educated Italians who might disapprove simply choose not to read newspapers or watch Mr Berlusconi's television stations.