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www.freedomandprosperity.org |
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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 Heritage Foundation, 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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Tuesday, January 31, 2006 ~ 12:47 p.m., Andrew Quinlan Wrote: Nine nations from the old Soviet Bloc have adopted simple and fair flat tax regimes, and others are poised to follow suit. These countries are rejecting the European social
model of progressive taxes and implementing a system based on the notion that all citizens should be treated equally.
. . . Free-market Estonia was the first to adopt a flat tax, implementing a 26 percent rate in 1994, not long after the collapse of the Soviet Union. The two other Baltic states followed in the mid-1990s, with Latvia choosing a 25 percent rate and Lithuania 33 percent. Learning from its neighbors, Russia shocked the world with a 13 percent flat tax that went into effect in 2001. The idea was taken up in 2003 by Serbia, which adopted a 14 percent rate. Slovakia climbed on the bandwagon the following year with a 19 percent rate, as did Ukraine, which chose 13 percent. Romania joined the flat tax revolution in 2005, with a 16 percent rate, along with Georgia, which chose 12 percent - giving it the honor (at least so far) of having the lowest rate.
Tuesday, January 31, 2006 ~ 8:30 a.m., Dan Mitchell Wrote: Often the only incentives for government activities and spending seem to be upward ones, as lobby groups and politicians seek to extend the
power of the State. Hence the historical trend for taxes to increase, and anything that helps counter this will be beneficial. ...tax competition effectively sets up a market for governments, who are forced to
compete for "customers" (whether businesses or individuals). Competition will have the same effects on governments that it has on businesses - they will be forced to be more efficient, and to be more
responsive to "customer" preferences. At its best, competition should result in genuine choice of governments, with different countries
offering different levels of taxation and government activity to suit different preferences. Tax competition...mean[s] that countries will face
the consequences of their choices, and it gives an exit mechanism for minorities to protect themselves from victimization. ...Unfortunately this makes tax competition as popular amongst governments as other
forms of competition are amongst large corporations, and so often their reaction is to form a cartel to guard their patch from upstart smaller competitors. ...The best known attempt by the European governments
to shore up their crumbling tax systems was the Organization for Economic Co-operation and Development's campaign against low-tax jurisdictions. The OECD accepted (in theory) the benefits of tax
competition in keeping taxes low and governments efficient, but sought to emasculate it by preventing "harmful" tax competition (which seemed to be defined as any tax competition that might actually be
effective), forcing non-members to change their tax systems by imposing sanctions on non-compliant countries. ...If Europe's economy is not going to suffer even more damage, its governments will have to
stop their failed attempts to impose a tax cartel and recognize the realities of a global economy. This means lower, simpler taxes, which in turn means that restricted State spending will have to be more
responsive to the wishes of their electorates, and tax competition is the force that has the best chance of bringing this about.
Tuesday, January 31, 2006 ~ 7:41 a.m., Dan Mitchell Wrote: If there is a crisis in health spending, it is the direct result of government policy over the past four decades, which has encouraged
the dramatic rise in third-party payment of health care. Today federal, state and local spending accounts for nearly half of the nation's health
care bill, up from 38% in 1970. In addition, the tax code explicitly favors insurance payment of even routine health bills. That's because only health care spending funneled through employer-provided health
insurance gets a full and complete tax break. The result is that consumers increasingly are shielded from the true cost of health care. In 2004, out-of-pocket spending accounting for just 12.6% of national
health spending, down from 33% in 1970. With the true cost of care mostly hidden from consumers, they naturally demand more and more, pushing up spending and prices. The problem is that most health care
reform proposals -- including those offered so far by the Bush administration -- simply offer more of the same: more government spending, or more generous tax breaks for health care spending.
Monday, January 30, 2006 ~ 8:51 a.m., Dan Mitchell Wrote: Former Treasury Secretary Robert Rubin wrote a tedious essay in the Wall Street Journal that wisely advised "putting aside ideology in favor
of facts and analysis." ...Mr. Rubin identified the unserious heretics as a group of nameless supply-side theoreticians who allegedly made wildly
incorrect predictions about lower tax rates in 2003 and also about higher tax rates in 1993... No supply-side economist asserted any and all tax cuts will pay for themselves. My Wall Street Journal response to
President Bush's initial 2001 tax bill said it was mostly a demand-side effort to reduce revenue (particularly the rebated 10 percent tax rate)
with minimal effect on marginal incentives. On the other hand, quite a few academic economists -- Larry Lindsay, Dan Feenberg and James Poterba, Martin Feldstein and others -- have observed reducing the
highest marginal tax rates soon resulted in larger tax receipts. This is partly a matter of supply-side effects on labor effort and entrepreneurship and partly reduced incentive to avoid taxes. At least
13 studies found reducing the capital-gains tax rate results in more gains and therefore more taxes paid. ...While the top tax rate on salaries and dividends was 28 percent, it brought in 7½ percent of
GDP. After President Clinton added the 36 percent and 39.6 percent tax brackets in 1993, the income tax (aside from capital gains) brought in only 7.4 percent of GDP for four years.
Monday, January 30, 2006 ~ 8:04 a.m., Dan Mitchell Wrote: The prescription drug bill may have temporarily taken Medicare "off the table" for the 2004 election, but Republicans will be bedeviled for
decades by its rising costs and complexity. At current growth rates, Medicare, its cousin Medicaid and Social Security will consume a fifth of the nation's gross national product by 2020. That number represents
the current size of the entire federal government. Nor have Republicans learned much from that mistake. President Bush and the GOP Congress continue to preside over the largest expansion of government since
LBJ's Great Society. Economic growth fueled by the Bush tax cuts created a 22% surge in federal revenue over the past two years. But even that flow is barely keeping pace with spending, which went up by
8% in 2005 and is set to increase by 9% in 2006. When the good times slow down, no one expects it will be easy to slam the brakes on spending. ...Senator Tom Coburn, the Oklahoma Republican who along
with John McCain now promises to challenge every earmark on the Senate floor, says that ultimately good policy is good politics. "The Founders taught us the best policy was limited government that didn't
presume men were angels," he told me.
Sunday, January 29, 2006 ~ 1:55 p.m., Dan Mitchell Wrote: Myriad books with titles such as The Death of the Automobile, Road to Ruin, Highways to Nowhere, Divorce Your Car!, and Asphalt Nation
have been written over the last four decades, all complaining about car culture. Jane Kay Holtz, author of Asphalt Nation, describes America in
the introduction to her book as "a nation in gridlock from its auto-bred lifestyle, an environment choking from its auto exhausts." To her, the
anti-car movement is "a personal activism, an activism that shifts and focuses our own lives to favor the foot, the bike, the public vehicle."
...This anti-car agitprop reveals nothing so much as an ignorance of what cars mean to real people. ...Traveling in a car, on average, takes half as long as a ride on mass transit. According to transportation
expert Wendell Cox, the average American commute in a car is 30 miles per hour, while heavy and light rail are 25 and 15 miles per hour, respectively. Automobile opponents look back fondly to the early 20th
century when streetcars and rail systems served as the dominant modes of transportation. At the peak of rail travel in 1920, the average American traveled about 1,400 miles a year on urban transit and 440
miles a year on inter-city rail, transportation expert Randal O'Toole reports in his book The Vanishing Automobile and Other Urban Myths. No one, except businessmen and the wealthy, ventured farther than a
few miles from home. Today, the average American drives 14,000 miles a year and travels more than 10 times as much as his early 20th century counterpart. The automobile has made life better for everyone. It has
done so by creating not just mobility, but choice, wealth, freedom, and time. ...The rise of the car also means that people living in isolated areas can escape their surroundings. Without cars, some
neighborhoods, both those that are too far out and those that aren't situated near transit stops, would be off limits to non-residents. Medical
care, too, is easily accessible for everyone who owns a car. ...Some countries have banned cars. North Korea, one of the world's most brutal dictatorships, forbade the use of private cars until last year.
When Communist Albania abolished the car, its economy disappeared with it. The absence of cars and highways is consistent in the poorest,
most oppressed countries in the world. ...It's no coincidence that as soon as the automobile became affordable to the masses and ceased being a
luxury good for the wealthy, the anti-car crowd swung into high gear. To them, the car is a symptom of an entire lifestyle they find objectionable: that is, mobility and choice for all. And, not surprisingly,
the people they criticize tend to be people they have little in common with, who have no chance of becoming part of their social circles. One
only has to conjure the names of environmental activists in Hollywood, such as Cameron Diaz or Laurie David--the wife of comedian and Seinfeld creator Larry David--to prove this point. To illustrate the
snobbery of anti-car elitists, car enthusiasts like to quote the Duke of Wellington, who at the advent of the railroad proclaimed the new technology would "only encourage the common people to move about
needlessly."
Saturday, January 28, 2006 ~ 2:43 p.m., Dan Mitchell Wrote: Australian Finance Minister Nick Minchin has proposed that the government should abolish the superannuation tax in the next budget
rather than cutting income taxes which, he argues, could help overheat the economy by boosting consumer spending and increasing inflation. ...Senator Minchin cautioned that further income tax cuts which
boosted consumer spending might force the Reserve Bank to raise interest rates to keep inflation in check. "There is however a very obvious way to reduce taxation without unduly stimulating the economy
and putting upward pressure on interest rates, and that is to look at how we tax savings as opposed to spending or income," Senator Minchin argued. "Abolishing Labor's tax on super contributions would
deliver a very real benefit to Australian workers without overheating the economy," he concluded.
Friday, January 27, 2006 ~ 7:12 a.m., Dan Mitchell Wrote: Mr Bolkestein, who served in the previous Prodi commission from 1999 to 2004, predicted in a speech delivered on Wednesday (25 January)
that the common currency will face a huge test in around 10 years, when a pensions boom is likely to hit Europe. The ageing of Europe's
population will hit the continent "ruthlessly," the outspoken Dutch politician stated, with eurozone states like Italy being unprepared for
the expected jump in pension claims. These states "will be forced by political pressure to borrow more and increase their budget deficit, with
consequences for interest rates and inflation," he indicated, adding "the real test for the euro is not now, but in ten years time".
Friday, January 27, 2006 ~ 5:34 a.m., Dan Mitchell Wrote: German Finance Minister Peer Steinbrück is urging new EU member states to raise taxes, since their currently low rates have "nothing to do
with fair tax competition", he says. ...The German economy has been developing poorly for a number of years. ...Germany is having trouble competing. The finance minister obviously knows this. And he also
seems to realize that high German taxes are partly to blame. But his solution is not for Germany to cut taxes radically. Instead, he wants his
competitors to become less competitive. ...To a large extent, this is all a symptom of the debate on the so-called "European Social Model"
shared by most countries in Western -- "old" -- Europe. We created a highly uncompetitive model -- the core of which is a big state -- and now
find it very hard to pursue reforms that take us away from it. ...the so-called social model makes Western Europe less competitive: First, the size of the state determines what tax pressure you have. High taxes
make a country less competitive. And if the state and its public monopolies constitute a large share of society, there will be less space for all the forces of competition that create wealth.
Thursday, January 26, 2006 ~ 8:32 a.m., Dan Mitchell Wrote: ...the reality for Europe's biggest economies is brutal. This ageing Continent can't create enough jobs for its people, especially the young,
or stay competitive in a fast changing world. Europe fusses about a widening gap with the U.S. on nearly every economic criteria. Forget about trying to close that. The more immediate worry is that rising
powers like China and India are catching up to a Continent stuck in place. Any discussion of a solution for the EU's problems needs to begin with its bloated state sectors, its restrictive labor markets and its
aversion to free competition. ...Employment is Europe's greatest failing. The U.S. labor market takes in millions of new workers each year and comes as near as possible to full employment. Its magic formula:
flexibility. But no one in Europe is willing to embrace this path to "social cohesion," i.e. making sure everyone has a job. The current
view still sees government welfare checks as the proof of a just society. ...The reckoning for Europe, with its stagnant growth and demographic time bomb, may be years or even a decade off. Concerning the previous slogan of the so-called Lisbon Agenda, to make Europe the most competitive economy by 2010, the commission
experts point out that they are no longer "obsessed" with that goal, which had been expressed mainly in terms of "catching up" with the
US. "Our goal is simply to do much better in growth and jobs," they said on Monday. But Eurochambers' 2004 figures show that the EU has
fallen further behind its American competitor, lagging 18 years behind in terms of income and 14 years in productivity per employee. The EU's 2004 employment rate was reached by the US in 1978 and the R&D
investment per capita level in 1980, with both European indicators deteriorating between 2003 and 2004.
Thursday, January 26, 2006 ~ 8:17 a.m., Dan Mitchell Wrote: ...the recently-appointed leader of the Conservative Party, David Cameron, has stressed that economic and fiscal stability must be the
Party's first priority before tax cuts, although the new Tory leader said that low taxation remains a long-term goal. ..."When it comes to the
economy, I am absolutely clear that stability and responsibility come first, second and third as our priorities - and that they come before the
commitment to cut taxes," he argued. ...Shadow Chancellor George Osbourne explained that the fruits of economic growth would be shared between improving public services and cutting taxes. "That is the
sustainable path to lower taxes. It will make Britain more competitive and protect public services," Mr Osbourne noted. ...Mr Osbourne also
used his speech as an opportunity to attack the record of his opposite number, Chancellor of the Exchequer Gordon Brown, who, he remarked, had increased UK taxes as a share of the economy while the
UK's competitors had reduced theirs.
Wednesday, January 25, 2006 ~ 7:18 a.m., Dan Mitchell Wrote: Teachers unions keep telling us they care deeply, profoundly, about poor children. But what they do, as opposed to what they say, is behave
like the Borg, those destructive aliens in the Star Trek TV series who keep coming and coming until everyone is "assimilated." We saw it in Florida this month when the state supreme court struck down a
six-year-old voucher program after a union-led lawsuit. And now we're witnessing it in Milwaukee, where the nation's largest school choice program is under assault because Wisconsin Governor Jim Doyle
refuses to lift the cap on the number of students who can participate. ...Mr. Doyle, a union-financed Democrat, has vetoed three attempts to loosen the state law that limits enrollment in the program to 15% of
Milwaukee's public school enrollment. ...There's no question the program has been a boon to the city's underprivileged. A 2004 study of high school graduation rates by Jay Greene of the Manhattan Institute
found that students using vouchers to attend Milwaukee's private schools had a graduation rate of 64%, versus 36% for their public school counterparts. Harvard's Caroline Hoxby has shown that
Milwaukee public schools have raised their standards in the wake of voucher competition. ...The unions scored a separate "victory" in
Florida two weeks ago when the state supreme court there struck down the Opportunity Scholarship Program. ...Barring some legislative damage control, the 5-2 ruling means these kids face the horrible
prospect of returning to the state's education hellholes next year. ...What the Milwaukee and Florida examples show is that unions and their allies are unwilling to let even successful voucher experiments
continue to exist. If they lose one court case, they will sue again -- and then again, as long as it takes. And they'll shop their campaign cash
around for years until they find a politician like Jim Doyle willing to sell out Wisconsin's poorest kids in return for their endorsement. Is there a more destructive force in American public life?
Tuesday, January 24, 2006 ~ 8:41 a.m., Dan Mitchell Wrote: Thomas Jefferson recognized the dangers of pork-barrel spending back in 1796 when he wrote James Madison that allowing Congress to spend
federal money for local projects would set off "a scene of scramble among the members [for] who can get the most money wasted in their
State; and they will always get most who are meanest." ...In his last act before leaving the presidency in 1817, Madison vetoed a bill for federal
financing of roads, bridges and canals. The man popularly known as "the Father of the Constitution" rejected the view of Congress that its
general welfare clause justified the expenditure. He wrote that "such a view of the Constitution would have the effect of giving to Congress a
general power of legislation instead of the defined and limited one hitherto understood to belong to them, the terms 'common defense and general welfare' embracing every object and act" imaginable.
Ultimately, the answer to the Jack Abramoff scandals is to combine immediate reforms with the realization that unless the size of government is reduced, even conservatives inevitably get caught up in
the care and feeding of the state. Industries that want favors or protection from government will hire the powerful to manipulate the levers of power. Local governments will be similarly motivated to look
for free federal money. Abuse and corruption will inevitably follow. The current scandals in Washington should remind us just how far we have strayed from the vision of limited government the Founders handed
down to us. Madison urged those who wanted federal largesse for "county roads" to amend the Constitution to permit it.
Tuesday, January 24, 2006 ~ 7:57 a.m., Dan Mitchell Wrote: Angered by a Supreme Court ruling that gave local governments more power to seize people's homes for economic development, a group of
activists is trying to get one of the court's justices evicted from his own home. The group, led by a California man, wants Justice David Souter's
home seized to build an inn called the "Lost Liberty Hotel." They submitted enough petition signatures only 25 were needed to bring the
matter before voters in March. ..."This is in the tradition of the Boston Tea Party and the Pine Tree Riot," Organizer Logan Darrow Clements
said, referring to the riot that took place during the winter of 1771-1772, when colonists in Weare beat up officials appointed by King George III who fined them for logging white pines without approval.
"All we're trying to do is put an end to eminent domain abuse," Clements said, by having those who advocate or facilitate it "live under it, so they understand why it needs to end."
Monday, January 23, 2006 ~ 8:13 a.m., Dan Mitchell Wrote: America is not competing for jobs with China. We are competing for capital. Double taxing dividend and capital gains income drives capital
to China, where it earns higher after-tax returns. When that happens, American workers are left behind with falling productivity and uncompetitive companies. Reducing or eliminating dividend and
capital-gains tax rates keeps capital in America, where it makes workers productive and supports high incomes. Congress must act now to keep rates from increasing in 2008, by extending or eliminating
dividend and capital gains taxes. ...America enjoys the highest living standard in the world because American workers enjoy the use of the largest and most advanced stock of tools in the world. But tools are
mobile, workers are not. While America continues to double-tax capital income through dividend and capital gains taxes, China, India, and other countries are aggressively competing for American capital with
investor-friendly policies. When the capital leaves, the paycheck goes with it. We can't afford to let that happen.
Monday, January 23, 2006 ~ 7:52 a.m., Dan Mitchell Wrote: The Health Care Choice Act sponsored by Rep. John Shadegg (R., Ariz.) and Sen. Jim DeMint (R., S.C.), would let American consumers purchase
health insurance across state lines, just as they now may shop coast to coast for mortgages. Shadegg-DeMint would let insurers licensed in one
state sell to individuals in the other 49. As such, Congress would use its constitutionally enumerated powers to liberate interstate commerce and
transform 50 separate, closed markets for medical coverage into one open, national market for health insurance. ..."Just as Delaware became a magnet for banking, some states will become magnets for
health insurance," predicts Dr. David Gratzer, a physician and Manhattan Institute senior fellow, and one of this idea's earliest proponents. "People seem to understand intuitively that it doesn't
matter whether their checks come from Delaware or New York or California. Likewise, the issues around health insurance are cost and availability rather than state of origin." Location matters. A health
policy for a single Pennsylvanian costs roughly $1,500 annually. Cross the Delaware into New Jersey, as George Washington did in 1776, and a similar health plan costs about $4,000, thanks to government
regulations.
Monday, January 23, 2006 ~ 7:27 a.m., Dan Mitchell Wrote: The modern CEO position requires a variety of skills and experience that aren't easily found. Especially in a Sarbanes-Oxley world, CEOs
face more scrutiny and have shorter tenures. It's also notable that many of today's most informed and sophisticated investors are only too happy to pay handsomely, perhaps even exorbitantly, for the right CEO
candidate. Private-equity firms in particular have persisted in giving out large pay packages to the top managers they hire to turn companies around. And because they are paying with their own money, they have a
big stake in getting it right. No doubt some executives earn more than their performance deserves, but that ought to be an issue for shareholders. And the best way to give shareholders influence over
managers and their pay is to restore the market for corporate control--that is, remove the legal and other impediments to takeovers. The CEOs and boards most likely to pad their own pay despite lousy
performance are those who know their jobs aren't at risk. ...If certain media moralists want to oust bad CEOs, they should call for a repeal of
the Williams Act, which requires that investors disclose any large share accumulation to the broader public. This has the effect of preventing quiet accumulations and making takeovers less profitable and more
difficult.
Sunday, January 22, 2006 ~ 2:02 p.m., Dan Mitchell Wrote: Britain's road to economic ruin under Tony Blair and Gordon Brown is nearly complete. Next year the U.K. government will spend more as a
percentage of GDP than its German counterpart for the first time in a generation -- 45.7%, according to OECD estimates. That's up from 37.5% in 2000 and surpasses Germany's figure of 45%, which has been
falling. ...It is no coincidence that growth numbers for the British economy are starting to feel very Continental. While final GDP growth figures for 2005 have not been published yet, the OECD's latest
projection for Britain was 1.7% -- slightly ahead of Germany's rate of 1.5% and a fraction behind France's 1.9%. ...Mr. Brown, the chancellor
of the exchequer, has blamed high oil prices and a slow housing market for Britain's sluggishness. No mention was made of explosion in public-sector employment, red tape and stealth taxes. The former has
seen an increase of over 860,000 since 1997 according to the think tank Reform, bringing the total number of people employed by the state to a
staggering six million, or one in 10 Britons. ...with both main political parties seemingly agreeing on the flawed concepts of social justice and
redistribution, and committed to ever more state interference, Britons can expect their country to decline slowly but inevitably, yet again, into an international has-been.
Sunday, January 22, 2006 ~ 11:46 a.m., Dan Mitchell Wrote: A recent tax cut in a city already known for its low-tax policies could boost Hong Kong's standing as an asset-management center for wealthy
international investors. Late last year and with little fanfare, Hong Kong eliminated its estate tax, which exacted as much as 15% of the value of any assets held in the city, including real estate, stocks and
luxury goods, when their owner passed away. ...Getting rid of the tax also levels the playing field with Hong Kong's biggest competitor as a
financial hub in Asia, Singapore. The city-state doesn't impose an estate tax on nonresidents. ...Florence Yip, a partner at PricewaterhouseCoopers, notes that the absence of an estate tax will
help woo overseas capital that already has been attracted by a policy of no capital-gains tax. It also could prompt some small- and midsize-business owners concerned with inheritance issues to set up
holding companies in Hong Kong rather than in offshore tax havens such as the Cayman Islands or the British Virgin Islands, says a Hong Kong-based banker.
Saturday, January 21, 2006 ~ 9:45 a.m., Dan Mitchell Wrote: Public employee pensions have become increasingly generous since 2000, promising a more comfortable retirement for civil servants but a
serious financial challenge for future taxpayers. ...Governments have been ...increasing monthly benefits, making it easier to retire at 55 and
spending more on retiree health benefits. ...Average annual benefits for retired state and local workers grew 37% to $19,875 from 2000 to 2004, the most recent data available, according to the Census Bureau.
...The portion of the private workforce enrolled in plans that pay monthly benefits for life has fallen from 39% in 1980 to 18% in 2004, according to the Employee Benefit Research Institute. By comparison,
more than 90% of government workers are covered by such plans, the Bureau of Labor Statistics says.
Saturday, January 21, 2006 ~ 9:16 a.m., Dan Mitchell Wrote: Not enough money for education? It's a myth. The truth is, public schools are rolling in money. If you divide the U.S. Department of
Education's figure for total spending on K-12 education by the department's count of K-12 students, it works out to about $10,000 per student. Think about that! For a class of 25 kids, that's $250,000 per
classroom. This doesn't include capital costs. Couldn't you do much better than government schools with $250,000? You could hire several good teachers; I doubt you'd hire many bureaucrats. Government
schools, like most monopolies, squander money. America spends more on schooling than the vast majority of countries that outscore us on the
international tests. But the bureaucrats still blame school failure on lack of funds, and demand more money. ...A study by two professors at the Hoover Institution a few years ago compared public and Catholic
schools in three of New York City's five boroughs. Parochial education outperformed the nation's largest school system "in every instance,"
they found -- and it did it at less than half the cost per student.
Friday, January 20, 2006 ~ 8:59 a.m., Dan Mitchell Wrote: Twenty-five years ago today, Ronald Reagan was inaugurated as the 40th President of the United States promising less intrusive
government, lower tax rates and victory over communism. ...If the story of history is one long and arduous march toward freedom, this was a momentous day well worth commemorating. All the more so because
over this 25-year period prosperity has been the rule, not the exception, for America--in stark contrast to the stagflationary 1970s. Perhaps the
greatest tribute to the success of Reaganomics is that, over the course of the past 276 months, the U.S. economy has been in recession for only
15. That is to say, 94% of the time the U.S. economy has been creating jobs (43 million in all) and wealth ($30 trillion). More wealth has been
created in the U.S. in the last quarter-century than in the previous 200 years. ...Where Republicans have most strayed from the Reagan vision
has been on controlling federal spending. ...They should all recall the Gipper's words in his inauguration speech 25 years ago: "It is no
coincidence that our present troubles parallel and are proportionate to the intervention and intrusion in our lives that result from unnecessary and excessive growth of government."
Friday, January 20, 2006 ~ 8:48 a.m., Dan Mitchell Wrote: A much better explanation for the millions going to the campaign coffers of Washington politicians lies in the awesome growth of
government control over business, property, employment and other areas of our lives. Having such power, Washington politicians are in the position to grant favors. The greater their power to grant favors, the
greater the value of being able to influence Congress, and there's no better influence than money. ...Campaign finance and lobby reform will only change the method of influence-peddling. If Congress did only
what's specifically enumerated in our Constitution, influence-peddling would be a non-issue simply because the Constitution contains no authority for Congress to grant favors and special privileges.
Friday, January 20, 2006 ~ 8:31 a.m., Dan Mitchell Wrote: A senior UK tax lawyer says that Treasury hostility towards the corporate sector could drive major companies out of the country,
reports London's Lehmann Communications plc. Jonathan Ivinson, Head of Tax at Hogan & Hartson says: "Gordon Brown believes that UK corporates do not pay enough in taxes. He has no idea that by
restructuring their affairs and relocating staff out of the UK they could leave a huge hole in the public finances". Mr Ivinson says that at least
one FTSE 100 company is investigating domiciling itself outside the UK following an 18-month crackdown by Revenue & Customs on tax avoidance. ...Richard Collier-Keywood, head of tax at PwC, said: "A
lot of UK tax is paid by relatively few companies, and many of those have a choice about where they site some of their operations - the tax situation could persuade them to site discretionary additional business
elsewhere."
Friday, January 20, 2006 ~ 7:59 a.m., Dan Mitchell Wrote: Organized labor, having mightily tried and miserably failed to unionize even one of Wal-Mart's 3,250 American stores, has turned to organizing
state legislators. Maryland was a natural place to begin because it has lopsided Democratic majorities in both houses of its legislature. ...Wal-Mart's enemies say Maryland is justified in expropriating some of
the company's revenues because the company's pay and medical benefits are insufficient to prevent some employees from being eligible for Medicaid. ...Maryland's new law is, The Washington Post says, "a
legislative mugging masquerading as an act of benevolent social engineering.'' And the mugging of profitable businesses may be just beginning. ...Maryland's grasping for Wal-Mart's revenues opens a new
chapter in the degeneracy of state governments that are eager to spend more money than they have the nerve to collect straightforwardly in taxes. Fortunately, as labor unions and allied rent-seekers in 30 or so
other states contemplate mimicking Maryland, Wal-Mart can contemplate an advantage of federalism. States engage in "entrepreneurial federalism,'' competing to be especially attractive to
businesses. A Wal-Mart distribution center, creating at least 800 jobs, that has been planned for Maryland could be located instead in more hospitable Delaware.
Friday, January 20, 2006 ~ 7:15 a.m., Dan Mitchell Wrote: The EU should be fed by its own tax instead of member states' donations, the Austrian presidency said on Wednesday... "Europe needs
stronger own resources," Austrian chancellor Wolfgang Schussel indicated... He hinted the tax could target short-term financial investors, air-travel and maritime transport... A spokesman for UK
prime minister Tony Blair quickly responded that London has "strong reservations" about any EU tax plan... But French diplomats reacted
warmly, saying "We should have an open mind in the discussion on how the future undertakings of the EU can be met. This might include a new European tax."
Thursday, January 19, 2006 ~ 10:14 a.m., Dan Mitchell Wrote: Economic behavior, whether measured in terms of employment, work effort, saving, investment, risk-taking, entrepreneurship or capital
formation, is highly responsive to changes in marginal tax rates. In other words, incentives matter. The economic power of lower tax-rate incentives has been proven at national and state levels. It is also borne
out by the results of lower tax-rate systems put in place internationally. Allowing people to keep more of the extra dollar earned or the extra
dollar invested, by providing a reward for incentive, is a tried-and-true prescription for economic growth. Raising after-tax rewards for work,
investment and risk-taking is the surest path to long-term prosperity and competitiveness... waging class war against the wealthy is nonsensical; it merely wages war against...non-rich working people who
are deprived of scarce and valuable capital that is so necessary to create new technologies, businesses, equipment, jobs and job training.
Thursday, January 19, 2006 ~ 10:02 a.m., Dan Mitchell Wrote: In a poll conducted for the University of Maryland's Program on International Policy Attitudes between June and August last year, fully
74% of Chinese citizens said they agreed with the statement "the free enterprise system and free market economy is the best system on which
to base the future of the world." The Philippines, at 73%, and the U.S., at 71%, were second and third. The poll, which surveyed 20,791 people
in 20 countries, seems like a pretty good snapshot of current sentiment, as such things go. Remarkable, isn't it, that residents of the Middle Kingdom have maintained their appreciation of the benefits of free
enterprise through six decades of oppression and economic backwardness imposed by their Communist cadres? ...Less encouraging were the responses of European citizens, who arguably could do with a
much bigger dollop of capitalist religion, given the moribund state of their economies. Fully half of the French disagreed that capitalism is the best way forward, for instance. (We'd be curious to hear their
proposed alternative, given how their socialist experiment has produced double-digit unemployment and low growth.)
Thursday, January 19, 2006 ~ 9:45 a.m., Dan Mitchell Wrote: One that believes the government should improve living standards for the poor, and the other which believes that people should take care of
themselves, without government help. Those protesting the president's current budget would label the first group as "compassionate" and the
second group as "uncompassionate." But how do they compare in their private giving behaviors? According to the General Social Survey in
2002, the proponents of government spending are six percentage points less likely to give money to charity each year than the opponents, and a
third less likely to give money away each month. ...who exhibits greater compassion by donating more blood? Once again, it is those opposed to government aid. These supposedly uncompassionate folks are 25% of
the population, but donate more than 30% of the blood each year. Meanwhile, supporters of government spending to the poor are 28% of the population, but donate just 20% of the blood. If the whole
population gave blood like opponents of social spending do, the blood supply would increase by more than a quarter. But if everyone in the population gave like government aid advocates, the supply would drop
by about 30%.
Thursday, January 19, 2006 ~ 9:17 a.m., Dan Mitchell Wrote: Several of the world's most talented and best paid footballers, including FIFA World Player of the Year, Ronaldinho, are said to have been
deterred from joining British soccer clubs because of the UK's unfavourable tax regime for those on high incomes. This is the conclusion drawn by Roy Saunders, chairman of International Fiscal
Services, the international tax consultancy, who is urging Chancellor of the Exchequer Gordon Brown to relax taxation rules for sports stars in
order to attract the best talent to Britain. Mr. Saunders argues that the Treasury would benefit from a review of tax laws relating to high-income sport stars by ultimately taking more in tax receipts if the
rules were changed. ...Under the UK's tax laws, income over GBP32,400 is taxed at 40%, but because of social security contributions British clubs would have to pay a footballer GBP100,000 in gross
income for him to earn GBP50,000 in net income. In Spain, a club would have to pay just GBP66,000 gross income for a player to earn GBP50,000 after tax. Furthermore, certain other European countries
are more attractive to the well-paid from a tax perspective because their governments allow more income to be held offshore.
Thursday, January 19, 2006 ~ 8:20 a.m., Dan Mitchell Wrote: Low-skilled workers cannot receive more in compensation than the value of their labor. If Wal-Mart is forced to increase the share of
compensation that comes in the form of health benefits, then it will have to decrease take-home pay. If it cannot decrease take-home pay, then it
will have to reduce its reliance on low-skilled labor or cut back on operations altogether. The Wal-Mart law injects politics into the process
of setting benefits for Wal-Mart workers. Once the Wal-Mart law takes hold, various suppliers of health care services will have an incentive to
apply pressure. Dentists and optometrists will lobby for laws that force Wal-Mart to pay for its workers' dental care and eyeglasses. The biggest
beneficiaries of the Wal-Mart law are likely to be people who are better off than Wal-Mart workers. For example, owners of other businesses will be able to charge higher prices and earn higher profits.
Wednesday, January 18, 2006 ~ 11:48 a.m., Dan Mitchell Wrote: The European Commission on Tuesday announced that it has adopted a Communication that presents a possible solution to the compliance
costs and other company tax difficulties that Small and Medium Enterprises (SMEs) face when doing business across borders. The Commission suggests that Member States allow SMEs to compute their
company tax profits according to the tax rules of the home state of the parent company or head office. An SME wishing to establish a subsidiary or branch in another Member State would as a result be able
to use tax rules and file tax returns in a country with which it is familiar. ...The Home State Taxation scheme would...mean that an SME's tax base (i.e. taxable profits) would be calculated in accordance
with the rules of the Home State. Each participating Member State would then tax at its own corporate tax rate its share of the profits determined according to its share of the total payroll and/or turnover.
Wednesday, January 18, 2006 ~ 11:21 a.m., Dan Mitchell Wrote: Hungary's liberal SZDSZ party, a junior partner in the country's governing coalition, wants to follow the example set by many other
countries in Central and Eastern Europe by introducing a flat tax following elections which are due to be held in later in the Spring. Speaking at a business conference on Monday, Hungary's youthful
Economy and Transport Minister Janos Koka proposed a 20% flat tax system, including personal income tax, value-added tax and corporate tax. ...The Socialists have rejected flat taxes on the grounds that it
would mean that "the head of a successful business would pay the same tax rate as a low-income worker." In June of last year, a proposal to
introduce a single 21% flat-rate corporate, personal income and value added tax was rejected by the government, which has instead committed itself to a five-year programme of tax reforms designed to
reduce the total burden of taxation as a percentage of the country's economy... At present, Hungary's personal income tax rates range from 18% to 36%, while corporate tax rate is levied at 16%. ...Flat taxes
have become a much used tool by the former members of the Warsaw pact to raise levels of investment and attract foreign business, a trend which began in 1994 when Estonia introduced a flat tax rate of 26% for
all personal income and corporate profits (which it plans to reduce to 20% this year). Since then, a number of countries in the region have followed Estonia's lead: in 1997 Russia introduced a flat tax of 13%;
the Polish government has announced that it will be putting in place a single 18% rate of corporate tax, income tax, and VAT by 2008; while Hungary's neighbours in Slovakia and Romania have also forged ahead
with flat taxes.
Wednesday, January 18, 2006 ~ 9:15 a.m., Dan Mitchell Wrote: Not counting foreign immigrants, Massachusetts has been losing more people than it attracts every year since 1990, according to MassINC, a
Boston-based research institute. The net outflow during the 12 years from 1990 to 2002 -- the excess of people leaving Massachusetts over those entering -- was 213,000, and the hemorrhaging has only gotten
worse since then. MassINC reported in 2003 that one-fourth of Bay State residents would leave if they had the opportunity to do so. ...a hatred of cold winters doesn't explain New Hampshire's net gain of
78,000 transplanted Massachusetts residents between 1990 and 2002... What is it about Massachusetts that keeps employers -- or potential employers -- from braving the risk involved in launching a new
enterprise or expanding an old one? ...This is a state in which a tax cut can be decisively approved by the voters yet never go into effect. In
which grocers can be prosecuted for pricing milk too low. ...In which local officials have been known to heatedly object to opening town meetings with the Pledge of Allegiance. In which a $2 billion Big Dig
ends up costing $14 billion. In which Ted Kennedy keeps getting reelected. Is it really any wonder so many people are fleeing Massachusetts? Maybe the real mystery is why so many of us stay.
Wednesday, January 18, 2006 ~ 7:56 a.m., Dan Mitchell Wrote: The beauty of capitalism is that deals must always be win-win, or they don't happen. You work for an employer if you think you're better off
working for him than not doing so; he employs you if he thinks you're worth what you demand. A strike is simply an organized refusal to work
for less than the strikers think they're worth. The principle is the same whether one individual or a union walks off the job: It's the principle of
self-ownership, the underlying principle of the whole capitalist system, the principle that we are all free individuals dealing voluntarily to
mutual advantage. As John Locke taught in the "Second Treatise of Government," "every Man has a Property in his own Person. This no
Body has any Right to but himself. The Labour of his Body, and the Work of his Hands, we may say, are properly his." Of course, just as
workers have a right to strike, employers -- morally, at least -- have a right to fire them. Under President Reagan, the federal government dismissed striking air-traffic controllers and let eager new employees
take the jobs.
Tuesday, January 17, 2006 ~ 10:10 a.m., Dan Mitchell Wrote: A report submitted to Congress this week by National Taxpayer Advocate Nina E. Olson urged lawmakers to enact fundamental
simplification of the the US tax system to ease the tax reporting burden for legitimate taxpayers... Olson went on to observe that: "As taxpayers become confused and make mistakes, or deliberately 'push the
envelope,' the IRS understandably responds with increased enforcement actions. The exploitation of 'loopholes' leads to calls for new legislation to crack down on abuses, which in turn makes the tax law more
complex. ...Thus begins an endless cycle - complexity drives inadvertent error and fraud, which drive increased enforcement or new legislation,
which drives additional complexity. In short, complexity begets more complexity. This cycle can only be broken by true tax simplification, followed by ongoing legislative and administrative discipline to avoid
'complexity creep.'" In 2005, taxpayers will pay roughly $1.2 trillion in federal income taxes. But America's tax burden is more than just the amount of tax paid. It
also includes the cost of complying with federal taxes, including tax planning, paperwork and other hassles caused by tax complexity. In the last century the cost of tax compliance has grown tremendously. ...In
2005 individuals, businesses and nonprofits will spend an estimated 6 billion hours complying with the federal income tax code, with an estimated compliance cost of over $265.1 billion. This amounts to
imposing a 22-cent tax compliance surcharge for every dollar the income tax system collects. Projections show that by 2015 the compliance cost will grow to $482.7 billion.
Tuesday, January 17, 2006 ~ 9:45 a.m., Dan Mitchell Wrote: The politics of education reform typically features Republicans pushing for more choice and Democrats defending the status quo. But not
always. In Connecticut, Democrats in the legislature are eager to expand the state's successful charter school model while GOP Governor Jodi Rell refuses to lift a finger to help. ...Connecticut boasts some of
the finest charter schools in the country. In June, the Hartford Courant reported that at "New Haven's Amistad Academy, where 98 percent of students are African American or Hispanic, math and reading scores
have risen to triple those of neighboring public schools and equal to scores in [wealthier and predominantly white] Greenwich." ...when Ms.
Rell presents her new budget next month, she's expected once again to ignore the education reformers. That's because she is running for re-election in November and is seeking the support of the teachers
union -- the Connecticut Education Association -- which is dead set against charters and any other education reform that threatens its monopoly. With a job-approval rating that's remained well over 70%
since she took office, Ms. Rell has the political capital to take on an entrenched interest that hurts poor kids. But she apparently lacks the political will.
Monday, January 16, 2006 ~ 12:39 p.m., Dan Mitchell Wrote: Suburbia, the preferred way of life across the advanced capitalist world, is under an unprecedented attack -- one that seeks to replace
single-family residences and shopping centers with an "anti-sprawl" model beloved of planners and environmental activists. ...All this reflects a widespread prejudice endemic at planning departments in
universities, within city bureaucracies, and in much of the media. Across a broad spectrum of planning schools and practitioners, suburbs and single-family neighborhoods are linked to everything from obesity,
rampant consumerism, environmental degradation, the current energy crisis -- and even the predominance of conservative political tendencies. ...Planners in Albuquerque have suggested banning backyards --
despised as wasteful and "anti-social" by new urbanists and environmentalists, although it is near-impossible to find a family that doesn't want one. ...It is time politicians recognized how their
constituents actually want to live. If not, they will only hurt their communities, and force aspiring middle-class families to migrate ever further out to the periphery for the privacy, personal space and
ownership that constitutes the basis of their common dreams.
Monday, January 16, 2006 ~ 10:45 a.m., Dan Mitchell Wrote: What should a woman do when attacked by a criminal? Should she behave passively? Use pepper spray? A gun? ...It turns out that pepper
spray may not do you a lot of good when it is raining or snowing. A woman is just as likely to disable herself as the attacker when it's windy or when using the spray indoors. Knives and baseball bats are
particularly problematic, because women have to get very close to their attackers to use them, and male criminals--that is, most criminals--tend
to be much stronger physically than their female victims. ...women who used a gun to resist an attack were 2.5 times more likely to escape uninjured than those who behaved passively.
Monday, January 16, 2006 ~ 9:33 a.m., Dan Mitchell Wrote: Talk about the poor getting poorer tugs at the hearts of decent people and squares nicely with the agenda of big government advocates, but it
doesn't square with the facts. ...The authors analyzed University of Michigan Panel Study of Income Dynamics data that tracked more than 50,000 individual families since 1968. Cox and Alms found: Only five
percent of families in the bottom income quintile (lowest 20 percent) in 1975 were still there in 1991. Three-quarters of these families had
moved into the three highest income quintiles. ...Cox and Alm's findings were supported by a U.S. Treasury Department study that used an entirely different data base, income tax returns. The U.S. Treasury
found that 85.8 percent of tax filers in the bottom income quintile in 1979 had moved on to a higher quintile by 1988 -- 66 percent to second and third quintiles and 15 percent to the top quintile.
Sunday, January 15, 2006 ~ 1:00 p.m., Dan Mitchell Wrote: Many Republicans have forgotten that as government grows, its increased power to grant favors or inflict pain attracts more people
who would abuse the system. Sen. John McCain once told me that "the best long-term answer to corruption is a smaller government." Indeed,
disgraced lobbyist Jack Abramoff observed a decade ago, "More money available from government is blood in the water for sharks." He proved
to be one hungry shark. If the GOP response to the Abramoff scandal is merely to enact "lobbying reforms," the party will skirt the problem
that underlies the corruption: runaway spending. ...Nothing better illustrates the meltdown in spending restraint than earmarking, the process by which members secure special pork projects such as Alaska's
infamous $223 million "bridge to nowhere." ...In 1998, Congress approved 1,850 earmarks just for transportation projects. Last year's
transportation bill contained 6,371. Earmarks have become the corrupt currency by which bills like the ruinously expensive prescription drug entitlement are bought vote by vote. They inevitably result in some
lower-priority projects being funded first, with potentially disastrous results. In Louisiana, the Army Corps of Engineers spent $1.9 billion between 2000 and 2005, more than 80% of which was earmarked. Less
than 4% of the total was spent on protecting levees, while over a third of the money went to building a new lock on an underused canal. ...The federal government is now 250 times as big in real terms as it was a
century ago. If Republicans don't use Mr. DeLay's departure to restore their limited-government credentials, they will see their own voters rebel.
Sunday, January 15, 2006 ~ 12:15 p.m., Dan Mitchell Wrote: The nation's 16 million state and local government workers form a large, growing, and well-compensated class in society. State and local
workers earned $36 per hour in wages and benefits in 2005, on average, compared to $24 per hour for U.S. private-sector workers. ...The number of school teachers and administrators increased 22
percent between 1994 and 2004. By contrast, the number of children in the public schools increased just 9 percent during the period. ...Along
with the District of Columbia, the largest bureaucracies are in Alaska and Wyoming-states that have an image of rugged individualism. ...Nevada has the smallest bureaucracy, with a state and local
workforce only about half the relative size of Alaska's. ...Some states, such as Alaska and New Mexico, have high levels of bureaucracy across many budget areas. Other states, such as Pennsylvania and Rhode
Island, have consistently lower levels of bureaucracy.
Sunday, January 15, 2006 ~ 10:54 a.m., Dan Mitchell Wrote: Appropriations that are, effectively, cash flows from individual representatives to private entities are invitations to corruption. Federal
money directed to private entities was what ex-Rep. Duke Cunningham, R-Calif., was bribed to deliver. So, end ``earmarks." They write into law
a representative's or senator's edict that a particular sum be spent on a particular project in his or her state or district. ...The Inland Valley
Daily Bulletin of Ontario, Calif., reported last week that a $1.28 million earmark put into the transportation bill by Rep. Gary Miller, R-Calif., is
for improving streets in Diamond Bar, Calif., in front of a 70-acre planned housing and retail development of which Miller is co-owner with those who are his largest campaign contributors.
Saturday, January 14, 2006 ~ 5:21 p.m., Dan Mitchell Wrote: Drug gangs have a lot at stake and they can't simply call up the police when another gang encroaches on their turf, so they end up essentially
setting up their own armies. (Nor can drug users call the police when someone steals their cache.) Just as gangs find ways to smuggle drugs in from Latin America and Asia, they will also find ways to smuggle in
weapons to defend their turf. Letting more law-abiding citizens own guns may actually save police lives. There are also a large number of peer-reviewed academic studies showing that letting private citizens
own guns reduces violent crime, and some work finds that gun crime falls even faster than overall violent crime. Others have directly linked
this reduction in crime to officer safety. Professor David Mustard in the Journal of Law and Economics specifically tested this and found that on
average each additional year a state allows citizens to carry concealed handguns reduces the number of police murders by another 2%.
Saturday, January 14, 2006 ~ 11:15 a.m., Dan Mitchell Wrote: Medicare's prescription-drug benefit--with its huge costs and labyrinthine complexities--is already a notorious entitlement program,
and it just began operating a couple of weeks ago, on Jan. 1. Little wonder, then, that its sponsor and "partners"--the federal government,
insurance companies, drug retailers--have launched a slick ad campaign on its behalf. ...the federal government is spending $300 million on its own campaign to get 28 million or so of the 42 million Americans on
Medicare to sign up for drug coverage. ...Most of your tax dollars will be spent on pamphlets to help seniors figure out the system. ...About
$30 million in federal money is being spent on national TV spots. One ad, titled "Make You Look Good," targets adult children and friends of
those on Medicare. ...if it's really necessary for the government to pay for prescription drug coverage--if Americans are truly choosing between food and medicine, as so many politicians are fond of
saying--why do federal officials have to spend so much time and money persuading people to sign up? ...they are surely promoting the government, based on the very political notion that massive transfers of
wealth are what's needed to solve our social ills.
Friday, January 13, 2006 ~ 11:51 a.m., Dan Mitchell Wrote: Reagan...disliked government's using the [tax] code to conduct industrial policy, picking commercial winners and losers, which is a recipe for what is
called "lemon socialism" -- tax subsidies for failing businesses that the market says should fail. Regarding the second part of Reagan's statement, any tax
code is going to shape society. But he opposed manipulating the tax code to stigmatize this or that consumer preference. ...When government uses
subsidies to moralize, as with tax preferences for bonds that can be used to finance this but not that, government is speaking. It is expressing opinions
about what is and is not wholesome. And once government starts venting such opinions, how does it stop? Government could spare itself the stress of
moralizing about so many things if it decided that the choices people make with their money is their, not its, business. And government could avoid
having opinions about so many things if it would quit subsidizing so many things.
Friday, January 13, 2006 ~ 11:03 a.m., Dan Mitchell Wrote: Retailers have also rushed to Washington demanding that Congress impose a de facto price cap on credit card charges -- as Australia and
the European Union have already done. This campaign against credit card fees and the clamor for price controls sound eerily familiar. A few
years ago dim-witted politicians employed price controls to try to limit fees for using ATMs. In localities where that was tried, the result was not lower fees, but fewer ATMs, and thus much less convenience for
customers. Once upon a time, credit cards were the playthings of the rich. But today credit (and debit) cards are a ubiquitous feature of the U.S. economy, with three of four adults owning either credit or debit
cards as America moves closer to becoming a "cashless society." Certainly the shift toward plastic payments suggests the industry is satisfying its customers. ...rising interchange fees have also
corresponded with lower annual fees charged to cardholders and increasingly lucrative incentive packages to entice shoppers to pay with plastic: cash back rewards, airline frequent flyer miles, and even exotic
benefits like free "concierge service" to get tee times on the golf course. We're all in favor of more competition to drive down interchange fees.
But the argument retailers are making that this industry operates as a cartel is highly unpersuasive. There are five major competitors in the credit/debit card market aggressively vying for customers: Visa,
MasterCard, American Express, Discover, and the newest player, Star. Meanwhile, mega-retailers such as Wal-Mart and Sears are using their market power to cut separate deals with credit card companies to lower
their interchange fees. Wal-Mart and Target also want to establish their own banks so they can reduce interchange fees. Federal regulators should welcome this development.
Friday, January 13, 2006 ~ 10:15 a.m., Dan Mitchell Wrote: EU finance commissioner Joaquin Almunia announced on Tuesday (10 January) that he supports boosting the union's budget from a new EU
tax, which would also give greater autonomy and room for manoeuvre to EU institutions. The commissioner said that such a fiscal instrument, which he preferred to call a "community resource" rather than
"community tax", would have to conceal the origin of money collected from individual member states, to avoid the constant fighting over net
and gross cash balance. ...The Austrian chancellor Wolfgang Schussel, Bavarian prime minister Edmund Stoiber, leader of France's centre-right UMP Nicolas Sarkozy and Germany's new chancellor
Angela Merkel, all support the idea of an EU tax.
Thursday, January 12, 2006 ~ 3:41 p.m., Dan Mitchell Wrote: In order to vote for the Bush tax cuts, some liberal Republicans insisted on a $20 billion giveaway to the states to offset what they thought
would be "lost" revenue. But the revenue data show that the Bush tax cuts and the economic expansion that has followed have been a windfall
for state coffers. Since the tax cuts passed in mid-2003, GDP growth has averaged close to 4%, the jobless rate is down to 4.9%, and federal
tax receipts have climbed at the fastest pace in more than two decades. More workers and rising incomes translate into more taxable income for states. And because most states tax investment income too, state
budgets are also benefiting from an increase in corporate dividend payouts. If the states were smart, they'd offer to repay the $20 billion if Washington will make the tax cuts permanent.
Thursday, January 12, 2006 ~ 1:18 p.m., Dan Mitchell Wrote: Last week, Florida's supreme court ruled that public money can't be spent on private schools because the state constitution commands the
funding of only "uniform . . . high-quality" schools. How absurd. As if government schools are uniformly high quality. Or even mostly decent.
...For "Stupid in America," a special report ABC will air Friday, we gave identical tests to high school students in New Jersey and Belgium.
The Belgians trounced the Americans. We didn't pick smart kids in Europe and dumb kids in the United States. The American students attend an above-average school in New Jersey, and New Jersey kids'
test scores are above average for America. "It has to be something with the school," said a New Jersey student, "'cause I don't think we're
stupider." She was right: It's the schools. At age 10, students from 25 countries take the same test, and American kids place eighth, well
above the international average. But by age 15, when students from 40 countries are tested, the Americans place 25th, well below the international average. In other words, the longer American kids stay in
American schools, the worse they do. They do worse than kids from much poorer countries, like Korea and Poland. ...This should come as no surprise since public education in the USA is a government
monopoly. If you don't like your public school? Tough. If the school is terrible? Tough. Your taxes fund that school regardless of whether it's good or bad. Government monopolies routinely fail their customers.
...in Belgium, school funding follows students, even to private schools.
Wednesday, January 11, 2006 ~ 12:36 p.m., Andrew Quinlan Wrote: "The conferees remain concerned with proposals by international organizations to interfere with the sovereign right of jurisdictions to
pursue low-tax policies and direct the Department of State to consider such behavior when reporting whether continued participation in that
international organization serves the interests of the United States."
Wednesday, January 11, 2006 ~ 10:23 a.m., Dan Mitchell Wrote: A look at the latest economic data suggests an obvious change that should have broad bipartisan appeal: a cut in the corporate tax. ...Job
creation is disappointing, and it's time we put aside the blame game and try to figure out why. Some months ago, I was at a lunch attended by a
number of important corporate leaders. I asked how many of them were planning to build a major facility in the U.S. None of them was. I asked how many were planning to expand overseas. Almost all of them were.
The fact is, companies with only U.S. operations have a hard time competing in the global marketplace unless, like Microsoft Corp. or Amgen Inc., they have significant intellectual property that lets them
fend off foreign competitors. ...The most powerful factor appears to be taxes. The U.S. has the highest corporate tax rate among the world's most developed economies. With a combined federal and state tax rate
of 39.3 percent, the U.S. taxes corporations at a rate that is 10 percentage points higher than the average of other nations in the Organization for Economic Cooperation and Development. In a world
of tight margins, a 10-percentage-point disadvantage is humongous. And the U.S. rate is well above that of countries such as Ireland, which has enjoyed an economic boom that coincided with a reduction in
corporate taxes to 12.5 percent. ...Congress should adopt legislation to lower the tax, and the president should push for the move in his State of
the Union address later this month. Unless we make a concerted effort to reduce the rate to something comparable to that of other developed nations, we can expect more bad jobs reports.
Tuesday, January 10, 2006 ~ 7:45 a.m., Dan Mitchell Wrote: Spain's Economy Minister Pedro Solbes stated last week that the government will introduce proposals into parliament this month aimed
at simplifying and cutting rates of taxation, including corporate tax. In an interview with the Spanish daily La Vanguardia last week, Mr Solbes
revealed that the Socialist Party government wishes to unify the various rates of capital gains taxes and implement a cut in the corporate tax
rate to 30%, bringing the Spanish company tax rate more into line with the European Union average. ...The minister also outlined plans to streamline and cut personal income taxes. The tax cuts will go before
Spain's Parliament later this month and are expected to be implemented next year.
Tuesday, January 10, 2006 ~ 7:21 a.m., Dan Mitchell Wrote: The University of Illinois must soon decide whether, and if so how, to fight an exceedingly silly edict from the NCAA. That organization's
primary function is to require college athletics to be no more crassly exploitative and commercial than is absolutely necessary. But now the NCAA is going to police cultural sensitivity, as it understands that.
Hence the decision to declare Chief Illiniwek ``hostile and abusive'' to Native Americans. ...why should anyone's disapproval of a nickname doom it? When, in the multiplication of entitlements, did we produce an
entitlement for everyone to go through life without being annoyed by anything, even a team's nickname? If some Irish or Scots were to take offense at Notre Dame's Fighting Irish or the Fighting Scots of
Monmouth College, what rule of morality would require the rest of us to care? Civilization depends on, and civility often requires, the willingness
to say, ``What you are doing is none of my business'' and ``What I am doing is none of your business.''
Monday, January 9, 2006 ~ 11:06 a.m., Dan Mitchell Wrote: What's notable so far about this scandal is the wretchedness of the excess on display, as well as the fact that it involves self-styled
"conservatives," who claimed to want to clean up Washington instead of cleaning up themselves. That some Republicans are just as corruptible as some Democrats won't surprise students of human
nature. But it is an insult to the conservative voters who elected this class of Republicans and expected better. ...the Abramoff scandal wouldn't resonate nearly as much with the public if it didn't fit a GOP
pattern of becoming cozy with Beltway mores. The party that swept to power on term limits, spending restraint and reform has become the
party of incumbency, 6,371 highway-bill "earmarks," and K Street. And it's no defense to say that Democrats would do the same. Of course
Democrats would, but then they've always claimed to be the party of government. If that's what voters want, they'll choose the real thing.
...Lobbyists per se aren't the problem; most of them are hired to protect Americans from a federal government that wants to take more of their money or freedom. ...Republicans won't escape voter anger by writing
new rules but only by returning to their self-professed principles. Gradually since 1994 they've decided they want to reform and limit government less than they want to use government to entrench their
own power, and in the case of the Abramoffs to get rich doing so.
Monday, January 9, 2006 ~ 10:45 a.m., Dan Mitchell Wrote: Britain's new Conservative Party leader, David Cameron...is simultaneously bashing former Prime Minister Margaret Thatcher, the
one conservative leader in recent history with a record of real accomplishments. ...the Conservative Party took out full-page newspaper ads announcing its agenda. ...the Labour Party might have
written the ad. ...David Cameron pledged to put the interests of the poor above the rich. He didn't offer details, but this usually means more government handouts instead of rewarding initiative and priming the
entrepreneurial pump. As in the United States, no conservative can ever out-promise a liberal. ...Margaret Thatcher's convictions are to be preferred over what appears to be David Cameron's pandering. ...A
brief letter to the editor of The Daily Telegraph from an E.D. Weaving of Carshalton, Surrey had it right: "Having read about Mr. Cameron's
proposals for Conservative policies, I think we might as well vote New Labour."
Sunday, January 8, 2006 ~ 1:54 p.m., Dan Mitchell Wrote: ...there is a "new" Arnold Schwarzenegger, brought to heel by his Democratic adversaries, and he was on full display last night during
California's State of the State Address. ...He's become so committed to getting along with the Democrats that he's effectively become one of them. In recent days, he's proposed to raise the minimum wage, import
cheap prescription drugs, obtain a $50 billion infrastructure bond, and spend $428 million on expanding after-school programs to every California elementary and middle school... The Arnold Schwarzenegger
who last year pledged to cut spending and reorganize the government now seems intent on simply subsidizing it, and its workers, as generously
as he possibly can. "We need more roads, more hospitals, more schools, more nurses, more teachers, more police and more firefighters, more water, more energy, more ports, more, more more.'' Now that's an
agenda that the Democrats - and their union masters - can embrace.
Sunday, January 8, 2006 ~ 11:24 a.m., Dan Mitchell Wrote: Forty-five-year-old Otto Guevara, the Libertarian Movement (ML party) candidate in Costa Rica's Feb. 5 presidential race, is
campaigning door to door in the barrios of his country's central valley this week. ...Mr. Guevara, who has a Masters in law from Harvard, is a certifiable underdog, with only a remote chance of winning the whole
enchilada next month. Yet his candidacy and his party -- which promotes economic freedom -- are playing a crucial role in Costa Rican politics these days. Though still small, ML has cleverly used its five-seat
position in the 57-seat Congress to slow the growth of government over the past term. Conservative estimates show it could double its seats in
next month's elections. ...Mr. Guevara...favors the adoption of a flat tax to replace the country's steeply progressive income tax, which according to the Costa Rican controller general has produced an
estimated income-tax-evasion rate of 70%. It is likely to shoot even higher if the Congress passes a plan to subject earnings gained outside Costa Rica to domestic taxation. The flat tax is of a piece with Mr.
Guevara's plan to liberate the poor from government oppression. Simplified tax policy is proven to generate higher rates of growth, better standards of living and a more secure revenue stream for things
like funding highways and fighting crime. Predictably, the left's preference for progressive tax rates has produced a system in which the rich don't pay taxes, the black market expands, economic mobility
disappears and the country's competitiveness deteriorates.
Saturday, January 7, 2006 ~ 7:43 p.m., Dan Mitchell Wrote: Despite hysteria over high home prices, in most parts of the United States housing is quite affordable. But in some places housing prices are
astronomical -- three times the national average in much of California, for example. ...Why then are there particular places where housing costs
have skyrocketed? In those places, much of the land is prevented by law from being used to build housing. These land use restrictions are seldom
called land use restrictions. They are called by much prettier names, like "open space" laws, laws to "preserve farmland" or prevent "sprawl,"
"greenbelt" laws -- or whatever else will sell politically. People who already own their own homes don't worry about whether such laws will
drive housing prices sky high. Somebody else will have to pay those prices while existing homeowners see the value of their property rise...
the biggest lies of all are green lies. To hear environmental zealots tell it, they are just trying to save the last few patches of greenery from
being paved over. But in fact the land area of the United States covered by forests is more than three times as large as the land area covered by all the cities and towns across the nation.
Saturday, January 7, 2006 ~ 4:02 p.m., Dan Mitchell Wrote: If we told you that an organization gave away more than $65 million last year to Jesse Jackson's Rainbow PUSH Coalition, the Gay and
Lesbian Alliance Against Defamation, Amnesty International, AIDS Walk Washington and dozens of other such advocacy groups, you'd probably assume we were describing a liberal philanthropy. In fact,
those expenditures have all turned up on the financial disclosure report of the National Education Association, the country's largest teachers union. Under new federal rules pushed through by Secretary of Labor
Elaine Chao, large unions must now disclose in much more detail how they spend members' dues money. Big Labor fought hard (if unsuccessfully) against the new accountability standards, and even a
cursory glance at the NEA's recent filings--the first under the new rules--helps explain why. They expose the union as a honey pot for left-wing political causes that have nothing to do with teachers, much
less students. We already knew that the NEA's top brass lives large. Reg Weaver, the union's president, makes $439,000 a year. The NEA has a $58 million payroll for just over 600 employees, more than half of
whom draw six-figure salaries. Last year the average teacher made only $48,000, so it seems you're better off working as a union rep than in the classroom.
Friday, January 6, 2006 ~ 11:30 a.m., Dan Mitchell Wrote: Many observers have noted the "moral hazard" in the IMF's practice of endorsing massive write-offs by private and taxpayer-funded creditors,
while insisting that obligations to itself and the World Bank remain sacrosanct. Moreover, it is unseemly, to say the least, that the IMF executive board approved a key December 2004 agreement with Congo
just weeks after the regime engaged as its adviser a Washington-based firm comprised entirely of former senior IMF officials, up to and including a former deputy managing director. As the U.N. Oil-for-Food
debacle and now IMF/Congo scandal make abundantly clear, it is well beyond time for the world's multinational institutions -- including not only the U.N. and IMF, but others, such as the OECD -- to be held to
the same standards of accountability regarding their performance and conflicts of interest as those to which advanced societies subject private enterprise. Many of us have been writing about the abuses in these
organizations for years, but the U.S. and other governments have been AWOL in protecting their taxpayers' interests and the rule of law (with
the exception of the Bush administration's appointment of the brilliant and gutsy John Bolton as ambassador to the U.N.). Effective action would include stepping on the financial windpipes of these institutions.
Wake up, Congress.
Friday, January 6, 2006 ~ 9:57 a.m., Dan Mitchell Wrote: If the problem with government is that it is run by people and not, as James Madison put it, angels, the problem with big government is that
it is run by a lot of people who are not angels. They can, together and in the aggregate, do much mischief. They can and inevitably will produce a great deal of injustice, corruption and heartlessness. People in
government--people in a huge, sprawling government--often get carried away. And they don't always even mean to. ...conservatives are not supposed to like big government. It's not our job. We're supposed to like
freedom and the rights of the individual. ...In some rough way the public expects the party that loves big government to be pretty good at finagling government, playing with it, using it for its own ends. That's
kind of what they do. They love the [big government] steamroller, of course they love the grease that makes it run. But the anti-big-government party isn't supposed to be so good at it, so
enmeshed in it. The antigovernment party isn't supposed to be so good at oiling the steamroller's parts and pushing its levers. And so happy
doing the oiling and pushing. It isn't good to love the steamroller. In the end it can roll right over you, and all you stand for, or stood for. Is
there a way for Republicans to go? Stop trying to fit in. Stop being another atom in the steel. It does no good trying to run a better steamroller. It won't work. Steamrollers are not your friend.
Thursday, January 5, 2006 ~ 10:50 a.m., Dan Mitchell Wrote: Canada's overall crime rate is now 50% higher than the crime rate in the United States. Read that again slowly--it seems incredible, but it's
true. It's true too that you are now more likely to be mugged in Toronto than in New York City. ...While American cities and states are adopting
anti-crime policies proved to work, Canadian cities and provinces are adopting policies proved to fail. ...prison works. Criminals do not commit crimes while they are held in prison. Yet a Canadian criminal is
80% less likely to go to jail than his American counterpart. ...The right kinds of gun laws work too: for example, extending the sentence of any criminal who commits any crime--down to jaywalking--while in
possession of a gun. Gun registries and gun bans on the other hand do not work. Youth programs do not work. Counseling does not work. Grants to community activists, peer counselors and after-school
facilities do not work.
Thursday, January 5, 2006 ~ 9:17 a.m., Dan Mitchell Wrote: A new Christian club at California State University--San Bernardino was recently denied official recognition by the university because it
required its members to adhere to Biblical principles of morality. ...According to Cal-State San Bernardino President Albert Karnig, these membership restrictions violate Title 5 of the California Code of
Regulations. This law states, "No campus shall recognize a student organization which discriminates on the basis of race, religion, national
origin, ethnicity, color, age, gender, martial status, citizenship, sexual orientation, or disability." ...The effect of this law is that it would
prevent a Catholic student organization from denying membership to a Southern Baptist. It would prevent a Muslim student association from denying membership to a Hindu. ...If students are forced to allow people
who have fundamental disagreements about existence and morality into their club, how could the members ever accomplish their goals of praying together and promoting their beliefs?
Wednesday, January 4, 2006 ~ 12:15 p.m., Dan Mitchell Wrote: German finance minister Peer Steinbruck has urged new EU member states to raise their taxes and ensure "fair tax competition" among the
25 members of the bloc. Tax cuts in many of the new EU member countries have "nothing to do with fair tax competition and place a burden on German jobs", the minister said in an interview with German
daily Die Welt. ...The combined corporate tax rate in Germany is almost 40 percent, while it is much lower in a number of countries. Slovakia
has imposed a 19 percent flat tax in order to attract business and create more jobs. ...But German industry did not back the minister in his
crusade to ensure what he considers fair tax competition in the EU. Tax expert Klaus Braunig from the Federation of German Industries (BDI) said the government would do better by ensuring that German tax rates
are internationally competitive. "There is no guarantee that business will stay in Germany or move in, if other EU countries were forced to raise their tax levels", he noted.
Wednesday, January 4, 2006 ~ 11:50 a.m., Dan Mitchell Wrote: The Federal Deposit Insurance Corporation (FDIC) will soon have to make a big decision: whether to grant retail giant Wal-Mart a charter
to enter the consumer banking business. You won't be surprised to learn that the idea of more banking competition is not universally popular with . . . bankers. In particular, the Independent Community Bankers
Association (ICBA) is raising a ruckus in Washington to keep big bad Wal-Mart locked out of their game. We have here a textbook case of a powerful corporate lobby rushing to its pals in Congress and their
regulators, in this case the FDIC, and pleading for them to squash competition that might lower the prices of banking services. ...If the bankers succeed in this protectionist gambit, the biggest loser won't be
Wal-Mart, but rather consumers, particularly those in lower-income neighborhoods where competition in retail banking is traditionally scarce. ...what really spooks the banking industry is the threat of more
competition, more convenience and lower prices for financial services. But that should be welcome news to members of Congress and the regulators at the Federal Reserve Board and the FDIC if they truly care
about the welfare of the banking consumer.
Wednesday, January 4, 2006 ~ 10:39 a.m., Dan Mitchell Wrote: In a recent society section of the liberal Guardian newspaper, several pages advertised vacancies on the government payroll, some of them
offering six-figure salaries. They include outreach workers, diversity coordinators, policy advisers, liaison officers and a racism awareness counselor. The average annual pay for these jobs is 10,000 pounds
higher than the comparable private sector wage. These are not real jobs -- like nurses or business owners - but government positions whose reason for existence is to steal power from the individual and award it
to the state. ...Commenting on growing government, a Dec. 30 editorial in The Daily Telegraph said, "By bloating the state in this way, Labour
has created a caste of people with a vested interest in pursuing certain policies. It doesn't much matter how we vote, nationally or locally, as
long as decisions are in the hands of strategy coordinators and policy directors." Britain has retreated from the days of Margaret Thatcher,
who said, "A man's right to work as he will, to spend what he earns, to own property, to have the state as servant and not as master. These are
the British inheritance. They are the essence of a free country." The alternative is a less-free country, which is what Britain is again becoming.
Wednesday, January 4, 2006 ~ 10:19 a.m., Dan Mitchell Wrote: ...the Bulgarian Finance Ministry has indicated that the government is willing to explore the possibility of reducing taxes on business in the coming year...
Finance Minister Plamen Oresharski has stated that one of the government's specific aims is to cut the rate of corporate tax, which is currently levied at
15%. The Bulgarian government had initially planned to cut corporate tax to 12% last year... Draft legislation also called for the tax system to be simplified, and for value added tax to be cut by 2% to 18%.
Wednesday, January 4, 2006 ~ 8:37 a.m., Dan Mitchell Wrote: Philip Morris recently got the Illinois Supreme Court to overturn a gigantic judgment against... The court's ruling resulted in this Wall
Street Journal headline: ``Tobacco-Revenue Munis Get a Lift.'' This episode illuminates American governance today. ...governments are increasingly addicted to cigarette tax revenues, the governments must
be careful not to make cigarettes so expensive they do not sell well. ...smoking makes money for governments, for two reasons. Cigarettes are the world's most heavily taxed consumer product (state taxes range
from 5 cents to $2.46 per pack; the federal tax is 39 cents). And many smokers die prematurely from smoking-related illnesses, curtailing their
receipt of entitlements for the elderly. ...The states' ability to continue treating the tobacco industry as a ``budgetary Alaska'' -- the last
frontier for exploitation -- depends on brisk sales of cigarettes far into the future. So all 50 states, which in 2004 reaped $12.3 billion in
cigarette taxes, have an incentive to carefully calibrate these taxes so as to maximize revenues. They want high taxes, but not high enough to
cause large numbers of smokers to quit the habit that is so lucrative to states. The state governments seem to be calibrating cleverly: The adult
smoking rate has not fallen much recently. So we have here a rarity -- a government success story. Of sorts.
Tuesday, January 3, 2006 ~ 12:32 p.m., Dan Mitchell Wrote: ...no government bureaucracy is ever going to be the kind of well-oiled machine that can reliably and effectively prevent domestic terrorist
threats. And this is to say nothing of natural disasters. Instead, what we have is a kind of antiterror version of France's pre-World War II Maginot Line; an expensive, highly visible static defense against a
nimble adversary. Congress loves it because it offers the chance to throw money at domestic constituencies, and liberals love it because it allows them to sound hawkish on terror without having to fire a shot.
Tuesday, January 3, 2006 ~ 11:12 a.m., Dan Mitchell Wrote: The European Union argues that special tax rates accorded to holding companies in parts of Switzerland distort competition and violate a
free-trade agreement. Bern rejects the allegation. ...The head of the Swiss Mission in Brussels, Bernhard Marfurt, said Switzerland had reaffirmed its position that the 1972 agreement only dealt with trade.
He said the Commission had failed to show how certain cantonal tax practices influenced commercial dealings. ...The dispute dates back to September when the Commission sent a letter to Switzerland alleging
that the country's tax system violated the free-trade agreement. The letter questioned whether low-tax cantons Zug and Schwyz granted unfair advantage to foreign firms by encouraging them to set up
holding companies. In October Swiss Finance Minister Hans-Rudolf Merz made a public and vigorous defence of Switzerland's tax system in a letter to the Commission. Merz also rejected the idea of rigid tax
harmonisation with the EU. The people of canton Obwalden will wake up in a new tax haven on January 1 after voting for radical tax reforms that promise riches but
also carry risks. On Sunday 86 per cent of citizens voted for a degressive tax system that especially benefits those earning above SFr300,000 ($230,000) in an effort to attract big companies and
wealthy residents. ...Obwalden's new 6.6-per-cent corporation tax will be the lowest in Switzerland and property tax will drop by at least 30
per cent. Individuals earning up to SFr70,000 will in future pay eight to ten per cent less personal tax. Those earning up to SFr300,000 will be
taxed up to six per cent, while those in the highest bracket will see their burden sink from 2.35 per cent to one per cent. "We used to be known
as a tax hell, but we will soon be referred to as a tax heaven," Robert Vonwyl, Obwalden's deputy tax chief, told swissinfo. "We want to bring
in big companies and people with high incomes. We currently get a lot of government subsidies, but we don't want to rely on this any more. We want to be more independent and generate our own revenues."
...Gentinetta [of the Swiss Business Federation] welcomed Obwalden's decision and rejected objections from the European Commission that such low rates may contradict the 1972 Free Trade Agreement. EC and
Swiss officials met on Thursday to thrash out the issue but failed to come to any agreement. "For Switzerland, the Obwalden reform is very welcome and will compel other cantons to react and drive on healthy
competition. If Switzerland wants to stay in the first ranks it must reform its taxes more because other countries like Slovakia are competing hard," he said.
Monday, January 2, 2006 ~ 11:00 a.m., Dan Mitchell Wrote: Most companies interviewed about the government-backed Sept. 11 loans they received have told investigators they weren't hurt by the
suicide attacks and didn't know they were getting terrorism assistance, an internal government investigation found. The Small Business Administration's inspector general also reported Wednesday that
lenders who doled out billions of dollars in such loans failed - 85 percent of the time - to document that recipients were actually hurt by the
terrorism attacks and therefore eligible for the federal aid. ...The report said SBA officials told lenders they would not be questioned on how they
gave out money. ...The AP found that terrorism recovery loans went to businesses including a South Dakota radio station, a Virgin Islands perfume shop, a Utah dog boutique, and more than 100 Dunkin' Donuts
and Subway sandwich shops in various locations. Meanwhile, small businesses near Ground Zero in New York couldn't get the assistance they desperately sought. A Texas golf course, a Nevada tanning salon and an Illinois candy shop were among small businesses that may have improperly received U.S.
subsidized loans intended for firms hurt by the September 11 attacks, an internal government watchdog has found. ...The one-year, $4.5 billion
Supplemental Terrorist Activity Relief, or STAR, program offered loan guarantees to small businesses adversely affected by the September 11 attacks. However, the Small Business Administration had failed to
properly oversee lenders to make sure that only eligible borrowers obtained STAR loans, the watchdog's report found.
Monday, January 2, 2006 ~ 9:33 a.m., Dan Mitchell Wrote: Governor Murkowski's wife Nancy and three of her siblings own 33 acres of land on the island that would benefit from the first bridge. A
relative of Mr. Young's, meanwhile, owns land that would benefit from the second. We hold the view that citizens of democracies generally get
the government they deserve, so we'll leave it to Alaskans to judge at the next election whether their leaders are really acting in the public
interest. But every American has a right to be steamed that the funding for these projects is the so-called "free" money allocated from the
federal gasoline tax. If Congress really wanted to address concerns about overspending, it wouldn't try to kill the occasional sides of pork
like the Bridge to Nowhere. It would take away the opportunity for such mischief permanently by returning most of the responsibilities for planning and indeed funding road projects to where they belong: with
the states.
Sunday, January 1, 2006 ~ 1:45 p.m., Dan Mitchell Wrote: Looking ahead to 2006, the main risks to another good year are likely to come from policy mistakes in Washington. Higher taxes, energy price
controls, anti-Chinese protectionism and incipient inflation are always possible when politicians are in session. ...since the investment tax cuts
of 2003 were one of the triggers for the surge in asset values, business investment, and job growth, extending the 15% capital gains and dividend tax rates should be Congress's first order of business.
Opponents of those lower rates will moan about "the deficit," but the truth is that those tax rates corresponded with a record $284 billion
increase in tax revenues in Fiscal Year 2005 and a $100 billion decline in the budget deficit. We'd also like to see Republicans begin a campaign
for a simplified and pro-growth tax reform, with New Europe's popular flat tax as a potential model. Finally, it would be nice to see Republicans in Congress start to act as if they truly believe in limited
government by putting Uncle Sam on a low-pork budget diet. The most conspicuous blemish on the 2005 economic scorecard was frenetic federal spending, estimated to be up another $180 billion, or 8%. If
Congress were to cut that spending growth rate in half, and if the economy continues to spin off tax revenue dividends as in 2005, the budget deficit would fall in half by this time next year.
Sunday, January 1, 2006 ~ 9:21 a.m., Dan Mitchell Wrote: At least eighteen out of Switzerland's 24 cantons are planning to cut rates of taxation in 2006, following the lead of Obwalden whose
electorate voted to reduce both personal and corporate income tax from January 1. According to a report by the Neue Zürcher Zeitung, Cantons Zurich, Valais, Fribourg, Uri and Schaffhausen will all reduce
taxes in the New Year, with competition to attract foreign businesses and wealthy tax exiles seemingly intensifying. A number of other cantons are also considering cutting taxes in the near future. ...In
Switzerland, cantons are free to set their own tax rates...and the direct link between voters and tax policy has helped to push local tax rates
lower. ...not all in Switzerland are supportive of tax cuts, and the Social Democratic Party has pledged to help coordinate a Europe-wide campaign against what it calls "increasing competition" among
countries seeking to attract the rich and famous, and has warned that a "race to the bottom" on tax will endanger public finances.
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