Capital gains and dividends would be taxed as income

The moment of truth. "The title of the report published yesterday by the commission to reduce the Federal deficit to be at stake. "America cannot be large if it is mown", provide the rapporteurs. Everything must be put on the table to reduce the debt as the budget deficit of the United States, reaching unsustainable levels. The federal debt rises to 13.700 billion, while the budget deficit is established at 1,400 billion in 2009 and must reach 1,300 billion this year.

The co-chairs of the bipartisan commission created by Barack Obama, Erskine Bowles, a former Chief of staff to Bill Clinton and the Republican Senator from Wyoming Alan Simpson, yesterday presented a slightly revised version of the plan unveiled mid-November. They want to reduce the federal debt to 4,000 billion in here to 2020 (and 35 of the GDP of here at 2035), reduce the budget deficit to 2.3 of GDP by 2015, reform the Tax Code, remove 10 for federal officials here to 2020 (approximately 200,000 positions, replacing departures) and double the federal tax on gasoline by increasing 15 cents. "The era of the denial and its consequences is completed," says Erskine Bowles vigorously.

So that there is nothing of people's in this plan, which significantly reduces the tax deductions on mortgage, increases the retirement age to 68 years in 2050 (and 69 years in 2075), compresses the spending of Government's health and retirement programs and freezes the defence budget. Parliamentarians and the White House are not spared by the report, which provides for a reduction of 15 of their respective budgets and immediate freezing of the salaries of elected officials such as federal employees non-military. But even with all these efforts, the budget deficit would reach still 421 billion in 2015.

The plan promotes also a simplification of the Tax Code, which is infinitely complex and reduces the rates of tax in exchange for the loss of certain deductions. The income tax could thus be reduced to three categories (12, 21 and 28), the lowest scale reducing all access to the various benefits and tax cuts. Capital gains and dividends would be taxed as income. To seduce the Republicans do not affect the economic recovery, the tax would fall from 35 to 28 and the profits of the subsidiaries of US multinationals would be more charges. But, at this stage, in more convincing. Democrats resist because they are socially unacceptable plan, Republicans are opposed because they see too much tax.

The 18 members of the commission must vote Friday on this version revised but always controversial and is still very far from the 14 favourable votes needed. To date, only two parliamentarians (a Republican and a Democrat) gave their support. If it is adopted, the plan will be recommended to Congress. In the contrary case, it may serve as basis for negotiations between the White House and Congress, but it may especially be a blow of the sword in the water.

Another sensitive subject, which has a direct impact on the federal budget, was discussed yesterday in Washington. A bipartisan commission was appointed Tuesday by Barack Obama - after he met at length with the leaders of the two parties. Under the leadership of the Secretary of the Treasury, Tim Geithner, it held its first meeting yesterday and must find a compromise on the renewal of George Bush's tax cuts expire on 31 December.