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The views expressed by Andrew Quinlan and Dan Mitchell on this weblog are solely their own and are not necessarily those of their employers, The Center for Freedom and Prosperity Foundation and The Cato Institute, respectively. |
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The Market Center Blog |
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Observations and insights on the global fight |
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CF&P's Market Center Blog Archives |
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Saturday, April 30, 2005 ~ 3:10 p.m., Dan Mitchell Wrote: ...democracy is of merit only when severely constrained. In this I had some good authority from the American Founders, of course, from Federalist No. 10, where Madison,
Hamilton and Jay wrote: "Democracies have ever been spectacles of turbulence and contention; have ever been found incompatible with personal security or the rights of property; and have in general been as
short in their lives as they have been violent in their deaths." To indicate that his sentiment had strong historical support especially now, I mentioned the democratic selection of Adolph Hitler, of Benito
Mussolini and the example of some current democracies such as Haiti.
Saturday, April 30, 2005 ~ 11:41 a.m., Dan Mitchell Wrote: ...a study published last year indicated that most of the black alumni of Harvard were from either the West Indies or Africa, or were the children
of West Indian or African immigrants. These people are the same race as American blacks, who greatly outnumber either or both. If this disparity
is not due to race, it is equally hard to explain by racism. To a racist, one black is pretty much the same as another. ...The people who settled in the
South came from different regions of Britain than the people who settled in the North--and they differed as radically on the other side of the
Atlantic as they did here--that is, before they had ever seen a black slave. ...The culture of the people who were called "rednecks" and "crackers"
before they ever got on the boats to cross the Atlantic was a culture that produced far lower levels of intellectual and economic achievement, as
well as far higher levels of violence and sexual promiscuity. ...As late as the First World War, white soldiers from Georgia, Arkansas, Kentucky
and Mississippi scored lower on mental tests than black soldiers from Ohio, Illinois, New York and Pennsylvania. Again, neither race nor racism can explain that--and neither can slavery. The redneck culture
proved to be a major handicap for both whites and blacks who absorbed it. Today, the last remnants of that culture can still be found in the worst
of the black ghettos, whether in the North or the South, for the ghettos of the North were settled by blacks from the South. The counterproductive
and self-destructive culture of black rednecks in today's ghettos is regarded by many as the only "authentic" black culture--and, for that
reason, something not to be tampered with. Their talk, their attitudes, and their behavior are regarded as sacrosanct.
Friday, April 29, 2005 ~ 2:00 p.m., Andrew Quinlan Wrote: In his annual state of the nation address to parliament, Russian President Vladimir Putin urged the tax authorities to cease menacing the business
community with claims for back taxes, in a message designed to reassure foreign businesses that their contribution to the Russian economy is welcomed by the government. "That money must work in the Russian
economy," Putin told parliament. He went on to add that the "tax authorities have no rights to terrorize business". "We should stimulate
the return of capital earned by our people to our national economy," he added.
Thursday, April 28, 2005 ~ 2:03 p.m., Dan Mitchell Wrote: American trade policy needs fresh thinking, beginning with the definition of "free trade." Traditionally, free trade has been defined as the lowering
and elimination of barriers to trade, but a more comprehensive and accurate definition should include opposition to trade subsidies. Those subsidies, including the Export-Import Bank and agricultural price
supports, distort trade by shifting trade and the use of productive resources away from what Americans would choose in a truly free market. If we define free trade to include opposition to trade subsidies as
well as trade barriers, members of the 108th Congress can be classified into four categories: free traders, who oppose both trade barriers and
subsidies; internationalists, who oppose barriers and support subsidies; isolationists, who support barriers and oppose subsidies; and interventionists, who support barriers and subsidies. An analysis of
voting on 23 key issues in the 108th Congress finds that few members vote consistently for free trade. In the House, 22 Republicans and 3 Democrats opposed barriers and subsidies in more than two-thirds of the
votes they cast. The most consistent free traders were Jeff Flake (R-AZ), Michael Castle (R-DE), Susan Davis (D-CA), Vernon Ehlers (R-MI), Jim Ramstad (R-MN), Christopher Shays (R-CT), and Chris Van Hollen
(D-MD). Of the other members, 157 voted as internationalists, 2 as isolationists, and 16 as interventionists. The rest had mixed voting records. In the Senate, 15 Republicans and 9 Democrats voted as free
traders. The most consistent were John Sununu (R-NH), Wayne Allard (R-CO), Sam Brownback (R-KS), and Pat Roberts (R-KS). Of the other senators, 24 voted as internationalists, 15 as interventionists, and none
as isolationists. The rest had mixed voting records.
Thursday, April 28, 2005 ~ 1:16 p.m., Dan Mitchell Wrote: The clock is ticking. Unless Congress acts--who knows?--we could see a wave of suicides, patricides, matricides and rich-uncle killings in 2010.
That's the year that the federal tax on estates--also known as the "death tax," the most hated tax exacted by the U.S. Treasury--will be repealed.
If you die in 2010, you can pass along all your assets to your heirs without a penny to Uncle Sam. But repeal recedes. If you die after 2010,
only $1 million of your estate is exempt from tax, and the rest gets hit with a top rate of 55 percent. Those are the loony terms of the tax law
Congress passed in 2001. The Senate lacked a super-majority of 60, so, under the Byrd Rule, the repeal had to sunset after 10 years, when conditions revert to what they were before the law. Cinderella's coach
turns into a pumpkin. ...What about the deficit? Critics say that repealing the estate tax would cost $40 billion in 2011, but that's a phony number.
In fact, the contribution of the tax to federal revenues "may be zero or negative," says Harvard's Greg Mankiw, who formerly headed the
Council of Economic Advisors. The reason is that the tax "encourages people to take avoidance actions"--financial decisions that actually hurt
the economy, not to mention the deadweight losses from accounting and legal costs.
Thursday, April 28, 2005 ~ 12:19 p.m., Dan Mitchell Wrote: Three new polls show that a majority of Dutch people are likely to vote 'no' in the upcoming referendum on the EU constitution, although many
are still undecided. A new internet poll by the IPP institute (with 7,500 respondents) shows that 58.2 per cent would reject the new EU treaty,
while 41.8 per cent would vote in favour, according to press reports on Monday (25 April). The Netherlands will put the draft constitution to a referendum on 1 June, three days after the French vote on 29 May.
Wednesday, April 27, 2005 ~ 1:13 p.m., Dan Mitchell Wrote: In 2003, total federal, state and local taxes in the United States were 24.2% of our gross domestic product, ranking 29th among the 30 OECD
countries. Only Mexico (19.5%) had lower taxes. In 2003, total taxes in the 26 OECD nations with higher taxes than ours ranged from 25.5% of GDP in Korea to 50.8% in Sweden. In 1965, U.S. corporate income
taxes were 4.0% of our GDP, compared to 2.4% of GDP in the other OECD countries. But by 2002 U.S. corporate income taxes had dropped to 1.6% of GDP, while corporate income taxes in the other OECD
countries had risen to 3.0% of GDP. In 2003, U.S. corporate taxes fell to only 1.5% of our GDP. Personal income taxes in the United States have fallen from 10.5% of GDP in 1980 to 8.8% in 2003-a decline of 17
percent. In contrast, over that same period, personal income taxes in the other OECD countries have been stable as a share of GDP.
Wednesday, April 27, 2005 ~ 12:17 p.m., Andrew Quinlan Wrote: The total amount of state aid granted by the then fifteen Member States was estimated at EUR53 billion in 2003 (0.57% of EU GDP), according
to the latest EU State Aid Scoreboard compiled by the European Commission. The underlying trend in the total amount of aid is stable rather than downward, but there was a shift away from aid to individual
companies and towards horizontal objectives and in particular R&D and the environment. By sector, around EUR32 billion of aid was earmarked for manufacturing and services, EUR14 billion for agriculture and
fisheries, just over EUR5 billion for coal and a little over EUR1 billion for transport (excluding railways). ...The overall level of state aid granted by the (then) fifteen Member States was estimated at EUR53
billion in 2003. In absolute terms, Germany granted the most aid (EUR16 bn) followed by France (EUR9 bn) and Italy (EUR7 bn).
Wednesday, April 27, 2005 ~ 10:10 a.m., Dan Mitchell Wrote: A little more than a year ago Hans-Martin Tillack, a German journalist then working in Brussels, went to bed and, in his words, "woke up in a
police state." Mr. Tillack, who writes for the newsweekly Stern in Germany, describes his experience since that day as "Kafka-esque." He
had spent two years exposing a story of alleged fraud at the European Union's statistical agency, Eurostat, in which millions of euros of public
funds were siphoned off into secret bank accounts. On that morning in March 2004, he woke up metamorphosed from a whistleblowing journalist into the target of an accusation from the EU's antifraud office,
Olaf. His computer and diaries were seized and he was questioned for hours by the Belgian police without access to counsel. More than a year
later, his files and diaries are still in the possession of the police, and last week the EU's highest court, the European Court of Justice in Luxembourg, denied his request to retrieve those documents and deny
the European Commission access to his personal records. ...In the commission's hands, his documents have the potential to compromise his sources on those fraud stories and so have a chilling effect on anyone
inclined to speak to journalists about possible misdeeds inside the European institutions. So far, the commission has not requested access to
his files, but refuses to rule out the possibility that it may do so. ...Mr. Tillack has now placed his hopes in the hands of the Strasbourg, France-based European Court of Human Rights, which is independent of
the European Union -- but also has no jurisdiction over it. So the most he can hope for is a condemnation of the Belgian police for doing Olaf's
bidding in raiding his apartment and office and seizing his files. Kafka would be proud.
Wednesday, April 27, 2005 ~ 9:43 a.m., Dan Mitchell Wrote: [England] has released the names of all 100,000-plus recipients of CAP money in fiscal 2004. The largest claimant by far was British sugar
products giant Tate & Lyle with some £127 million (EUR187 million) in subsidies. Tate & Lyle's take represents around 5% of Britain's nearly
EUR4 billion CAP allocation -- and more than half of the company's pretax profit of £224 million last year. In all, the 20 largest subsidy checks written in England -- Scotland and Wales have yet to identify
their recipients -- total more than half a billion euros. These revelations have sparked outrage in Britain, in part because millions in subsidies also
went to farms owned by the royal family and various dukes and earls. ...we can't think of a better rebuttal to the EU's insistence that the
subsidies are intended to protect small, vulnerable family farms. When a quarter of Britain's CAP money goes to some 2% of its subsidy recipients, it's hard to explain the payments as anything other than
taxpayer-funded largesse for landowners.
Wednesday, April 27, 2005 ~ 7:19 a.m., Dan Mitchell Wrote: ...we never thought we'd see the day when the nation's largest teachers' union opposed a federal law because it forced school districts to spend
too much on education. Of course, the No Child Left Behind Act can't "force" states to do anything, and the National Education Association's
claim that the bill is an "unfunded mandate" strains credulity. Overall education spending rose to a record half-trillion dollars last year, and
federal support for K-12 schooling has risen by nearly two-thirds since 2001. ...last week, Utah's state Legislature passed a bill that orders state
officials to ignore parts of NCLB. If Republican Governor Jon Huntsman signs the law, Utah could be kissing off $76 million in federal education
funding. ...But what's really going on here has less to do with money (or states' rights) and more to do with the fact that No Child Left Behind
requires the public education blob to change its ways if it wants to continue receiving money from Washington. For decades the states failed to honestly measure academic progress, but they continued to receive
tens of billions in federal funding anyway. ...Local and state control of K-12 public education is certainly better than running things from Washington, and if the public education lobby has decided that federal
money is suddenly more trouble than it's worth, that's fine by us. We look forward to NEA leaders endorsing reduced federal spending and lower
taxes if they really mean it. For too long money has flowed to the states with no questions asked, even while millions of mostly poor and minority
students have been herded through our worst schools and dumped into the workforce with a diploma they can barely read. NCLB was a bipartisan agreement that such education failure was no longer
acceptable, and the political compromise traded more federal money in return for higher standards and more accountability. But now the critics
want to keep the cash and drop the standards. The choice has to be both, or neither.
Tuesday, April 26, 2005 ~ 1:30 p.m., Dan Mitchell Wrote: ...it becomes a criminal offence for any accountant, solicitor or banker to tip off their clients even that such a "suspicious transaction report"
(STR) has been made. This marks an astonishing breach in the code of confidentiality which governs the relationship of professional advisers
and their clients. The professionals are being forced to act as (unpaid) government informers. ...It is the EC's legislation which now makes it
impossible to open a bank account without particular proofs of identity often so hard to obtain that, as one victim wrote to The Times on Friday,
if he is seen going into a bank waving a gun it will not be because he wants to steal money but simply because he wishes to open an account to deposit some. Tuesday, April 26, 2005 ~ 11:44 a.m., Andrew Quinlan Wrote: "We misled you. And we plan to keep on misleading you." That's essentially what the Centers for Disease Control announced this week. The agency said Tuesday that it has greatly over-exaggerated the
number of lives lost each year to obesity. After years of putting the figure somewhere between 300,000 and 400,000, the agency now says the net
number is just under 26,000, meaning the government has been telling us obesity is fourteen times the threat it actually is, leading policymakers at
all levels of governance to prescribe all matter of intrusive, expensive, choice-restrictive public policies aimed at addressing it. ...If all of that
weren't bad enough, press reports indicate the CDC will still continue to spend millions of taxpayer dollars on anti-obesity programs, and will not
be using the new data in those programs. ...Oddly enough, after years of spouting the flimsy 300,000 and 400,000 figures, Dixie Snider, the CDC's
chief science officer, told the New York Times that it's "too early in the science" for the agency to embrace the new study. Of course, when it
comes to invasive, hands-on government programs aimed at curbing obesity, nutrition activists and government officials don't seem nearly as
concerned with accuracy. ...This latest statistical malfeasance from the CDC brings up an important, more fundamental lesson: What we eat is simply no business of the government's. No matter how well-intentioned
the researchers, government science and government science translated into policy is too prone to incentives, misplaced motivation, and the prodding and influence of special interest groups to be taken at face
value, particularly on a matter so intimate and vital as nutrition. ...Once we allow our waistlines and dinner plates to be a legitimate province of
government, it's difficult to think of what might still be off-limits. We've let "public health" -- once a term used to describe legitimate public
goods, such as protecting against communicable diseases and, more recently, bio or chemical terrorism -- come to encompass such ridiculous and obviously personal matters as whether or not we wear our seat belts,
choose to have a cigarette, or how many trips we make to the buffet table. Tuesday, April 26, 2005 ~ 10:15 a.m., Dan Mitchell Wrote: "Acting against the obesity epidemic." This is the dubious title of a bill presented by French socialist MPs to the French National Assembly
under the leadership of Jean-Marie Le Guen. ...Health is only a pretense for launching an attack on a market based economy. This bill establishes
a plan which would affect the whole food production system from the conception of the product to its distribution, through marketing, advertisement and promotion. Obviously, if there is an epidemic, socialist
MPs have found the virus: the free market. ...In France, the free market has become the favorite scapegoat for all evils. Le Guen, the proud
author of this bill, stated he had the "scruples to ask to everyone to make efforts for the Social Security [which reimburses all individual health
expenditures], when the food industry is selling without scruples products which are known to be noxious over the long run". The public health law passed in 2004 provides that companies running food
advertisements must give "specific information of a sanitary nature" or pay a tax as high as 1.5 percent of their communication budget to the
National Institute of Health Prevention and Education. If these rules concerning information on ads are not respected, article 9 of the present bill provides that companies will be taxed at 5 percent of their
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Monday, April 25, 2005 ~ 12:21 p.m., Dan Mitchell Wrote: The Boston Globe began the latest cycle of hand-wringing by pointing to a gas station near the ballpark that was allegedly charging patrons $100 to "pahk their cahs" (as the locals say) before
heading into Fenway for the Opening Day festivities. This figure struck many of the city's luminaries as exorbitant. As Boston's Mayor Thomas P. Menino put it, "Someone came up to me and said 'I just paid
$100 to park.' I blew my top." Parking around Fenway is a display of free market capitalism at its finest. There is an option for getting to and from the Fens for every wallet, or at least every wallet that
can afford the not inconsiderable price of attending a game in the first place. For the cost conscious, Boston's mostly-above-ground subway, the MBTA, has two stops within easy walking distance of the park. And
around the ballpark, fanning out about a mile in every direction, are a wealth of parking options. Unsurprisingly, the closer one gets to the park, the more expensive the parking becomes. One also pays a premium
for easy egress after the game concludes. ...none of the lots use coercive or deceptive measures on customers. Typically each lot has a worker standing on the street waving a bright orange flag to advise
motorists of parking availability and the price. Motorists that find a given lot's price too steep are free to drive further away from the ballpark and seek a lot closer to their desired price point. ...The
mayor's fondness for the market and the law of supply and demand is somewhat questionable. As he told the Globe, "My goal is to have control over the fees." A Boston attorney who regularly parks at
Leahy's Mobil when he attends Red Sox games was disturbed by the mayor's disregard for free market principles. "As a lawyer who practices in Boston," he said during an interview, "I'm quite
thankful that the mayor has yet to see fit to regulate my rates." ...we live in a society where the market--not a politician--decides what is fair compensation. ...the city has told the Globe that it will
"use whatever regulatory leverage the city has to force parking lot operators to lower game-day fees." Therefore, it was unsurprising that Leahy's Mobil and other lots were visited by city inspectors
after Opening Day--purportedly to ensure the safety of the lots/gas stations. The people who own the parking lots around Fenway Park do business in one of Boston's shabbier and less commercially viable
neighborhoods. In recent years, they have received a stroke of good fortune in that 81 times during each baseball season their neighborhood is flooded by well heeled individuals willing to pay a handsome fee to
park their cars for three hours. There is nothing wrong with them charging what the market happily or, at least willingly, bears. If they had a monopoly on accessing the park, it might be a different story; but
they don't. (By comparison, the New England Patriots who play their games in rural Foxboro and have a virtual monopoly on parking and charge their patrons $35 dollar to park--$125 for an RV.)
Monday, April 25, 2005 ~ 11:42 a.m., Dan Mitchell Wrote: Yale's chapter of the American Constitutional Society sponsored a conference at Yale Law School titled "The Constitution in 2020." The
stated purpose of the conference, at which some of America's best-known liberal law professors appeared, was to work toward a "progressive" consensus as to what the Constitution should provide for
by the year 2020, and a strategy for how liberal lawyers and judges might bring such a constitutional regime into being. ...The conversation
left no doubt about the "rights" that, according to these eminent liberals, should be constitutionally enshrined by the year 2020. The touchstone is
Franklin Roosevelt's "Second Bill of Rights," which would recognize a right to "a useful and remunerative job"; sufficient earnings to provide
"adequate" food, clothing, and recreation; a "decent" home; a "good education"; and "adequate medical care and the opportunity to achieve
and enjoy good health." The essence of the progressive constitutional project is to recognize "positive" rights, not just "negative" rights, so
that citizens are not only guaranteed freedom from specified forms of government interference, but also are guaranteed the receipt of specified economic benefits. The bottom line is that Congress would no longer
have the discretion to decline to enact liberal policies. The triumph of the left would be constitutionally mandated. ...The left makes no secret of its
intentions where the Constitution is concerned. It wants to change it, in ways that have nothing to do with what the document actually says. It wants the Constitution to enshrine its own policy preferences--thus
freeing it from the tiresome necessity of winning elections. ...If the idea of a Constitutional right to government-funded child care, "adequate"
recreation, and $80,000 in cash seems outlandish, remember that these concepts are no more eccentric than the idea of a right to abortion was, prior to Roe v. Wade. As a law school exercise in 1972, my class was
charged with trying to formulate an argument for a constitutional right to abortion. We were stumped. None of us could think of one. A few months later, the "right" to abortion was born.
Monday, April 25, 2005 ~ 11:19 a.m., Dan Mitchell Wrote: ...the Transportation Security Administration (TSA) itself has come under more scrutiny than a cigarette lighter at a passenger screening station.
The three-year-old agency has been ridiculed for everything from pat-downs of women and U.S. senators, to a "no-fly" passenger list that
has produced story after story of mistaken identity, to a recent $16 million purchase of new uniforms with sturdier epaulets. More importantly, it still fails too often at detecting guns, knives and
improvised explosive devices, and it's years behind in developing "smart" technologies that could help screeners do their work. ...it's also
an embodiment of the torpor that can overcome bureaucracies, public or private. As memories of 9/11 have faded, TSA has begun to look like any
other federal agency. It has lived an entire bureaucratic life in quick time, moving from urgency toward complacency in just three short years. ..TSA's first administrator, John Magaw, issued one irritating rule
after another, prohibiting passengers from carrying nail clippers through checkpoints one day, and cups of coffee the next.
Monday, April 25, 2005 ~ 10:34 a.m., Dan Mitchell Wrote: Of the claimed EUR2.3 billion cost, EUR250 million was contributed by EU taxpayers from the Cohesion Fund and EUR997 million was lent by
the EU's European Investment Bank, backed by a Greek government guarantee. Much of the rest came from Greek taxpayers. But when Mr Coronakis, owner and editor of New Europe, began investigating the
financing of the project, some very large question marks began to appear. First, published figures for the cost of the airport's construction
varied wildly, from Hochtief's original offer of EUR878 million in 1992 and the EUR973 million cited by the European Commission in 1996, to the EUR1.8 billion quoted by the Commission in April 2003 and EUR2.3
billion by Hochtief in the same month. Why was the cost of Spata apparently more than double that of, for example, the new Malpensa airport serving Milan which, although of similar size, offered much
better facilities and cost EUR945 million? Why was the EUR997 million EIB loan, approved by the Commission, larger than the total estimated
cost of the airport when the loan was given, apparently in breach of the maximum 50 per cent infrastructure cost that the EIB was permitted to give?
Monday, April 25, 2005 ~ 8:28 a.m., Dan Mitchell Wrote: A lack of participation in the workforce is Europe's biggest obstacle to economic growth, an International Monetary Fund official said Thursday
(21 April). Europe needs to focus on bringing young people, people over 50 years old and women into the workforce, the IMF's deputy director of
research, David Robinson, said at the Brussels Economic Forum. ...policy makers representing countries and organisations from all over the world
are participating in the two-day forum in an effort to find ways of boosting economic growth in the EU. The consensus Thursday was more investment in education and research and development are needed...
Former Danish prime minister Poul Nyrup Rasmussen said that if each Member State invests an additional one per cent in each area covered by
the Lisbon Agenda over the next four years, the EU will find itself much better off economically. He pointed to Denmark and Scandinavia where childcare costs are subsidised by the governments.
Sunday, April 24, 2005 ~ 6:15 a.m., Dan Mitchell Wrote: MEPs have agreed to scrap member state opt-outs from the EU rule on limiting a working week to an average of 48 hours, and supported the
idea that hours spent on-call should be regarded as working time. Members of the Parliament's Employment and Social Affairs Committee approved a compromise version of a report by Alejandro Cercas,
Spanish Socialist MEP on Wednesday (20 April). ...However, such a requirement is not likely to be approved by some member states. Britain remains the strongest critic to any changes of its opt-out from the
working time limit, and also rejects the idea of allowing the opt-out only through collective agreements. Some new member states - mainly Slovakia and Malta - are supporting its defiant stance. "We only
departed from the paternalistic system of the previous regime a few years ago, and we don't want to get back to some of its elements by too
strict and bureacratic measures initiated at the EU level. It should be up to citizens to decide how long they want to work, not up to the state," a
diplomatic source from Slovakia's representation in Brussels told the EUobserver.
Sunday, April 24, 2005 ~ 3:56 a.m., Dan Mitchell Wrote: Conservative-minded opponents of VAT place great weight on the "money machine" argument. They claim that VAT would raise so much
money that it would provoke a splurge in federal spending. ...VAT revenues have grown rapidly in Europe. But steep revenue increases are a feature across the European tax landscape, not a peculiarity of VAT
systems. VAT did not encourage the growth of European government. Instead, European welfare programmes grew in response to popular demand and forced European leaders to find less distorting taxes with
lower rates and broader bases. ...If the US tries to satisfy even one-third of future revenue needs with higher corporate tax rates, the result could
be economic meltdown. Another conservative charge is that VAT would add to existing federal taxes, not contribute to tax reform. This allows critics to ignore the harsh fact that US corporate income tax drives
companies to other countries with lower rates.
Saturday, April 23, 2005 ~ 2:22 p.m., Andrew Quinlan Wrote: You and I just spent $2.5 million to turn a pyramid on its side, paint it with a rainbow coalition of colors and build a stairway along its side for
a stick figure to climb. The Department of Agriculture outsourced this cartoon revision of the old and incomprehensible 1992 food pyramid to
Porter Novelli, the international marketing firm. They call it MyPyramid. ...All of this is meant to translate the Agriculture and Health and Human
Services departments' 70-page 2005 Dietary Guidelines for Americans into bite-size portions the public can ingest without mental heartburn. It
is also intended to replace the much-derided 1992 pyramid that asked us all to count portions or servings but didn't define what a portion or serving was. ...So what are homeland hippos to do? Get off their
burgeoning duffs, jog to the nearest post office and send their congressman a note demanding that federal agencies stop paying for useless diet propaganda. McPyramid is just the kind of bureaucratic
intrusion into our lives that a conservative administration should be lopping out of agency budgets with a meat axe. If we are too weak or dumb to eat the way we know we should, having to pay for a redundant
and fudged federal reminder is an unfair tax on bloat recidivists and thin folk alike.
Saturday, April 23, 2005 ~ 10:34 a.m., Dan Mitchell Wrote: It is now evident that the Civil Rights Act of 1964 did not apply to the Social Security system. Due to the rising retirement age, differences in
life expectancy between Blacks and Whites, and mandatory payroll tax deductions, the system by its very nature discriminates against black men
and women. ...Black males today have an average life expectancy of 68 years, yet Congress continues to raise the retirement age. The current
structure simply cannot afford to send monthly checks to all citizens over the age of 65. That is a mathematical fact, and a dirty little secret Congressional Democrats do not want you to know. To compound the
discrimination, your mandatory payroll tax deductions do not go to your heirs when you die, but to people you do not even know. Under the
current Social Security structure, deceased black men essentially fund a large percentage of the retirement income of elderly white women, since they live the longest to nearly 80 years on average. ...Members of
Congress and all federal workers have personal retirement accounts in what is called the Thrift Savings Plan. They contribute to one of five
carefully managed accounts, and when they retire the money is theirs to keep. The Sununu and Hagel bills both provide for accounts based on the
Thrift Savings Plan. Yet, their Democratic colleagues want to deny us the same access to retirement security they enjoy and let the entire Social
Security structure go bankrupt. ...black Democratic leaders are willing to see the next generation of Blacks remain in economic slavery on the Democratic plantation, so long as they can deny any Republican a
perceived political victory.
Friday, April 22, 2005 ~ 3:30 p.m., Dan Mitchell Wrote: There are two sectors of the economy where the federal government involves itself heavily in financing private transactions, namely health
care and higher education. It is not a coincidence that these are the two sectors with the greatest amount of price inflation in modern times.
When the federal government increases subsidized student loans, gives a Pell Grant, or grants a tuition tax credit, it increases the number of
students wishing to attend college at any given tuition fee. Indeed, that is the idea--the federal government wants to provide access to persons who
might not otherwise go to college for financial reasons. In short, federal policies increase the demand for education relative to the supply, which
pushes prices or tuition fees up. For those who have copies of my book, I refer you to page 16 for a graphical presentation of this phenomenon.
When the federal government began tuition tax credits a few years ago, I jokingly called it the Faculty Salary Enhancement Act, reasoning that
the tax credits would lead to larger tuition increases, and some of the incremental money that colleges received would go to the faculty in larger raises than would otherwise have been provided. I believe I was
right. ...The big problem is that there is no bottom line in higher education. ...With private for-profit firms, we have real time changes in
valuations based on stock prices, and frequent earnings reports to give a sense of the financial success of the firm. There is a very specific and
precisely measured bottom line. In private firms, poor profits often lead to managers being fired, employees being laid off, bonuses being reduced. In traditional higher education, it is difficult even to say
whether the university is doing good or bad, and there are few incentives to improve. Accountability is limited. Poor performance goes unpunished, and good performance goes unrewarded. ...In 1929,
American universities spent about 8 cents of each dollar on administration, whereas today they spend 14 cents and it has been rising. The big personnel explosion in universities has not been in new faculty,
but in non-teaching professionals, many of whom are bureaucrats who do little to improve learning but who must be paid--by tuition fees if not third party payments. In 1976, American universities had three
non-teaching professionals for every 100 students; 25 years later, they had six.
Friday, April 22, 2005 ~ 2:41 p.m., Andrew Quinlan Wrote: From childhood on, Americans are told by ``experts'' -- therapists, self-esteem educators, grief counselors, traumatologists -- that it is
healthy for them continuously to take their emotional temperature, inventory their feelings and vent them. Never mind research indicating that reticence and suppression of feelings can be healthy. Because
children are considered terribly vulnerable and fragile, playground games like dodgeball are being replaced by anxiety-reducing and self-esteem-enhancing games of tag where nobody is ever ``out.''
...Sensitivity screeners remove from texts and tests distressing references to things like rats, snakes, typhoons, blizzards and ... birthday parties
(which might distress children who do not have them). The sensitivity police favor teaching what Sommers and Satel call ``no-fault history.'' Hence California's Department of Education stipulating that when
``ethnic or cultural groups are portrayed, portrayals must not depict differences in customs or lifestyles as undesirable'' -- slavery? segregation? anti-Semitism? cannibalism? -- ``and must not reflect
adversely on such differences.'' ...In 2001 the Girl Scouts, illustrating what Sommers and Satel say is the assumption that children are ``combustible bundles of frayed nerves,'' introduced, for girls 8 to 11, a
``Stress Less Badge'' adorned with an embroidered hammock. It can be earned by practicing ``focused breathing,'' keeping a ``feelings diary,''
burning scented candles and exchanging foot massages. Vast numbers of credentialed -- that is not a synonym for ``competent'' -- members of the
``caring professions'' have a professional stake in the myth that most people are too fragile to cope with life's vicissitudes and traumas without professional help. Consider what Sommers and Satel call ``the
commodification of grief'' by the ``grief industry'' -- professional grief ``counselors'' with ``degrieving'' techniques. Such ``grief gurus'' are
``ventilationists'': they assume that everyone should grieve the same way -- by venting feelings sometimes elicited by persons who have paid $1,795 for a five-day course in grief counseling.
Friday, April 22, 2005 ~ 12:33 p.m., Andrew Quinlan Wrote: You and I just spent $2.5 million to turn a pyramid on its side, paint it with a rainbow coalition of colors and build a stairway along its side for
a stick figure to climb. The Department of Agriculture outsourced this cartoon revision of the old and incomprehensible 1992 food pyramid to
Porter Novelli, the international marketing firm. They call it MyPyramid. ...All of this is meant to translate the Agriculture and Health and Human
Services departments' 70-page 2005 Dietary Guidelines for Americans into bite-size portions the public can ingest without mental heartburn. It
is also intended to replace the much-derided 1992 pyramid that asked us all to count portions or servings but didn't define what a portion or serving was. ...So what are homeland hippos to do? Get off their
burgeoning duffs, jog to the nearest post office and send their congressman a note demanding that federal agencies stop paying for useless diet propaganda. McPyramid is just the kind of bureaucratic
intrusion into our lives that a conservative administration should be lopping out of agency budgets with a meat axe. If we are too weak or dumb to eat the way we know we should, having to pay for a redundant
and fudged federal reminder is an unfair tax on bloat recidivists and thin folk alike.
Friday, April 22, 2005 ~ 10:37 a.m., Dan Mitchell Wrote: A plan to force banks into disclosing hundreds of millions of wire transfers to help fight terrorist financing would overwhelm bankers and
regulators and add questionable value to the war on terrorism, experts and officials say. The proposal is being studied by the U.S. Treasury and
would grant the government unprecedented access to banking records. Banks wire more than $6 trillion across the globe each day, the bulk of it
in and out of the United States. ..."The big provisos are whether that data can be obtained in a cost-effective way that doesn't overburden the
private sector, doesn't choke the government, and in a way that it can be ... used without running roughshod over privacy and civil liberties concerns," said Joseph Myers, a former National Security Council
official under President Bush. One current counterterrorism official said: "With a billion additional reported transactions a day, you're just
increasing the amount of hay in the haystack. You're not getting any closer to finding the needle." ...In the industry, bankers are wary of more
reporting requirements in the wake of Sept. 11. Financial institutions must already report to the government a host of other transactions, such
as "suspicious activities" and some currency moves. "Someone needs to take a temperature check," said John Byrne, a senior official at the
American Bankers Association. "Is all of this information worthwhile? Should resources be allocated to yet another information-gathering requirement without any sort of evidence that this is going to be
remotely useful?" Jimmy Gurule, the Treasury's former undersecretary for enforcement, agreed. "In the end, the banks could be reporting this
overwhelming volume of data, most of which will probably not have any legitimate investigative value."
Friday, April 22, 2005 ~ 10:11 a.m., Dan Mitchell Wrote: The withholding tax makes it possible for the government to silently steal the wealth from its citizens with little or no outrage about the loss. And
even in the case where the citizen receives a refund of all the taxes he has paid in, the withholding tax still serves two evil purposes. First,
getting a refund of all the taxes one pays in amounts to an interest-free loan to the government. The government gets money to continue its spending orgy, and the citizen loses the ability to receive a return on
money that could be invested. And second, getting a tax refund fosters the notion that the government is benevolent. Never mind that the money is yours. If the government sends you a check in the mail then the
government can't be all that bad. ...Ideally, the elimination of the withholding tax would force the American people to see exactly how much of their income is being confiscated by the government to fund its
trillion-dollar budgets. This would, of course, have to be followed by sufficient outrage on behalf of the American people to reduce those budgets.
Friday, April 22, 2005 ~ 9:35 a.m., Andrew Quinlan Wrote: Opening Monday and trumpeted proudly by city officials is the Midnight Mission - and one of the nation's plushest homeless shelters. The $17
million state-of-the-art facility boasts a full-sized gymnasium, library, playroom, hair salon, education center, and professional kitchen. ...But
20-year local activist Ted Hayes, who runs an encampment of temporary housing just blocks away, says the building will do the opposite. "The
building of large missions in the inner cities of America only helps to keep the cycle of homeless going with what we call the 'homeless
industrial complex,'" says Mr. Hayes. "A big fancy operation like this only maintains the bank accounts and lifestyles of those who run them and helps donors rid themselves of guilt."
Friday, April 22, 2005 ~ 8:41 a.m., Dan Mitchell Wrote: In Okemos, Mich., a 71-year-old health nut named Howard Weyers runs a health-care benefits company called Weyco. Weyers thinks his
employees should be healthy, too, so years ago, he hired an in-house private trainer. Any employee who works with her and then meets certain exercise goals earns a $110 bonus per month. So far, so good.
But then, in November 2003, Weyers made an announcement that shocked his staff: "I'm introducing a smoking policy," he said. "You're
not going to smoke if you work here. Period." ...Today, he calls the policy a success. Twenty Weyco employees who smoked, stopped. Some of their spouses even quit. ...Virg Bernero, a Michigan state senator,
wants to make such firings illegal. ...Bernero's thinking is muddled. I think whether you smoke, get fat or go skydiving should be your choice. I
say "Give Me a Break" [the title of Stossel's book] to busybody politicians in New York and California who've banned smoking in every bar and restaurant. But there's a big difference between government
banning things . . . and Howard Weyers doing it. We have only one government. When government bans something, it bans it for everybody in its jurisdiction. That's why the Bill of Rights limits government power.
But Weyco is just one company. Its employees have other choices. There are other jobs available in Michigan. ...Freedom includes the right to
quit your job, but freedom also includes the right not to employ someone you don't want to employ. No one forced Stiffler and Epolito to work for
Weyco. But now, they want to force Howard Weyers to employ smokers. He built the company. He owns the company. What about his freedom?
Friday, April 22, 2005 ~ 8:02 a.m., Dan Mitchell Wrote: The estimates of the effective tax burdens take into account the most important taxes on corporate income and capital that are relevant for
profitable investments. Therefore, the calculations consider the statutory tax rates of theses taxes as well as the most important rules for the
definition of the tax base, e.g. differences in depreciation allowances.
Thursday, April 21, 2005 ~ 11:39 a.m., Dan Mitchell Wrote: Australian Treasurer Peter Costello won a major breakthrough in a tax wrangle with state governments on Wednesday when six out of eight
states and territories agreed to abolish a number of indirect taxes. The agreement means that the states will phase out A$4.4 billion (US$3.4 billion) worth of taxes over a six year period to the fiscal year
2010/2011. The taxes in question include stamp duty on leases, mortgages, bonds, debentures, cheques, bills of exchange and promissory notes. ...However, Costello, determined to hammer home the warning
that these dissenting states will face "serious consequences" as a result of their refusal to abolish the taxes, has urged businesses to vote with
their feet and relocate to areas where taxes are lower. "If you're in business, you can practice your business stamp duty-free under this deal
in every state except Western Australia and NSW," Costello told reporters. "Businesses can and should relocate...out of the high-tax states...to the low-tax states," he added.
Thursday, April 21, 2005 ~ 11:00 a.m., Dan Mitchell Wrote: Saving is a good thing, but it is possible to overdo it. The uncritical acceptance of the notion that more saving is always better than less
saving is a bad guide to individual behavior and a bad guide to public policy. Anyone who thinks that a nation whose people consistently work
hard, save, and invest will be consistently better off than a nation whose people may work hard but save less need only compare the economies of
Japan and the United States since 1990. Over the past fifteen years, America's real net worth has risen by nearly 80 percent (about 4 percent per year), while Japan's wealth has actually dropped despite its much
higher saving rate. The form that saving takes is also important. Saving involves forgoing current consumption in return for the security of having accumulated assets or for the earnings on investment that is
financed by saving. The very low level of American saving, measured as the difference between income and consumption, suggests that a rise in
the value of housing is being viewed as saving by many U.S. households. That may not be the best way to save, however. There are some ways to raise saving while correcting the U.S. bias toward housing-as-saving
that the President's Tax Reform Commission may want to consider. A consumption-based tax that taxes all saving only once, rather than twice as the current income tax system does, makes a lot of sense. ...The tax
preferences for U.S. residential real estate are well known. Interest on mortgages up to $1 million is fully deductible from income tax. Capital gains on sales of residences are exempt from tax in amounts up to
$500,000. So, too, are state and local real estate taxes, although the alternative minimum tax may be starting to atrophy this benefit. Still, the
largest tax benefit lies with the fact that the consumption services from owning real estate and living in it, either as a primary residence or a vacation home, constitute a non-taxed form of consumption. These
extraordinary tax preferences for residential real estate amount to $1 trillion in tax revenue losses over the next five years. Those funds could be used to finance a move toward a far more efficient
consumption-based tax system wherein all forms of saving are treated the same--and more favorably--than under the current system.
Thursday, April 21, 2005 ~ 10:19 a.m., Andrew Quinlan Wrote: Since the U.N.'s self-described dawn of integrity three years ago (one of several such sunrises since Mr. Annan became secretary-general in
1997), we have seen the sex-for-food scandal in the Congo, featuring the rape of minors by U.N. peacekeepers, which continued well after press
disclosures last year prompted a U.N. internal investigation. We have seen theft at the World Meteorological Association, scandal in the U.N.
audit department, the resignation over sexual harassment charges of the refugee high commissioner Ruud Lubbers, turmoil within the Electoral
Assistance Division, and allegations of corruption involving the U.N.'s Geneva-based World Intellectual Property Organization. We have seen
rebellion by the U.N. Staff Union against "senior management, and a raft of resignations by senior U.N. officials who nonetheless linger on the
premises on official salaries of a dollar a year, plus the various perquisites and connections the place affords. Biggest of all, we have seen the former Oil for Food relief program for Iraq blow like Krakatoa.
The program's executive director, Benon Sevan, has been accused by the U.N.-authorized inquiry, led by Paul Volcker, of engaging in a severe conflict of interest. Among other items, Mr. Sevan was found to have
been receiving large mysterious payments from his pensioner aunt in Cyprus. ...And how is the U.N. handling the possibility that some of its
high-ranking officials may be under investigation for sitting on illicit millions in secret payoffs from a former totalitarian regime under sanctions? In any private company, or any democratic government, this
would fill top management not only with dismay, but with an urgent mission to ransack the place to the rafters, immediately. At the U.N., there has been no sign of any such urgency. At a press briefing Monday,
Kofi Annan's spokesman, Fred Eckhard, when asked for details that might help identify the accused officials, told reporters to go check the
library (where reporters were told the materials needed were not on file).
Thursday, April 21, 2005 ~ 8:15 a.m., Dan Mitchell Wrote: In managing our personal security, should we guard against possible or probable threats? ...It is indeed possible for an 88-year-old man crippled
with debilitating arthritis to be a terrorist. It's possible that one of our Marines returning from Iraq for stateside reassignment, carrying ID and
official reassignment orders, is also a member of al Qaeda ready to take out an airplane. It's possible for a mother accompanied by her four
children, or a 92-year-old woman, to be "mules" paid by terrorists to bring something on board to blow up the plane. It is also possible that a
pilot plans to blow his plane up with a shoe bomb. That's reason for making him take his shoes off. It's possible that a blind person carrying a
cigarette lighter will give it to a terrorist accomplice to light a shoe bomb in flight. There are other possible security threats. Women's
stockings and underwear, as well as men's ties and belts, can be used as garrotes for strangulation. Soda straws can be used to blow poison
darts. While these are all possible threats, the question is, how probable are they? Resource expenditure on security threats just because they are
possible means that those same resources cannot be spent on those far more probable. ...The TSA's determined opposition to passenger profiling
is in itself a threat to airport security. Take their additional screening. They have every incentive to be politically correct. But suppose the TSA
had to pay $1,000 to each passenger they selected for additional screening who was found to be no security threat. You can bet they'd develop a screening method that made more sense, and it would include
some sort of passenger profiling, including racial profiling.
Thursday, April 21, 2005 ~ 7:46 a.m., Dan Mitchell Wrote: A new poll for the Financial Times has revealed that the Conservative Party is failing to convince the British electorate of its low tax
credentials, with the general election little more than two weeks away. According to the poll conducted by MORI, more than two-thirds of voters believe that the Tories will be unable to cut tax, and will in fact
increase taxation if voted into government. This is around three times the number who think the party will cut tax. However, there was one crumb of comfort for the Conservatives, as the poll revealed that even
more voters - some four in five - believed that the Labour Party would increase taxation if re-elected to a third term. ...Whilst Tory leader
Michael Howard has been keen to tout the Conservatives as the party of low taxation, he has at the same time attracted criticism from within his
own party that his initial £4 billion tax cut package is unambitious in scope.
Thursday, April 21, 2005 ~ 6:21 a.m., Dan Mitchell Wrote: Although we may wish to defer to Europe on matters relating to existentialist philosophy and anachronistic pomp and ceremony, it is the
last place on earth we should look for regulatory guidance. The highly risk-averse regulators of the European Union have raised to a high art form the obstruction of innovation and the free market. Central to
Europe's strategy to remain globally competitive with the U.S. and Asia is to "lead through regulation" -- in other words, attempting to export to
America and the rest of the world the same smothering level of counterproductive and burdensome regulation that has made the formerly robust EU an economic basket case. Eager allies in this
regulatory invasion are the powerful, global environmental NGOs that invoke the virtuous-sounding Precautionary Principle to support proposals like the current legislative assault on pthalates. Superficially,
the Precautionary Principle seems merely to promote the better-safe-than-sorry theory of policy making, but turning rational analysis on its head, Precautionary Principle devotees argue that when a
100 percent guarantee of safety cannot be proven (and it never can), we should be prudent and ban altogether the product, process or activity in
question. As noted historian Paul Johnson anticipated several years ago, the Precautionary Principle "combines fear of technology, hatred of
capitalism, and a compulsive itch to interfere." It is obsessed with whatever scare du jour elicits the "maximum of public apprehension"
with the "minimum of public understanding." It is not science. It is politics by other means.
Wednesday, April 20, 2005 ~ 1:00 p.m., Dan Mitchell Wrote: Tax depreciation rules create economic distortions when the depreciation allowance differs from true economic depreciation. This
leads firms to substitute tax-favored types of equipment for other types of equipment. Current depreciation rules introduce a non-optimal tax on
capital because firms do not receive the full benefit of depreciation in the year that they purchase an asset. With expensing, a dollar spent on a
machine, for example, would generate a deduction worth one dollar. When a deduction is spread out over many years, the present value of the deduction declines sharply.
Wednesday, April 20, 2005 ~ 12:13 p.m., Dan Mitchell Wrote: Hillary is returning to her liberal roots by joining the high priestesses of feminism in marking "Equal Pay Day." According to feminist
calculations, the first four months of 2005 were spent making up for last year's wage gap; today, women supposedly will have finally earned as
much as men in 2004. She will introduce legislation to "fix" this gap and thereby end a grave injustice. Senator Clinton can count on a
widespread public belief that women receive 75 cents for every man's dollar. ...Unfortunately, this ignores more than it reveals. Important factors including occupation, number of years and hours worked, and
education aren't taken into account. Moreover, on average, women tend to make lifestyle choices that lead to lower earnings than men. Consider that women typically take about a decade out of the workforce caring
for family. It's reasonable that a 35-year-old woman reentering the workforce after ten years earns less than a man or woman who worked continuously during that time. ...The phony wage-gap debate perpetuates
the lie that lower pay is nearly always evidence of sexism. In reality, pay differences may simply reflect different priorities - ones in which women
can be proud. Money isn't everything. A prison guard may earn more than an elementary-school teacher, but most teachers aren't looking to trade places. Hillary Clinton's legislation would attempt to eliminate
these tradeoffs by putting a Washington bureaucracy in charge of overseeing how wages are determined. Under the new regime, employers would have to pay equal salaries to "equivalent" jobs - however
bureaucrats choose to define that - and businesses would likely respond by offering fewer employment options. Senator Clinton's fellow lawyers,
who will exploit the system to launch thousands of lawsuits, will be the only real winners from the thicket of red tape.
Wednesday, April 20, 2005 ~ 11:49 a.m., Andrew Quinlan Wrote: Commonly referred to as the Nutrition and Health Claims directive, this ludicrous piece of legislation massively restricts the ability of
manufacturers to market their products. Whilst the Commission claims that this legislation is needed to protect consumers from misleading information, this directive is not about accurate labeling. Everyone
supports that, indeed it already exists under protections against false advertising. Rather, this is an example of mission creep by the European
Union, expanding its role in public health policy. The Commission's proposal for the regulation of nutrition and health claims made on foods would create a huge new bureaucracy to verify and authenticate all the
"health claims" based on an emerging science called "nutritional profiling." ...Under this directive, foods' bad qualities would prohibit
manufacturers from marketing their good ones. Any claims regarding olive oil -- a far healthier choice than lard or butter -- would be banned
from labels. Thus, touting olive oil's ability to lower the risk of coronary heart disease by reducing blood cholesterol levels would be banned
because of its high fat content. Even brand names and food signposting schemes are not safe under the directive. Slimfast and Health Plus product names would be considered illegal under the health claims
restrictions. "Digestive" biscuits would surely be forced off supermarket shelves. ...Leading charities will also suffer. Implied health claims would
prohibit charity logos from appearing on food packaging -- ending schemes by which charities such as the British Heart Foundation raise hundreds of thousands of pounds a year. In addition to charity logos,
association endorsements such as the British Dental Association's accreditation of Ribena's ToothKind soft drink will be banned. This type of government intrusion into the marketplace will remove any incentive
industry has to put forward healthier products -- leaving consumers with fewer healthy choices. Ever eager to regulate people's drinking habits,
the Commission's proposal puts the strongest restrictions on alcohol. Under the directive, no health claims whatsoever regarding beverages containing over 1.2 percent alcohol would be allowed. Familiar slogans
such as "Guinness is Good for You" would be banned as well as "light" and "lite" beer labels. Despite consumer demand for low-calorie
beverages and food, statements such as "low carbohydrate" or "low sugar" would also not be permitted. ...This directive is an extreme
example of nanny state legislation. Laying the blame for rising obesity rates at the feet of the food and beverage industry, the European Commission is telling consumers that they are too inept to make the
decisions between good and bad food and thus need the guiding hand of government.
Wednesday, April 20, 2005 ~ 11:19 a.m., Dan Mitchell Wrote: Chancellor Gerhard Schroeder's plans for a cut in the basic rate of German corporate tax have run into trouble after opposition lawmakers
told the government that better ways of financing the tax cut must be found. "We won't accept any company tax cuts financed on credit,"
Bavarian Finance Minister Kurt Faltlhauser told Sueddeutsche Zeitung in an interview. ...Responding to the opposition claims, Finance Minister
Hans Eichel, the chief architect of the tax cut plan, told Reuters that it is now up to the opposition to come up with financing solutions. After
shelving a proposal to increase dividend taxes, Eichel is said to favour a cut in tax on property sales by companies, which government tax experts
believe will encourage more transactions and increase revenues from the tax.
Wednesday, April 20, 2005 ~ 11:00 a.m., Dan Mitchell Wrote: It's been nearly three years since Congress unleashed Sarbanes Oxley upon the land... The most notorious part of the law is Section 404...
Worst of all, 404 forces companies to re-document their efforts every year, regardless of circumstances. No surprise, then, that the number of companies missing financial filing deadlines has at least doubled
compared with a year ago. And costs are piling up. One conservative estimate puts the national 404 tab at $35 billion, or some 20 times what the SEC predicted. Companies also finance the new accounting
oversight board, a bill that approaches $2 million for some larger companies. As always, the Fortune 500 can afford the burden better than can small companies. Because Sox's goal was to punish all business,
its rules hold companies with 40 employees to the same standards as IBM. The American Electronics Association estimates that while Section 404 costs the average multibillion-dollar company about 0.05% of
revenue, the figure can approach 3% for small companies. One result is that many companies are rethinking their decision to tap the public equity markets -- 21% of all those surveyed in a 2004 Foley and Lardner
study. Foreign companies are threatening to delist from U.S. stock exchanges... The tort bar also stands to gain, because Senate Democrats
wrote Section 404 as a kind of trial-lawyer roadmap; all a trial attorney has to do is demand the "internal controls" checklist and then search for
causes of action. This has already started; securities lawsuits seeking class-action status was up 16% in 2004, and they're certain to explode in the next economic downturn.
Wednesday, April 20, 2005 ~ 10:24 a.m., Dan Mitchell Wrote: ...ignorance on energy matters is profound, and the latest evidence is a letter sent to President Bush last month by the Energy Future
Coalition--a group that includes religious conservatives like Gary Bauer and hard-line defense advocates like Frank Gaffney and Daniel Pipes,
along with a potpourri of political operatives. The writers argue that, since the United States holds so little of the world's oil reserves, we are
dependent on foreigners, often in unstable parts of the world. "This dependency," the letter-writers say, "is a matter of national security." As
far as it goes--which isn't very far--this statement is correct. Of course, it would be wonderful if we owned all the oil in the world, along with all
the coal and uranium--and gold and silver and coffee, for that matter. ...They want aggressive government-mandated conservation and sharply
increased subsidies for alternative-fuels industries. We've already tried this approach under Jimmy Carter. Top-down federal dictates on energy don't work. Remember synfuels? The worst idea from the group is to
boost the already massive subsidies for ethanol, a fuel made from corn. We have lots of corn in America, goes the thinking, so we can stuff it in
our gas tanks and save on oil. In fact, the ethanol project is simply a pork-barrel jamboree for a few Midwest states, plus producers like Archer Daniels Midland, which, despite a serious price-fixing scandal,
remains politically well connected.
Wednesday, April 20, 2005 ~ 9:51 a.m., Andrew Quinlan Wrote: Today, the typical black household has a net worth of only $6,100, while a typical white household has $67,000. In recent years, the wealth gap
between blacks and whites has been intensifying. Blacks are more likely to be unemployed, living in poverty, and in need of government assistance. We can begin reversing these trends and erasing today's
racial inequities by encouraging black participation in what President Bush calls America's "ownership society." ...An individual who owns his
retirement security--a concept central to the president's plan for reforming Social Security--would enjoy many of the same benefits homeownership provides. And under the plan, even the lowest-income
workers would have the opportunity to build equity. Black Americans have the most to gain from the proposals. As it stands today, black seniors are disproportionately more dependent on Social Security, but
they receive less benefit from the system. While approximately 20% of white Americans depend entirely on Social Security for their retirement income, the figure doubles for blacks. But blacks receive far less in
return for their Social Security contributions. One in three will get no benefit at all because he will die before he is eligible to collect benefits.
...Allowing every American to accumulate inheritable wealth will go a long way in solving the intergenerational wealth gap. Younger workers allowed to set aside part of their money into personal retirement
accounts will be able to build nest eggs for their own futures that they can pass along to their children and grandchildren.
Wednesday, April 20, 2005 ~ 9:05 a.m., Dan Mitchell Wrote: European companies may be to blame for a lack of growth within the euro zone, according to an EU Commission report released Monday (18
April). Major European companies, including those posting record profits during 2004, are giving money back to investors or buying back shares rather than reinvesting it into more jobs or investing in
technology. "When investment picks up, employment goes up. Since employment is not increasing so strongly in the past few years, it could
be another explanation for the lack of growth", said Klaus Regling, the Director General for Economic and Financial Affairs.
Wednesday, April 20, 2005 ~ 8:30 a.m., Dan Mitchell Wrote: Romania's president has warned France to stop lecturing his country over its close links with London and Washington as he prepares to sign
the treaty to join the European Union. Traian Basescu says he wants to form a "special relationship" with the US and Britain to improve
security in the Black Sea region, and he also aligns himself with London's liberal economic policies. ...Asked which economic model he would
pursue, he said it would be a "more liberalised" system. "We want to have a state with minimal involvement in the economy," he said.
Tuesday, April 19, 2005 ~ 4:06 p.m., Dan Mitchell Wrote: You want to get people excited about personal accounts? Tell them about the 1960 Supreme Court case, Flemming v. Nestor, which
explicitly says Americans have no ownership rights to the money they pay into Social Security. It is, the Court ruled, a social program of Congress with absolutely no contractual obligations. What you get back
at retirement is entirely up to the 535 members of Congress. Where's the dignity in that? ...We can choose where we live, who we marry, what we
drive, the insurance we prefer, but when it comes to Social Security, Congress tells us what the deal is? We have no option but to go into a system in which we have no right to the money we pay in? This is a
major error the creators of Social Security made. Reform offers an opportunity to correct it. Give us the choice to stay in the current system or to purchase real assets that we own within the system. Choice is
consistent with American values. ...President Bush has an opportunity to create a real legacy. He has been heroically bold in raising this issue. But
it seems to me he's been timid in the manner in which he has chosen to promote it. Personal accounts are the right thing to do whether Social
Security is solvent or not. Solvency discussions are boring, not to say uninspiring. Ownership and inheritability are inspiring. The fact that personal accounts help traditional Democratic constituents even more
than Republicans should be another opportunity to turn debate around.
Tuesday, April 19, 2005 ~ 2:42 p.m., Dan Mitchell Wrote: A kerfuffle has broken out in Brussels over whether the European Union's 25 commissioners should have to disclose whether, and from
whom, they accept vacations paid for in whole or in part by others. The European Commission's answer -- which came, we're told, after a heated
internal debate on the question -- is "No."... the commission's own code of conduct bars commissioners from accepting gifts valued at more than
EUR300 ($384). Unfortunately, that code of conduct does not require disclosure; it is meant to be self-enforcing. Or, in the words of commission spokesperson Françoise Le Bail, referring to their own
compliance with the code, the "European Commissioners can judge that for themselves perfectly well."
Tuesday, April 19, 2005 ~ 11:19 a.m., Dan Mitchell Wrote: The main source of tax complexity is not reporting deductions but reporting income -- particularly minute details about interest, dividends
and capital gains. Countries with simple tax systems, such as Hong Kong, have a single tax rate on investment income, which allows the tax to be easily collected directly by financial intermediaries (who already
send us the information), rather than from millions of individuals.
Tuesday, April 19, 2005 ~ 10:44 a.m., Dan Mitchell Wrote: President Bush's bipartisan tax-reform commission should endorse a powerfully simple idea that would ease the pain of many taxpayers: Let
Americans choose between today's tax system and a 19-percent flat tax. For now, Americans contend with a federal tax code that has grown luxuriant after ten years of Republican congressional dominance. As
Cato Institute tax analyst Chris Edwards reports, federal tax rules that filled 40,500 pages in 1995 stretch to 60,044 pages today. A decade ago,
50 percent of Americans hired tax professionals; at least 62 percent do so now. Last year, Americans spent 6.5 billion hours wading through the
529 different tax forms the IRS scrutinizes. Completing the standard 1040 tax return and Schedules A, B, and D required 21.2 hours on average in 1995, compared with 28.5 hours in 2004... For individuals
and companies, once you go flat, you don't go back. All exits from today's system are final. Businesses would pay 19 percent with no deductions beyond immediate amortization of capital purchases.
Stupefying depreciation tables would be relegated to Karl Marx's Museum of Antiquities. If you fear outsourcing employment, insource capital. A 19-percent corporate tax would help U.S. companies attract
job-making foreign investment as Germany, Poland, Slovakia, and other European nations slash business levies below 20 percent. America's 35-percent corporate tax - the industrialized world's highest - currently
exports domestic funds and repels international cash.
Tuesday, April 19, 2005 ~ 9:29 a.m., Dan Mitchell Wrote: Unfortunately, a dominant strain of contemporary police culture wants citizens to limit their involvement in their own protection. Just call the
authorities. Don't do anything else. Certainly, don't defend yourself. This strain is most obvious in Britain. That country has strict gun control
laws. And sword control laws. And knife control laws. Cooks have been prosecuted for carrying their specialty knives in public. People who have defended themselves against violent criminals with knives and other
"illegal weapons" have been prosecuted - and have even received harsher penalties than their criminal attackers. ...British police and
prosecutors too often side with criminals rather than with victims who defend themselves. Take the case of Barry-Lee Hastings, who defended
his family from another burglar. In an altercation in his own home a few years ago, he armed himself with a bread knife, of all things, and after
hearing what he thought was his daughter's cry, confronted the assailant rather than call and wait for the police. In the struggle, Mr. Hastings killed the miscreant - a wanted man, a career criminal - and found
himself charged with murder. The prosecutor said he'd gone "too far." ...No matter what happens in Britain, let's make sure we always have guns for self-defense in America.
Tuesday, April 19, 2005 ~9:10 a.m., Dan Mitchell Wrote: Brazilian government officials indicated last week that a ceiling may be applied to federal tax collections in the 2006 budget in an effort to
reduce the country's tax burden as a share of its wealth. Under the proposal, the central government's share of the tax haul would be limited to 16% of GDP. At present, the country's overall tax burden stands at
more than 36%. A federal 16% share, which was first reached in 2002, is considered by Finance Minister Antonio Palocci as an acceptable limit for taxpayers, Dow Jones has reported.
Tuesday, April 19, 2005 ~ 8:31 a.m., Dan Mitchell Wrote: Maybe it's because he was once a Governor of a border state, but sometimes President Bush seems to be the only man in Washington who
has a sense of proportion about U.S. border security. He showed that sense again last week when he said he has asked the government to review its recent rule to require passports for U.S. citizens crossing into
Canada and Mexico by 2008. ...You can say that again. Millions of Americans cross the two borders daily, and in places like Buffalo, New York, or Brownsville, Texas, the regional economies would be seriously
disrupted without this routine flow of people who work, commute to a weekend home, or visit relatives. Burdening Americans with daily passport checks is the bureaucratic thing to do: It's hard on regular
folks, but it will protect government workers from political blame if a terrorist is found to have come across either border. It's also part of the
unnerving government habit since 9/11 of burdening all Americans rather than confronting some politically correct shibboleths. For example, airplane screening would have to be less onerous for
grandmothers if the Transportation Security Administration allowed racial profiling of suspicious passengers. The same goes for allowing pilots to carry guns in the cockpit.
Tuesday, April 19, 2005 ~ 7:43 a.m., Andrew Quinlan Wrote: For decades, members of the National Organization for Women and other groups that support abortion rights urged politicians to "keep your
hands off our bodies." Today, women who want to enhance their appearance with silicone breast implants can justly turn this slogan against NOW, which is pro-choice on abortion but anti-choice on
cosmetic surgery. ...Given the many charges and the difficulty teasing out small risks from epidemiological research, NOW's demand for "complete information" on silicone implants will never be met. In
practice, it is the same as a demand for a permanent ban. Why doesn't NOW apply the same impossible standard to abortion, which has its share of complications and side effects, both known and hypothesized? I
hesitate to suggest a nonscientific explanation, but perhaps it's because NOW -- which complains of "slick advertising campaigns" that
manipulate women into getting boob jobs and dresses its activists in T-shirts declaring their breasts "100 percent all natural" -- would prefer certain choices not be made at all.
Wednesday, April 18, 2005 ~ 9:22 p.m., Dan Mitchell Wrote: Nevada lawmakers are considering a bill that would tax the state's 28 legal brothels, the only regulated bordellos in the United States. The
brothels pay local taxes and license fees but have never been taxed by the state, which under the bill would impose a 10 percent tax on drinks and food and collect a $2 fee on each customer. ...Greg Bortolin, a
spokesman for Republican Gov. Kenny Guinn, said the governor did not support the tax bill because he did not want to break with the tradition
of managing legalized prostitution at the local level in rural counties and because he opposed new taxes. Nevada lawmakers are also taking up a bill that would impose a 10 percent tax on strip clubs. The general
counsel of the America Civil Liberties Union of Nevada has warned lawmakers the bill, if passed, would be overturned by the courts since stripping is constitutionally protected free expression and cannot be
singled out for a tax.
Monday, April 18, 2005 ~ 11:13 a.m., Dan Mitchell Wrote: The more complicated a country's tax system becomes, the easier it is for governments to make it more complicated still, in an accelerating
process of proliferating insanity-until, perhaps, a limit of madness is reached and a spasm of radical simplification is demanded. In 2005,
many of the world's rich countries seem far along this curve. The United States, which last simplified its tax code in 1986, and which spent the
next two decades feverishly unsimplifying it, may soon be coming to a point of renewed fiscal catharsis. ...there is indeed an alternative, and
experience is proving that it is an eminently realistic one. The experiment started in a small way in 1994, when Estonia became the first country in
Europe to introduce a "flat tax" on personal and corporate income. Income is taxed at a single uniform rate of 26%: no schedule of rates, no
deductions. The economy has flourished. Others followed: first, Latvia and Lithuania, Estonia's Baltic neighbours; later Russia (with a rate of 13% on personal income), then Slovakia (19% on personal and
corporate income). ...Practical types who said that flat taxes cannot work offer a further instant objection, once they are shown such taxes
working-namely, that they are unfair. ...Not so. A flat tax on personal incomes combines a threshold (that is, an exempt amount) with a single
rate of tax on all income above it. The progressivity of such a system can be varied within wide limits using just these two variables. ...What then
are the advantages of being very simple-minded when it comes to tax? Simplicity of course is a boon in its own right. The costs merely of administering a conventionally clotted tax system are outrageous.
Estimates for the United States, whose tax regime, despite the best efforts of Congress, is by no means the world's most burdensome, put the costs of compliance, administration and enforcement between 10% and
20% of revenue collected. ...that direct burden is almost certainly as nothing compared with the broader economic costs caused by the government's interfering so pervasively in the allocation of resources. A
pathological optimist, or somebody nostalgic for Soviet central planning, might argue that the whole point of the myriad breaks, deductions,
allowances, concessions, reliefs and assorted other tax expenditures that clog rich countries' tax systems-requiring total revenues to be gathered
from a narrower base of taxpayers at correspondingly higher and more distorting rates-is to improve economic efficiency. The whole idea, you
see, is to allocate resources more intelligently. Yes, well. Take a look at the current United States tax code, or just at one session of Congress's
worth of tax-gifts to favourite constituencies, and try to keep a straight face while saying that. In 1994, Estonia became the first country in Europe to introduce a so-called "flat tax", replacing three tax rates on personal income, and
another on corporate profits, with one uniform rate of 26%. Simplicity itself. At the stroke of a pen, this tiny Baltic nation transformed itself
from backwater to bellwether, emulated by its neighbours and envied by conservatives in America who long to flatten their own country's taxes.
Latvia and Lithuania, Estonia's Baltic neighbours, promptly followed its example. In 2001, Russia too moved to a flat tax on personal income.
Three years later, Slovakia imposed a uniform 19% rate on personal and corporate income... To the layman, a flat tax simply means a single rate
of income tax. But the connoisseur of the flat tax can distinguish several different varieties. In America the flat tax is associated with a proposal
advanced by Robert Hall and Alvin Rabushka, two economists at the Hoover Institution. Their tax, which falls on businesses and households, and allows a personal exemption, is designed not to tax saving. It thus
resembles a consumption tax, such as VAT, more than a traditional income tax, which is typically also levied on returns to saving, such as
interest and dividends. Slovakia, which taxes profits firms make, but not the dividends they distribute, perhaps comes closest to this model. ...Estonia's economy has grown impressively since its 1994 reform.
Growth reached double digits in 1997, and has since settled at around 6% annually, after a slump at the turn of the century. Repealing its high
tax rate on the rich did not erode the country's tax base as some might have feared. In 1993, general government revenues were 39.4% of GDP;
in 2002, they were 39.6%. Estonia now plans to cut its flat tax from 26% to 20% by 2007. ...The most remarkable turnaround in government revenues was recorded in Russia. Prior to its 2001 tax overhaul, the
federal government's tax-raising powers were rapidly deserting it. ...On January 1st 2001, Russia flattened and broadened its personal income taxes, collapsing 12%, 20% and 30% bands into a single, uniform 13%
rate. ...How did revenues respond? A year after the reform, the personal income tax was raising almost 26% more revenue in real terms. ...A careful study by two IMF economists, Anna Ivanova and Michael Keen,
together with Alexander Klemm, of the Institute of Fiscal Studies in London, tries to unearth the causes of this pleasant fiscal surprise. ...They did discover a conspicuous increase in compliance with the tax
authorities, however. In the year before the flat tax, Russians in the two higher tax brackets reported only 52% of their income to the taxman. In
2001, after falling into the new, all-encompassing 13% bracket, these same households reported 68%.
Monday, April 18, 2005 ~ 10:49 a.m., Dan Mitchell Wrote: Whatever the outcome of President Bush's push for personal accounts in Social Security, one of its effects deserves to be damage to whatever
credibility AARP had left as a pragmatic and non-partisan organization. ...AARP's not-so-hidden big-government agenda is to ensure those promises are kept largely by raising taxes, though the organization has
in the past been willing to go along with benefit cuts such as raising the retirement age. ...Which brings us to the best evidence that AARP isn't
even in the ballpark of serious debate about Social Security: its continuing deception about the nature of the Trust Fund. To hear AARP tell it, the Trust Fund is a big pot of money sitting somewhere that will
help the government pay benefits painlessly through roughly 2042. When pushed, AARP acknowledges that's not exactly true but protests that the
Trust Fund's self-referential IOUs should be just as secure as other U.S. government debt. But that's exactly the point: the Trust Fund is a debt,
not an asset. The most accurate way to think about the Trust Fund is simply as the amount of money that Congress will have to raise in future general tax revenues to pay itself back for the surplus payroll taxes
(above current year elderly benefits) it's squandering on other things now. ...It's also worth mentioning the hypocrisy of AARP's deriding
diversified bond and stock investment as too "risky" in other ads, while at the same time profiting by putting its brandname on various
investment funds of its own. AARP sells 38 mutual funds, and makes north of $300 million annually by such co-branding of financial products.
Monday, April 18, 2005 ~ 10:30 a.m., Dan Mitchell Wrote: A switch to a consumption tax would cut the Gordian knot of the tax code. All of the millions of hours of tax-planning, tax-preparing and
tax-loathing would be gone. H&R Block would go out of business. You would not have to worry that while you were paying your full measure of
tax, your neighbor was skating by with something less (sometimes a lot less, on the same income). The whole intrusive monster of the IRS would no longer have the right to know how much we earn, and employers
would be freed from the morass of withholding. Savings and investment would no longer be penalized. Clearly, certain exemptions would have to
be arranged for the poor. But April 15 would be a beautiful introduction to spring, instead of the day of doom it now represents.
Monday, April 18, 2005 ~ 10:12 a.m., Dan Mitchell Wrote: The U.S. is extraordinarily generous. In 2003, Americans donated a quarter-trillion to charities and churches, approximately $180 billion of
which came from private individuals. They give far more, per person, than citizens of any other developed country. ...Contributions to charities
and churches are tax deductible, constituting the government's largest "matching grant" program. ...Most low-income families do not receive
this benefit, because they cannot afford enough deductible expenses -- including donations -- to make itemization worthwhile. In fact, while 79% of households in the top 20% of the income distribution itemize,
only 2% of households in the bottom 20% do so. ...Not surprisingly, tax incentives to give charitably create disproportionate benefits for the
nonprofits supported by the wealthy, such as elite health organizations, private universities, and arts groups... Meanwhile, organizations
supported by the poor -- religious organizations, in particular -- tend to get far less indirect government support.
Monday, April 18, 2005 ~ 8:15 a.m., Andrew Quinlan Wrote: ... as with previous budgets, Congress has NO Constitutional authority for a large portion of the FY06 budget. In the late 19th century, Justice
Stephen J. Field noted in an opinion: "If the provisions of the Constitution can be set aside by an Act of Congress, where is the course of usurpation to end? The present assault upon capital is but the
beginning. It will be but the stepping-stone to others, larger and more sweeping, till our political contests will become a war of the poor against
the rich; a war growing in intensity and bitterness." Indeed. For most of American history, taxes were levied primarily on consumption, rather
than income, and for good reason. In The Federalist Papers, Alexander Hamilton argued, "It is a signal advantage of taxes on articles of consumption that they contain in their own nature a security against
excess." ...Government taxation and spending radically departed from constitutional limits under Franklin Delano Roosevelt's reign. FDR launched myriad socialist programs, the effluent of which plagues us
today. Roosevelt, by decree, redefined the role of the central government -- and was class warfare's greatest advocate. He proclaimed, "Here is
my principle: Taxes shall be levied according to ability to pay. That is the only American principle." Of course, that wasn't an "American
principle," but a paraphrase of Karl Marx's Communist maxim, "From each according to his abilities, to each according to his needs." FDR set
the stage for the entrapment of future generations by the welfare state and the incremental shift from individual freedom to dependence on the state.
Sunday, April 17, 2005 ~ 9:30 a.m., Dan Mitchell Wrote: People scurrying to meet tonight's tax deadline might consider this: It's taking you and your fellow Americans 6.6 billion hours to do all that
paperwork. The basic tax return - the Form 1040 filed by most people every year - accounts for 1.6 billion hours. The Internal Revenue Service
furnished those statistics to the White House budget office, which keeps tabs on the government's bureaucratic demands. The budget office notes
that tax work "towers over the entire paperwork burden for the rest of the federal government" and accounts for some 80 percent. ...the forms
are not just a drain on people's free time, but on the productivity of the country, Keating said. "That's a huge, dead weight burden, trying to
discern the tax code, what it rewards most," he said. "If we turn the nation into a paper-shuffling, law-figuring-out country, no one actually gets anything done." Link to this Blog Entry
Sunday, April 17, 2005 ~ 8:55 a.m., Dan Mitchell Wrote: We know how much Congress spends, but to what end? The Department of Education received $67 billion in 2004, but do children read better?
The government spends $30 billion on agriculture annually. Most of these subsidies go to the wealthiest farmers, including Ted Turner, making it our largest corporate welfare program. Was this the intent?
...When it funds broken programs, Congress engages in malfeasance. It's a breach of the public trust to play with investor (taxpayer) dollars -- not
unlike the CEOs of Enron and Worldcom who squandered employees' pensions and shareholders' investments. With one big difference: As taxpayers, we aren't free to stop investing in our government, or sue for
damages. Link to this Blog Entry
Sunday, April 17, 2005 ~ 8:16 a.m., Dan Mitchell Wrote: ...the French referendum could transform the political and economic prospects for the whole of Europe, including Britain, for an entire
generation. ...The French referendum has been grandly described as a choice between the past and the future. But the real choice is exactly opposite to the one articulated by campaigners on both sides. The
alternatives offered to the people of France are not between the idealistic European multiculturalism of the 21st century and the xenophobic nationalism of the 19th. Rather they face a choice between
two approaches: on one hand the liberal ideology of free markets and small governments that seems to be sweeping the world after its relaunch in Britain and America in the 1980s. The alternative is the
1970s belief that a centralised, protectionist and bureaucratically managed state could gradually be extended to the whole of Europe, preserving and enhancing the traditions of Gaullism in its glory days,
when Chirac and Giscard were rising to power. If the French vote "no", many of them will probably be trying to protect their country from the
incursions of Anglo-Saxon economic liberalism. And the chattering classes will doubtless conclude that the failure of the constitution is a tragic step back to the dark days of racism, nationalism and
protectionism. But whatever the intention of some voters, the consequence of a "no" vote may well be to accelerate both economic and political liberalisation in France and across Europe. Why would the
failure of the EU constitution advance liberalisation? First because it would be a wake-up call for the politicians and officials who have so mismanaged the European economy since the mid-1990s that France,
Germany and Italy, which used to be among the world's most prosperous and technologically advanced countries, have not just fallen behind America, Japan and Britain but now see their jobs and leading industries
threatened with extinction by South Korea, Taiwan and even China. Without faster economic growth, liberal market reforms are almost impossible to implement in consensual societies such as those of
continental Europe - and faster growth could well be the consequence of a French "no". ...A French "no" will force the people of Europe and the
governing elites to face the fact that their living standards, cultures and influence in the world can be preserved only by improving economic performance, not by integrating, harmonising, enlarging or writing
constitutions. Denied the illusions of "exceptionalism" and "ever-closer union", Europe may have to think seriously about economic reform. Link to this Blog Entry
Sunday, April 17, 2005 ~ 7:51 a.m., Andrew Quinlan Wrote: ...when racial preferences are lifted, whites don't gain much, but Asian admissions jump through the roof. At the University of Texas-Austin,
when preferences were removed, Asian freshmen jumped to 18 percent in a state where Asians comprise only 3 percent of the population. In other words, what is denied with Orwellian savoir-faire by defenders of
the diversity-academia complex is just plain obvious to people who are not professionally or ideologically invested in denying the existence of
the elephant in the corner: The diversity "racket" discriminates against some minorities for the benefit of other minorities. ...the debate over
diversity is driven largely by the unavoidable fact that, on average, African Americans and Hispanics are less academically qualified than whites and various other demographic groups. This was highlighted a
few years ago during arguments over the University of Michigan Law School's quota system. Justice Antonin Scalia noted during oral arguments before the Supreme Court that the easiest way to increase
diversity would be to lower the law school's standards. If diversity is "important enough to override the Constitution's prohibition of racial
distribution, it seems to me it's important enough to override Michigan's desire to have a super-duper law school." ...If, as a group, the kids of
Asian immigrants work harder and do better academically than blacks or whites or Jews, is it fair for Harvard to say at some point, "Sorry,
we're full up on Asians," simply because it had reached a quota based on the Asian share of the U.S. population? Link to this Blog Entry
Sunday, April 17, 2005 ~ 7:23 a.m., Dan Mitchell Wrote: Miracles happen, even to liberals, and the latest proof is their discovery of the horrors of the alternative minimum tax, or AMT. They've finally
found a stealthy, soak-the-rich tax increase they don't like--and, better yet on this annual tax-payment day, their revelation may make tax reform possible. ...like many soak-the-rich schemes it captured only a
small number of taxpayers at first. But because it wasn't indexed for inflation, and because prosperity has lifted the incomes of so many Americans, the AMT has begun to pinch millions and now threatens the
middle class. ...on present trend the AMT will hit an estimated 3.8 million taxpayers this year, 20.5 million in 2006, and 34 million by the end of
this decade. By 2009, the AMT will collect more revenue than the regular income tax. ...the AMT is biting hardest in the most liberal, high-tax
states. That's because the AMT doesn't allow deductions for state and local taxes the way the regular code does. So middle-class taxpayers in New York, California and other states with high income-tax rates are
getting hit sooner than people in, say, Florida or Wyoming. It is the ultimate blue-state tax. This helps to explain why people who normally
thrill to higher tax rates are suddenly up in arms. ...We could ask why these Senators don't merely call for lower taxes in their own states. But
let's be generous and congratulate the prodigal liberals for joining the broader cause of tax reform. Link to this Blog Entry
Saturday, April 16, 2005 ~ 12:10 p.m., Andrew Quinlan Wrote: ...the obsessive drive to improve profits, though coldblooded, creates social benefits. Growing profits don't simply bolster the stock market or
finance new investment. Advancing productivity -- a fancy term for efficiency and a byproduct of the quest for profits -- is the wellspring of
higher living standards. Without it, we'd quarrel ferociously over a fixed economic pie. ...But a vibrant economy requires someone to screen out
inefficiencies and promote change. In the 1980s, U.S. companies were compared unfavorably with Japanese and German rivals that supposedly
focused more on the "long term." In reality, that was often an excuse to stand pat. The American economy has achieved higher living standards
and adapted more smoothly to change in part because most CEOs didn't wait for the long term.
Saturday, April 16, 2005 ~ 10:30 a.m., Dan Mitchell Wrote: But the governor's proposal for tax credits to encourage school choice is expected to founder, and his plan to cut the personal income tax rate
from 7% to 4.75% was sharply modified in the Senate to benefit only small businesses. Some lawmakers expressed incredulity that the governor would pitch a tax break based, in part, on its potential benefit
to wealthy taxpayers from out of state. Mr. Sanford hoped to lure wealthy businessmen to South Carolina who would presumably relocate their companies as well. It also was designed to attract well-heeled
retirees. He remains unmoved by critics who say there's no evidence that lower taxes would accomplish either goal. Last year, the tax-cut plan
died as a result of a Senate filibuster, when two Republican senators declined to support cloture. Democratic leaders contended that their GOP colleagues were privately relieved with the result, since the cuts
would have cost $1 billion that the Legislature would prefer to spend.
Friday, April 15, 2005 ~ 1:30 p.m., Andrew Quinlan Wrote: Globalization has dramatically increased the importance of good economic policy. Investment funds now have almost unlimited ability to
cross national borders. Jobs and capital are fleeing high-tax welfare states for low-tax jurisdictions. This means the rewards for good economic policy are greater than ever. By the same token, though, the
penalties for misguided class-warfare policies are greater than ever. ...Other countries certainly seem to realize the importance of tax competition. Eight nations in Eastern Europe have adopted flat taxes,
for instance, including a 13 percent flat tax in Russia. Two of the countries -- Romania and Georgia -- adopted the flat tax this January, and Poland just announced that it will be hopping on the flat-tax
bandwagon. All of these former Soviet bloc countries recognized that it was very difficult to overcome the legacy of communism while burdened
with high tax rates and discriminatory taxes on saving and investment. Leaders from these nations understand that a flat tax draws job-creating
capital. They understand that a low tax rate rewards productive activity. ...The United States needs to regain its status as a major contender in
the tax-competition battle. If we want to remain the world's strongest economy, we can't rest on our laurels. Yes, the Reagan tax cuts resuscitated the U.S. economy in the 1980s. And yes, the Bush tax cuts
are helping the United States grow faster and create more jobs than most other industrialized nations. But growing faster than France and Germany is nothing to brag about. ...Tax competition is causing a global
shift toward better tax policy. Fifteen years ago, people would have called you crazy if you predicted the Soviet Union would disappear and that a bunch of communist countries would have a flat tax. Twenty years
ago, people would have laughed if you said that Ireland would have a 12.5 percent corporate tax rate and be the fastest-growing economy in Europe. More and more nations understand the critical importance of
good tax policy, and the United States should join them. A flat tax would improve the American economy dramatically and serve as an example for the rest of the world. Link to this Blog Entry
Friday, April 15, 2005 ~ 12:15 p.m., Dan Mitchell Wrote: The authors of the "tax justice manifesto" aim "to eliminate cross-border tax evasion and limit the scope for tax avoidance, so that
large corporations and wealthy individuals pay tax in line with their ability to do so." (Shades of "From each according to his ability, to each
according to his need.") They also want to increase corporate tax rates worldwide and taxes on the "wealthy" as part of their antitax
competition and tax harmonization proposals. Reading through their program, one becomes curious about how little they seem to know of real world economics and how little regard they have for individual
liberty. ...Global financial information-sharing among "all states and territories" is another demand. Again, basic questions: How is it just to
deny reasonable financial privacy to people and their legal entities? How is it just to share sensitive financial information with terrorist or criminal
governments or with governments either so incompetent or corrupt they cannot safeguard sensitive information? One of their most bizarre proposals is for an international welfare program for people in low-tax
jurisdictions who lose their jobs and are impoverished by the much higher taxes of the "new world order tax justice" people and their allies.
Despite the high-sounding rhetoric, the Tax Justice Network is only a collection of socialist-no-nothings -- or worse -- whose policies, if
enacted, would destroy economic growth, financial privacy, civil society and individual liberty. Link to this Blog Entry
Friday, April 15, 2005 ~ 10:45 a.m., Dan Mitchell Wrote: ...the punitive nature of the death tax -- now 45% on every dollar above a $1.5 million exemption -- encourages consumption over saving, since
most people would sooner spend their own money than let the government capture a giant share of it. The death levy also encourages people to transfer their assets while they are still alive, so that their heirs
can enjoy their inheritances sooner and potentially at a lower tax rate. ...the aristocracy of wealth already exists, despite the current tax,
because super-rich families like the Hiltons have always found ways to avoid or mitigate it through offshore accounts, tax-sheltered foundations, and so on. It is the heirs of the not-so-super-rich -- the
thrifty dentist, the canny investor, the small-business millionaire -- who are typically devastated by the tax. As it is, the notion that most rich
people come by their money the Hilton way is a myth. According to the 1996 best-seller, "The Millionaire Next Door," 81% of millionaires made
their own money. ...according to a survey by pollster Frank Luntz, 64% of Americans favor a complete repeal of the tax. They understand that
the death tax isn't just about economics. It's about justice, and no policy that penalizes the thrifty and busts up family businesses belongs in our tax code.
Friday, April 15, 2005 ~ 9:22 a.m., Dan Mitchell Wrote: Ever since women have been enlarging their breasts with implants, feminists have been upset. So predictably, today when an FDA advisory
panel begins hearings to consider approval of silicone gel-filled breast implants, feminist health activists will urge them to reject the devices,
claiming they are unsafe. But the data emphatically do not justify their concerns. Study after study confirms silicone implants do not cause disease. Unfortunately women can't depend on groups like the National
Organization for Women to give them the facts. ...studies show that leaked silicone is not harmful. ...Several respected medical entities have
concluded that there is no greater incidence of collagen vascular disease in women with ruptured implants than in those without implants. ...But
no matter what the data say, these women's groups won't be satisfied. ...The objections of women's health activists are driven by feminist body politics which say women should love their bodies as they are, not
change them to please men. Apparently, in the feminist mind, a woman has the right to choose what she does to her body as long as she chooses the right thing.
Friday, April 15, 2005 ~8:10 a.m., Dan Mitchell Wrote: The earth has warmed about one degree in the past 100 years. Climate changes . It always has. I reported on the real warming trend in my TV
special, "Tampering With Nature." The real question is whether the warming is a "crisis," and whether trying to "fix" it will help or just
wreck the lives of the poor. ...Thirty years ago this month, Newsweek reported: "There are ominous signs that the Earth's weather patterns
have begun to change dramatically and that these changes may portend a drastic decline in food production -- with serious political implications
for just about every nation on Earth. The drop in food output could begin quite soon, perhaps only 10 years from now." The headline? "The
Cooling World." That's right: Just 30 years ago, scaremongers were telling us about global cooling . The alarmists never stop. Maybe the key
issue isn't science. Maybe they just want us to be "concerned."
Thursday, April 14, 2005 ~ 9:00 a.m., Andrew Quinlan Wrote: To most taxpayers the need for a simpler, fairer (and some of us dare say cheaper) tax code seems obvious. But now the issue is getting some
serious attention inside Washington. A presidential commission is studying tax reform, and its recommendations are due back by July 31. After Social Security, we are told that this is next on President Bush's
reform agenda. "Tax reform" is often code for a tax hike, and the best reform would be a simple one, a low flat rate, which isn't likely. But
there's reason to hope that we'll end up with something better than what we have now.
Thursday, April 14, 2005 ~ 8:19 a.m., Dan Mitchell Wrote: The final product, the Sarbanes-Oxley Act, goes against a 30-year trend of general economic deregulation under Republican and Democratic
presidents. It undermines federalism, by going where the federal government has never gone before in areas of corporation law that had long been provinces of the states; UCLA law professor Stephen
Bainbridge wrote in Regulation magazine that the act has ushered in "the creeping federalization of corporate law." It regulates the structure
and functions of boards of directors, and prescribes the duties of specific employees and board members. Intentionally or unintentionally, the law
takes a significant step toward the longtime goal of Ralph Nader and other leftists: federal chartering of corporations. ...Many companies are hurrying to escape Sarbanes-Oxley by leaving the stock exchanges:
According to a Wharton study, 198 American companies deregistered from exchanges in 2003, the year after the law was passed - nearly triple the number that deregistered in 2002. Prominent European firms, such
as Siemens, are also considering pulling their U.S. listing because of the law. In 2004, the New York Stock Exchange had only ten new foreign
listings. This is clearly a threat to overall economic vitality. Alfred C. Eckert III, CEO of the GSC Partners investment firm, also worries that
both Section 404 and the law's mandates for boards of directors will lead to the "bureaucratization" of large American firms: "We're going to
have people who are much more bureaucratic . . . and who are frightened and will react in always the most conservative course and will rely on process dictated by lawyers rather than good business
judgment." Eckert warns that if Bush and Congress ignore these effects of Sarbanes-Oxley, Bush's planned tax and Social Security reforms will
not come to full fruition. "[Sarbanes-Oxley] will make capital more expensive and lower the rate of growth of America. It's very simple."
Thursday, April 14, 2005 ~ 8:06 a.m., Dan Mitchell Wrote: The simple truth is, there is no demonstrable instance in economic history where nations were made worse off by free and open trade. There
are only doomsday scenarios spun out of the imagination of half-baked economists that are concocted to spur governments to act pre-emptively. There are, however, innumerable instances where a false fear of free
trade (usually goaded by economic interests who benefit in the short run from protectionist policies) has led a government to "pre-empt a crisis"
with protectionist policies that very quickly cascaded into a genuine economic calamity. Smoot-Hawley is the most dramatic instance in the last hundred years.
Thursday, April 14, 2005 ~ 7:45 a.m., Dan Mitchell Wrote: The Transportation Security Administration (TSA) behaves as if all passengers and all baggage pose an equal security threat, and that's
stupid, because not nearly all passengers and baggage pose a security threat. They've seized articles such as tweezers, toy soldiers, hat pins, sewing scissors and other items they deem as threatening to flight
security. ...There's little threat of another 9-11 hijacking event. First, sky marshals are randomly assigned to flights. But more important than that
is if a hijacking occurred, passengers, knowing they were being flown to their death, would subdue the hijackers. Giving them greater incentive
to do so is the likelihood of an F-14 fighter jet flying up to shoot the plane down. The greater threat to airport security is the placement of a
bomb onboard. The TSA practice of seizing harmless personal items from passengers is a waste of resources.
Thursday, April 14, 2005 ~ 7:02 a.m., Dan Mitchell Wrote: A plan to raise the rate of dividend tax in order to offset the revenue loss from Germany's proposed cut in corporate tax has been dropped,
according to Finance Minister Hans Eichel. ...Eichel is said to a favour a solution whereby the rate of tax on sales of property by companies will
be halved, a move which government tax experts believe could actually increase revenues by EUR750 million by encouraging more transactions. However, Eichel's talks with opposition lawmakers, upon whom the
government depends for support for its tax plans in the upper house, have failed to provide an immediate remedy to the problem of funding the corporate tax cut. Nonetheless, he appears to be optimistic that the
tax cut can be legislated by the summer break.
Thursday, April 14, 2005 ~ 5:58 a.m., Dan Mitchell Wrote: Venture capital is risky business in the hands of professionals. When done by the federal government it tends toward the disastrous, as the
Small Business Administration is now admitting about its decade-long attempt to outsmart Warren Buffett. The SBA launched its Participating Securities program in the early 1990s on the dubious premise that there
wasn't enough venture capital for small start-ups. ...The fund is expected to go into receivership in May, and the Boston Business Journal recently reported that company executives now admit the fund, which was
launched in 1999, was an "unmitigated disaster." No kidding. After 10 years the entire Participating Securities program has estimated losses of
$2.7 billion, SBA head Hector Barreto told Congress last month. Of that, "$I.7 billion ... are realized cash losses," he said. Actually, it's worse:
We're still years away from knowing the program's ultimate burden on taxpayers because venture-capital funds are given 10 years to repay the money. The government's total exposure as of last September 30 was
$11.25 billion. ...But no bad idea ever dies an easy death in Congress. And at today's hearing, Chairman Don Manzullo (R., Illinois) is expected
to promote "reform" instead of mercy killing. He'll have many allies on both sides of the aisle for extending a program that hands out taxpayer money to small businesses in most districts.
Thursday, April 14, 2005 ~ 12:09 a.m., Dan Mitchell Wrote: The Energy Future Coalition -- the operation overseeing this campaign -- is really an "Energy Past Coalition" that suffers from a severe case of
amnesia. The stated policies that this crowd promotes -- sharply increased subsidies for domestic alternative-fuels industries and aggressive government-mandated conservation -- were textbook
economic fiascos when adopted 30 years ago and will fare no better were we to enthusiastically re-embrace them again. ...Unfortunately, when it comes to government intervention in energy markets, past is
prologue. Ethanol and other forms of biomass energy -- the modern iteration of the Synfuels program embraced by the Energy Future Coalition -- are an open joke among economists and generally opposed
by environmentalists. Already on the receiving end of about $1 billion of federal largesse per year, ethanol requires more energy to produce than
it yields upon combustion and produces more worrisome air pollution than even conventional gasoline. ...The coalition also advocates
subsidies for hybrid gasoline-electric and other "flexible fueled" vehicles and tighter automobile fuel efficiency standards. Regarding the former, a
$2,000 federal tax credit is already available to hybrid car buyers. How much more subsidy do these people want? Regarding the latter, the Congressional Budget Office reports that tightening fuel efficiency
standards will increase the sticker price of new automobiles beyond what those automobiles will save consumers in reduced fuel consumption over
the lifetime of the vehicle. ...However one feels about foreign oil, the belief that government can intelligently pick winners in energy markets
or promote conservation in an economically reasonable manner is belied by an avalanche of real-world evidence. The best way to weaken al Qaeda is by killing bin Laden and those who support him, not by
subsidizing GM to make cars they wouldn't otherwise make.
Wednesday, April 13, 2005 ~ 5:30 p.m., Dan Mitchell Wrote: The UK Conservatives have promised a referendum on the EU Constitution within six months of the general elections and a
re-negotiation with Brussels on social policy and fisheries. ...If they win the elections, the Tory cabinet would seek a major reform of several EU
policies, while restoring national control over British fishing grounds, or over spending in international aid. ..."In a reformed Europe, the
restrictive employment laws of the Social Chapter will have to give way to more flexible working. We will ensure that Britain once again leads
the fight for a deregulated Europe by negotiating the restoration of our opt-out from the Social Chapter," states the manifesto. According to a survey conducted on behalf of the Financial Times by pollsters MORI, nine out of ten finance directors believe UK taxes will
rise if Tony Blair's Labour Party is returned to power at the general election, scheduled for May 5. Of the 200 directors with senior financial
responsibility at firms of varying size questioned, 51% believed that Labour's tax and regulatory policies discouraged company expansion... The survey additionally revealed that 58% of the directors polled would
be voting Conservative, compared to 26% who planned to vote for Labour and 14% for the Liberal Democrats.
Wednesday, April 13, 2005 ~ 11:48 a.m., Dan Mitchell Wrote: Brussels' plan to introduce a new minimum tax on wine, as part of a revision of EU taxes on alcohol, is set to be rebuffed by France and
other wine producing countries... The European Commission wants to boost harmonisation of alcohol excise duties in the EU, in a bid to deal
with fraud, smuggling and tax variations which distort the single market. But its officials admit that wine will have to stay out of its proposal, according to the Financial Times.
Wednesday, April 13, 2005 ~ 10:50 a.m., Dan Mitchell Wrote: My maternal grandfather was a farmer and would proudly take his vegetables and produce into town to sell at the farmers' market. He was
often successful in getting a respectable return on his sweat equity, which would allow him to support his family and plan for the next growing season. Even though my grandfather was the grandson of
slaves, he was able to own his small farm, own his crops and own the modest return as the fruits of his labor. Our Founding Fathers envisioned a society that valued and rewarded ownership and individual
achievement. Ownership is as much an unalienable right as life, liberty and the pursuit of happiness, because they are all endowed by our
Creator. Just as the pursuit of happiness is not possible without liberty, liberty is not possible without ownership of one's time, talent and
treasure. ...The 70-year-old Social Security structure and the 92-year-old income tax code thwart the natural, individual motivation of citizens to
use their God-given talents to pursue happiness and their respective dreams. Any program that undermines an individual's liberty to create
ownership is, then, by its very nature, immoral. It took our nation nearly 250 years to end slavery and live up to the self-evident truth that all men
are created equal. It should not take us another 250 years to cease the involuntary negative return most working people receive from Social Security, or the involuntary servitude imposed by the oppressive income
tax code.
Wednesday, April 13, 2005 ~ 10:26 a.m., Andrew Quinlan Wrote: Shrinking the balance sheets of Fannie Mae and Freddie Mac, as Alan Greenspan proposed last Wednesday, won't hurt the availability of home
mortgages or the economy. Instead, downsizing Fannie and Freddie, the two largest government-sponsored enterprises (GSEs), will reduce the systemic risk their huge balance sheets pose to the financial system.
Congress should, as it considers legislation to reform GSE regulation, establish guidelines for shrinking Fannie's and Freddie's mortgage investments, which constitute the bulk of their balance sheets. These
guidelines should limit the GSEs' investments to their short-term liquidity needs and an inventory of mortgages awaiting securitization. Such
guidelines would also put a stop to Fannie and Freddie's profit-seeking arbitrage behavior, which takes them well beyond the limits of their original mandates. The GSEs take advantage of their low borrowing
costs to make derivative investments that bring no benefit to taxpayers, mortgage-holders or mortgage-investors. The Fed has found that this behavior only benefits Fannie's and Freddie's stockholders while
threatening the market's stability. ...Once Congress enacts GSE regulatory reform, it will try to avoid dealing with GSE issues for many years. Therefore, it is vitally important that the reform legislation
empower the new GSE regulator to cut Fannie and Freddie down to size by limiting their mortgage investments to what they need for liquidity and mortgage securitization, and nothing more. Letting them continue to
grow could lead to the systemic crisis Mr. Greenspan understandably fears.
Wednesday, April 13, 2005 ~ 9:16 a.m., Dan Mitchell Wrote: It was a signature plan of Bill Clinton's presidency: Attack the rising crime rates of the early 1990s by putting 100,000 more cops on
America's streets. Ten years later, the grant program known as COPS (for Community Oriented Policing Services) has given $10 billion to help more than 12,000 police agencies hire and reassign officers. ...a less
flattering view of the COPS program is emerging: Federal audits of just 3% of all COPS grants have alleged that $277 million was misspent. Tens of thousands of jobs funded by the grants were never filled, or
weren't filled for long, auditors found. And there's little evidence that COPS was a big factor in reducing crime. ...In Albuquerque, for example, auditors allege that police used $7.4 million of the city's $12
million in COPS grants not to hire officers but to offset city cuts in the police budget. ...In Novinger, Mo., former police chief Charles Middleton
was sentenced to two years' probation and ordered to pay $53,000 in restitution in 2002, after auditors accused him of using grant money to pay his salary and give himself a $6,000 raise. ...Auditors continue to
seek documentation from 82 police agencies that have not explained in detail how they spent $111 million. ...few crime analysts say that COPS grants were significant in reducing crime. Analysts such as Stanford
University's Joseph McNamara say that a much bigger factor has been the strong economy, which has kept many young people employed and away from crime. Of three studies on the issue, only one - which was
funded by the Justice Department - found that the police hiring program was chiefly responsible for drops in violent crime rates among big cities.
The General Accounting Office, Congress' research arm, dismissed that study as "inconclusive."
Wednesday, April 13, 2005 ~ 8:32 a.m., Andrew Quinlan Wrote: The enemies of campus bake sales are at it again, inflaming one another over the dire threat of cupcakes and cookies sold at different prices to
whites, minorities, and women. The sales are political parody, of course, poking fun at affirmative action policies and trying to get a debate going. Campus orthodoxy holds that such policies are sacred and that
any dissent, even in the form of satirical cookie prices, is illegitimate and deserving of suppression. ...In Chicago, the College Republicans at
Northeastern Illinois University canceled an affirmative action bake sale after the administration warned that they would be punished if they went
ahead. Dean of Students Michael Kelly announced that the cookie sellers would be in violation of university rules and that "any disruption of university activities that would be caused by this event is also
actionable." This seemed to promise that if opponents of the sale conducted a riot, the Republicans would be held responsible. The university did not understand it was dealing in viewpoint discrimination
(it did not object to a satirical wage-gap bake sale run by feminists). Kelly said the affirmative action sale would be allowed if cookie prices
were the same for whites, minorities, and women. So the university was willing to tolerate a bit of satire as long as all satirical content was removed. The Philadelphia-based Foundation for Individual Rights in
Education stepped in, reminding the university that forbidding political expression is clearly unconstitutional. Under pressure from FIRE, the university backed down, issuing no public statement but allowing the
bake sale.
Tuesday, April 12, 2005 ~ 11:33 a.m., Dan Mitchell Wrote: The Associated Press blares the headline that all conservatives have been dreading: "GOP Considers Dropping Personal Accounts." The
story begins, "Senate Republican leaders are considering whether to seek Democratic support for Social Security legislation without the personal
accounts." ...There's an old saying that applies to politics: "Don't throw the baby out with the bath water." This latest GOP capitulation to the
Democrats would throw the baby out and keep the bath water. It would be reminiscent of the counterproductive deal the White House struck on education reform a few years ago. The one and only conservative idea in
the bill - school vouchers - was dropped, and the liberals got their whole bag of goodies. ...The Senate moderate plan leaves free-market reforms
on the cutting board and thus will not solve the problems of Social Security. Raising taxes and reducing future promised benefits in the ways that are being proposed would reduce the already miserable rate of
return offered by Social Security for all workers earning over $30,000 per year. Indeed, so-called progressive price indexing would allow taxes
on wages to grow while benefits increase at a slower rate. That means Social Security's rate of return for workers would decline each and every
year in perpetuity. ...The payroll-tax increase being proposed by Senate moderates would raise the top marginal tax rate for workers earning over $90,000 per year by a whopping 12.4 percentage points. This
discourages work, productivity, and entrepreneurship and reverses the positive impact of the tax cuts passed in Bush's first term. ...President
Bush campaigned boldly and successfully for personal accounts in 2000 and 2004. But his pro-growth agenda on Social Security is now being hijacked by Senate Republican moderates who abhor free-market
solutions. Bush whipped the moderates back into shape on his tax-cut agenda and it will take just that kind of leadership from the White House to get the Social Security debate back on the message of freedom,
ownership, and individual control. The president simply must reject any plan that drops personal accounts. Link to this Blog Entry
Tuesday, April 12, 2005 ~ 10:32 a.m., Dan Mitchell Wrote: Swedish opposition leader Fredrik Reinfeldt will stand at the election in 2006 on a platform of tax cuts and privatisation in an attempt to reduce
Sweden's tax burden, which according to EU statistical body Eurostat, is officially the highest in Europe at more than 50% of GDP. In a recent interview with Bloomberg, Reinfeldt, leader of the Moderate Party,
revealed that his plans will include "taxation, companies, deregulation and privatisation" in the hope of boosting economic growth and job
creation. Under these plans, taxes will be reduced by an estimated SKR55 billion ($7.7 billion) in a programme designed to cut the government's share of the economy to 48%. This will entail a reduction
in income tax and the scrapping of the wealth tax, among other measures.
Tuesday, April 12, 2005 ~ 9:30 a.m., Andrew Quinlan Wrote: The U.S. and Europe may soon set some kind of record by reversing a free-market experiment in global textile trade only three months after it
began. The reason isn't because the experiment failed, but because it is succeeding too well. That is the plain-language translation of the Commerce Department's decision last week to investigate whether the
U.S. textile market "is being disrupted and whether China is playing a role in that disruption." That refers to a sharp, probably onetime, surge
in U.S. imports of Chinese textiles and apparel since the December 31 expiration of a decades-old global quota regime. The European Commission has also just issued guidelines on how far imports could rise
before it too restores limits. ...The White House wants the industry's support for the Central American Free Trade Agreement, which will soon go to Congress for a vote. And those U.S. textile companies that
have already moved a great deal of production to Central America tend to be Cafta supporters. Cafta is worth passing in its own right, but the price of freer trade with Central America shouldn't be a rise in
protectionism elsewhere. There is no reason Central American producers sitting on the U.S. doorstep shouldn't be able to compete with China. The
real question here is whether Americans are going to be able to buy from the cheapest source, or whether the U.S. will discriminate against the
Chinese. The latter message won't be lost on a Beijing government that the U.S. is also asking to do more to protect the intellectual property of
American companies in fast-growing, high-tech businesses. President Bush's first term got off to a bad trade start with steel tariffs; textile protectionism is no way to start the second.
Tuesday, April 12, 2005 ~ 8:00 a.m., Dan Mitchell Wrote: ...the Clinton administration in 1995 launched a new program called the Direct Student Loan Program. This allowed students to apply for student
aid directly from Uncle Sam and thus bypass private lenders altogether. This was supposed to cut costs be eliminating the middle man and leveraging the government's lower borrowing costs. In reality, the
program was a kind of "privatization in reverse." Rather than contract out lending to professional borrowers, the government decided to play
the roles of banker, credit agency and debt collector all at once under the Education Department. It turns out this was about as good an idea
as the "Charlie's Angels" sequel. The government is a lousy banker. It does a poor job of assessing and pricing risks, managing funds and
collecting on debts. Big surprise: The program's net losses have sky-rocketed. Since 1997, the Direct Student Loan Program has increasingly lost money for taxpayers every year. ...Some 500 colleges
have stopped participating in the program because of shoddy management and financial losses. ...The Clinton Direct Student Loan program especially has a decade-long legacy of mismanagement. It
belongs in a category of feel-good Clintonite programs like Americorps and Goals 2000 that were advertised as ways to make government operate more efficiently but never lived up to the hype.
Tuesday, April 12, 2005 ~ 6:03 a.m., Dan Mitchell Wrote: Carrying losses forward is a tax advantage. But is it "equivalent" to the immediate tax relief that the subtraction of losses provide? The judges
might think not because the tax break of carrying losses forward only works with a time delay and only if the company one day turns a profit --
never a given. What's more, as several countries have a time limit for carrying losses forward, the company may never feel any relief. It is far
more likely that Mr. Maduro's qualification was intended to avoid any "double-dipping," whereby companies claim the losses twice, once at
home and again through the foreign subsidiary. Some commentators have feasted on the apparent irony that Britain, so long opposed to any kind of tax harmonization, should now indirectly be responsible for
bringing about something that seems like tax harmonization -- and to boot not with a political decision by member governments but through the judicial back door. We've long opposed both tax harmonization and
judicial activism. But first off, this case isn't about removing tax competition between EU member states -- it's about destroying barriers to the smooth functioning of the single market. The removal of these
discriminatory provisions is a victory for free competition.
Tuesday, April 12, 2005 ~3:48 a.m., Dan Mitchell Wrote: ...words like "liberal" and "conservative" have lost all relationship to the original meanings of those terms. Liberalism at one time referred to
liberty, to making people as free as possible from the control of their presumed betters, and especially free of excessive control by the government. Broadly, liberals tended to favor change while
conservatives defended the status quo. All that has been turned upside down. Liberals today are for preserving not only historic landmarks but
also the status quo in the welfare state, obstructing the building of new housing, fighting against introduction of parental choice into the school
system, and are digging in against allowing even a little bit of Social Security privatization. As for freedom from government controls, liberals
have pushed ever more regulation of ever more details of people's homes and businesses. Some places where liberals have been politically dominant for years, you dare not cut down a tree on your property, even
if it is about to fall and smash your house or you.
Monday, April 11, 2005 ~ 5:29 p.m., Dan Mitchell Wrote: Belgium, Sweden and Germany featured as the EU states with the highest total employment costs - on average and including social
benefits, with more than 50,000 euro per worker a year. ...Meanwhile, the German government is considering introducing a minimum wage, in a bid to deal with the increasing trend of companies employing workers
from east and central European countries, willing to work for lower salaries. ...Unlike some other EU countries, Germany does not have a set minimum wage... The newly planned minimum wage provisions are to
be introduced in the most vulnerable sectors of the German economy - like slaughterhouses, where employers use cheaper labour from eastern Europe. Commentators suggest the decision would mark a U-turn for
chancellor Gerhard Schröder, who has several times opposed a minimum wage despite requests from his own party's left wing.
Monday, April 11, 2005 ~ 4:11 p.m., Dan Mitchell Wrote: A statement issued by the Justice Department said that "most of the voluminous Patriot Act is actually unobjectionable from a civil liberties
point of view" and that "the law makes important changes that give law enforcement agents the tools they need to protect against terrorist
attacks." Oops. My mistake. That statement didn't come from the administration. It came from the American Civil Liberties Union. ...A lot
of the outrage against the Patriot Act stemmed from unrelated actions taken by the Bush administration, especially the prolonged detention of many immigrants after the Sept. 11 attacks. ...some parts of the law
drew intense fire. One was the "sneak-and-peek" section, which allows law enforcement agents to enter a home to inspect papers, computers and the like, without informing the owner in advance. ...If
sneak-and-peek searches were a horrible abuse, you'd expect the critics to demand they be abolished. In fact, the ACLU and its allies only want
to slightly narrow the conditions under which they are allowed. ...there is the section that lets federal agents obtain library records, among other
things. ...Attorney General Alberto Gonzales said last week that since the Patriot Act was passed, it has never been used to subpoena library
records. He still wants to keep this provision in case it's ever needed. And even the critics are agreeable, though they want to "refine" this section
of the law "by requiring some individualized suspicion," as the ACLU explains.
Monday, April 11, 2005 ~ 3:52 p.m., Dan Mitchell Wrote: The idea, which will face its first referendum in Arizona, is to require that 65 percent of every school district's education operational budget be
spent on classroom instruction. On, that is, teachers and pupils, not bureaucracy. Nationally, 61.5 percent of education operational budgets reach the classrooms. Why make a fuss about 3.5 percent? Because it
amounts to $13 billion. Only four states (Utah, Tennessee, New York, Maine) spend at least 65 percent of their budgets in classrooms. Fifteen
states spend less than 60 percent. The worst jurisdiction -- Washington, D.C., of course -- spends less than 50 percent.
Monday, April 11, 2005 ~ 11:00 a.m., Dan Mitchell Wrote: Thanks to a preliminary decision issued last week by the European Court of Justice (E.C.J.), many E.U. governments could face billions of dollars
in back-tax claims, and will probably have to overhaul significant parts of their corporate tax codes. ...Marks & Spencer wanted to use the losses
incurred in its disastrous European foray to offset profits from operations in Britain. Firms in most E.U. nations commonly make use of losses in this way, but primarily to offset profits made in the same
country as the losses. In 2001, the company cited Britain's "group relief" rules that allow firms to cluster different business units for tax purposes;
if successful, the argument would have gained Marks & Spencer tax relief of about $56 million. But that same year, Britain's Inland Revenue
said no, declaring that Marks & Spencer had no right to deduct its Continental losses because they hadn't been incurred in Britain. The retailer appealed the decision to the E.C.J., and last week E.C.J.
advocate general Miguel Poiares Maduro weighed in on its side. ...The European Commission has long struggled to devise a common set of European corporate tax rules that are acceptable to all. The Marks &
Spencer case, taken together with other rulings, now provides the Commission with powerful ammunition... Laszlo Kovacs, a Hungarian who is the new E.U. Tax Commissioner, has yet to outline his policy
approach, although he did tell a German interviewer last year that his ambition was for the E.U. "to work toward a harmonized corporate tax
base." He'll encounter strong political opposition. "The idea of a European corporate tax system is not popular," says Linklaters'
Hardwick. But if the E.C.J. continues to make tough rulings that demand similar tax treatment in all E.U. member states - and all indications are
that it will - governments may have little choice in the long term but to get their tax systems into line.
Monday, April 11, 2005 ~ 10:41 a.m., Dan Mitchell Wrote: Public companies have had to dig even deeper than previously estimated to pay the costs of complying with Section 404 of the Sarbanes-Oxley
Act, according to a just-completed survey by Financial Executives International (FEI). ...Companies' total costs for year one Section 404 compliance averaged $4.36 million, up 39 percent from the $3.14 million
they expected to pay, based on FEI's earlier July 2004 cost survey. The increase stems largely from a 66 percent leap in external costs for consulting, software and other vendors and a 58 percent increase in the
fees charged by external auditors. ...94 percent of all respondents said the costs of compliance exceed the benefits. The survey also reflects a steep increase in the reported costs of implementing the Sarbanes-Oxley law and new stock exchange listing
standards. The number of companies reporting estimated costs of more than $10 million nearly doubled, jumping to 47% from 22% reported in 2004. And close to one-third of respondents reported costs in the range
of $6-10 million.
Monday, April 11, 2005 ~ 9:25 a.m., Dan Mitchell Wrote: Given prices and other taxes, eliminating the estate tax raises aggregate output and the capital-output ratio by 1.4%, and 1.3%, respectively.
...Raising the estate tax for the rich reduces the size of the estates that are left to their descendants, and thus decreases wealth concentration in
the upper tail. The amount of net worth held by the richest 1% and 5% decreases, respectively, from 30.3% to 27.9% and from 61.1% to 58.9%. This reduction, however, comes at steep cost: a 3.7% decrease in output
and 3.3% decrease in the capital-output ratio. ...In this section we focus on the effects of assuming income taxes with different degree of progressivity. ...This implies that richer entrepreneurs are now taxed
more heavily relative to those in the lower tail of the distribution. This tax scheme leads to a decline in output and in the capital-output ratio
(by 8.2% and 3.3%, respectively) as higher taxation discourages the formation of large businesses. ...Higher progressivity hurts capital accumulation and thus decreases output... Switching to proportional
taxation has very large effects, both on wealth inequality and on the aggregates. This reform increases the capital-output ratio by 13.7%, and
aggregate output by 40%... Decreasing progressivity can generate large increases in output, as this stimulates entrepreneurial savings and capital
formation... Our model does not consider tax avoidance costs. It is possible that significant amounts of resources might be spent to decrease the tax burden, by using lawyers and accountants. The cost of tax
avoidance might generate a deadweight loss that should be considered in the overall evaluation of any change in the estate tax. Link to this Blog Entry
Monday, April 11, 2005 ~ 7:19 a.m., Andrew Quinlan Wrote: The Washington area has not spent the majority of $145 million in anti-terrorism grants awarded by the federal government over the past
three years... Washington will miss a June 30 deadline for spending $46 million that has been available for two years, the D.C. government said.
Officials have asked for a half-year extension from the Department of Homeland Security to avoid losing the money. The area's record in using federal dollars illustrates a major flaw in a homeland security grant
funding system that doles out cash first and requires plans later, said Rep. Christopher Cox (R-Calif.), chairman of the House Homeland Security Committee. Cox is proposing legislation that would award more
money to certain jurisdictions based on threat assessments and require states and regions to coordinate plans before applying for aid. ...So much
federal money has flowed to the region in a short period of time that officials have veered between spending the money quickly and spending it carefully. After the terrorist strikes on the World Trade Center and
Pentagon, the region received an initial $324 million in security funds with few guidelines or restrictions. In spending those funds, officials said
speed was more important than coordination. A Washington Post review of the spending found cases of duplication, waste and diversion of federal aid to pay for such items as leather jackets for police, a summer
jobs program for D.C. teenagers, lucrative consulting contracts for political figures and redundant purchases of emergency command centers and vehicles across the region.
Sunday, April 10, 2005 ~ 12:15 p.m., Dan Mitchell Wrote: For the first time in human history, it is hard to find a country that does not have positive economic growth. Even most of the African countries
are now doing better, both because of higher commodity prices and better economic policies. The world's largest economy, the United States, has had a higher economic growth rate over the last three decades than
anytime in its history. Since the Reagan revolution, the path of rapid economic growth in the U.S. economy has been marred by only two very short and shallow recessions (in 1990 and 2001). Among the major
economies, only Japan, Germany and France are performing poorly, with very low growth, due to excessive government taxation, spending and regulation, all of which can be corrected. Thirty years ago,
pessimists said the world was headed for mass starvation as a result of rapid population growth and falling food production. The reality has
been just the opposite. Population growth is falling virtually everywhere. In fact, now depopulation seems a greater worry than overpopulation.
Global food production is far in excess of what is needed for everyone on the planet. The relatively few cases where people do not have enough to
eat are almost due to incompetent, corrupt and criminal governments. ...there are real dangers - terrorism, new diseases, and the growth of the
international bureaucratic state, which would tax and regulate us all into poverty and servitude. However, the challenges we now face are minor
compared to the risk of mass nuclear annihilation which was a very real possibility during the Cold War. We now know what we need to do to bring peace and prosperity to almost every individual on the globe: Push
for democratic regimes that protect private property and individual liberties, provide free markets and have low government taxation, spending and regulation. Link to this Blog Entry
Sunday, April 10, 2005 ~ 11:22 a.m., Dan Mitchell Wrote: Ask nearly any business executive to name the biggest menace facing corporate America, and the answer is apt to be a number: "404." That
refers to Section 404 of the Sarbanes-Oxley Act, which requires massive reporting by publicly held companies... For honest corporate officers,
this is classic governmental over-regulation -- a dagger aimed at the heart of the U.S. economy. The implementation of 404 by the Securities and Exchange Commission (SEC) has created painful demands that
drain corporations, large and small, of funds. This is springtime for auditors, with requirements for more of their number to perform the
investigations. The most dangerous aspect of this regulatory overkill is a further inclination by corporations to hold onto money rather than put it
into productive investment, thereby threatening to stifle economic growth. ...Non-government estimates put the cost for publicly traded companies at $35 billion with a $4.4 million average per enterprise.
Beyond the cost is the climate of fear, with executives warned by auditors that inadvertent mistakes could mean a 25-year prison sentence. Financial analysts see this as the principal reason American
corporations are hoarding cash, afraid to invest. Sarbanes-Oxley, the 2002 reform legislation, imposes new rules, including a requirement that senior executives declare whether financial
controls are adequate. But a much bigger problem is the interpretation of the law -- by courts, colleagues and regulators. The law's broad and ambiguous language, for example, widens public companies'
vulnerability to class actions. Stock exchanges now demand more independent directors on boards -- a demand that is hard on quirky, insider-oriented technology culture. Accounting rules for public
companies are a problem. Link to this Blog Entry
Sunday, April 10, 2005 ~ 9:46 a.m., Dan Mitchell Wrote: Want to understand the federal spending problem in a nutshell? Then follow the fate of the Safe and Drug-Free Schools (SDFS) State Grants,
one the 150 programs targeted for termination in President Bush's 2006 budget. ...This SDFS project got its start in 1986 with the unassailable objective of reducing youth crime and substance abuse. Money is
allocated via state education departments based on student enrollment, and the government will spend $437 million on the program this year.
The only problem is that, after nearly two decades, there's little evidence that SDFS does any good. While we didn't expect SDFS defenders to
take the news lightly, neither did we expect them to sink to invoking last month's carnage in Red Lake, Minnesota, where a student killed seven
people at his high school. But "school safety professionals," such as Kenneth Trump of National School Safety and Security Services, are
telling every reporter who will listen that the tragedy is somehow linked to the proposed SDFS cuts. Mr. Trump told the Los Angeles Times that
"we are going backward in protecting the hallways of our schools." Columbine occurred in 1999, 13 years into a well-funded SDFS state
grant program. And even though spending later increased, Red Lake still happened. Government programs tend to last forever because they develop constituencies that fight like crazy to keep them, whether or not
they work. Taxpayers are too busy to understand the details and so Members of Congress bend to the lobbyists who really care. Let's hope the Members are offended enough by the political exploitation of Red
Lake to take Mr. Bush's advice and zero this one out.
Sunday, April 10, 2005 ~ 9:00 a.m., Andrew Quinlan Wrote: Considering the dearth of any real U.N. influence, its secretary-general can't do too much harm beyond giving aid and comfort to the world's
Saddam Husseins while they commit their crimes. But think of what the United Nations might have been under better management. The great tragedy isn't the evil the United Nations condones but the good it fails to
do. Imagine a United Nations that stood up for freedom instead of betraying it at every turn. Imagine a world in which all that Oil-for-Food
money had actually gone for food -- instead of billions siphoned off by Saddam and his accomplices. Imagine a world in which international help for tsunami-stricken survivors in places like Banda Aceh would be
delivered in less than the month the U.N. took to act. The U.S. Army, Navy, Air Force and Marines were on the case in days, maybe hours. But as long as Kofi Annan heads the United Nations, such a better world is
hard to imagine. No, all the U.N.'s various problems will not be solved by finding the U.N. a new secretary-general. But it would be a good start.
Saturday, April 9, 2005 ~ 4:45 p.m., Dan Mitchell Wrote: To secure the gains of democratic security, Mr. Uribe needs to deliver free-market capitalism. To that end, Mr. Uribe need look no further than
Ireland, a Catholic nation once hopelessly mired in poverty, dominated by socialist thought and somewhat fatalistic toward what seemed a hopeless
plight. ...Spending cuts helped, but it was the adoption of a rather unorthodox approach to tax cutting that gave the country an almost surreal boom. At the
end of the 1990s, Ireland had a higher GDP per capita than Great Britain or Germany. If Ireland can be the Celtic Tiger there is no reason why Colombia
can't become the South American Puma. It is the perfect Latin American candidate for the job, with a popular democratic leader, a sophisticated
business community, and a prime location in the region. ...Colombia needs to bring down its debilitating tax rates. Mr. Uribe has been discouraged from
doing this by both the local "experts" and by the U.S. government. The U.S. ambassador here is known to complain that Colombia's effective tax burden
of 21% of GDP means that Colombians are not paying enough for government. This is ridiculous. The Colombian tax burden is roughly equivalent to Chile's. If the U.S. wants to be constructive, it should point out
that a top marginal rate equivalent to more than 38% on corporate profits and individuals, and a 16% value-added tax, are impediments to growth. ...Much
of what Ireland first tried when it faced budget deficit problems will be familiar to Colombians, including tax hikes that managed to cut the primary deficit in
half but also suffocated growth. By 1986 the debt-to-GDP ratio was 116%. "High levels of government debt, interest payments, and expenditures put the
Irish government in a precarious fiscal position," Mr. Powell explains. Unable to raise taxes further, the government began in 1987 to cut spending. The
reduced size of government together with a relatively open trade policy produced a welcome return to respectable growth. By 1989 Ireland's
economy was growing at 4%. ...the "tiger" growth came in the latter half of the decade. From 1996 through 2000 the average rate of growth was a
mind-boggling 9.66%. What differentiates those two periods is the change in Ireland's tax regime. In 1996 the corporate tax rate was 40% but by 2000 it
was down to 24%, making Ireland a magnet for capital. There was "also a special 10% corporate taxation rate for manufacturing companies and
companies involved in internationally traded services," Mr. Powell explains. When the European Union pressured Ireland to eliminate the special 10%
rate, it obliged but lowered the standard rate to 12.5% in 2003.
Saturday, April 9, 2005 ~ 12:11 p.m., Andrew Quinlan Wrote: ...the bill represents progress only in the watered-down form that has, alas, become the norm. The potential was there to do much more. The
government bill proposes to privatize what is in effect the world's largest bank, Japan Post, which includes savings and insurance arms and manages a tidy sum of $3.3 trillion. The government has directed large
amounts of the Japan Post's savings and insurance deposits into semipublic corporations. Putting assets under private management would bring market forces into play for both borrowers and savers,
making the Japanese financial system more efficient and reducing political influences that distort resource allocation. But Monday's proposal gives new reason to worry. ...In a best-case scenario, this bill
proposal eventually could lead to a meaningful privatization of the post office that could infuse much-needed dynamism into the Japanese economy. But judging from the way vested interest politicking has
vitiated even a modest beginning, that miracle may be a long time in coming.
Friday, April 8, 2005 ~ 12:01 p.m., Dan Mitchell Wrote: Small European firms spend eight times less on research than their US counterparts. Their representatives argue Brussels should take the gap
into consideration more effectively in its seven-year blueprint on research and development, to be launched on Thursday (6 April). The European Commission is planning to double its research budget to 70
billion euro, in its bid to support a "knowledge-based" economy in the EU and boost its competitiveness. ...Brussels is also keen on urging
member states to increase public and private spending on research, as the "Lisbon target" of 3 per cent of GDP per year remains far from
being accomplished - with the EU spending 1.93 percent, as compared to the US which invests 2.76 per cent on R&D. ...The EU should therefore
support small firms on increasing their low level of R&D investments and also make this clear in its new framework, according to Hans-Werner
Müller, secretary general of the European association for small and medium business and crafts (UEAPME). "The Commission must pay more than just lip service to these aims .. and tailor programmes to the
needs of small businesses," Mr Müller said in a statement.
Friday, April 8, 2005 ~ 10:33 a.m., Dan Mitchell Wrote: Some years ago, a married couple, Taalib-Din Uqdah and Pamela Farrell, went into business braiding hair, African-style. They called their
shop Cornrows & Co. If politicians' speeches are right, Uqdah and Farrell were heroes: Inner cities need businesses, and the couple had built a booming business in Washington, D.C. They had 20,000
customers, employed 10 people and took in half a million dollars a year. Some women came from as far away as Connecticut, six hours away, to
have their hair braided by Cornrows & Co. Did the politicians honor these entrepreneurs for contributing to the community? Find ways to encourage others to do similar things? Well, the government did
respond. But it wasn't with encouragement. Local bureaucrats ordered Uqdah to cease and desist, or be "subject to criminal prosecution."
Why? Because he didn't have a license. "It's a safety issue," said the regulators. Those who run a hair salon must have a cosmetology license.
The chemicals they use dyeing or perming hair might hurt someone. Hair dye is hardly a serious safety threat, but even if it were, Cornrows & Co.
didn't dye or perm hair. They only braided it. That didn't matter, said the Cosmetology Board -- they still had to get a license. In order to get one,
Uqdah would have to pay about $5,000 to take more than 1,000 hours of courses at a beauty school. ...Uqdah thought he understood why the cosmetology board wanted to shut down his salon: "Money -- other
salons don't like the competition."
Thursday, April 7, 2005 ~ 8:30 a.m., Dan Mitchell Wrote: An opinion piece by reporter Anna Bernasek in last Sunday's New York Times actually argues that there's no real evidence that lower tax rates
spur economic growth. Bernasek finds a couple of economists to back up her idea before concluding that tax "reform based on a notion that taxes
are bad for the economy is just that: a notion not backed by strong evidence." ...Before making her strange assertions, Bernasek should have referenced the work of Harvard economists Martin Feldstein and
Greg Mankiw, along with numerous articles published by the National Bureau of Economic Research. Then there's the work of Columbia economist Glenn Hubbard and Princeton economist Harvey Rosen.
These are no small thinkers when it comes to tax theory. Each has found a high correlation between lower tax rates and higher economic growth.
Then there's the Nobel-prize-winning Edward Prescott of Arizona State and Robert Mundell of Columbia. Add two more sound minds to the lower-tax, higher-growth list. Sure, the above economists have been
Republican advisors at one time or another, but Bernasek could have found a trove of data contrary to her thesis had she looked to the "non-partisan" OECD, IMF, or Congressional Budget Office.
...Margaret Thatcher's tax cuts had made Britain the strongest European Union economy until Ireland passed it with even lower tax rates. Russia and almost all the former Soviet bloc countries in East Europe have
moved to low flat-tax-rate systems. Western Europe, until recently, has not. Consequently, their economic growth rate has fallen 25 percent behind the pace set in the U.S. over the last decade. ...Back at home,
real-world evidence throughout the 20th century shows a stark contrast between high- and low-tax policies. In the 1920s, the Harding-Coolidge-Mellon tax cuts produced the Roaring Twenties. But
repeated tax increases by Herbert Hoover and Franklin D. Roosevelt produced and prolonged the Great Depression. John F. Kennedy vowed to get the economy moving again after the sluggish growth of the
high-tax Truman-Eisenhower years. JFK made good on his promise when he lowered the top income-tax rate from 91 percent to 70 percent. The result was the 1960's boom. Twenty years later, Ronald Reagan
turned stagflation into the 1980's boom by slashing the top personal tax rate from 70 percent to 28 percent.
Thursday, April 7, 2005 ~ 8:17 a.m., Andrew Quinlan Wrote: The United Nations is a mess. Often corrupt and venal, always inefficient and wasteful, frequently captured by the worst political interests, and
commonly motivated by the worst ideological impulses, the organization is anything but "the last great hope of mankind." If anyone can push it
towards real reform, it is a serious critic, like John Bolton. ...Those who believe in the U.N. should not attempt to deny the organization's obvious
failings. After all, it was the body's own secretary general, Boutros Boutros-Ghali, who, when asked how many people worked at the U.N.,
quipped: "about half of them." The challenge for the U.N.'s supporters is to change the organization so that someone would notice if it lost ten
stories. For that they need the help of a John Bolton. ...We must start by recognizing what the U.N. has become. "During the 1960s and 1970s anti-Western and anti-American U.N. General Assembly majorities
regularly and enthusiastically trashed our values," he wrote. Although the Carter administration seemed untroubled by these events, President
Ronald Reagan and Reagan-era Congress responded forcefully, rejecting the Law of the Sea Treaty, withdrawing from UNESCO, and cutting U.N. funding. This willingness to fight back had an effect. Observed
Bolton: "President Reagan's policy laid the groundwork for rare opportunities to use the Security Council constructively."
Thursday, April 7, 2005 ~ 7:41 a.m., Dan Mitchell Wrote: In years past, I would have been in the forefront of those denouncing the idea. But now, reluctantly, I have joined the pro-V.A.T. side. ...In the
1980's and 1990's, I thought it was possible to restrain the growth of government by cutting taxes. This would "starve the beast," as Ronald
Reagan used to say, and force government to live on its allowance. And after Republicans got control of Congress in 1994, I thought the means
had finally come to make a frontal assault on the welfare state. ...This behavior has led me and other conservatives to conclude that starving
the beast simply doesn't work anymore. Deficits are no longer a barrier to greater government spending. And with the baby-boom generation aging, spending is set to explode in coming years even if no new
government programs are enacted. ...huge tax increases are inevitable because no one has the guts to seriously cut health spending. Therefore,
the only question is how will the revenue be raised: in a smart way that preserves incentives and reduces growth as little as possible, or stupidly
by raising marginal tax rates and making everything bad in our tax code worse?
Thursday, April 7, 2005 ~ 6:59 a.m., Dan Mitchell Wrote: To his many other achievements in 46 Senate years, West Virginia's Robert C. Byrd can now add one more: He is responsible for hammering
U.S. exports with higher prices in Europe and Canada. Those nations announced last week that they will soon smack thousands of American products with a 15% tariff in retaliation for the U.S. protectionist rule
known as the Byrd Amendment. That's the law that lets domestic businesses collect the tariffs that the U.S. government imposes on foreign competitors. The World Trade Organization has ruled it illegal,
and so the European Union and our neighbors to the north have every right to retaliate against American goods until Congress repeals this Byrd brainstorm. ...when U.S. businesses win anti-dumping complaints,
they benefit both from the higher prices they can charge for their goods and from the tariffs paid by foreign competitors. ...this payola has encouraged more U.S. companies to file more anti-dumping suits.
...foreign countries have taken note and are filing more of their own anti-dumping suits against foreign (including American) goods. India had
only six anti-dumping cases in 1995. By 2001 it had 79, followed by 81 in 2002 and another 46 in 2003. And now come the foreign retaliatory
tariffs on U.S. exports -- including paper products, farm goods, textiles and machinery. These will hurt globally competitive U.S. businesses in
order to protect Mr. Byrd's less efficient constituents. In trade politics, the first protectionist blow is never the last one.
Wednesday, April 6, 2005 ~ 12:30 p.m., Dan Mitchell Wrote: Liberals may denounce "greed," for example, but in practice it all depends on whose greed. Nothing the government does is ever likely to
be called "greed" by liberals. Even when the government confiscated more than half the income of some people in taxes, that was not greed,
as far as the left was concerned. Nor is it greed in their eyes when local politicians across the country bulldoze whole working class neighborhoods, destroying homes that people spent a lifetime sacrificing
to buy, and paying them less than the market value of those homes through legal chicanery. Even when the land seized under "eminent domain" laws are turned over to casinos, hotels, or shopping malls --
places that will pay more taxes than working class homeowners -- liberals can never seem to work up the outrage that they display when
denouncing "greed" on the part of businesses whose prices are higher than liberals think they should be.
Wednesday, April 6, 2005 ~ 11:44 a.m., Dan Mitchell Wrote: When Czechoslovakia broke up in 1993, the prevalent feeling among the Czechs was one of spiteful arrogance toward their secessionist Slovak
brothers. "We will show you who made the mistake," is how Jiri Pehe, former adviser to Czech President Václav Havel, summed up his countrymen's thinking at the time. ...Former Prime Minister Vladímir
Meciar, who ruled over a coalition of nationalists and ex-Communists, turned the country into an economic and political basket case, prompting
then U.S. Secretary of State Madeline Albright to call Slovakia a "black hole in the heart of Europe." How fortunes have changed since then. In
the past few years -- and despite only a narrow majority in parliament -- the center-right government of Prime Minister Mikulas Dzurinda first
brought Slovakia back into the democratic fold and then turned it into an economic powerhouse. Bratislava is leading the way in Europe with landmark pension, health-care and tax reforms, pulling in foreign
investments in the process and recording high growth rates. In the Czech Republic, on the other hand, initial reform steps have been halted and
even partly reversed, as was reflected in recent tax increases. Economic growth over the last 10 years has been only slightly more than half of Slovakia's 4.2%. The Czech Republic's recent pick-up in economic
growth is largely a product of falling trade barriers following the country's accession to the European Union. The recovery will quickly run out of steam, economists fear, unless the government gets back to
economic reform.
Wednesday, April 6, 2005 ~ 10:00 a.m., Dan Mitchell Wrote: ...the problem is our public school system itself. How do you fix a business that has no competition and for which government itself limits
the possibilities for reform? Poor kids are simply trapped in a government school monopoly where the manner in which education is defined and administered and the values that are conveyed are by and
large pre-scripted by a politically correct establishment. ...According to the Pacific Research Institute, the L.A. Unified School District spends
more than $9,000 per year per student. I am confident that if inner-city parents had $9,000 through a voucher or scholarship to send their child
wherever they chose to school, more than one in two would graduate. Businesses that face competition deliver more and more for less and less. Monopolies deliver less and less for more and more. ...We can educate
these kids. But we need to open the education marketplace, take it out of the hands of the unions and monopolists, and let people who really want to help these families and their children have a chance with them.
Wednesday, April 6, 2005 ~ 9:25 a.m., Dan Mitchell Wrote: Recently, a World Wildlife Fund press release was picked up by Reuters. "Himalayan glaciers are among the fastest-retreating glaciers globally
due to the effects of global warming," the advocacy group announced. WWF timed its press release for a two-day Energy and Environmental Ministerial conference in London, where the United States was
(predictably) criticized because it won't commit economic suicide by adopting the Kyoto Protocol on global warming. ...Glaciers are in steady state when the annual snowfall and summer melting rate are roughly in
balance. Actually, this is rare. When glaciers melt too much in the summer, they retreat. And if it snows more in the winter than normal,
they advance. ...glaciers went into retreat at the end of this cold period. Gangotri is even more tenuous, receding even as local temperatures
continued declining. Incidentally, the Northern Hemisphere's largest ice mass -- the Greenland icecap -- is in retreat in the southern part of the
island, where temperatures also show a substantial net cooling for the last 75 years. All this leads to an obvious conclusion. Southern Greenland, Glacier National Park and the Himalayan glaciers are on
their way out, with little or no nudging needed from people. They're relics of the Big Ice Age that ended 11,000 years ago. It's too bad,
though, that in the fight to hype global warming, the truth is also rapidly becoming another relic.
Wednesday, April 6, 2005 ~ 7:51 a.m., Dan Mitchell Wrote: Nations with the highest per-capita possession of firearms, such as Switzerland (where most households contain at least one "assault
weapon" as part of their "well regulated militia") are among those with the lowest murder rates. Conversely, nations like the UK, with the most
restrictive gun laws, are now experiencing escalating crime rates. The UK's gun restrictions, for example, did not stop a sociopath from slaughtering 16 kindergarteners and their teacher in Dunblane, Scotland,
three years before Columbine. As a result of that shooting, all handguns were confiscated (similar to Sen. Diane Feinstein's proposal after Columbine). The result? By 2002, England and Wales had the highest
incidence of "very serious" offences (18 crimes per 100 people) among the 17 developed Western nations. Second in line is Australia (16 per
100) where many classes of guns have also been confiscated. The incidence of "violent crime" is 3.6 per 100 in the UK, compared with 1.9
per 100 in the U.S. Gun confiscation has never protected anyone. Gun restrictions have not protected citizens in Atlanta, Washington, D.C., New York or Boston, much less anyone in Columbine or Red Lake. Nor
did such laws protect Jews from Hitler or Stalin or Chinese peasants from Mao, etc., ad infinitum.
Wednesday, April 6, 2005 ~ 1:17 a.m., Dan Mitchell Wrote: Germany's conservative opposition has reportedly stated that the new corporate tax cut proposed by Chancellor Gerhard Schroeder will be
passed by parliament as early as this coming summer. "We won't block a quick solution," chancellery spokesman Martin Neumeyer was quoted as
announcing in weekly magazine, Der Spiegel. He continued: "We will be able to pass the tax reform before (parliament's) summer recess (in the
second week of July)." ...The government favours an end to tax breaks for certain special purpose media investment funds, higher taxes on
dividends and more limits on firms' ability to carry over losses. However, opposition lawmakers believe that much of the shortfall will be offset by
higher revenues from companies who will pay more taxes in Germany rather than move profits offshore.
Tuesday, April 5, 2005 ~ 12:25 p.m., Dan Mitchell Wrote: The European Commission on Monday (4 April) slashed 2005 economic growth forecasts for the eurozone to 1.6% - down from the 2% predicted
six months ago. "The second half of 2004 was very bad, very low growth rate, so the carryover for 2005 was not strong", said Economic Affairs Commissioner Joaquin Almunia presenting the Spring Economic
Forecasts. "We are estimating recovery along the year and at the end of 2005 we are expecting a growth rate according to the potential growth
around two percent", said the Commissioner. The Commission also revised down its predictions for the entire EU from 2.4 to 2 percent. By contrast the growth forecasts for the US suggest an increase of 3.6%.
Tuesday, April 5, 2005 ~ 12:02 a.m., Andrew Quinlan Wrote: One of the greatest benefits of a Social Security system based on personal accounts is that workers would never face a use-it-or-lose-it
decision. They would never forego any benefits by continuing to work. They would just continue to build up wealth, providing more income when they do choose to stop working or providing a nest egg that can be
left to children or a spouse at death. Consequently, personal accounts will greatly increase work by the elderly by removing penalties for doing so. New research by economists Alan Gustman of Dartmouth and
Thomas Steinmeier of Texas Tech quantify the impact. They find that adoption of something like the Social Security Commission's second option, which is very similar to what President Bush is proposing, would
reduce retirement at age 62 by 5 percent -- a significant impact -- by encouraging more seniors to stay in the labor force. ...So far, there has
been almost no discussion of the implications of Social Security reform for economic growth. The potential benefits, however, may be large and are an important reason to take action.
Tuesday, April 5, 2005 ~ 11:17 a.m., Dan Mitchell Wrote: Since 1820, when Louisiana sugar planters successfully argued for high tariffs to prevent a collapse in the value of slaves, the industry has used
political influence to fleece consumers and taxpayers and avoid competition. No other industry has used its deep pockets and vast political clout ($22 million of campaign contributions to both parties
since 1990) to restrain trade and competition. American consumers have been the victims. In 2004, government price controls through trade quota restrictions and loan guarantees priced U.S. sugar at more than
20 cents a pound, about 2½ times the world price. This means Americans spend about $2 billion more yearly in higher prices for sugar and food
items that contain sugar than if we had a free market in sugar. The gains from this sweet deal are conferred upon the sugar plantation owners --
mostly large, financially healthy conglomerates. ...How is the racket perpetuated? One answer is sugar producers have tremendous political influence. Geographically concentrated in Florida, Louisiana and key
Upper Midwest swing states, they practically invented the political patronage game. There has been no change in recent years -- since 1990, the industry has donated more than $22 million -- about $12 million to
Democrats and $10 to Republicans.
Tuesday, April 5, 2005 ~ 10:37 a.m., Andrew Quinlan Wrote: The committee's own proposal would impose burdens that are well beyond the capabilities of most nonprofits. Of 65,000 foundations, only
46, or 0.06%, have assets over $1 billion. Most have assets under $50 million. And of the roughly 1.4 million public charities, about 94% have
annual revenue of $1 million or less; 98% have revenue of less than $5 million. Most are run with small staffs and tight budgets. These smaller nonprofits are where people with problems often find help, where
research and funding begins for everything from AIDS to charter schools, where local communities organize to keep their streets beautiful, protect the environment, return the homeless to productive society and
support civic institutions. This is the sector that most often preserves the texture and strength of our communities -- and that would be most hurt
by many of the current proposals. ...Private philanthropy is the organized expression of the highest of American ideals: the belief that Americans can create wealth, and then use it generously to establish
organizations that act in good faith and have the wisdom, compassion and initiative to help others, without undue reliance on government. Naturally, all wrongdoers should be punished. But surely the
enforcement of existing laws against self-dealing and abuse is a far better solution than the imposition of potentially prohibitive costs on every struggling nonprofit in America.
Tuesday, April 5, 2005 ~ 9:16 a.m., Dan Mitchell Wrote: The government-created bank's demise should come as no surprise. Credit officers at the not-for-profit bank lacked incentives to monitor
loans on an ongoing basis. The lacdb's lending was subject to pressures by public officials, which distorted decisions so as to favor politically
connected borrowers. Moreover, the bank - like other public lenders - was actively encouraged to fund ill-conceived, highrisk projects. A
financial institution with a portfolio of very high-risk loans was bound to fail. ...The U.S. Department of Housing and Urban Development allocated $435 million in grants and loan guarantees to capitalize the
community development bank. The federal funds were awarded to the County and City of Los Angeles, which were then to funnel the funds to the lacdb. An agreement was reached in 1995 that set forth the
conditions for the annual flow of funds from the county and city to the lacdb. ...As of the fall of 2003, the lacdb had $16 million in outstanding
loans. Since 1996, the bank received $43 million in repayments and charged off $39 million worth of loans. Assuming the remaining $16 million in outstanding loans would have been repaid, the bank still
charged off an astounding 40 percent of the funds it lent. To put that in perspective, the current charge-off rate for private commercial banks is
less than one percent. Over the last 20 years, it never rose above two percent. ...The fundamental assumption of proponents of community development banks is that private banks overlook viable investment
opportunities. The proponents presume that employees of a federally funded, nonprofit bank can and will identify those overlooked business opportunities and make them happen. Given the incentives of the
individuals involved, that is a hard premise to defend. It rests on concerns that private banks discriminate in lending (avoiding otherwise
profitable investments), as well as the even-more-incredible premise that credit officers at a nonprofit community development bank are more
adept than their private-sector counterparts at assessing the potential success of firms that plan to operate in poor neighborhoods.
Monday, April 4, 2005 ~ 3:19 p.m., Dan Mitchell Wrote: Federal spending (aka "big government"): It has gone up an average of about $50 billion a year under presidents of both parties. But that breaks
down as $35 billion a year under Democratic presidents and $60 billion under Republicans. If you assume that it takes a year for a president's
policies to take effect, Democrats have raised spending by $40 billion a year and Republicans by $55 billion. ...As for measures of general prosperity, each president inherits the economy. What counts is what
happens next. Let's take just two measures, although they all show the same thing: Democrats do better under every variation. From 1960 to 2005 the gross domestic product measured in year-2000 dollars rose an
average of $165 billion a year under Republican presidents and $212 billion a year under Democrats. Measured from 1989, or measured with a one-year delay, or both, the results are similar. And how about this
one? The average annual rise in real per capita income -- that's the statistic that puts money in your pocket. Democrats score about 30 percent higher.
Monday, April 4, 2005 ~ 1:00 p.m., Dan Mitchell Wrote: Today, the U.S. Senate is weighing whether to endorse an equally insidious Trojan Horse - the so-called United Nations Law of the Sea
Treaty - known by its appropriate acronym: LOST. This pact, conceived by anti-American "globalists" in the 1970s, was backed by the Carter
administration, rejected outright by President Ronald Reagan and ultimately signed by Bill Clinton. Now, the Bush administration is inexplicably urging the Senate to ratify the treaty, which would put 70
percent of the Earth's surface under the despot-doting, corrupt and unaccountable "governance" of the United Nations. ...State Department
officials have quietly told Senate Foreign Relations Committee members that ratification of LOST will prove to skeptics we are receptive to a
"multilateral approach" to "solve international problems." Yet, it is this treaty's very "multilateral" aspect - in its definitions, provisions and
mandatory dispute resolution - that poses the greatest risk to the United States. ...The treaty is evidence of the U.N.'s longstanding commitment to redistributing wealth and technology from developed to
"less-developed" countries and entities that "have not yet attained full independence or other self-governing status." For example: Article 144
would obligate private U.S. companies to transfer seabed mining and "other" technologies to a multinational U.N. bureaucracy called the
"International Seabed Authority." The wire diagram of this Orwellian entity looks like a rough draft of Enron's financial arrangements - and is
likely to produce enough opportunity for corruption and financial wrongdoing to give Paul Volcker's U.N. Whitewash Team work for the rest of their lives. ...Under LOST, this global entity is empowered to levy
"fees" and "other taxes" on private companies to which mining contracts are awarded and can compel industrialized nations to share
technologies with others "unable to obtain" sophisticated seabed mining equipment. The billions of dollars this would put under the control of
U.N. bureaucracy makes the Oil-for-Food program look like pocket change.
Monday, April 4, 2005 ~ 10:43 a.m., Dan Mitchell Wrote: As Germany and France released a fresh batch of dismal employment numbers on Thursday, the specter of seemingly ineradicable joblessness
is hanging over both Europe's economic recovery and the fortunes of its political leaders. Unemployment in Germany rose to 12 percent in March, a record in the post-World War II period, while in France, the
rate remained at 10.1 percent in February, its highest level in five years. ...
Sunday, April 3, 2005 ~ 12:42 p.m., Andrew Quinlan Wrote: In an amazingly fecund 27-month period, the cause of freedom was strengthened by the coming to high offices of Margaret Thatcher, Ronald
Reagan and John Paul II who, like the president, had been an actor and was gifted at the presentational dimension of his office. This peripatetic pope was seen by more people than anyone in history and his most
important trip came early. It was a visit to Poland that began on June 2, 1979. In nine days a quarter of that nation's population saw him. Marx
called religion the opiate of the masses, but it did not have a sedative effect on the Poles. The pope's visit was the nation's epiphany, a thunderous realization that the nation was of one mind, mocking the
futility of communism's 35-year attempt to conquer Poland's consciousness. Precisely at the moment the West most desperately needed it, we were sent a champion. It is hard to remember now how dark those days were.
The 15 months following the pope's elevation marked the high tide of Soviet communism and the nadir of the free world's post-Vietnam collapse. It was a time of one defeat after another. Vietnam invaded
Cambodia, consolidating Soviet hegemony over all of Indochina. The Khomeni revolution swept away America's strategic anchor in the Middle East. Nicaragua fell to the Sandinistas, the first Soviet-allied
regime on the mainland of the Western Hemisphere. (As an unnoticed but ironic coda, Marxists came to power in Grenada too.) Then finally, the Soviets invaded Afghanistan. And yet precisely at the time of this
free-world retreat and disarray, a miracle happens. The Catholic Church, breaking nearly 500 years of tradition, puts itself in the hands of an obscure non-Italian -- a Pole who, deeply understanding the East
European predicament, rose to become, along with Roosevelt, Churchill and Reagan, one of the great liberators of the 20th century.
Sunday, April 3, 2005 ~ 10:32 a.m., Dan Mitchell Wrote: Greece is set to raise taxes on tobacco and alcohol, as well as value added tax, to meet EU budget targets. ...VAT will rise from 18 per cent
to 19 per cent. "We have a tough adjustment effort to make and we need to keep up the pressure on revenue collection," the Greek finance
minister George Alogoskoufis told the Financial Times. ...The socialist opposition reacted to the government's decision to raise taxes as "unfairly targeting low-income groups", according to the FT.
Saturday, April 2, 2005 ~ 4:08 p.m., Andrew Quinlan Wrote: "We know what the pope has achieved. Fifty percent of the collapse of communism is his doing," Walesa told The Associated Press on Friday.
"More than one year after he spoke these words, we were able to organize 10 million people for strikes, protests and negotiations. "Earlier
we tried, I tried, and we couldn't do it. These are facts. Of course, communism would have fallen, but much later and in a bloody way. He
was a gift from the heavens to us." ...Poles say the pope's charismatic visits and Masses let people feel their collective power in defying the
authorities. Anna Bohdziewicz, who helped distribute underground books around the time of the pope's first visit to Poland, recalled the electrifying feeling in the huge crowd that formed even the day before
the pope arrived, among people walking to Victory Square in Warsaw where he was to speak, and later during his Masses. "This feeling was something absolutely new because people were together, happy and
somehow free, because they came because they felt like it, putting flowers on the square where the Mass was supposed to be," said Bohdziewicz, 54. "And the next year you had Solidarity, and it was the
same feeling. I think it broke some kind of fear - I'm sure because suddenly people saw that there were a lot of people who feel the same, who think the same, and this was a kind of power."
Saturday, April 2, 2005 ~ 3:32 p.m., Dan Mitchell Wrote: German Chancellor Gerhard Schröder, desperate to get companies to invest and create jobs, has proposed slashing six percentage points from
the country's nominal corporate income tax. That would take the effective rate down to around 32% when local levies are figured in. If, as expected, opposition leaders agree, Germany will boast a corporate tax
rate lower than that of France or Italy and close to Britain's -- sharpening the race to attract foreign investment and putting the onus
on other countries to respond. "In Italy, there is a lot of attention on the German move," says Maria Cecilia Guerra, a professor of finance at the
University of Modena. Hard to believe that only last year, Germany was among the ringleaders of an effort to force low-tax countries like Estonia to raise their rates. Now, Germany, whose current rate of about
38% is the highest in Europe, is facing reality. "The eastern countries are advertising lower tax rates and that has definitely created pressure,"
says Jörg Otto Spiller, a member of Parliament who is tax policy spokesman for Schröder's Social Democrats. ...Corporate tax rates in the core of Europe had already been falling, from an average of 38% in
1997 to about 31% last year, according to KPMG International. But the entry of 10 new members in May, 2004, has sparked a race to the bottom. Eager to attract business and raise living standards, the new
entrants in Eastern Europe and the Baltics are touting rates ranging from 15% for Lithuania and Latvia to 28% for the Czech Republic. (Estonia charges 24% on distributed profits.) Ireland also has used its
superlow 12.5% rate to drum up foreign investment.
Saturday, April 2, 2005 ~ 1:54 p.m., Andrew Quinlan Wrote: Anyway, there's more good news, of course. According to Gregg Easterbrook, air pollution is lower than it has been in a generation,
drinking water is safer, and our waterways are cleaner. America's environmental revival is a rich and complicated story with many specific exceptions, caveats and, of course, setbacks. But the overarching theme
is pretty simple: The richer you get, the healthier your environment gets. This is because rich societies can afford to indulge their environmental
interests and movements. Poor countries cannot. Unsurprisingly, rich countries tend to have a better grasp of economics and the role of markets, private stewardship and property rights, reasonable
regulations, and so forth. ...In socialized economies, a "tragedy of the commons" almost always arises. As Harvard president Lawrence Summers says, nobody's ever washed a rented car.
Saturday, April 2, 2005 ~ 12:15 p.m., Dan Mitchell Wrote: Spain's Economy Minister, Pedro Solbes announced on Wednesday that the government is seeking to cut the top marginal rate of income tax and
streamline the number of income tax brackets. Solbes did not offer any specific proposals during an address to the College of Economists, merely stating that the Socialist government intends to reduce Spain's
top rate of tax, currently 45%.
Saturday, April 2, 2005 ~ 10:13 a.m., Dan Mitchell Wrote: ...the Grand Canyon State is bidding to become the first to offer a "universal" voucher -- that is, a grant that any child would be able to
use at any private school in the state. School vouchers already exist in limited form (mostly for low-income children) in Washington, D.C., Milwaukee, Cleveland, Florida, Maine and Vermont. Arizona's voucher
would be the first available without restrictions to parents of all school-age children. A universal voucher bill passed the state Senate and
is awaiting a vote in the House of Representatives. The legislation would offer vouchers of $3,500 a year for elementary school children and
$4,500 for high schoolers. The average cost of educating a child in the public schools is $8,500 to $8,900. "I think parents should have the
choice of how to educate their children," says GOP Representative Andy Biggs, sponsor of the House bill. Universal vouchers are "just the next
logical step" for school choice in Arizona. ...Whatever the outcome this year, that vouchers can come this close to passing statewide is a sign of
political progress. With their long experience with public-school choice and private scholarships, Arizona voters have been able to see past the
scare tactics of those who claim that vouchers will ruin public schools. In fact, letting taxpayer money follow each student to the school of his choice is the best way to rescue American public education.
Saturday, April 2, 2005 ~ 9:45 a.m., Andrew Quinlan Wrote: Now comes the AFL-CIO's campaign against private Social Security accounts. In addition to its usual grassroots and Congressional lobbying,
it is threatening to pull its $400 billion pension fund business from any financial services firms backing personal accounts. "We have no
intention of letting any of these companies get away with this while they manage our workers' funds," stated Gerald Shea, a top AFL-CIO lobbyist. That threat sent two Wall Street players, Edward Jones and
Waddell Reed, scurrying out of a coalition supporting reform, as did the Financial Services Forum, a group of 21 chairmen of large financial
concerns. Next on labor's hit list are heavyweights ranging from Morgan Stanley to Charles Schwab. Three trustees representing the New York
City Employees' Retirement System recently sent a letter to a half-dozen investment banking companies demanding a review of their Social Security stance. The problems with all this are many, starting with a rich
irony: Unions are using the clout they've acquired from investing in the stock market to oppose a plan to let individuals invest their own tax money in the same market. According to a Tax Foundation paper, of
nearly $2 trillion in public employee pension plan assets, 55% are invested in corporate equities. Labor leaders don't mind stock-market investing when it enhances their own political leverage, but for
individual workers to build their own wealth is too "risky." ...Most troubling of all is the confusion of fiduciary responsibility with partisan
politics. As a matter of law, pension-fund trustees have a fiduciary duty to maximize investment returns for their beneficiaries. That certainly
includes the right as shareholders to lobby for better "corporate governance," to the extent that that improves company performance or
prevents fraud. But Big Labor's new political campaigns have nothing at all to do with return on shareholder equity. They may even end up lowering returns to the extent that they prohibit certain good
investments or obstruct useful government reforms.
Friday, April 1, 2005 ~ 12:10 p.m., Dan Mitchell Wrote: French Finance Minister, Thierry Breton is reported to be studying new proposals that will offer tax incentives to small domestic technology
companies in order to encourage more investment in fledgling hi-tech firms, particularly in the biotechnology sector. According to a report in
the Financial Times, the proposals drafted by the research lobby group Conseil Stratégique de l'Innovation (CSI), to be presented to Prime
Minister Jean Pierre Raffarin at a meeting later in the month, would give tax breaks on research spending to companies with fewer than 2,000 employees and with revenues of less than EUR150 million. Lasting for a
period of eight years after a company's initial public offering, the package of tax breaks would also give shareholders exemptions on capital gains, wealth and inheritance taxes. It is thought that the new
measures were prompted by the announcement that Paris-based pharmaceutical Company IDM - recognised as one of the country's most promising biotech ventures - plans to merge with a US company and
relocate to San Diego.
Friday, April 1, 2005 ~ 12:00 p.m., Dan Mitchell Wrote: One can believe that life is sacred and still recognize that trade-offs exist. If government policy always erred on the side of life, the speed
limit would be reduced to 5 miles per hour to eliminate all fatal accidents. Of course, voters would not stand for a 5 m.p.h. speed limit, so at least implicitly policy makers recognize that there is a trade-off
between risk and the time required to transport goods and people on the highways. This principle was clearly stated by the Office of Management
and Budget in the 2003 budget: "Since the nation does not possess enough resources to eliminate all risks, an important performance goal for government is to deploy risk-management resources in a way that
achieves the greatest public health improvement for the resources available." Yet research indicates that the government generally does a
poor job in choosing policies that maximize life years. Many programs are intended to reduce the risk of premature death. If the government
used its limited budget to maximize the number of life years, the cost of saving an additional life year would be the same across different programs. In actuality, the cost per year of life saved varies widely
across regulations and programs. Some cost-effective initiatives that would reduce risks are passed over, while others that are more costly and less effective are put in place. For example, a program of prenatal
care for pregnant women is estimated to cost $2,800 per year of life saved, while the cost per year of life saved from regulating airborne benzene is around $5 million.
Friday, April 1, 2005 ~ 11:19 a.m., Andrew Quinlan Wrote: It is one of the oddest things about the European Union that the more money and effort is put into a project the worse it performs. Until the
1990s before the EU decided to take interest in the sporting activities of its citizens, they seemed to get on quite well, doing all sorts of useful and
healthful things. ...Meanwhile, the Commission has announced that the number of obese children is rising by 400,000 per year and something must be done about that. The health commissioner, Markos Kyprianou,
has launched the EU's Action on Diet, Physical Activity and Health, explaining that "he will act together with industry and consumer groups,
health experts and political leaders to tackle obesity. The Platform will pool expertise and act as a forum where good practice from one country
is disseminated and replicated across Europe." Whether there is an obesity problem or not, its notional existence is to be used for two things:
an attempt to interfere even more in people's lives and to integrate health, diet and sport policies across the European Union. In fact, the
Commission is not ruling out the possibility of legislative approach if the present voluntary one does not work. ...What, one asks oneself, would
that legislation be? Compulsory sports for all? A diet police knocking on people's doors and counting the number of potatoes they eat with their
meals? And, above all, will the commissioners show us a good example and lose some of their own surplus flesh?
Friday, April 1, 2005 ~ 10:36 a.m., Dan Mitchell Wrote: Europe's economic performance is nothing to get excited about. Yet one European member state seems to defy the law of economic gravity:
Ireland - the Celtic Tiger. Workforall, an independent European think tank, based in Belgium, has compared the economic performance of various European economies -- particularly Belgium and Ireland -- over
the period 1984 - 2002. They found that there were surprisingly large differences in economic growth and GNP p.c. (Gross National Product per capita). Belgian real growth over this period of 18 years amounted
to 42%, while Ireland achieved 167%! Consequently, the Celtic Tiger has moved to the top of the European league: from one of the poorest to one
of the most prosperous countries. What is the secret of its success? ...The most striking conclusion was that 93% of the differences between growth performances could be explained by government spending and tax
levels. ...in 1985 Ireland made a u-turn. It drastically lowered the tax burden. All wasteful government spending was eliminated. In three years
time public spending was reduced by no less then 20%. The result was that Ireland entered a period of explosive GNP growth, averaging 5.6% from 1985 to 2002. This is roughly three times the Belgian growth rate.
The boom went hand in hand with the creation of new jobs, which was far in excess of that in Belgium. ...the authors venture the thought that a
1% reduction in government spending will lead to an additional annual growth of 0.6%.
Friday, April 1, 2005 ~ 10:11 a.m., Dan Mitchell Wrote: Brushing aside qualms about privacy rights and potential economic effects, the German government is going after tax evaders by using a
computer system originally designed to fight money laundering for terrorism. The new "Law for Tax Honesty" takes effect Friday and permits investigators to ascertain where Germans, who some say
practice widespread tax evasion, have domestic bank accounts. It would not reveal what is in the accounts. ...Yet Germany's banks, under immense competitive pressure from foreign and domestic rivals, regard
the measure as another headache that they and their customers do not need. "It's a clear weakening of Germany's status as a financial center,"
said Hermann Burbaum, chief executive of the Volksbank Raesfeld, a small bank that mounted a court challenge to the issue but lost an initial
test last week. ...Germans are believed to have stashed billions abroad, in tax havens like Luxembourg and Switzerland, a key reason why Germany pushed so hard for European cooperation in catching tax
evaders. ...Germany's own domestic efforts have gone even further. A tax amnesty for German cheaters, which ran for 15 months, ends the same day as the new law on tracking bank accounts takes effect. The
amnesty program brought in EUR1.1 billion, or $1.42 billion, a substantial sum but far below the EUR5 billion that Hans Eichel, the finance minister, had hoped for. ...Germany's banks believe the prospect
of state snooping is already increasing the number of clients who go elsewhere to do their banking.
Friday, April 1, 2005 ~ 9:56 a.m., Dan Mitchell Wrote: With general elections expected in May in the UK, the opposition Conservatives are promising far-reaching changes in the country's EU
agreements. According to a senior Tory John Redwood, the shadow deregulation secretary, the new Conservative cabinet would push for the UK's withdrawal from the common fisheries policy and for more control
over immigration, social and employment measures, while cutting down on unnecessary business regulations.
Friday, April 1, 2005 ~ 9:00 a.m., Dan Mitchell Wrote: The preliminary results of a major research project assessing compliance with the US tax laws, released by the Internal Revenue Service on
Tuesday, revealed that the vast majority of American taxpayers abide by the tax rules. However, the figures also suggest that non-compliance is
on the increase. The findings show that the gross tax gap - essentially the difference between what taxpayers are obliged to pay and what they
actually pay - exceeds $300 billion per year. The results indicated that the gap increased slightly to between $312 billion and $353 billion in tax
year 2001 compared to a previous estimate of $311 billion based on earlier studies. According to the IRS, enforcement activities, coupled with late payments, recover about $55 billion of the tax gap, leaving a
net tax gap of between $257 billion and $298 billion.
Friday, April 1, 2005 ~ 8:39 a.m., Andrew Quinlan Wrote: Annan may not be a thief, but we do know he's a floundering bureaucrat responsible for mismanaging a sick organization mired in a multibillion
dollar fraud. ...Corruption at the United Nations has worked hand-in-glove with incompetence to produce institutional paralysis and political irrelevance. ...real reform means oversight and accountability.
At the moment, it is only the United States -- in its often anarchic manifestations of free press, congressional committees and bouts of taxpayer outrage -- that acts as a check on the United Nations. ...the
first reform is to force Annan to resign, now. His refusal to resign is ego-crat at its worst. The second reform is to prosecute the thieves. The
third is to end the ridiculous requirement that jobs be distributed by nationality, a feature that feeds "connected elites" into U.N. staff
positions instead of experts hired on merit. As for real reform: (1) strip France of permanent U.N. Security Council (UNSC) status; (2) keep
Russia as a permanent member, but with no veto (all it has are nukes)... Glenn Reynolds suggested former Czech president and Cold War dissident Vaclav Havel as Annan's replacement. I can think of no one better.
Friday, April 1, 2005 ~ 7:43 a.m., Dan Mitchell Wrote: Japanese lawmakers in parliament's upper house gave their approval yesterday to the phasing out of a tax break originally passed to help jolt
the economy out of recession, in a bid to reduce the country's mounting debt levels. As a result of the measure, the tax deduction first introduced in 1999 will be halved to 10% from January 2006, and may be
eliminated altogether in the following year - depending on Japan's economic circumstances - in a move that would effectively raise taxes by
some 3.3 trillion yen ($30.8 billion) per year. ...However, the government of Prime Minister Junichiro Koizumi maintains that the measure is an
integral part of a wider strategy aimed at curbing Japan's debt, which is predicted to reach 151% of gross domestic product by 2006 - the highest in the OECD.
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