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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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Sunday, April 30, 2006 ~ 5:45 p.m., Dan Mitchell Wrote: It's well-known that Fannie Mae and Freddie Mac have good friends on Capitol Hill. But last week the Federal Election Commission shed some light on how Freddie Mac rewarded
its friends. In a settlement with the FEC, Freddie admitted to illegally raising $1.7 million for candidates from both parties between 2000 and 2003. In 2001 alone, Freddie Mac's Senior Vice President for
Government Affairs boasted of holding 40 fund-raisers for House Financial Services Committee Chairman Michael Oxley. Unfortunately for Freddie, it is explicitly barred by law from political fund-raising. In the
settlement, Freddie agreed to fork over $3.8 million in fines. ...Fan and Fred have lower costs of capital than their competitors because of the market perception that the government stands behind their debt.
This, in turn, is indispensable to their business model. Fannie and Freddie between them hold more than $1 trillion worth of mortgage-backed securities that they've bought with this cheaper credit. ...It took
Congress just weeks to pass Sarbanes-Oxley in 2002. But -- perhaps because Mr. Oxley has been spending so much time at Freddie's fund-raisers -- it can't seem to deal with the far larger financial problems at
Fan and Fred. A watered-down reform bill has passed the House, but a stronger bill in the Senate shows no sign of being brought up for a vote anytime soon. ...Portfolio limits are...in the interest of American
taxpayers and the integrity of the financial system. The law requires that the bonds that Fannie and Freddie issue explicitly deny that they are backed by the federal government, but plainly no one believes
that. Otherwise, who in their right mind would purchase the debt of Fannie Mae, a company with no financial statements and $11 billion in overstated profit?
Sunday, April 30, 2006 ~ 3:16 p.m., Sven Larson Wrote: President George W. Bush yesterday stepped up efforts to combat rising petrol prices, calling for an investigation into possible price manipulation and announcing plans temporarily to stop deposits to the strategic petroleum reserve. "Our strategic reserve is sufficiently large to guard against any major supply disruption," Mr Bush told the Renewable Fuels Association. "By deferring deposits until the fall, we'll leave a little more oil in the market." The plan marks the most comprehensive effort by the White House to address an issue that has risen rapidly up the political agenda. Democrats have been seeking to forge a direct link between high petrol prices and Republican policies to aid oil companies, and last week called for congressional candidates to hold events at petrol stations. Mr Bush, who earlier this year warned that America was "addicted to oil," tried to put some distance between his administration and its close links with the oil industry. He directed the Department of Justice to work with the Federal Trade Commission, the consumer watchdog, to address the illegal manipulation of petrol prices. http://news.ft.com/cms/s/17dfaa90-d45e-11da-a357-0000779e2340.html
Saturday, April 29, 2006 ~ 10:13 a.m., Dan Mitchell Wrote: Few things are less becoming in a political party than desperation, as Republicans are now demonstrating as they panic over rising oil and gas
prices. If blaming private industry for Congress's own energy mistakes is the best the GOP can do, no wonder its voters may sit out the November
election. Oil prices hit $75 a barrel last week, while gas has reached a national average of about $2.85 a gallon. The Republican response has been to put on Chuck Schumer and Nancy Pelosi fright wigs and shout
about corporate greed and market manipulation. House Speaker Denny Hastert and Senate Majority Leader Bill Frist fired off a letter to President Bush yesterday demanding the Federal Trade Commission and
Justice Department investigate "price fixing" and "gouging." Senator Arlen Specter wants to go further and impose stricter "antitrust" laws
for oil companies, as well as a "windfall profits" tax. Mr. Hastert also delighted the class warriors in the press corps by lambasting recently
retired Exxon CEO Lee Raymond's pay "unconscionable." There's been unconscionable behavior all right, most of it on Capitol Hill. A decent
portion of the latest run-up in gas prices--and the entire cause of recent spot shortages--is the direct result of the energy bill Congress passed last
summer. That self-serving legislation handed Congress's friends in the ethanol lobby a mandate that forces drivers to use 7.5 billion gallons annually of that oxygenate by 2012.
Friday, April 28, 2006 ~ 8:56 a.m., Dan Mitchell Wrote: There's one problem with Equal Pay Day—the premise is bogus. …Feminists may not like it, but the evidence shows that women's
choices—not discrimination—cause wage gap. Warren Farrell — a former board member of the National Organization for Women's New York chapter — identifies 25 decisions that individuals make when
choosing jobs in his book, Why Men Earn More. Women, he finds, are much more likely to make decisions that increase their quality of life, but
decrease their pay. Most people understand that many women often take time out of the workforce to care for family members, particularly young
children. Even women who work full-time log fewer hours in the office on average than full-time working men. It is common sense that a worker who remains employed continually is going to make more than someone
who drops out of the workforce for several years. Working less is just one of the decisions women make that results in less take-home pay.
Women also avoid dangerous jobs (more than nine in ten occupational deaths occur among men) and jobs that place them outdoors in the elements. Women are less willing than men to move for a job or travel
frequently. … Women who hear the feminists' rhetoric on Equal Pay Day may feel exploited. But before embracing the victim myth, they should consider how their choices have affected their careers. Most women will
find that their decisions have been made based on many factors. Women care about financial compensation. But they also consider the number of
hours in the office, whether the work is personally fulfilling, and the convenience of the workplace.
Friday, April 28, 2006 ~ 8:22 a.m., Dan Mitchell Wrote: With gasoline prices close to $3 a gallon, President Bush this morning gave a disingenuous speech to an alternative fuels association about
what he was going to do to stem the rising tide. … He started his speech by, once again, criticizing Americans for their "addiction to oil." He used
the same obnoxious phrase in his State of the Union Address. … The President--and I am not even mentioning the claptrap one hears from Speaker Denny Hastert, Senate Majority Leader Bill Frist and Judiciary
Chairman Arlen Specter--is now using the lexicon of extreme environmentalists and statists. … After talking about addiction, the President said he was going to crack down on price gouging-- that old
bugaboo. He said he had asked the Justice and Energy departments to find out whether the rising price of gas was partly the result of manipulation. This is absurd. The gasoline market is broad, fragmented
and highly competitive. Price gouging has been studied many times, to no effect. Gas prices are rising because crude oil prices are rising. … Imagine you're the CEO of an oil company today, listening to Specter
talk about a windfall profits tax, the President go on about "addiction" or Frist about "price gouging." Your main job as CEO is to allocate
capital, to decide where to put your shareholder's money for the long term. Are you encouraged to make "strong re-investment [of] cash
flows" in this environment? I doubt it. Maybe the best idea is to stash the cash in Treasury bills or buy a retail chain or give the money back to
investors. If politicians truly want oil companies to invest in drilling and refineries, the best tactic is to recognize that these firms are not villains.
Friday, April 28, 2006 ~ 8:04 a.m., Dan Mitchell Wrote: It has exclusive shops, fabulously luxurious homes and a glamorous cultural scene, but this is not what has made London the destination of
choice for the world's multi-billionaires. For the ultra-rich few, this country is now a virtual tax haven, which is why more and more princes, tycoons and oligarchs are making it their home. … Its generous tax
treatment of the mega-rich, particularly those born abroad, makes it in some ways a virtual tax haven. … "The IRS is perceived to be a much
more burdensome tax regulator than the UK Revenue," says David Harvey. "The UK tax authorities take the approach that it's much better
to fight over a small piece of a very large cake." … One of the big tax advantages for super-rich British residents who aren't British-born is this
country's unique "non-domiciled" tax rule, which allows tens of thousands of wealthy people to avoid paying tax on income earned
overseas. Almost four years after an investigation by Nick Davies in this newspaper showed how the Swedish billionaire Hans Rausing, then
described as "the richest man in Britain", had in one year received more from the Treasury in refunds and grants than it was getting from him in
tax, the government shows no sign of closing the loophole. "Non-domicile is much bigger than people think. It's massively important," says the hedge fund manager. … A million Britons work in
the money management business; Britain has a trade surplus of more than $25bn in financial services. For every campaigner and journalist pointing out the apparent inequity of the non-domiciled rule and other
tax-avoidance schemes, there is a lobbyist or three arguing that, far from being too much like an offshore tax haven, Britain should be more like
one, a sort of extra-large Grand Cayman, because that's what we're good at in a competitive world, working the game of fees and percentages with the planet's rich.
Friday, April 28, 2006 ~ 7:43 a.m., Yesim Yilmaz Wrote: Juergen Stark, the Bundesbank vice president nominated to join the European Central Bank's inner circle in June, raised the issue at his
European Parliament hearing this week, bringing into focus the limits of what the euro currency can achieve... Right now a malaise hangs over
the euro zone and uncertainty over what economic direction it pursues -- witness violent youth protests over French labour law reforms, near stalemates in Italian and German elections, and watering down of the
European Union plan to open the massive service industry to competition. This follows last year's rejection of the EU constitution in referenda in France and the Netherlands. "The EU currently is in a
critical phase," Stark told European parliamentarians on Tuesday. He added to the litany weakening budget strictures and rising nationalism in
Europe. "I am concerned about these trends because monetary union ... needs a common political foundation and a political commitment to
function smoothly," Stark said. For a central bank mandated to fight inflation, there is only so much it can do about these problems and
sluggish growth. It must rely on politicians to push through the economic reforms that they all largely agree are needed in the Lisbon agenda in 2000 to lift the region's growth rate. This means opening national
markets to outside competition, tearing down treasured job protections and cutting budget deficits. Reforms are happening gradually, notably in
Germany, but they regularly hit road blocks with the electorate. Stark has suggested that boosting the political dimension of the euro zone project could cut through the barriers.
Thursday, April 27, 2006 ~ 8:57 a.m., Dan Mitchell Wrote: Paul de Grauwe has argued the euro is bound to collapse in 10 to 20 years as there is no clear progress towards a political union in Europe.
Professor De Grauwe from the Catholic University of Leuven, advocated the creation of the common currency in the 1990s but his forthcoming research paper will present evidence of the euro's risks for the future,
news agency AFP reports. "A political union is the logical end-point of a currency union," Mr De Grauwe told Belgian weekly, The Business,
adding "The monetary union will collapse ... not next year, but on a time frame of 10 or 20 years. There is not a single monetary union which survived without political union. They have all collapsed."
Thursday, April 27, 2006 ~ 8:35 a.m., Yesim Yilmaz Wrote: Proposed EU rules to extend the regulation of television to the internet could hamper on-demand television and even blogging, an alliance of IT
and media firms warned yesterday. The group, led by IT trade body Intellect and the Broadband Stakeholder Group (BSG), believes the changes would be unworkable and deter investment. Producers of online
content would be subject to the same advertising and production requirements as broadcasters. "As drafted, this directive is likely to
confuse businesses, overwhelm regulators and let down consumers," said BSG head Antony Walker.
Thursday, April 27, 2006 ~ 8:13 a.m., Dan Mitchell Wrote: The growing complexity of the UK tax system is jeopardising its international competitiveness, according to company directors. ...Almost
60 per cent of the respondents thought that the tax system was having a negative impact on the UK's international competitiveness. Half of all respondents also said they were spending increasing amounts of money
on tax planning and compliance. Nearly 20 per cent of them said that they would consider transferring their operations outside the UK, solely
because of the tax system's complexity. ...The IoD said that even though a flat-tax system was not an immediate prospect for the UK, it would be
worth examining the opportunities for simplifying the tax system that it would offer. It called for a simplification of personal tax computations,
sweeping away the complex rules for allocating different tax bands to savings income, non-savings income, dividends and capital gains.
Wednesday, April 26, 2006 ~ 11:09 a.m., Yesim Yilmaz Wrote: Divisions in Congress mean that thorough reform is unlikely anytime soon, even though some parts of the legislation could do with a second
look. The priority is to modify the most hated part of SOX, the 20 lines of text called Section 404, which regulates the internal controls used by
firms in their financial reporting and extends scrutinising to such minutiae as travel expenses and petty cash. The cost of implementing Section 404 has been far higher than expected, especially in smaller
firms. Happily, several changes could lighten the burden of Section 404 and these can probably be seen through by America's main markets regulator, the Securities and Exchange Commission (SEC) without
troubling Congress. A good start would be for the SEC to follow the likely advice of its own Advisory Committee on Smaller Public Companies and exempt companies with a stockmarket value below
$128m and sales of less than $125m. That would still leave the bigger firms that account for 94% of the value of America's stock markets subject to Section 404. The SEC should also try to lighten the burden on
them too. It could, for example, narrow the scope of the internal-control review carried out by auditors so that they examine only the larger risks,
not the size of people's lunch expenses. Small technical changes, perhaps, but in SOX, the detail is what costs the money. At the least such reforms
would help restore the reputation of America's stockmarkets. They might even make America's own companies more competitive.
Wednesday, April 26, 2006 ~ 8:37 a.m., Dan Mitchell Wrote: In 1904, government, federal and state, cost every citizen $20 per year, according to a 1999 Tax Foundation study. Don't blame inflation --that
only brought it to $340. For more than 150 years after we declared independence, we spent less than $1,000 each on government. Yet by 1999, government cost every man, woman and child an average of more
than $10,000 per year -- more than housing and health care combined. ... You probably don't know how much you pay, because the government is
sneaky about how it taxes you. Paying withholding taxes each pay period dulls the pain of the income tax -- it's money you earned, but it's never in
your hands -- and a hundred other taxes are hidden. ... Political scientist James L. Payne examined the record of 14 congressional appropriations
hearings and found that of 1,060 witnesses who testified, only seven spoke against spending money, while more than a thousand testified that
the spending -- whatever it was -- was necessary. Even a politician who believes in limited government has a tough time resisting a constant
onslaught of "needy" people saying, "This program is crucial!" The testimony is lopsided because of the "concentrated benefits-diffuse costs"
problem: The benefits of any given government program go to a few, but the costs are spread among many. If sheep and goat ranchers get $200
million in handouts, it costs each of us less than $1. What are you going to do about that? Go to Washington and protest? For a buck, you probably won't even write your congressman, let alone take him out to
dinner or give him a $2,000 campaign contribution. Yet the sheep ranchers have an incentive to spend $199 million lobbying if it gets them a $200 million subsidy back.
Wednesday, April 26, 2006 ~ 8:22 a.m., Dan Mitchell Wrote: Since 1970, carbon monoxide emissions in the U.S. are down 55%, according to the Environmental Protection Agency. Particulate
emissions are down nearly 80%, and sulfur dioxide emissions have been reduced by half. Lead emissions have declined more than 98%. All of this
has been accomplished despite a doubling of the number of cars on the road and a near-tripling of the number of miles driven, according to Steven Hayward of the Pacific Research Institute. ...In the 1970s,
prominent greens were issuing dire predictions about mass starvation, overpopulation and--of all things--global cooling. Since then, population-growth estimates have come way down, biotechnology
advances have found ways to feed more people than the doomsayers believed possible, and the global-cooling crisis has become the global-warming crisis without missing a beat. ...the cause of global
warming has come at a fortuitous moment for clean-air warriors looking for alarms to ring. It is global in scope, will take decades to come to
fruition--or to be revealed as another false alarm--and provides endless opportunities for government intrusion into the economy.
Wednesday, April 26, 2006 ~ 7:51 a.m., Yesim Yilmaz Wrote: Even though Alaska led the nation with $489 per capita ($325 million), it was less than half of Alaska's 2005 per capita number of $985. The
runners up in 2006 were Hawaii with $378 per capita ($482 million) and the District of Columbia with $182 per capita ($100 million). Alaska's
drop can be attributed to Sen. Ted Stevens' (R-Alaska) descent from the throne as Senate Appropriations Committee Chairman. ... By passing
pork-laden appropriations bills and by not vetoing a single spending bill, Congress and the President of the United States have respectively failed the American taxpayer.
Wednesday, April 26, 2006 ~ 7:30 a.m., Sven Larson Wrote: The story of Lebanon is a perfect illustration of why government should not be "competing" with private businesses. The temptation to use the
power of coercion is too strong to resist. The city is simply using its power to give itself a competitive advantage over Time Warner, its rival.
In a victory for consumers, in February the Court of Appeals ruled that the city's connection requirement is an unconstitutional "taking" of
private property. The city argued, however, that since a portion of the "connection fee" was being used to fund projects other than the
mandatory connection, it should still be able to collect that fee. The court disagreed with the city's assertion, but its decision seems to let the city
enact another ordinance requiring anyone seeking a new building permit to pay a fee to expand telecommunications service, as long as the city
does not force these new buildings to actually connect to the system. It remains to be seen if the city will use that power.
Tuesday, April 25, 2006 ~ 12:03 p.m., Sven Larson Wrote: On the eve of the International Monetary Fund-World Bank Spring Meetings, World Bank President Paul Wolfowitz and the United
Kingdom's Chancellor of the Exchequer Gordon Brown called on rich nations to increase funding for education so that every child on every continent can go to school. Brown issued the challenge at a joint media
conference in Washington, DC, after announcing the UK would pledge US$170 million to help fill a US$510 million funding gap in a program that fast tracks education funds to poor nations. "We call on other
donors now to come forward to announce their contributions," said Brown. The UK said last week it would spend US$15 billion on aid for education over the next 10 years-four times as much as it spent in the
previous 10 years. For US$10 billion extra a year, "every child on every continent could have teachers, books, and classrooms," said Brown. "It
is one of the world's greatest scandals that must now be addressed that 100 million children are not going to school today, denied one of the
most basic rights of all, the right to education. And most who lose out are girls, denied the most basic chance to realize their potential," said
Brown. Wolfowitz hailed the UK's $15 billion pledge as "historic" and a "very important step forward." But he said more funding is needed to
give every child a chance for an education. "We know that investment in education, particularly for girls, can help slow the spread of AIDS,
contribute to economic growth, and break the cycle of poverty...The urgency is clear when you consider in Sub-Saharan Africa alone, more
than 40 million children don't go to school." He said all wealthy nations, including the United States, should increase contributions to the
Education for All Fast Track Initiative, a global partnership between donors and developing countries. The UK contribution to education amounts to US$20 per capita, while the US contribution, at about
US$260 million, is about $1 per capita. "I think the US could do a lot more. So could just about every G7 country, with the exception of the UK," said Wolfowitz. Link to this Blog Entry
Tuesday, April 25, 2006 ~ 10:49 a.m., Yesim Yilmaz Wrote: Ken Davies, a senior OECD economist leading an effort to lobby China's government to clarify its complex inward investment rules, argued that a
more transparent, market-based regulatory regime will ultimately force domestic companies to compete better. "What the government really
wants is to find ways to bring in foreign capital and use that directly in restructuring SOEs," he said. "But there's a desire to retain control of
national champions." ... The OECD's findings suggest China, while gradually opening many domestic industries to outside investment, is at the same time growing wary of excessive foreign involvement in its
leading SOEs and certain "strategic" industries. In recent months, there have been signs Beijing has been worried about losing valuable state
assets to foreigners. Approval for some large-scale mergers and acquisitions has been held in limbo by central and local government regulators. ...Mr Davies suggested Beijing clearly list specific industries
that are off-limits to foreigners, as OECD member nations do. "It's a much simpler way of doing business," he said. "Wherever there is a
restriction, it's helpful to find out why that restriction is there. They [foreign investors] could spend more time looking at sectors that are not
closed." Beijing's current investment environment makes it difficult, at times impossible, for foreigners to purchase stakes in certain state
industries - telecoms, for instance, or those tied to the military.While such national security concerns exist in other countries, Mr Davies argued
China should have looser M&A rules allowing more foreign involvement since this will force domestic firms to compete more effectively, as has been the case in white-goods manufacturing.
Tuesday, April 25, 2006 ~ 8:46 a.m., Dan Mitchell Wrote: Is there truly a deficit? The short answer is yes, but only in an accounting sense -- not in any meaningful economic sense. Let's look at it. If
Congress spends $2.4 trillion but only takes in $2 trillion in taxes, who makes up that $.4 trillion shortfall that we call the budget deficit? Neither the Tooth Fairy, Santa nor the Easter Bunny makes up the
difference between what's spent in 2005 and what's taxed in 2005. Some might be tempted to answer that it's future generations who will pay.
That's untrue. If the federal government consumes $2.4 trillion of what Americans produced in 2005, it must find ways to force us to spend $2.4
trillion less privately in 2005. In other words, the federal government can't spend today what's going to be produced in the future. ... Some Americans have called for a balanced budget amendment to the
Constitution as a method to rein in a prolific Congress. A balanced budget is no panacea. For example, suppose Congress spent $6 trillion and taxed us $6 trillion. We'd have a balanced budget, but we'd be far
freer with today's unbalanced budget. ...The founders of our nation would be horrified by today's level of American servitude to their government. From 1787 to the Roaring '20s, federal government
spending, as a percentage of GDP, never exceeded 4 percent, except in wartime, compared to today's 20 percent. ... The taxpayer is forcibly used to serve the purposes of others -- whether it's farm or business
handouts, food stamps or other government programs where the earnings of one American are taken and given to another. This situation differs only in degree, but not in kind, from slavery. After all, a working
description of slavery is the process where one person is forcibly used to serve the purposes of another. Link to this Blog Entry
Tuesday, April 25, 2006 ~ 8:11 a.m., Sven Larson Wrote: Federal Health Minister Tony Clement says he doesn't know when patients will see promised guarantees on medical wait times, but his
Ontario counterpart bets it'll be a while. "A time frame of a few years would be more appropriate," George Smitherman told reporters
yesterday at a conference on the future of medicare. Clement said the federal government has a lot of work to do with provinces and territories
in making the health-care system more efficient before any guarantees would be worth the paper they're printed on. "I don't have an exact
date," said Clement, whose government made the guarantees one of its five key promises in the last election because of concerns Canadians are
waiting too long for treatment. "Wait-times guarantees are going to be a collaborative process. There's going to be some zigs and zags along the
way." Prime Minister Stephen Harper reaffirmed the promise yesterday, saying the guarantee would give Canadians "the health care they need,
when they need it." Under the guarantee, patients would get treatment close to home within what medical experts deem to be a reasonable period of time or be sent elsewhere at government expense.
Tuesday, April 25, 2006 ~ 7:28 a.m., Dan Mitchell Wrote: The German government is stepping up its efforts to make German more prominent in the EU, demanding that EU documentation be translated
into the language of Goethe- or else it will not attend meetings. ...In a joint statement earlier this month, the German parliament and the
French national assembly denounced the "unacceptable drift toward a monolingual system" dominated by English.
Monday, April 24, 2006 ~ 3:43 p.m., Sven Larson Wrote: The liberal mantra that conservatives are bankrupting the nation with their "tax cuts for the rich" depends, for its force, on the economic
illiteracy of its audience. When the federal government cuts the tax rate for high- income earners, that doesn't mean that it's forking over barrels
of cash to wealthy people. Indeed — and this is a point liberals seem congenitally incapable of grasping — it doesn't even mean that the government winds up collecting less money. Suppose a rich guy is
earning $1,000,000 per year — in keeping with liberals' cartoon views of such matters, let's call him Chadwick Worthington III. Suppose, further,
he's being taxed at 35 percent. That means he's paying $350,000 per year in taxes. If you cut his tax rate to 25 percent, in theory he'd be paying
$250,000 per year — which means $100,000 more in Chadwick's pocket, and $100,000 less in the government coffers. But here's the twist. Like most people who earn $1,000,0000 per year, Chadwick doesn't punch a
time clock and simply pick up a check for 20 grand every week. Chances are he earns the money through a combination of guaranteed salary,
bonus incentives, and private investments . . . or perhaps he owns a small business and takes a share of the profits. So when Chadwick hears that
his income-tax rate has been cut from 35 percent to 25 percent, he doesn't simply lie back on the sofa and think, "Now I can afford that
expensive new polo pony!" More likely, he tries to think of ways to earn even greater sums of money because now he can keep 75 percent, rather
than 65 percent, of it. Maybe he hires a personal assistant to help him reach higher bonus incentives, or maybe he plows more of his personal wealth into the stock market, or maybe he opens up another branch
office of his small business. Each of these measures stimulates the economy — this is the essence of supply side economics — resulting in more jobs, and thus more taxpayers . . . but that's of no concern for
Chadwick, who, after all, is only looking out for numero uno. What matters to him is that, one year later, he's earning $2,000,000 — out of which, the government is now taking 25 percent. So a year later the
government winds up collecting $500,000 in actual revenues. In other words, he's getting taxed at a 10-percent lower rate than the year before, but in reality he's paying $150,000 more in taxes.
Monday, April 24, 2006 ~ 2:12 p.m., Yesim Yilmaz Wrote: Personally, I can think of no faster path to a worldwide recession than for the multiple engines of the global economy to turn against one
another. In Recent years, commodity prices have risen, and over the last two years, global economic growth is as strong as most people can ever
remember. Millions have been lifted out of poverty. These gains have come with the rapid rise of China and India, and the recovery of
southeast Asia. ... But the gains of the Asian economy have not prevented the rapid economic growth and job creating in the U.S. Inflation and
interest rates are low-business confidence is high-and unemployment is very low. Put another way, our economy is hitting on all cylinders. And
all this could easy by endangered if our policymakers implementing wrongheaded protectionism-or if American companies refuse to engage constructively with the world. The stakes have never been higher-and
the benefits of globalization have never been clearer. Trade liberalization, in the end, is a "win-win-win" proposition. It's good for the U.S., and it's good for the world.
Monday, April 24, 2006 ~ 8:51 a.m., Dan Mitchell Wrote: State-to-state differences in premiums can be dramatic, especially in the market for individual coverage. A survey last year by the online
insurance marketplace eHealthInsurance compared the price for similar policies in 50 cities and found a roughly sixfold difference between the cheapest and most expensive. A policy for a single 30-year-old,
nonsmoker that cost $54 a month in Long Beach, Calif., went for $334.09 in New York City. ... states...add to insurers' costs by adding mandated coverage for specified services, illnesses or types of
practitioners, such as acupuncturists and chiropractors. Some, such as New York, keep premiums extra high for the healthy with guaranteed-issue and community-rating laws. These are meant to spread
the cost of insuring the sickest patients, but they've have had the unintended consequence of pricing young people with modest incomes out of the market. We're not holding our breath for over-regulated states
to change their policies, at least not without a competitive jolt. And as long as Washington leaves health insurance in the hands of state legislatures and commissioners, there will be no effective national
insurance market and no effective competition. So it's time to treat the marketing of health coverage as interstate commerce - which it truly is,
in the Internet Age - and allow policy sales across state lines. Rep. John Shadegg, R-Ariz., has introduced a bill to that effect (the "Health Care
Choice Act," H.R. 2355), and passing it should be a priority for Congress this year. Link to this Blog Entry
Monday, April 24, 2006 ~ 8:28 a.m., Dan Mitchell Wrote: Politicians are crying crocodile tears about deficit spending but their actions demonstrate that they remain addicted to big government. The
latest example is a $106.5 billion Senate supplemental spending package. The stated purpose of this latest round of supplemental funding was to support the Department of Defense operations in Iraq and the
Department of Homeland Security. According to President Bush, "the funds support US Armed Forces and Coalition partners [...] fight the
terrorists and insurgents," and "unanticipated needs to help relieve human suffering associated with a number of humanitarian crises."
Senate appropriators approved the bill after adding $15 billion over the President's request. But many of the projects will not even to be spent in
Iraq or in the region devastated by Katrina. For instance: $400,000 for the Pappajohn Higher Education Center in Des Moines, Iowa; $250,000 for the University of Vermont Small Enterprise Research Initiative;
$200,000 for the Genesis of Innovation in Rapid City, South Dakota; $500,000 for the Wisconsin Security Research Consortium, $500,000 for the Rowan University Technology Center and Business Incubator;
$1,500,000 for the Vermont Center for Emerging Technologies; $820,000 for the Central Michigan University Center for Applied Research and Technology; $1,100,000 for the University of Arkansas'
Research and Technology Park; $600,000 for the Maryland Technology Development Corporation for the Minority R&D Initiative; $200,000 for the University of Nevada Las Vegas to study and operate the
international air trade show; $250,000 for the Oregon Department of Consumer and Business Services' One-Stop Permitting Portal and much more.
Monday, April 24, 2006 ~ 8:11 a.m., Dan Mitchell Wrote: Much of the EUR2.8 billion of EU support paid to Russia under the TACIS programme since 1991 could have been a waste of money, a new
report by the European Court of Auditors suggests. ...In one example, a project aimed at harmonising EU and Russian road standards failed to
notice there is no EU road standard and paid for road testing equipment that was never used.
Monday, April 24, 2006 ~ 7:38 a.m., Dan Mitchell Wrote: In the spending corner is Governor Janet Napolitano, one of the celebrated "moderate" Democrats running a red state. Earlier this year
she proposed a one-year 22% budget expansion to $10.1 billion from $8.2 billion -- with the goodies spread far and wide across the government and especially to the teachers unions. That's nearly three
times the rate of increase that the spendthrift U.S. Congress is contemplating. Ms. Napolitano is also floating a tax cut, but one microscopic in size and sheer gimmickry: for example, a three-day sales
tax holiday for purchasing school supplies and a tax credit for buying environmentally friendly cars. Republicans in the Arizona legislature are taking a page from tax-cutting former Governor Fife Symington and
proposing to cut the income tax. The state senate has passed a bill chopping the top marginal income-tax rate to 4% from 5% over five years, while the house wants a smaller reduction over three years. The
GOP also wants to eliminate the state portion of the property tax, which would shave $125 a year off the tax bill on the average-priced home.
That makes sense too: In only two years, property taxes have soared by 51% thanks to the hot local housing market. ...give the Republicans
credit for learning the lesson of the previous state revenue booms of the 1980s and 1990s. States such as Arizona and Colorado that cut income
tax rates enjoyed about twice the pace of new job creation, and about one-third faster income growth, than states like Connecticut, Illinois and
New Jersey that raised their tax burdens. Another lesson is that these revenue booms don't last forever, while the spending programs created
during the good times nearly always do. Arizona would be far better off using its current surpluses as a political opportunity to construct a tax code with non-punitive tax rates to stimulate jobs, business and
investment.
Sunday, April 23, 2006 ~ 8:59 a.m., Dan Mitchell Wrote: The three main nations of continental Western Europe have allowed their economies over the years to become encrusted with regulations,
subsidies, and spending programs that misallocate resources (including investment), obstruct flexibility and innovation, and encourage social
attitudes harmful to enterprise and wealth-creation. As the two sets of French riots demonstrate, the effect of these "compassionate" policies is
not to help the poorest but to create artificially high and secure living standards for those fortunate enough to be in work while driving a
growing number of people into a permanent underclass of the seldom employed. A British newspaper, The Business, an increasingly indispensable guide to Euro-realities, pointed out the consequences:
"Long-term unemployment in the euro zone is now six times higher than in America, where only 13% of unemployed workers are unable to find work within 12 months, compared with 21% in Great Britain, 42% in
France, 52% in Germany and 50% in Italy." ...there is little or no public will - either among Europe's politicians or its voters - to swallow the
necessary reforms. Most voters are in work and react like the French students. The unemployed naturally fear any change that might threaten
their already low living standards. And political and intellectual elites are in the grip of anti-capitalist theories that treat job flexibility and tax
cuts as "barbarism." ...Prodi wants to pass the buck to Brussels and get the EU to solve Italy's problems. Given the chance, the leaders of other
West European countries would do the same. But Brussels and the EU are run by elites who spend 40 percent of their budget on the wasteful
and damaging Common Agricultural Policy and generally favor the same kind of social democratic corporatism that is the problem in the first place.
Saturday, April 22, 2006 ~ 9:44 a.m., Dan Mitchell Wrote: Bastiat's views might be viewed as anti-French by some today. He opposed any form of trade barrier or protectionist policy, even if it meant
a trade deficit. In fact, he argued that if having exports exceed imports was so important, France should export a great deal of goods on ships (more than whatever is imported) and then simply sink the ships,
ensuring an export surplus. He also detested rent-seeking by special interests, and illustrated that distaste by writing a mock proposal from candlemakers that would require all home windows to be blocked, so
that the sun would stop unfairly taking market share from French candles. Perhaps most relevant for the French economic crisis today is
Bastiat's "That Which is Seen and That Which is Not Seen," published in 1850. It is there that Bastiat presents his "broken window" metaphor.
Governmental resource allocation, Bastiat wrote in his essay, contains numerous hidden opportunity costs. In other words, every time the government tries to promote economic growth or generate individual
prosperity through government policy, it fails because it only looks at what is seen, the transfer of funds. It overlooks what is not seen, that
human wants are unlimited and resources are scarce, so the money now in one person's hand as a result of government action was denied a place where it likely would have been more productive.
Saturday, April 22, 2006 ~ 9:12 a.m., Dan Mitchell Wrote: If in November Republicans lose control of the House of Representatives, April 5 should be remembered as the day they demonstrated that they
earned defeat. Traducing the Constitution and disgracing conservatism, they used their power for their only remaining purpose -- to cling to power. Their vote to restrict freedom of speech came just as the GOP's
conservative base is coming to the conclusion that House Republicans are not worth working for in October or venturing out to vote for in November. The ``problem'' Republicans addressed is that in 2004
Democrats were more successful than Republicans in using 527 organizations -- advocacy groups named after the tax code provision governing them. ...McCain-Feingold restrictions on the amount, timing
and content of political speech were ratified by the Supreme Court, which embraces this perverse idea: Because elected officials are experts about politics, they deserve vast deference when they write rules
governing speech about, and campaigns against, elected officials. When the court gave its imprimatur to McCain-Feingold's premise -- that big
government should have big power to regulate speech about itself -- it guaranteed that what happened April 5 will happen incessantly: The First Amendment is now permanently in play, its protections to be
truncated whenever congressional majorities envision short-term partisan advantages.
Saturday, April 22, 2006 ~ 8:20 a.m., Dan Mitchell Wrote: The Energy Department this week predicted that gas prices will be at least 25 cents more per gallon than last summer's highs, and shortages
are already popping up around the country. The least Congress could do is apologize. ...the government is admitting that some of the price increases and regional shortages are the result of the ethanol love-fest
that Congress engaged in last summer as part of its energy bill. Congress has long required the use of such "oxygenates" as ethanol and MTBE in
gasoline. Midwest drivers have tended to rely on locally produced and corn-based ethanol, while places where ethanol is expensive to ship -- such as the East Coast and Texas -- have used petroleum-based MTBE.
But the ethanol lobby wanted more market share, and so last year's energy bill included a giant new ethanol mandate, while at the same time
denying liability protection for rival MTBE makers that are getting sued for having sold a product that Congress had once mandated. ...One eminently sensible short-term solution would be for the feds to drop the
54-cent-a-gallon tariff on imported ethanol, which would particularly help coastal areas. But eager to show the Bush Administration's own deference to the ethanol lobby, Energy Secretary Sam Bodman defended
the tariff last week, saying it was necessary so that foreign producers "can have no advantage over American companies." Heaven forbid
foreigners should be able to compete with a heavily subsidized domestic ethanol industry that is getting rich off U.S. drivers. Politicians in
Washington are blaming high gas prices in part for their low approval ratings, and as usual the voters are right.
Friday, April 21, 2006 ~ 8:41 a.m., Dan Mitchell Wrote: Gov. Phil Bredesen, a Democrat, was elected in 2002 in part on a mandate to restrain TennCare and not to create an income tax to pay for
it. After taking office, he managed to remove tens of thousands of people from the rolls, but he soon realized that it was impossible to manage
costs without also requiring nearly everyone to pay something for the care they received. Otherwise, as he told me, it's like shopping in a grocery store that doesn't have any price tags and where you don't have
to pay the bill at the checkout counter. Requiring consumers to pay at least part of the bill is essential to striking a reasonable balance between consumption and total cost. That means copayments for drugs and
doctor visits, deductibles, or other fees. For pointing this out, Gov. Bredesen has been blasted by Sen. Ted Kennedy and other Democrats. ...lawmakers are starting from the assumption that the program will cost
the state $50 a person and are shopping around to see what kind of coverage can be bought at that price. If in the process Tennessee removes the government controls that increase the cost of health
coverage and opens the market for insurance aimed at low-income workers, the Volunteer State may yet become a laboratory for market-oriented health care policy.
Friday, April 21, 2006 ~ 8:25 a.m., Dan Mitchell Wrote: ...the administration of President George W. Bush is investigating universities that have fewer women in science and math programs than
feminists would like. We are more than five years into the Bush presidency, but it appears that former President Bill Clinton's feminist policies are still in force. ...There isn't a shred of evidence that women
are discriminated against in math and science; there are no separate tracks for men's math and women's math. There simply is a higher proportion of men than women who voluntarily choose math and
engineering just as more men choose competitive sports. The feminists want a quota-imposed unisex society regardless of the facts of life, voluntary choice, human nature, common sense, or documented merit.
And they use the power of government to achieve their goal.
Friday, April 21, 2006 ~ 8:16 a.m., Dan Mitchell Wrote: If you're a scientist working for private industry, it helps to invent something useful. But if you're a scientist trying to get funding from the
government, you're better off telling the world how horrible things are. And once people are scared, they pay attention. They may even demand the government give you more money to solve the problem. ...It's also
easier to get funded if what you conclude feeds someone's political agenda. The idea of crack babies was perfect. It met the needs of liberals and conservatives. Conservatives wanted to demonize cocaine users.
Liberals wanted more money for social programs. When Dr. Coles dared suggest that crack babies were not permanently damaged, she was attacked by politicians, called incompetent, accused of making data up
or advocating drug abuse. Dr. Chasnoff, who helped start the scare, did not receive similar criticism. ...Next time you hear dire "scientific"
warnings -- and demands to surrender more control over your life to the government in order to avert disaster -- remember the crack babies. The only disaster coming may be an activist-induced panic.
Thursday, April 20, 2006 ~ 7:00 a.m., Dan Mitchell Wrote: ...according to the Employee Benefit Research Institute, average state and local employees were collecting nearly 50 percent more in total
compensation than the average private sector taxpayer, with local governments paying an astonishing 128 percent more than private employers to fund health care benefits and 162 percent more on
retirement benefits. ...A recent Standard & Poors Corp. analysis puts the current shortfall in the funding of state employee pensions nationwide at
$284 billion. Dennis Cauchon, writing a January 17, 2006, front page story for USA Today, says that funding promised pension and retiree medical benefits to the combined federal, state, and local workforce
"would require more than $5 trillion to be invested today to cover costs over the next 75 years." ...Beyond the outright purchase of political
support, the public employee complex uses its leverage with state representatives and city officer holders to ensure that only those social services agencies that express sympathy for big government ever get
funding from legislatures and municipal councils.
Thursday, April 20, 2006 ~ 6:53 a.m., Dan Mitchell Wrote: A week ago Monday the Times-Picayune reported that the U.S. Postal Service's New Orleans processing and distribution center would reopen
the following day -- more than seven months after Katrina hit. The paper called it "a move postal officials say will all but eliminate maddening
post-Katrina delivery times of a week or longer for letters mailed just across town." Not that things are completely back to normal. New
Orleanians still don't receive magazines, "although that is expected within weeks." Postal Service competitors fared better. Spokesmen for
DHL, FedEx and United Parcel Service tell us that all three companies restored service in New Orleans on September 19, just three weeks after Katrina hit. ...Some things the private sector simply does better.
Thursday, April 20, 2006 ~ 6:34 a.m., Yesim Yilmaz Wrote: For most European newspapers quoted in Courrier International, the failure of Chirac and De Villepin reveals three major handicaps of the
French model: ... 1) Ill-adapted institutional system (La Libre Belgique): the legislative power can easily be neglected by the executive, itself
reluctant to social dialogue and dependent on party discipline. This produces "a blocked state, which progresses only by convulsions, and in which decision-makers are completely disconnected from the public
opinion." ... 2) Lack of coherent, hence credible political leadership, since a disunited government tried to implement a liberal, "Thatcherite"
solution to growing youth unemployment while also "trying to shut out foreign companies from takeovers in France"(The Guardian). ... 3) Lack
of clear, two-ways communication strategy about the reform plans (Svenska Dagbladet): if it is "high time [for politicians] to listen to what
the French people are saying," according to Jean-Marc Ayrault, leader of the Socialist opposition (Spiegel online), the government "should
[also] have explained more clearly what was needed" for the French to "wake up"(The Guardian) and realize their model must adapt to the globalizing market place. Wednesday, April 19, 2006 ~ 8:56 a.m., Dan Mitchell Wrote: Albert Einstein is purported to have once complained that the most confusing force in the universe is the U.S. income tax. What's really
depressing is that back when Einstein sat down with pencil, eraser and slide rule, the IRS tax code was only one-eighth the size of the 66,000 pages of special-interest rules, regulations, loopholes, credits and
carve-outs it is today. ...The U.S. Government Accountability Office recently audited a sample of tax returns filed by real Americans who had
hired a tax preparer. More than half of those tax forms contained what the GAO described as "a significant level of errors." The GAO then
traveled to tax-preparation chain stores in random towns across the country and posed as ordinary taxpayers, such as plumbers, single working mothers, and the like. Only two of the 19 accountants could fill
out even routine tax returns mistake-free.
Wednesday, April 19, 2006 ~ 8:41 a.m., Dan Mitchell Wrote: Mr. Greenberg hasn't dimmed, but he believes America has. "You couldn't build an AIG today," he explains. Overbearing regulators, new
corporate governance rules, protectionism, a failing tort system, prosecutors unleashed--these, as he sees them, are the obstacles to corporate greatness. And Mr. Greenberg is uniquely positioned to know.
..."One of the biggest problems" facing America's competitiveness at the moment "is regulation," he states. He notes the legislative fiasco that
flowed out of Enron--Sarbanes-Oxley. "Any time you publish regulations in a crisis mode, you probably do it wrong," he says, and as proof he
points to all the companies now listing in London rather than New York. "Friends don't let friends regulate in a crisis," he jokes. Corporate
governance changes alone would make a new AIG impossible. Mr. Greenberg notes that when AIG started, it had almost entirely an "inside" board, made up of senior partners deeply involved in the
business. "And we obviously did something right because we became the largest insurance company in history." Today's intense focus on outsiders
and independence limits the expertise. "A board of directors can't run a company. They can oversee a strategy, but they can't be involved day to
day in a company, otherwise you get nothing done." The authorities themselves have changed. After Enron, "the regulators became far more
aggressive, threatening boards of directors with all kind of dire things if they didn't do certain things. What happens? The board simply takes
over. And when that happens you don't have a company that is thinking about innovation or risk-taking. . . . And once you stop thinking about
risk and thinking only about compliance, you are no longer going to be a growth company."
Wednesday, April 19, 2006 ~ 8:00 a.m., Dan Mitchell Wrote: Being a relatively land-rich and labor-scarce nation, immigration has always been good for our country. Plus, for most of our history, there
was a guarantee that immigrants would come here to work. The alternative was starvation. With today's welfare state, there's no such guarantee. People can come here, not work and not starve because the
welfare state guarantees that they can live off the rest of us.
Wednesday, April 19, 2006 ~ 7:42 a.m., Yesim Yilmaz Wrote: Google Inc. CEO Eric Schmidt on Wednesday defended the search engine's cooperation with Chinese censorship as he announced the creation of a Beijing research center and unveiled a Chinese-language
brand name Google is trying to raise its profile in China after waiting until January to launch its Chinese-language site Google.cn. Activists
have criticized the company for blocking searches for material about Taiwan, Tibet, democracy and other sensitive issues on the site. ... "We
believe that the decision that we made to follow the law in China was absolutely the right one," Schmidt said at a news conference. ... He said
Google had to accept restrictions in order to serve China, which has the world's second-largest population of Internet users after the United
States, with more than 111 million people online Schmidt also announced the creation of a research center in Beijing that he said should have 150
employees by mid-2006 and "eventually thousands of people." He said the center is meant to create products for markets worldwide, though he
said planning was still in such an early stage that he didn't know what they might be. ...Schmidt was speaking at a ceremony to announce
Google's Chinese-language brand name - "Gu Ge," or "Valley Song," which the company says draws on Chinese rural traditions to describe a
fruitful and rewarding experience. Talking to reporters later, Schmidt said Google's managers were stung by criticism that they accepted Chinese censorship, but said they haven't lobbied Beijing to change its
rules. ... "I think it's arrogant for us to walk into a country where we are just beginning to operate and tell that country how to operate," he said.
... Asked whether Google might try to persuade Beijing to change its restrictions, Schmidt said he didn't rule anything out, but said it hasn't
tried to change such limits elsewhere. He noted that Google's site in Germany is barred from linking to Nazi-oriented material. Wednesday, April 19, 2006 ~ 7:17 a.m., Dan Mitchell Wrote: Using panel data for 72 countries and 22 years, we explore the link between taxes and manufacturing wages. We find, controlling for
macroeconomic variables that have been found in the literature to influence wages, statistically significant evidence that wage rates are not responsive to median or average income tax rates. We find that wages
are significantly responsive to corporate taxation, and that the responsiveness of wages to corporate taxation is larger in smaller countries. We also find that tax and wage characteristics of neighboring
countries, whether geographic or economic, have a significant effect on domestic wages. These results are consistent with the frequently employed assumptions in the public finance literature that capital is
highly mobile, but labor is not and inelasticlly supplied. Under these conditions labor will bear the burden of labor taxes, and bear or share the burden of capital taxes.
Tuesday, April 18, 2006 ~ 10:23 p.m., Dan Mitchell Wrote: Our biggest objection to the AMT is that it is patently dishonest. First Congress uses the tax code to gain political credit by offering tax
write-offs for social and economic behavior it wants to reward: buying a home, rearing children, driving a hybrid car, donating to the Salvation
Army, caring for senior parents, creating savings accounts, and on and on. But then the same politicians use the AMT to snatch those benefits back, since the AMT typically hits taxpayers who claim many of these
credits or deductions. Taxpayers who have many children and live in high-tax states are especially vulnerable. We don't favor using the tax code to influence behavior in this way, but millions of families make
decisions in part because those tax credits exist. The AMT is an enormous revenue bait-and-switch. Even the very name is fraudulent. The AMT should really be called the mandatory maximum tax. Filers
must first tally their tax liability under the migraine-headache inducing standard IRS tax forms. Then when they're done with that delightful
exercise, they must fill out the AMT forms and figure their liability under that system. It is by no means an "alternative" (which connotes a choice)
and also isn't a "minimum" tax--since you have to pay the maximum of the two. ...The current AMT with its 12-line worksheet and 55-line form
is no walk in the park either, but its fundamental structure roughly resembles that of a flat tax. There are two rates: 26% and 28%. There
are virtually no allowable deductions except for the first $45,000, which is not taxed. And the eight pages of instructions are much simpler than
the hundreds in the "how-to" manual for the standard code. So how about this idea for creating a comprehensible and pro-growth tax system? Don't scrap the AMT, fix it. Lower the AMT rate to 20%.
Exclude all income from saving and investment that has already been taxed once. Simplify the form so it fits on a postcard and resembles what Steve Forbes and Dick Armey have proposed with their flat tax. And
then abolish the standard IRS code and hold a bonfire celebration in front of the Capitol to burn the tax forms, instruction manuals, and IRS documents.
Tuesday, April 18, 2006 ~ 4:45 p.m., Sven Larson Wrote: Kentucky's General Assembly has passed a budget establishing new records for both spending and borrowing. Ninety-eight House legislators smiled for the cameras while accepting billions of dollars of new
pork-barrel projects for their districts. However, two legislators - Reps. Jim DeCesare and Stan Lee -voted "no," standing firm for greater fiscal
responsibility. "Hand wringing isn't enough," said DeCesare, a Bowling Green Republican. "Someone needed to take a stand for Kentucky's
future fiscal health. This spending plan contains at least five significant tax and fee increases and a massive bonded indebtedness that boggles
the mind." The budget which passed overwhelmingly in both chambers this week plans to spend $18.1 billion - considerably more than in any
previous biennium. It contains nearly $2.4 billion in new state debt and borrows heavily from the rainy day fund. Lee, R-Lexington, said the state
shouldn't saddle taxpayers with long-term debt while doing nothing to protect Kentuckians from future economic downturns. "Instead of saving
during these good economic times, Kentucky is opting instead to borrow at record levels," Lee said. "The only hope for real moderation amid the
General Assembly's spending binge is Governor Ernie Fletcher's veto pen." Tuesday, April 18, 2006 ~ 11:19 a.m., Yesim Yilmaz Wrote: Countries have found they can't tax mobile factors heavily. So workers and their employers, less able than money to move across borders, get
stuck with the tab for an expanding public sector. ... Fiscal policy shouldn't be exempt from globalization-at least in theory. Companies and workers ought to realize that ever-growing spending, when not covered
by existing or new revenue streams, will someday lead to budget cuts or higher taxes. Knowing this, they should seek the safety of economies with
sounder fiscal policies. ... Why aren't mobile factors on the run from bigger government? Many businesses and workers, of course, have language, cultural and other bonds to their home countries. Many
governments operate on debt, so the lag between receiving benefits and paying for them may also be key. Companies, investors and even workers may be willing to stay put for short-term advantages of government
spending, including lucrative subsidies and contracts aimed at attracting business. Otherwise-mobile factors can pocket the money now, knowing
they are free to relocate when the bills come due and leave the debt to future generations.
Tuesday, April 18, 2006 ~ 11:07 a.m., Yesim Yilmaz Wrote: So why incorporate in Nevada? Nevada has no corporate income tax, no capital-gains tax, and the state doesn't share information with the U.S.
Internal Revenue Service, says Neal Chambers, a corporate attorney with the firm of Bullivant Houser Bailey in Las Vegas. California, for its part,
collects corporate income, capital gains, and franchise taxes -- all in the ballpark of 9%. ... Companies like the online shoe distributor Zappos.com, which last year sold $370 million worth of footwear online,
moved its operations -- including 221 employees -- from San Francisco to Clark County, Nev. in 2004. Zappos was the biggest of 37 companies that fled California in 2004 for Nevada, in part because of the more
favorable tax environment, according to the Nevada Commission on Economic Development.
Tuesday, April 18, 2006 ~ 10:24 a.m., Sven Larson Wrote: Tony Blair will be warned today that the spate of job cuts in the National Health Service will continue for at least another year. Patricia Hewitt,
the Health Secretary, will tell a Downing Street seminar on the cash crisis in the NHS that the shake-up of jobs is a short-term "pain" to guarantee
a service free at the point of use for the future. However, she will say there will be at least "a year of turbulence" and no "quick fix" as trusts
eliminate deficits that have been hidden for years but have now been exposed by reforms. Mr Blair has called national and local health bosses to the seminar at short notice as Labour MPs become concerned about
the loss of jobs. More than 6,000 have been announced.
Tuesday, April 18, 2006 ~ 8:33 a.m., Yesim Yilmaz Wrote: While economists have known for years that the coming retirement of the baby boomers would be a drain on the labor force, the Fed study
suggests that the United States is already feeling the effects and the impact in the next decade may be much bigger than previously thought.
... The study projects what the authors call a "conservative" three percentage- point decline over the next 10 years in the labor-force
participation rate - the percentage of people who are either working or looking for work. Much of that drop is driven by the retirement of the
baby boomers, the 78 million Americans born between 1946 and 1964. ... The participation rate is at the core of a simplified equation economists
use to estimate the country's "potential" gross domestic product, or the rate of economic growth that does not cause inflation to accelerate.
...The projected drop in the participation rate would "reduce the sustainable rate of economic growth relative to the robust pace experienced over the past decade or so," said the Fed report, which was
written by staff economists.
Monday, April 17, 2006 ~ 12:48 p.m., Yesim Yilmaz Wrote: The number of pages of federal tax rules and regulations increased from 40,500 in 1995 to 66,498 in 2006; · The number of pages in the IRS guide
for Form 1040 increased from 84 in 1995 to 142 in 2005; The number of different IRS tax forms increased from 475 in 2000 to 582 in 2006; The cost of compliance for federal taxpayers - filling out tax returns and
related chores - increased from $112 billion in 1995 to $265 billion in 2005; H&R Block's revenues from tax preparation soared from $740
million in 1996 to $2.2 billion in 2005; The complex alternative minimum tax hits 4 million taxpayers today, but will hit 30 million by 2010 if not
repealed. Recent tax bills have made some pro-efficiency reforms, but they have also added many pro-complexity breaks to the tax code. The number of special tax breaks for education increased from 7 in 1995 to
16 today. The number of breaks for the energy industry jumped from 11 to 26 during the same period. Politicians are increasingly using the tax code for social engineering.
Monday, April 17, 2006 ~ 11:18 a.m., Yesim Yilmaz Wrote: Mr Greenspan initially supported the passage of the Sarbanes-Oxley law - the landmark 2002 legislation introduced after the Enron and
WorldCom scandals - but said yesterday he was "disturbed" when companies started favouring London over New York for their flotations.
... "The Sarbanes-Oxley Act has created significant problems for foreign investors with its regulatory structure," he said at a question and answer
session at the Asian Financial Centres conference in Seoul, organised by the Financial Times. "I am nevertheless acutely aware and disturbed by
the fact that initial public offerings have moved away from the US - and to a large extent have moved to London." ...some parts of [the law] created too many burdens for business, he said, emphasising the
provision that forces companies to have their internal controls certified by auditors.
Monday, April 17, 2006 ~ 11:00 a.m., Sven Larson Wrote: Every year the governor submits for consideration an executive budget and asks citizens and state legislators to give serious consideration to his
recommendations. Again this year, OCPA has likewise submitted a proposed state budget for consideration. You may recall that in the current fiscal year the politicians at 23rd and Lincoln grew the
government by a whopping 12.7 percent. Regrettably, next year is shaping up to be a repeat performance. OCPA suggests a different path. At a time when Oklahoma's population-growth-plus-inflation rate is only
4.2 percent, and Oklahomans' paychecks are growing at 5.4 percent, the FY-2007 OCPA Budget increases spending by 4.2 percent and provides for $899 million to be returned to the hardworking Oklahoma families
who earned the money.
Monday, April 17, 2006 ~ 9:35 a.m., Sven Larson Wrote: Kentucky's office-seekers rarely miss an opportunity to vow support for creating new jobs and opportunities in their press conferences, photo-ops
and campaign stops. Once elected, however, their actions rarely resemble such high-minded exhortations and instead often wind up as anchors that
hold back entrepreneurship across the state. For example, the General Assembly passed a gross-receipts tax last year that taxed sales and
profits as part of Gov. Fletcher's "tax-modernization" plan. Now it is poised to punish Kentucky businesses even more with a new $200
"privilege tax." Oddly enough, some of Frankfort's "conservative" politicians apparently see nothing wrong with such an errant tax policy.
Sunday, April 16, 2006 ~ 12:51 p.m., Dan Mitchell Wrote: SMER, Slovakia's front-running social-democratic opposition party, will have a difficult time abolishing the country's 19 percent flat tax if it
enters government following June elections, as no other major political party supports the idea. The flat tax was introduced by the current centre-right Dzurinda administration in 2004 as part of its efforts to
reduce public sector spending. It has been praised by international economic bodies and has drawn foreign investment, but is bitterly opposed by Smer as a measure the benefits mainly the rich. Other
political parties, however, maintain that the flat tax rate must be maintained, although some, such as the opposition Christian Democrats and Free Forum, have called for the income tax rate to be cut to 14 or
15 percent, the SME daily wrote.
Saturday, April 15, 2006 ~ 1:42 p.m., Dan Mitchell Wrote: The U.S. Internal Revenue Service can ask PayPal for information on some of its customers as part of an ongoing investigation into suspected
tax evasion, a federal court ruled on Tuesday. The online payment provider, a division of EBay, has just received a summons from IRS, according to PayPal spokeswoman Amanda Pires. The summons was
approved by the U.S. District Court for the Northern District of California. Pires would not say whether PayPal would hand over customer information. "A key part of our response will be the fact that
PayPal takes the privacy of our customers very seriously," she said. PayPal isn't compelled to comply with the summons unless it becomes a
court order, she said. PayPal believes the agency is seeking information on U.S. taxpayers who claimed they lived in foreign localities and set up
PayPal accounts linked to foreign credit card or bank accounts in those places, Pires said. It is concerned with 35 places in particular, and a
PayPal account can only be set up in 10 of them, she said. Those include Anguilla, Costa Rica, Cyprus, Channel Islands, Hong Kong, Isle of Man, Luxembourg, Malta, Singapore, and Switzerland.
Saturday, April 15, 2006 ~ 11:13 a.m., Yesim Yilmaz Wrote: GPG wanted to be exempt from the conditions of the new regime because it considers itself a New Zealand company. Strictly it isn't
because it is registered in London. But look at the facts: four of the five directors are Kiwi, 79 per cent of the shares are in Kiwi hands, and it has
sizable investments in New Zealand including Turners & Growers, Turners Auctions and Tower. But this was not Kiwi enough for the Government. This means individuals with more than $50,000 in GPG
will be taxed on unrealised gains in the share price. ... The Government says relatively few people will fall into that category. But what it has not
talked about is the fact that fund managers holding GPG shares will also be slugged for tax on unrealised gains. Figures worked out by GPG's tax
lawyers show that if an institution invested $10 million in the company and the share price rose 20 per cent a year, then over three years the
institution would face tax bills totalling more than $2 million. Why invest in GPG if you are going to be hit like that? ...Bizarrely, fund managers
will be able to put money into Australian shares with no such penalties. The New Zealand sharemarket does not have so many really successful companies that we can afford to victimise a company that has done as
well for its Kiwi investors as GPG. The Government's proposals have been mostly welcomed by professional investors in the New Zealand sharemarket because of the major incentive they provide for people to
invest in New Zealand and Australia. But what about freedom of choice? What if an individual wants to invest in, say, BP but is faced with prohibitive tax ramifications? ... It seems to be treading a dangerous
path for our Government to use the tax system to, in effect, tell Kiwi investors where they should put their money. As survivors of some of the
more fraught tax-driven investment schemes of the 1980s would tell you, an investment motivated primarily by tax considerations can be an absolute disaster.
Friday, April 14, 2006 ~ 8:54 a.m., Dan Mitchell Wrote: Germany has reopened the ongoing debate about European tax harmonisation by accusing neighbouring Austria of 'fiscal dumping' in
order to poach investment from companies looking to lower their tax burden. German Finance Minister Peer Steinbrück was reported as remarking at an informal meeting of EU finance minister that Austria
has been "aggressive" in its attempts to encourage companies to locate there by recently cutting corporate tax to 25% from 34% - a move which
has led to increasing numbers of companies crossing the border from Germany to Austria. "In the case of Austria we are dealing not with a
moderate position but a rather ambitious and aggressive attempt to get companies to come to Austria," Steinbruck told Austrian daily Der
Standard. ...For its part, Austria argues that it has been compelled to cut its corporate tax rate to counter competition on its eastern borders,
particularly from Slovakia which has introduced a 19% flat tax. Indeed, Austrian Finance Minister Karl-Heinz Grasser told reporters that Steinbruck's remarks prove the Austrian decision to lower corporate tax
was the correct one. "I think that it's really a compliment if Peer is saying so many German companies are interested in Austria as a business location and want to invest in Austria," he stated. Reports in the German media in the past few days have suggested that the Finance Ministry is working on plans to slash the corporate income
tax burden on larger companies by as much as half, as part of an overall shake-up of Germany's unwieldy company tax system. Citing sources from within the Ministry, German daily Die Welt reported on Saturday
that corporate income tax could be cut to 15%, effectively pushing the overall tax burden for joint stock companies below 30%. Meanwhile, the weekly magazine Der Spiegel reported yesterday that the government
wants to cut the total amount of tax paid by joint stock companies from 38% to 25%, meaning corporate tax would effectively be cut in half to 12%. At present, large companies in Germany pay a basic 25% corporate
tax. However, this is on top of local company taxes, charged at around 13%, making a nominal corporate tax rate of 38% - one of the highest in Europe. Meanwhile, small and medium-sized firms are taxed on a
different legal basis, on a scale of between 15% and 42%.
Friday, April 14, 2006 ~ 8:32 p.m., Yesim Yilmaz Wrote: ...the new paternalism blithely assumes that, when your present self can impose costs on your future self, the outcome is necessarily bad. But
preventing harm to the future self might involve even greater harm to the present self. There's no valid reason to assume, when there is an
inconsistency between present and future interests, that the latter must trump the former. Second, the new paternalism ignores the fact that harms can be avoided in multiple ways. Restricting present behavior is
one way to reduce future harms, but that doesn't make it the best way. The future self might be capable of mitigating the harm at lower cost by other means. Third, the new paternalism neglects the possibility of
internal bargains and private solutions. All of us face self-control problems from time to time. But we also find ways to solve, or at least mitigate, those problems. We make deals with ourselves. We reward
ourselves for good behavior and punish ourselves for bad. We make promises and resolutions, and we advertise them to our friends and families. We make commitments to change our own behavior. Internality
theorists point to these behaviors as evidence that the internality problem exists. But they are actually evidence of the internality problem being
solved, at least to some degree. People are not perfect, so we should not expect real people's actions to mimic those of perfectly rational and
perfectly consistent beings. Mistakes will occur; self-control problems will persist. But paternalist solutions will solve them no better than
personal solutions. What is really at stake is how self-control control problems will be addressed-through private, voluntary means or through
the force of government. The new paternalists would have us believe that benevolent government can-through taxes, subsidies, restrictions on the
availability of products, and so on-make us happier according to our own preferences. But even if we place little or no value on freedom of choice
for its own sake, the paternalists' recommendations simply don't follow. Public officials lack the information and incentives necessary to craft
paternalist policies that will help the people who most need help, while not harming those who don't need the help or who need help of a different kind. Individuals, on the other hand, have every reason to
understand their own needs and find suitable means of solving their own problems.
Friday, April 14, 2006 ~ 7:37 a.m., Dan Mitchell Wrote: Winfrey, 52, who is reportedly worth more than $1 billion, said she doesn't feel guilty about her wealth. "I was coming back from Africa on
one of my trips," she said. "I had taken one of my wealthy friends with me. She said, 'Don't you just feel guilty? Don't you just feel terrible?' I
said, 'No, I don't. I do not know how me being destitute is going to help them.'
Thursday, April 13, 2006 ~12:15 p.m., Sven Larson Wrote: The finance ministers met informally in Vienna on Friday (7 April), amid tensions over protectionism that recently emerged following French,
Spanish and Polish attempts to thwart foreign takeovers of their energy and banking firms. Finance ministers demonstrated broad agreement
that "continuing protectionism is one of the reasons for the current levels of unemployment in our countries," said finance minister Karl-Heinz
Grasser of Austria, which holds the rotating EU presidency. But ministers clashed over a plan by UK finance minister Gordon Brown to set up a new EU taskforce that should identify sectors that "fail to
liberalise," according to press reports. Mr Brown's call was dismissed by EU monetary affairs commissioner Joaquin Almunia as unnecessary as
the European Commission itself is pursuing exactly that task itself. "The most efficient and respected experts in Europe regarding competition are
in the European Commission," Mr Almunia is quoted as saying after the finance ministers meeting.
Thursday, April 13, 2006 ~ 11:30 a.m., Yesim Yilmaz Wrote: Mr de Villepin said the CPE, which had been put into law without the usual negotiations with employers and unions, had been a measured
response to France's youth unemployment rate of 22 per cent. He said he "regretted" that it had not been "understood by everyone". "I had
wanted to act quickly because the tragic situation and the desperation of a lot of young people required it," he said. "I wanted to propose a strong
solution because I had the conviction that beyond the necessary action of the state, only a better balance between greater flexibility for companies and greater security for workers would allow us to break with
unemployment in our country." The prime minister will now be hoping that his popularity recovers from the record lows of recent weeks. His
approval rating of 49 per cent in January plunged to 25 per cent this weekend. President Jacques Chirac also suffered tumbling ratings in opinion polls.
Thursday, April 13, 2006 ~ 8:39 a.m., Dan Mitchell Wrote: Democrats in Washington seem to go into cardiac arrest at the mere thought of cutting taxes, but in certain state capitals Democratic
lawmakers are catching on to the economic growth and job creation dynamics of lowering tax rates. We recently praised Democrats in Rhode Island for their proposal to cut marginal income-tax rates to help bring
businesses back to their struggling state. Now, halfway across the country, Democrats in the Oklahoma legislature have embraced a 20% cut in income-tax rates. ... Republicans in charge of the state house of
representatives responded with a proposal to cut the state's personal income tax to 5.85% from 6.25%. Not to be outdone, Democrats who control the state senate have passed a further reduction in the income
tax -- to a top marginal rate of 4.9%. The politicos and media in Oklahoma City are reeling in disbelief. Some see the Democratic tax plan as a political ploy to one-up the Republicans, offered only in the
expectation that it will never become law. Brad Henry, the Democratic Governor, has resisted the tax cuts and is instead pushing his Wheel of
Fortune budget proposal with its whopping 18.4% spending increase. ... Oklahoma ranks 40th among states in per capita income, 15% below the national average. ...Oklahoma's punitive tax policy is one conspicuous
inhibitor of growth. According to the Oklahoma Council of Public Affairs, the per capita tax burden hovers at 20.4% above the average of the six other states in the Southwest region. Texas in particular has been
able to attract jobs and industry by exploiting its comparative advantage of having no income tax at all.
Thursday, April 13, 2006 ~ 7:56 a.m., Sven Larson Wrote: Intellectual property rights are important, but as a means not an end. How relevant they are in the promotion of the needed innovation
depends on context and circumstance. We know that they are considered a necessary incentive in developed countries where there is both a good
technological and scientific infrastructure and a supporting market for new health-care products. But they can do little to stimulate innovation
in the absence of a profitable market for the products of innovation, a situation which can clearly apply in the case of product principally for use in developing country markets.
Wednesday, April 12, 2006 ~ 1:24 p.m., Yesim Yilmaz Wrote: The closer welfare gets to what can be earned (after taxes) the more people will endeavor to become beneficiaries instead of contributors. The
resulting drain on the economy will result in higher taxes thus becoming the motor of the game of avoidance participation. Some of the states
defining the EU are high tax and extensive welfare states. Capital (like talent) being mobile, the natural desire to avoid what some feel are
confiscatory taxes, leads to the flight of funds. Border checks are unlikely to stop the process. The upshot is to try to use the EU to plug the vents.
Pressure on the remaining low-tax countries to mend their ways is a measure to complete the process. Inevitably this attempt has led to a confrontation between the EU and Switzerland. In tune with its known
tradition of neutrality - meaning not going along with European trends - the tiny country, against the wishes of its Socialists, is not a member of the EU. Here we must correct a common misunderstanding about
Switzerland. This is not at all a taxpayer's paradise and folks are not welcome to show up wearing dark glasses and toting a suitcase of bills
for the purpose of opening a numbered account. Just try this and, unless you are able to prove that the dough is rightfully yours, the bank will call
the cops. Even so, the conflict with the EU involves money, more precisely Swiss taxes. ...The pressure exerted by the EU to forge unity
through standardization, centralism and "more government," will not end with reining in the obnoxiously successful Swiss. Competing for
capital and know-how by offering, among other things, low taxes, too, is not a consequence of the genetically high economic IQ of the Swiss. A
number of ex-Soviet countries pursue comparable strategies. Once this "Reaganism" shows hard-to-overlook signs of success these member
states will also feel the whip the Coachmen like to crack. ...As the current riots in France show, the "old" Europe is hard to reform. Instead they
attempt to cope with the challenge of the modern world is by preventing those who are politically dependent on them from implementing their own modernization.
Wednesday, April 12, 2006 ~ 8:39 a.m., Dan Mitchell Wrote: In Minneapolis, public school officials now admit that black flight is a serious problem; the district enrollment is projected to be down to
33,000, from 48,000 in 2000, a 30% decrease, largely due to black students escaping to charter schools. The Washington D.C. school district has lost 10,000 students in five years; 25% of D.C. students are now
enrolled in charter schools. A Rand Corporation study of charter schools in Texas and California discovered that in both states black students are
significantly more likely to move to charter schools than are white students. ... over time the momentum is unambiguously one of black flight away from public schools. ...For more than a decade, inner city
African-Americans have supported school choice at a much higher rate than have suburban whites (Republican soccer moms are a core anti-choice constituency). Heroic African-Americans such as Democratic
State Representative Polly Williams and former Milwaukee Superintendent Howard Fuller crossed party lines to pioneer vouchers in Milwaukee. ...the mainstream education establishment -- including
teachers' unions and most academics -- continues to be unrelentingly hostile to school choice... Teachers' unions give heavily to Democrats over Republicans and are adamantly against school choice while
Republicans generally favor vouchers. NEA president Bob Chase has said that he would be against school choice even if it came with a tripling of
funding for schools. The logic seems to be that it is better to ignore the demands of black parents than to concede a Republican victory.
Wednesday, April 12, 2006 ~ 8:30 a.m., Dan Mitchell Wrote: The conservative base is furious over the complete failure of both President Bush and the GOP Congress to exercise spending restraint in
areas that have nothing to do with defense of homeland security. On Friday Mr. Bush took the unusual step of challenging his party's congressional leaders. "If necessary, I will enforce spending restraint
through the exercise of the veto," he told reporters. Sounds good, but in over five years Mr. Bush has never vetoed a bill. Few take his threats
finally to do so now all that seriously. Certainly Republican Arlen Specter doesn't. A famous advocate of pork-barrel spending, Sen. Specter is
pushing a plan to spend $7 billion above and beyond Mr. Bush's spending requests for health and education. "The Republican Party is now
principally moderate, if not liberal" on spending, Mr. Specter told reporters after a majority of GOP senators voted for his proposals last
month. Republicans should have learned from the reaction of their core voters to last fall's pork-stuffed transportation bill and the bloated
Hurricane Katrina relief measure that excess spending was driving their base crazy. Earmarks--home-state projects slipped into budget bills without adequate review or transparency--became a dirty political word,
led by the infamous $220 million Bridge to Nowhere in Alaska. ... We'll know soon enough if GOP voter turnout is likely to be a huge problem in
November. GOP volunteers in California's San Diego County report that absentee ballots from the party faithful are being turned in at disturbingly low rates for a special House election that will take place
tomorrow. ... Republicans have appeared to the world to be as unprincipled and rudderless as the politicians they campaigned against back in 1994. Unless they change course dramatically in the seven
months between now and Election Day, they may well find themselves facing the same fate as the Democratic political dinosaurs of that year that they replaced.
Tuesday, April 11, 2006 ~ 8:57 a.m., Dan Mitchell Wrote: You can quibble about the numbers, but the overall trend is clear: We're on a collision course. On the one hand, we have a private-sector
economy that is vibrant, creative, continually transforming itself and producing millions and millions of new jobs -- overcoming the stagflation
of the late 1970s, the sharp recession of the early 1980s, the savings and loan bailout of the early 1990s and the trauma of the attacks of Sept. 11,
2001. On the other hand, we have a public sector that is threatening to gobble up more and more of that economy as time goes on. We know what things look like somewhere down the road: France. As students,
union members and public employees riot in the streets against the outrageous notion that people should not be given lifetime jobs until age 26, France seems immobilized.
Tuesday, April 11, 2006 ~ 8:28 a.m., Yesim Yilmaz Wrote: A substantial broadening in the scope of government activities occurred in recent decades in the majority of developed countries, primarily due to the development of modern welfare states. However, those welfare states have faced with several problems, especially in the form of efficiency losses from redistribution and disincentives of high taxation, which have obviously caused the decline of long-term GDP growth. Although negative and statistically significant relationship between government size and GDP growth has been established in this and several other studies, mainstream theory predicts that the negative effect should be expected in countries where the size of government sector exceeds a certain threshold. Consequently, optimal size of government sector from GDP growth perspective should exist. The panel data estimates of Armey Curve suggest that optimal size of government in the sample of 12 European countries is approximately between 36 and 42 percent of GDP, indicating that potential scope for reduction of government spending ratio is from approximately 19 to approximately 30 percent. However, given the fact that large differences in the size of government across countries included in the sample exist, some theoretical as well as methodological considerations about panel data estimation occurred. Consequently, separate time series data estimations are implemented, implying, on average, approximately 19 percent reduction in government spending ratio.
http://soc.kuleuven.be/io/egpa/fin/paper/slov2004/pevcin.pdf Tuesday, April 11, 2006 ~ 8:00 a.m., Dan Mitchell Wrote: What insurance company will provide coverage with $0 deductible, at an annual premium of $295, for someone whose health care costs on
average $6,000 a year? The numbers imply losses of over $5,700, not counting administrative costs. To subsidize zero-deductible health insurance, state taxpayers might have to pay out about $6,000 per
recipient. There is no reason to expect firms to rush to offer a policy to uninsured employees. It makes more sense for them to pay their $295
penalty and hand the health-insurance problem back to the individual -- and ultimately to the taxpayers of Massachusetts. Economically, consumers who face deductibles of $0 have no incentive to restrain
health-care spending. They are only constrained by the time and discomfort involved in obtaining medical care. If more Massachusetts consumers enjoy coverage without any deductible, then the average
per-person expenditure on health care of $6,000 seems likely to go up. Health insurance companies will not write policies that lose them money.
Policies with deductibles of $0 in a state where spending per person on health care is on average $6,000 a year will have very high annual premiums -- presumably over $6,000 a year. ...The only way to make
zero-deductible health insurance available at low cost is with a large subsidy; how much will depend on negotiations with insurance companies. Only when the size of the necessary tax increase becomes
clear will Massachusetts's leaders learn the laws of arithmetic.
Tuesday, April 11, 2006 ~ 7:51 a.m., Dan Mitchell Wrote: ...the riots in France over labor reform, the slow-motion suicide of General Motors, and the continuing decline of the New York economy all
share one defining trait: entrenched and unchangeable union power. ...On the evidence throughout business and politics today, unions do not provide individual job or income security. On the contrary, they
undermine security by contributing to broader business and economic decline. ...the French example is clear enough. While the French private
sector is less unionized than America's, it must cope with mandated work rules that make it all but impossible to fire someone; so naturally companies are also reluctant to hire. The jobless rate is double
America's, while youth unemployment is 23%. ...Thanks to immigration, as well as America's continuing advantage in financial services, New
York City has so far been able to avoid another fiscal collapse of the kind it had in the 1970s. But upstate is a different story, with jobs and young
people fleeing to better business climes. New York manufacturing employment fell by 41% between 1990 and 2005, or double the national rate. ...This is the central problem the liberal wing of the Democratic
Party faces as it plots what to do if it does regain power this year, or in 2008. Democrats will eventually win an election or two because of Republican ineptitude or an economic slowdown. But to govern for the
long haul they need better ideas than trade barriers, a tax hike to increase the size of government, or the defense of the entitlement status quo. They need to champion reforms to help individual workers better
secure their own futures in a competitive global economy, rather than relying on the false hope of restoring the age of Walter Reuther. They need to promote portable pensions, cheaper health insurance and
education choice. So far all we see is Jacques Chirac in American drag.
Monday, April 10, 2006 ~ 8:46 a.m., Dan Mitchell Wrote: A 12-term congressman, Mr. Mollohan sits on the House Appropriations Committee, a panel that disgraced lobbyist Jack Abramoff dubbed the
"favor factory." Working with fellow West Virginian Sen. Robert Byrd, Mr. Mollohan has steered at least $178 million to nonprofit groups in his
district over the past five years using "earmarks" -- special-interest provisions that are slipped into spending bills to direct money to pet
projects. The money has brought more than jobs and building projects to his district. It has formed and financed a tight-knit network of nonprofit
institutions in West Virginia that are run by people who contribute regularly to Mr. Mollohan's campaigns, political-action committee and a family foundation. One of these people also invests in real estate
alongside Mr. Mollohan and his wife. The network of contributors also includes private companies that get contracts through these nonprofits.
... federal prosecutors have opened an investigation of Mr. Mollohan's finances and whether they were properly disclosed, according to people contacted in the inquiry. .. Mr. Mollohan was among House members
embarrassed by having received campaign donations from MZM Inc., one of the contractors from which Mr. Cunningham admitted taking bribes. MZM and its executives gave $23,000 to a political-action
committee affiliated with Mr. Mollohan. ...Government contractors and executives of the nonprofit groups in his network regularly give to his
campaign and to an affiliated political-action committee, Summit PAC. A third conduit for funds is the Robert H. Mollohan Family Charitable Foundation, named for the congressman's father. It holds an annual
charity golf tournament at the Pete Dye Golf Club in Bridgeport, W.Va., named a top-100 course by Golf Magazine. The tournament has been
very successful. It received $455,000 in contributions in 2003 -- the latest available figures -- from government contractors and other firms. The
donors included at least two of the federally funded nonprofits, ISR and Vandalia, the group Ms. Kuhns runs.
Monday, April 10, 2006 ~ 8:41 a.m., Sven Larson Wrote: An effective Tax and Expenditure Limitation (TEL) in South Carolina would be a constitutional restraint that allows for annual government
growth in spending as a function of population growth and economic inflation. Revenues collected beyond this limit would be used towards both an emergency fund and a reserve fund, with excess being returned
to the taxpayers. The measure would cover all streams of revenue and expenditures at every level of government in the state. Any adjustment or exception to the mechanism would need voter approval and would be
limited to a short and fixed period. The TEL should also include restrictions on fixed mandates or categories of expenditures as well as
safeguards against so-called "off-budget" spending or overrides. Special funds to meet short to mid term needs such as highway development
could be established but would sunset out. Such a TEL would counter the giant leaps in government spending during times of financial prosperity
that often prove to be short sighted and that rarely are reined back in during the longer course of the fiscal cycle. This measure would complement existing fiscal safeguards and promote greater
accountability to South Carolina's taxpayers.
Monday, April 10, 2006 ~ 8:23 a.m., Dan Mitchell Wrote: Germany wants to have the EU constitution ratified across the EU by 2009, suggesting a change in the name of the charter to "Basic treaty for
Europe," according to a German daily.
Sunday, April 9, 2006 ~ 12:58 p.m., Dan Mitchell Wrote: The European Parliament is subsidizing journalists to cover its parliamentary sessions in Strasbourg, a move that legislators say aims to
ensure that the EU's only democratically elected body is not ignored. As part of a program dating to the 1980s, journalists from across the EU
member states are receiving travel and entertainment subsidies from the Parliament to help defray the cost of covering the legislature when it
shuttles once a month to Strasbourg, in eastern France, from Brussels, journalists and legislators say... The funding for journalists can include
payment of a first-class round- trip train ticket or an economy-class plane ticket to Strasbourg from any of the 25 EU countries and a daily
stipend of EUR100 to cover hotel, food and entertainment over two days. About 60 journalists from across the bloc are invited to Strasbourg each month under the program... The Parliament also provides television
journalists with unlimited use of free state-of-the-art television studios, free sound and camera equipment, and free two-person camera crews
that can be borrowed for the day. ...A...broadcaster, who like others interviewed for this article requested anonymity, said perks such as these
had prompted journalists to refuse requests by editors to write stories on members' privileges and travel expenses at the Parliament, a topic of
growing interest in Europe. "How can I expose such perks when I myself am benefiting from them?" the journalist asked. ...Brussels's 1,550
journalists, one of the world's largest press corps outside Washington, benefit from a host of perks and privileges from EU institutions, including free meals and unlimited free phone calls during EU summit
meetings and free television studios at the European Commission. At the beginning of every six-month EU presidency, the presiding country
invites journalists to a free junket in the capital. In February, Austria, the current holder of the EU's presidency, invited 62 Brussels-based
journalists to Vienna, paying for their lodgings in a lavish Hilton hotel and hosting a complimentary dinner in an 18th-century baroque castle
where a soprano sang Strauss operettas - all on the tab of the Austrian government.
Sunday, April 9, 2006 ~ 10:19 a.m., Dan Mitchell Wrote: Across the country, the hottest money issue at the state and local level is property taxes. Tax collectors are reaping giant windfalls from the
national housing boom, as the average property tax on an American home has climbed to just shy of $3,000 a year. The National Taxpayers Union reports that Texas is one of at least 20 states -- including Arizona,
Idaho, New Hampshire, Nevada and South Carolina -- where homeowners are rebelling against soaring assessments that in some cases are taxing people out of their homes. ...In Texas, as in most other states,
there's a better way to cut property taxes. The latest data indicate that overall state revenues rose 10% last year, and that the combined state
surpluses could reach $25 billion this year. Rather than allowing these revenue surpluses to get spent, politicians could claim them to finance
installment reductions in property taxes. Texas already has a $4 billion surplus (expected to grow to $6 billion by year's end) and if that money were used to buy down property taxes, the rate could be cut by an
estimated 25 cents per $100 valuation. If the politicians in Austin were then to adopt a tax limitation law capping taxes at population growth
plus inflation -- which nine of 10 Republican voters in the state just said they favor -- another 20 cents could be trimmed from property tax assessments within two to five years. Critics will claim that using
surpluses to cut taxes is fiscally shortsighted because good times don't last forever. But returning surpluses to taxpayers is the only way to ensure that they don't get spent on new or expanded government
programs that end up breaking the bank during the lean years. That was how many states went nearly belly-up in 2001-02.
Saturday, April 8, 2006 ~ 1:19 p.m., Yesim Yilmaz Wrote: These findings should help remove the stigma attached to factory jobs and encourage nations to include them as an integral part of
development. The findings also reinforce long-held arguments in economic development theory that the replacement of agricultural or rural informal sector jobs with light-industry assembly firms is an
important step in raising incomes. Our research refutes claims that apparel and footwear production leads to lower educational achievement for women. We find that clothing and shoe production requires more
education than the average woman has attained in many developing countries. The plants usually don't hire women without at least a junior high education. In Bangladesh and other major apparel-exporting
nations, to qualify for these jobs, more women stay longer in school. Our study also allays concerns that the export factories create jobs for underage workers: Female workers' commitment to seek more education
delays childbearing and lowers the incidence of child labor. In short, the maligned suppliers of Nike, Gap and Wal-Mart encourage governments to educate women, give women a reason to stay in school and pay them
well by local standards. Our study presents a picture of textile and footwear plants that's far less harrowing than the sweatshop stereotype
and more compatible with surveys in dozens of countries that find female workers feel they benefit from the factory jobs.
Friday, April 7, 2006 ~ 11:33 a.m., Yesim Yilmaz Wrote: Tax competition between EU member states has increased as a result of the accession of 10 new members to the EU in 2004 and efforts by the
EU judicial system to remove barriers to the free movement of capital, KPMG said. Loughlin Hickey, global head of tax, said: "It is much easier
now to transfer people, manufacturing and services within the European region." Other parts of the world were facing less competition because
borders were less permeable, he said. Nonetheless, the global trend was stable or declining tax rates. The majority of the 86 countries surveyed
had either kept their tax rates unchanged since 2004 or had reduced them. Countries were becoming wary of aggressively cutting rates because of fears that neighbouring countries would follow suit, Mr
Hickey said. Increasingly, they were competing on other grounds, such as the "business friendliness" of their tax regimes. Favourable factors
included the simplicity and stability of the tax system, the willingness of tax authorities to make rulings ahead of transactions and the absence of an aggressive approach to enforcing tax law.
Friday, April 7, 2006 ~ 8:41 a.m., Dan Mitchell Wrote: For all the myths of equality that Europe tells itself, the Continent is by and large a woeful place for a woman who aspires to lead. According to
a paper published by the International Labor Organization this past June, women account for 45 percent of high-level decision makers in America,
including legislators, senior officials and managers across all types of businesses. In the U.K., women hold 33 percent of those jobs. In Sweden-supposedly the very model of global gender equality-they hold 29
percent. ... Europe has been consistently unable to tap the highest potential of its female workers, who represent half of college graduates in most countries. Women, it seems, can have a job-but not a
high-powered career. Why is this? Simply put, Europe is killing its women with kindness-enshrined, ironically, in cushy welfare policies that were
created to help them. By offering women extremely long work leaves after children, then pushing them to take the full complement via tax policies that discourage a second income, coupled with subsidies that
serve to keep them at home, Europe is essentially squandering its female talent. ... most European women do some kind of work outside the home,
but relatively few enjoy genuine upward mobility. ... There's also a marked concentration of women in public-sector and government jobs compared with the United States and even some developing countries.
...Half of Sweden's working women are in the public sector, for example, while more men work in better-paid private-sector jobs. Compare that to
30 percent of women in the public sector in the U.K., and 19 percent in America.
Friday, April 7, 2006 ~ 8:23 a.m., Sven Larson Wrote: Lawmakers overwhelmingly approved a bill Tuesday that would make Massachusetts the first state to require that all its citizens have some
form of health insurance. The plan - approved just 24 hours after the final details were released - would use a combination of financial incentives and penalties to dramatically expand access to health care
over the next three years and extend coverage to the state's estimated 500,000 uninsured. If all goes as planned, poor people will be offered free
or heavily subsidized coverage; those who can afford insurance but refuse to get it will face increasing tax penalties until they obtain coverage; and those already insured will see a modest drop in their
premiums. The measure does not call for new taxes but would require businesses that do not offer insurance to pay a $295 annual fee per
employee. The cost was put at $316 million in the first year, and more than a $1 billion by the third year, with much of that money coming from
federal reimbursements and existing state spending, officials said.
Friday, April 7, 2006 ~ 7:57 a.m., Dan Mitchell Wrote: President Bush insults our intelligence when he says illegal immigrants are needed to fill jobs that legal residents won't do. There is no job that
can't be filled at a price. If that price is too high, consumers will simply take on more do-it-yourself projects -- mowing their own lawns, cleaning
their own homes, growing their own vegetables, cooking their own meals and taking care of their own children or elderly parents. We would not
pay any more for fruit and vegetables because the price is set on world markets -- we'd just import more fruit and vegetables from Mexico. ...
Forget the silly idea that there are only so many jobs to go around. We are aging fast, and the country will soon run short of younger workers
who can take a load off our creaking backs. ... Should we slap big fines on businesses caught hiring illegal immigrants? Do we really want a lot
of young Latinos wandering the street without work? Many work in the cash economy as migrant workers at small farms, casual day laborers for marginal construction companies, maids, nannies, lawn maintenance
workers and the like. They are employed by households or very small businesses, making the cost of enforcement much higher than any likely benefit.
Thursday, April 6, 2006 ~ 12:07 p.m., Yesim Yilmaz Wrote: The 'tax wedge,' is the difference between labour costs to the employer and the net take-home pay of a single-earner employee is the biggest in Belgium (55.4%), Germany (51.8%), Hungary (50.5%) and France
(50.1%), a fresh report by the Organisation for Economic Co-operation and Development (OECD) reveals. The calculation includes all cash benefits received from government welfare programmes.The unweighted
average 'tax wedge' for the 30 member countries of the OECD was calculated at 37.28% in 2005 (down from 37.42% in 2004).For a married couple with a single earner and two children, the 'tax wedge' was found
by the OECD to be the highest in Poland (42.1%), Sweden (42.4%) and Turkey (42.7%), and the lowest in Iceland (11%), Ireland (8.1%) and the United States (11.9%).
Thursday, April 6, 2006 ~ 9:16 a.m., Sven Larson Wrote: The Ministry of Public Finance (MFP) has written several scripts dealing with amendments to the Tax Code, with the goal of increasing budget
revenues upwards of 30 per cent GDP, and waits for a political decision, with essentially two alternatives to be taken into consideration - higher
taxes or higher deficits, the Finance Minister, Sebastian Vladescu, said. "The game of taxes is for 1 per cent GDP. In my view, to carry on
beating about the bush -which is the best tax namely - is not a solution, since we have more important things to do in order to talk of revenues of
33-34 per cent GDP," Vladescu said. He also said that the ministry drafted four to five scripts for amending the Tax Code, which stipulate
either the increase by three percentage points of the Value Added Tax (VAT), or a mixed solution, to raise the VAT and the flat tax, but also
alternatives that include a change in the current level of the two main taxes. The Fin Min believes that the political decision will translate in either higher taxes or higher budget deficits.
Wednesday, April 5, 2006 ~ 8:32 a.m., Dan Mitchell Wrote: The larger embarrassment here is for the cause of "campaign-finance reform," which has once again been exposed as partisan hackery posing
as good government. Far from exiling big money from politics, McCain-Feingold's ban on "soft money" merely moved that cash away from political parties that could be held accountable for their sins and
into the shadow world of less accountable 527s and 501(c)4s, another IRS category used by interest groups. ...The solution here isn't to tilt at
the windmill of closing this or that "loophole," because there will always be another such loophole as long as there are money and politics. If
Republicans ban 527s, which at least have to disclose the names of their contributors, the money will move to 501(c)4s, which can keep their donors to themselves. If Republicans were smart and consistent, they'd
instead broadcast the failure of McCain-Feingold, exploit 527s themselves to level the playing field, and call for the entire campaign-finance system to be deregulated. This would allow unlimited
donations to candidates and parties as long as they are disclosed within 24 hours on the Internet. At least then the politicians would be publicly accountable for the financial company they keep.
Wednesday, April 5, 2006 ~ 8:09 a.m., Sven Larson Wrote: In most regions that have not done growth-management planning, long-term, inflation-adjusted housing prices grow at only about 1 percent
per year. But prices almost invariably start growing much faster soon after regions begin growth-management planning. In 1959 and 1969, almost every metropolitan area outside of Hawaii had affordable
housing. Cities in California and the New York metropolitan area began experimenting with growth-management planning in the early 1970s, and
by 1979 these cities were unaffordable. As more cities and regions began such planning, they too became unaffordable: the Boston area in the 1980s, the Denver area in the 1990s, and Florida cities in the early
2000s. Housing prices have dramatically increased in the past six or seven years, but this increase has not been uniform across the nation. In general, regions with growth-management planning have seen prices
increase by 4 to 14 percent per year. Regions without such planning have seen prices increase by only 1 to 3 percent per year. Factors other than
planning, such as a genuine shortage of private land available for development, appear to be responsible for high housing prices in only a handful of areas. In more than 110 metropolitan areas, higher home
prices are the penalty paid by people who live in regions that use smart-growth planning.
Wednesday, April 5, 2006 ~ 7:47 a.m., Dan Mitchell Wrote: ...will local children go on to do better in school, or grow up more employable and less likely to turn to crime? These are the grand claims
behind Sure Start, the government's flagship programme to provide child care, early-years education and parental support in the most deprived areas of England. ...Since Sure Start was launched in 1999, 524 local
programmes have opened, £3.1 billion ($5.4 billion) has been spent and untold quantities of playdough have been trampled into carpet tiles
across the land-with, sadly, not a lot to show for it. At least, that is the interim conclusion of a painstaking (and very expensive) government-commissioned evaluation being carried out by a team based
at the Institute for the Study of Children, Families & Social Issues at Birkbeck, University of London. Families in Sure Start areas seemed to
be only slightly better off than those who lived in similar areas where the programme wasn't yet up and running, and in only a very few ways: a
little less chaotic, with slightly more tolerant mothers and better-behaved children. Even more disturbingly, the benefits did not extend to the very worst-off families, where children's language development was
comparatively delayed.
Tuesday, April 4, 2006 ~ 8:52 a.m., Dan Mitchell Wrote: The first instalment of a withholding tax levied on the Swiss-held savings of European Union residents may not match expectations, a tax expert
told swissinfo. ...It was designed to stop people avoiding taxes in their resident country. But KPMG tax expert Roland Reding has seen evidence that much of the new tax has escaped through loopholes exploited by
banks. "I have seen [banking] provisions for this tax and I was always surprised the figures were so small. The payments to the EU may be far
below expectations," he told swissinfo. ...The new measures only apply to individual savings interest (not dividends) and bonds issued after March
2001, allowing account holders to manoeuvre assets into new financial products that are designed to avoid the narrow terms of the treaty.
Reding believes this activity will only increase when the tax rate rises to 20 per cent in 2008 and 35 per cent in 2011. "It is very easy to invest in
products or structures that are beyond the scope of withholding tax. You only have to click on the homepages of banks to see what these are," he said.
Tuesday, April 4, 2006 ~ 8:41 a.m., Dan Mitchell Wrote: The intentions of these acts and accounting rules are good. They are trying to make sure every company follows the same recipe of
accounting, auditing and reporting of things that go into their financial statements -- the statements that investors, including many institutional
investors and pension funds, rely upon to decide where to put their money. But the benefits protecting investors from fraud must outweigh the economic costs to business of complying with rules. After all, if the
costs outweigh the benefits it's the investors -- and the American economy " that suffers the losses. And right now, there's evidence the
reforms have gone too far. Take SOX, as Sarbanes Oxley is called. When passed, the Securities and Exchange Commission estimated it would take about five man hours per company to implement. But E. O'Brien Murray
of the Free Enterprise Fund quotes Financial Executives International as now estimating compliance at total $4.36 million per company. Instead of five hours, companies will have to spend some 26,000 hours
implementing the rules. ... A University of Rochester study put the lost opportunity and other economic costs at $1.4 trillion.
Tuesday, April 4, 2006 ~ 8:12 a.m., Dan Mitchell Wrote: ...the French protests appear to some of us as the Revolt of the Over- Privileged. For what these pampered young people are demanding seems
to be some kind of student deferment from the Global Economy. The striking public employees in Britain and the young in Paris are protesting
something unavoidable, like middle age. For what they see slipping away is something they are never going to see again. What is happening in Britain and France is happening across Europe: the unwinding of the
social welfare state. ...Since World War II, every country in Western Europe has been ruled for a time by socialists. These regimes put in place
laws that ensured job security, a living wage, a shorter workweek than in the United States, generous unemployment benefits, early retirement,
magnanimous pensions and state-subsidized health benefits. To finance these maternal welfare states, European regimes take 40 percent or even 50 percent of the economy in taxes, as compared with a U.S. federal,
state and local tax bite of 33 percent. But with globalization, European companies and workers who fund these munificent benefits are finding themselves in neo-Darwinian competition for survival, not only with
American, Japanese and East Europeans who work longer and harder, but Asians who work longer and harder for a fraction of their pay and few of their benefits. European companies are being stretched and
stressed, and some are breaking. The capitalist goose that laid the golden eggs for the Eurosocialists is aging, tiring and becoming ever more barren.
Tuesday, April 4, 2006 ~ 7:49 a.m., Sven Larson Wrote: The Dutch government has proposed to fully open the Dutch labour market to workers from the new member states from 1 January - but
parliamentary approval is uncertain. ...According to the proposal of the Dutch government, the borders will only open on 1 January next year,
not already on 1 May... The government will use the extra months to hammer out additional legislation designed to ensure that workers from
the east will work according to Dutch wage regulations and not on the black, a Dutch official told EUobserver.
Monday, April 3, 2006 ~ 12:12 p.m., Sven Larson Wrote: Medicaid, ...the largest single expenditure by state governments today...is on a course to consume the entire budgets of state governments in just a
few decades. ...there are ten times as many people on Medicaid as there are receiving welfare checks. Medicaid now costs American taxpayers
more than Medicare, or more than $1,000 per year for every man, woman and child in the country. The tax burden for both programs combined is more than $8,000 a year for the average family of four.
...New York's Medicaid program is especially costly. New York has less than 7 percent of the U.S. population, but spends about 14 percent of
the nation's Medicaid dollars. ...New York Medicaid spent about $2,165 for each state resident (more than any other state) and almost two- and-one-half times the national average.
Monday, April 3, 2006 ~ 8:19 a.m., Dan Mitchell Wrote: Getting high can be bad. Putting people in prison for it is worse. And doing the latter doesn't stop the former. I was once among the majority
who believe that drug use must be illegal. But then I noticed that when vice laws conflict with the law of supply and demand, the conflict is ugly,
and the law of supply and demand generally wins. The drug war costs taxpayers about $40 billion. ... Nearly 4,000 people are arrested every day for mere possession of drugs. That's more people than are arrested
for aggravated assault, burglary, vandalism, forcible rape and murder combined. ... some of the unintended consequences of drug prohibition: 1. More crime. Rarely do people get high and then run out to commit
crimes. Most "drug crime" happens because the product is illegal. ...2. More terrorism. The profits of the drug trade fund terrorists from
Afghanistan to Colombia. ...3. Richer criminal gangs. Alcohol prohibition created Al Capone. The gangs drug prohibition is creating are even richer, probably rich enough to buy nuclear weapons. ...Government's
declaring drugs illegal doesn't mean people can't get them. It just creates a black market, where even nastier things happen. That's why I have
come to think that although drug addiction is bad, the drug war is worse.
Sunday, April 2, 2006 ~ 3:31 p.m., Dan Mitchell Wrote: While the world's economy is booming at an average rate of over 4 percent, Europe is stagnating at just 1.5 percent. But even in the absence
of those challenges, it is likely to collapse under the combined weight of its massive public debt and its hidden liabilities, as a result of Europe's
pay-as-you-go public pension schemes. Unfunded pension liabilities now average some 285 percent of Europe's GDP, more than 4 times the
officially published public debt figures. Total public liabilities are causing runaway debt service. Referring to a study by Richard Disney, the
authors point out that if social policies are kept unchanged, tax hikes by as much as 5 to 15 percentage points will be necessary over the next
couple of decades... supporters of a sizeable role of the state in the economy continue to plead in favor of the Scandinavian model. But, as
the authors argue, Scandinavian policies have proved to be particularly inefficient. Scandinavia has gone through a long period of steady decline with poor growth and low job creation. In 1970, Sweden's level of
prosperity was one quarter above Belgium's. By 2003 Sweden's position in the prosperity index had fallen from number 5 to 14... Rather than taking them as an example, Europe's politicians should shun the
Scandinavian big-government recipes.
Sunday, April 2, 2006 ~ 2:23 p.m., Dan Mitchell Wrote: Mr. Corzine won the Trenton statehouse last year by running as a tax cutter who'd raise property tax rebates by 40% over four years. "I'm not
considering raising taxes. It's not on my agenda. We have a very high-rate tax structure. I'm not considering it," the then-U.S. Senator had vowed in October. Well, last week Governor Corzine removed the
Steve Forbes mask and submitted a record $30.9 billion budget that increases state spending by 9% and includes $1.5 billion in new levies. He
wants to raise the already high state sales tax by 16% and extend it to services; hike taxes on cigarettes, alcohol and expensive cars; and create
a new state water tax. And just so Garden State entrepreneurs don't feel left out, his budget would impose a corporate tax surcharge and a commercial property transfer tax. ... And what about his pledge to more
than double property tax rebates in a state where the average homeowner's tax bill has risen by $1,300 in the past four years? That's on ice for now, and perhaps until he's running for re-election. ... While
voters might feel misled by this 180-degree turn, Mr. Corzine is winning praise from fellow Democrats as a "straight shooter" brave enough to
make "hard choices." Former Governor Jim Florio said, "I think this is an intellectually honest budget." Senator Robert Menendez, who was
appointed to serve the remainder of Mr. Corzine's term, commended the Governor for submitting the "most honest, fiscally responsible budget in
years." These Democrats have an odd definition of truthfulness, but then Mr. Florio himself pushed through huge tax increases in the early 1990s
after saying he wouldn't. It cost him re-election, though that was when the New Jersey GOP still had a pulse.
Saturday, April 1, 2006 ~ 5:49 p.m., Sven Larson Wrote: Belgium, Germany and Hungary impose the highest taxes among OECD countries on the pay of a single person on average earnings, while Korea,
Mexico and New Zealand take the least, according to the latest edition of the OECD's annual publication Taxing Wages. For a single-earner married couple with two children on average earnings, by contrast,
Turkey, Sweden and Poland impose the biggest 'tax wedge', while Ireland, Iceland and the United States take the smallest slice in tax. Taxing Wages compares the shares of employee earnings taken by
governments in OECD countries through taxation by calculating what it calls the 'tax wedge', the difference between labour costs to the employer
and the net take-home pay of the employee, including any cash benefits from government welfare programmes. In 2005, single individuals without children earning the average wage in services and
manufacturing industries faced a tax wedge of 55.4% of the cost of their labour to their employers in Belgium, 51.8% in Germany and 50.5% in Hungary, compared with 17.3% in Korea, 18.2% in Mexico and 20.5% in
New Zealand. The average for OECD countries was 37.3%.
Saturday, April 1, 2006 ~ 1:15 p.m., Dan Mitchell Wrote: ...new data from the Australian Bureau of Statistics reminds us that growth in revenue continues to outpace growth in the economy as a
whole, leaving Mr Costello's Treasury awash with money to pay for reform and the Treasurer bereft of excuses for filibustering the case for tax reform. The Treasurer will no doubt seize on evidence from the
OECD's Taxing Wages publication that Australia continues to enjoy a relatively low overall burden of tax revenue as a share of gross domestic
product. ...But this is no cause for complacency for three reasons. ...most OECD members are European states whose crippling tax burdens - with
a few honourable exceptions - are putting Europe out of business. These are not examples for any country that wants to be able to win its way in
the 21st century battle for talent and capital - let alone one at the bottom of the world's most dynamic region - to follow. ...Australia's unique
combination of steeply progressive tax scales and strictly means-tested family assistance continues to inflict some of the worst effective marginal
tax rates in the OECD on middle-income families. A single parent of two children earning just two-thirds of average wages surrenders two-thirds of his or her marginal income to the government, compared with an
OECD average of 36 per cent; and a single-income family of four living on an average wage gives up 51.5 per cent, against 37 per cent across the OECD.
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