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Erroll Flynn as Robin Hood
Erroll Flynn as Robin Hood

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Government as Robin Hood: Taxing rich to pay the debt Add to ...

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Stories Report on Business is following today:

How governments are taxing the wealthy

Call them modern day Robin Hoods, taxing the rich to pay the poor, who happen to be themselves, in this age of austerity.

Governments laid low by the recession are turning more and more to the wealthy for sources of income through higher taxes. Bloomberg News notes today that several governments - from the European laggards to the United States - are looking more and more to the rich as their budget deficits spiral to new heights. Spain's prime minister has called for higher taxes on the wealthy, as have politicians in France and Sweden, while Britain has already made the move. At least 14 U.S. states have boosted tax rates or are studying the move.

"There's a real move to get at whatever revenue you can get at without being so broad as to get the populace all up in arms," Scott Pattison, executive director of the National Association of State Budget Officers in the United States, told the news agency.

Taxes aside, government austerity measures are hitting the masses in Europe's weaker economies. Several governments have unveiled cutbacks that hit public sector workers and have led to mass protests, notably in Greece, where the demonstrations turned deadly, and today in France, where thousands protested plans to raise the official retirement age above 60.

Related: French workers hit the streets

Obama unveils new drilling rules

President Barack Obama today threw the offshore energy industry into a tailspin, unveiling sweeping new measures that will affect the sector for months to come. Mr. Obama extended a moratorium on drilling permits for six months, and suspended planned exploration drilling off the Alaska and Virginia coasts, as well as on more than 30 wells in the Gulf of Mexico.

The decision is a blow to Royal Dutch PLC, which had planned to drill off Alaska this summer, The Wall Street Journal noted.

The president's move comes as BP PLC scrambles to plug a well that has been spewing oil into the Gulf with a so-called 'top kill' process that involves pumping in heavy fluids and then sealing it with cement. Read the story

Dollar, stocks in strong rally

Global stocks, the Canadian dollar and oil rallied today as the mood in financial markets changes considerably. The Canadian dollar shot up, oil is well above $73 a barrel, and The Dow Jones industrial average , S&P 500 and S&P/TSX composite index all jumped as North American markets opened.

Helping to drive stocks, and commodity-linked currencies such as the loonie, was positive news from Spain, the OECD's economic forecast yesterday and a denial by China of a news report that it is reviewing its holdings of euro assets, which is described as "groundless." In Spain, the parliament approved a €15-billion austerity package, though it passed by just one vote.

Market Blog columnist David Berman noted this morning that while global markets are rebounding, stocks have behaved erratically recently, to say the least, and markets have been whipsawed over the past two trading days.

As for the loonie, Scotia Capital economists Derek Holt and Karen Cordes Woods noted that, while there have been extreme ups and downs, the Canadian dollar is outperforming most of its global peers. "The [U.S. dollar]has outperformed almost all currencies this month, but [the Canadian dollar]has held its own better than most. The [loonie]has slipped 4.9 per cent against the greenback so far this month ... The point is that [the Canadian dollar] has outperformed on the upside and downside of broad movements in global risk appetite compared to a basket of currencies. Investors have done well over-weighting both the [U.S. dollar]and [the Canadian dollar]in portfolios. Yes this has been a [U.S. dollar]friendly environment, at least for now and until U.S. admonishment of European finances swings around to focus on U.S. fiscal austerity and drag effects on U.S. GDP over the next three years."

North American stocks closed on a down note late yesterday but there was a sharp turnaround today.

In his Global View blog today, Kevin Carmichael reports on why Prime Minister Stephen Harper's G20 summit must strike a decisive deal on sovereign debt.

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