US Debt Ceiling Looms Large at Davos 2013
Whisper it quietly, lest events change in the next few days — but in a departure from recent times, this year's annual think-fest in the snow will be dominated by the fiscal crisis in North America rather than Europe.
Not because Europe's debt problems are fixed, of course. They've just been knocked off the front pages by the dance of proposal-and-recrimination in Washington. With delicious timing, the World Economic Forum occurs as U.S. politicians scramble to meet another deadline, and the debt ceiling looms large. This topic will dominate conversations both on and off the official agenda.
The operating title for Davos this year is "Resilient Dynamism." It neatly encapsulates the challenge of leadership in a period of "prolonged global economic malaise."
(Read More: Is Income Inequality the Biggest Global Risk?)
As WEF Founder Klaus Schwab puts it: "Future growth in this new context requires dynamism — bold vision and even bolder action."
Presumably politicians and governments are listening. But let's be clear — this is also a challenge for the business community and every taxpayer.
Behind the smokescreen of rhetoric about Obamacare, entitlements, taxes for the rich, taxes for the poor, the squeezed middle, tax avoidance, tax evasion, overseas profit, and government spending cuts lies a simple truth: somebody isn't paying enough tax.
I've read Ayn Rand. I understand the Laffer Curve. I, too, shake my head every day at government waste and feckless scroungers. I'm no bleeding heart liberal. But someone is going to have to pay more.
Income must match expenditure — just like companies, society's balance sheet must, well...balance. My favorite literary quote on our current predicament comes from Dickens. In David Copperfield in 1850, Wilkins Micawber says: "Annual income 20 pounds, annual expenditure 19 pounds and six, result happiness. Annual income 20 pounds, annual expenditure 20 pounds ought and six. Result misery."
That's the western world's debt crisis in a nutshell. But unlike Wilkins Micawber, we can't expect "something will turn up."
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As this financial crisis lurches into its fifth year, the real question of who pays more and who takes less is being fought. U.S. corporations reportedly have over $1.6 trillion parked offshore to avoid domestic taxes. Companies around the world are under the spotlight like never before for creative accounting which reduces tax bills. And governments are going after banks and regimes that harbor tax evaders. Meanwhile, taxes are going up in the West for everyone.
But what is the right rate of tax for the corporate, or the individual? Is tax avoidance smart accounting or the abrogation of some moral responsibility to the communities we live in and benefit from? In a globalized economy is it time for globalized tax standards? And how do you hold on to more when some governments want to leave you with less?
Just some of the questions we will be putting to CEOs and policy makers in Davos.
—Please join me and my 'Taxing Times' board on Squawkbox Europe from 7-10 CET, Jan. 23 - 25.