Clinton Would Tax Rich In South America

by Mike Godfrey, Tax-News.com, Washington

14 June 2010

US secretary of state, Hillary Clinton continues to bang the drum for raising taxes in order to modernize in her latest South American tour, which takes in Peru, Ecuador and Colombia, saying that in many places "it was a simple fact that the wealthy did not pay their fair share."

Last year Clinton exhorted Pakistan to raise investment in public services "at the risk of sounding undiplomatic".

"By any fair measure, for example, the percentage of taxes to gross domestic product is among the lowest in the world. In the United States, we tax ourselves, depending upon who is in power, somewhere between 16% and 23% of GDP, and right now, it usually hovers around 20%. You're less than half of that," she told an audience in Pakistan last October.

Her contention that Brazil's growth may be attributed to high levels of taxation recently has been fiercely disputed by commentators. "Brazil has the highest tax-to-GDP rate in the Western Hemisphere, and guess what? It's growing like crazy," Clinton told her audience at the Brooking Institute.

Clinton's words went down well in Ecuador, where the US hope to improve relations after they reached a low point under the Bush administration.

"Despite progress in some places, tax and budget systems are ineffective and inefficient in much of the hemisphere," Clinton said in a speech in the capital, Quito. "This is partly due to how taxes are structured, with the burden falling too heavily on the lower classes and often hurting productivity," she said.

Ecuadorian president, Rafael Correa remarked: "In countries such as Ecuador, a government that tries to impose a tax on the rich is considered communist. If you apply the law equally, you are considered a dictator."

Correa expressed admiration for "dearest Hillary" and said he loved the United States. He said he was not anti-American nor anti-capitalist, but believed that if Obama and Clinton had inherited the problems that he had in Ecuador, they would be taking many of the same steps.

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