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[THE FOUNTAIN]Tax Rich Nations to Aid the Poor

Mar 06,2001

Alfred Marshall is the founder of neoclassical economics, also known as the Cambridge school of economics. His intellectual journey started from mathematics and physics to metaphysics and ethics, and he finally made his choice to study economics. He became a professor of Cambridge University in 1885. At his inaugural lecture, he said that the person produced by Cambridge has "a cold head and a warm heart." According to Mr. Marshall, one educated at Cambridge is a person who determined to contribute at least part of his vested power to fight the social agonies around him. The famous phrase that economics is a study to be pursued with a cold head and a warm heart came from his lecture.

Mr. Marshall set forth the issues to be resolved by economics as the study of various causes of poverty and seeking the development of human society through overcoming such causes. Therefore, he focused on redistributing profits and established the foundation of welfare economics by proposing a taxation system to accommodate change for a new ideology of financial policy. Today, almost all countries employee progressive scale systems of taxation in which the rate of taxation goes up as the taxable amount increases.

Much attention has been paid to the recently raised argument that the divide between rich and poor countries should be resolved by taxation, like income gaps between individuals is modified by taxation. At the Boao Forum for Asia held at the end of last month in Boao, in China's Huinan province, Malaysian Prime Minister Mahathir Mohamad proposed that "It is time the world thinks of taxing the rich countries on a sliding scale in order to gather funds to finance the construction of infrastructure in poor countries" under the administration of the United Nations. "Since part of the wealth of the rich comes from exploitation of the resources of the poor, it is fitting that they return some of it," he said. People opposed to globalization say rich countries become richer as poor countries get poorer as a result of globalization. James Tobin, a Yale University professor and a 1981 Nobel Prize winning American economist, has proposed an idea called the Tobin Tax, which would impose a very small tax on short-term foreign exchange transactions to deter short-term currency speculation and aid poor countries with the tax-raised money. Although 20 years have passed since his award winning idea was proposed, the Tobin Tax is still nothing more than an idea. The idea of imposing tax on rich countries has a good intention, but its feasibility is still questionable. Is it too much of a dream for expecting Mr. Marshall of the 21st century who has a cold head and a warm heart to resolve the dilemma of globalization - imbalance of incomes between countries?



by Bae Myung-bok




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