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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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Friday, June 30, 2006 ~ 8:50 a.m., Dan Mitchell Wrote: Russian Finance Minister Alexei Kudrin has dismissed a suggestion by the country's audit chief that Russia would benefit from a return to a tiered system of income tax whereby
higher incomes would be taxed at a higher rate - at least in the short term. Sergei Stepashin, the head of Russia's Audit Chamber told a conference last week that such a progressive system of income tax was
fairer, and would bring Russia into line with "global practice" where the more one earns, the more one pays in tax. Stepashin said this could be put in place by 2008/9. Finance Minister Kudrin
responded to the proposal by stating that a progressive tax scheme in Russia "would not work for long", and would be a retrograde step that inhibits economic growth. ...Such a step would also run
counter to the trend in Central and Eastern Europe, which has led the way in sweeping away complex tax systems in favour of simpler flat taxes to attract investment. Russia was one of the early flat tax
pioneers, putting in place its 13% flat income tax in 2001, but many other countries in the region have since gone further than Russia by pegging both personal and corporate income taxes together at one level.
In Russia, corporate tax is set at 24%.
Friday, June 30, 2006 ~ 7:56 a.m., Sven Larson Wrote: Tax expenditures worth hundreds of billions of dollars have helped create this increasingly dysfunctional insurance system. If we hope to
improve the system, we cannot simply add new subsidies on top of the existing structure. The open-ended tax exclusion has contributed to the moral hazard problem of insurance that leads to excessive
coverage and excessive use of services. The tax subsidy coupled with employer contributions disguises the true cost of health insurance, causing workers to buy more coverage than they might otherwise.
...Redirecting current tax expenditures could promote the purchase of insurance and encourage more efficient use of health services, but any reform risks upsetting the insurance arrangements of millions of
workers. Capping the exclusion to finance tax credits for those most in need is a conceptually straightforward approach that could only be accepted if those with higher incomes were prepared to pay more for
their own health insurance. The right tax reform recognizes that political reality and balances the need for institutional improvements in health insurance with the need to maintain some stability in the
insurance market. Such a reform is essential if we hope to resolve the larger problems of the health sector.
Friday, June 30, 2006 ~ 7:12 a.m., Dan Mitchell Wrote: The recent House of Lords decision found that Andre Agassi is liable to pay UK tax on all sponsorship income accrued at the British
tournament. This extra-territorial taxation, which will threaten many foreign stars with higher tax rates, may discourage them from competing in the UK claims Miles Dean, managing director of IFS.
The impact of such a talent drain would be disastrous, effectively relegating Wimbledon from its position as the "jewel in the crown" of
the international tennis circuit to a niche tournament for UK based players and rising stars, says Mr Dean. He explains: "The Lords' decision to give the Revenue carte blanche to assess the tax due on
sponsorship payments made from one non-UK company to another - in respect of UK based activity such as Wimbledon - could backfire massively if it deters the best in international sporting talent from
performing in the UK." "On the face of it, the Revenue could make millions from this judgement. However, as the principles of this landmark ruling are applied to other international sports stars and
entertainers performing in UK it will ultimately prove to be very counter productive, seriously damaging the UK's reputation as a destination for top sporting and entertainment events.
Thursday, June 29, 2006 ~ 9:00 a.m., Dan Mitchell Wrote: ...not all insurgencies are bad. It is hardly surprising that infamous regimes such as those in Syria, Cuba, Rwanda, Vietnam, Zimbabwe,
and Sierra Leone support these regulations. Yet, banning guns to rebels in totalitarian countries is like arguing that there is never anything such as a just war. In hindsight, would Europeans really
have preferred that no resistance was put up as Hitler rolled across Europe? Should the French or Norwegian resistance movements simply have given up? Surely this would have minimized war
causalities. Many countries already ban private gun ownership. Rwanda and Sierra Leone are two notable examples. Yet, with more than a million people hacked to death in those countries over seven
years, were their citizens better off without guns? ...There is a second reason to reject a ban on small arms. Even in free countries, where
there is little risk of a totalitarian regime, gun bans all but invariably result in higher crime. In the U.S., the states with the highest gun ownership rates have by far the lowest violent crime rates. And
similarly, over time, states with the largest increases in gun ownership have experienced the biggest drops in violent crime. Research by Jeff Miron, now at Harvard, in which he examined
homicide rates across 44 countries, found that countries with the strictest gun control laws also tended to have the highest homicide rates. ...Bans haven't even work in totalitarian countries, even after
having been in place for decades. The former USSR banned private ownership of guns after the Communist revolution and still had much higher murder rates than the U.S. The USSR's murder rates during its
last 15 years, from 1976 to 1991, were between 21 and 48 percent higher than ours. Did eliminating access to weapons fail simply because the USSR wasn't totalitarian enough? So why the perverse
effects? We all want to take guns from criminals, but regulations that primarily disarm law-abiding citizens, not criminals, can actually make crime more likely to occur.
Thursday, June 29, 2006 ~ 8:26 a.m., Sven Larson Wrote: The U.S. and Arizona constitutions require government to compensate property owners whenever it seizes their land. However,
government often passes laws and regulations that depress property values or completely prevent the use of private property, essentially taking the property without explicitly taking title to it. In these
instances, loopholes in judicial interpretation of the constitution often allow government to escape having to compensate property owners. These "regulatory takings" became so severe in Oregon that, in
2004, voters overwhelmingly approved a law called Measure 37, which required the government to pay people whenever it conscripted their land for public purposes, even if it did not seize the title
outright. This law followed an earlier attempt, called Measure 7, which, despite overwhelming popular approval, was deemed unconstitutional in 2002 by the Oregon Supreme Court. But in
February 2006, the court upheld Measure 37, leading many defenders of private property rights to hope that similar reform might be possible to protect home and business owners in other states. In this
report, Timothy Sandefur, author of the forthcoming book Cornerstone of Liberty: Property Rights in 21st Century America (Cato Institute), examines whether a regulatory takings law could be enacted in Arizona.
Wednesday, June 28, 2006 ~ 8:34 a.m., Dan Mitchell Wrote: To be competitive in the global marketplace, US tax policy needs to focus on offering tax treatment that is comparable, if not more
favourable, than that which is offered by other nations competing for investments, according to Craig Barrett, Chairman of Intel, the semiconductor manufacturer. ...Barrett...noted other countries with
considerable tax advantages, including: Ireland, with its 12.5% corporate tax rate and a 20% research tax credit... By comparison, the US has a 35% corporate tax rate, few investment incentives, and
relatively uneconomic and uncompetitive depreciation treatment, the Intel chief told lawmakers. ...According to Barrett, a critical issue that Intel considers when deciding where to locate a new wafer
fabrication plant is that it costs $1 billion dollars more to build, equip, and operate a factory in the US than it does outside the US - the largest portion of which is attributable to taxes. ...Barrett argued
that there are several potential solutions to close the gap in tax competitiveness between the US and the rest of the world. These include a corporate rate reduction, an investment tax credit (ITC),
full expensing of a factory in year one (or expensing plus a write-off of an additional percentage above and beyond the facility's cost), or a combination of these items. Link to this Blog Entry
Wednesday, June 28, 2006 ~ 8:17 a.m., Sven Larson Wrote: In order to fix Medicaid, policy makers need to understand what's wrong with the existing system. In one sense its problems are simple.
The checks and balances of a traditional marketplace are absent. In real markets, buyers spend their own money and act in their own interest, seeking to purchase the best quality goods and services they
can find at the best prices they can obtain. Likewise, sellers acting in their own interests market their products/services at the highest possible price. Furthermore, because reducing their cost of
production increases their profit/income, they have an incentive to continually innovate and become more efficient.
Wednesday, June 28, 2006 ~ 8:00 a.m., Dan Mitchell Wrote: When the Arizona legislature concludes its 2006 session in a few days, it will set a record for school-choice legislation by enacting four new
or expanded programs allowing disadvantaged children to attend private schools. Even more remarkable: The programs were enacted in a state with a Democratic governor. Yet Arizona is not an
aberration. Already in 2006, a new Iowa corporate scholarship tax credit bill was signed into law by Gov. Tom Vilsack; and in Wisconsin, Gov. Jim Doyle signed a bill increasing the Milwaukee
voucher program by 50%. Gov. Ed Rendell may expand Pennsylvania's corporate scholarship tax credit program, as he did last year. Messrs. Vilsack, Doyle and Rendell are all Democrats. ...
Once the Rubicon is crossed and legislators vote to adopt a school choice program--no matter how small or targeted--it becomes easier to support a new one, or expand the old one, the next time around.
Hence, of the seven new school choice programs enacted last year, six were in states that already had school choice. The seventh was a program for disadvantaged children in Utah, which was expanded
this year. ... Another factor inducing a more supportive or tolerant attitude toward school choice among Democrats is that they are running out of viable alternatives. The U.S. Department of Education
reported recently that three million children are attending chronically failing schools--that is, schools that have failed to satisfy minimal state standards for at least six consecutive years.
Tuesday, June 27, 2006 ~ 1:02 p.m., Sven Larson Wrote: [The] UN views itself as the emerging global government, and like all governments, it needs money to operate. The goal, which the UN
readily admits, is to impose a comprehensive set of global laws on all of us- laws that supersede sovereign national governments. To do this, the UN needs a global military, a global police force,
international courts, offices around the globe, and plenty of highly-paid international bureaucrats. All of this costs money. Rest assured that the UN is absolutely serious about imposing a global
tax. In fact, it has been discussing a global currency tax for years. The "Tobin tax," named after the Yale professor who proposed it,
would be imposed on all worldwide currency transactions. Such a tax could prove quite lucrative for the UN. The Tobin tax is not the only idea being considered. Some have suggested taxing all airline travel
or carbon emissions. The ultimate goal is an income tax, which will be imposed after we've all swallowed the concept of UN taxing authority. Fortunately, the House of Representatives last week passed
my language in the 2007 Foreign Operations bill that prohibits the Treasury from paying UN dues if the organization attempts to implement or impose any kind of tax on US citizens. But that only
protects us for another year. Given the stated goals of the UN, it would be foolish to believe the idea of a global tax will go away. Link to this Blog Entry
Tuesday, June 27, 2006 ~ 8:57 a.m., Dan Mitchell Wrote: Voters are still being misled and government is still taxing and spending on the false assumptions that $1 spent on a bridge-to-nowhere costs $1 in tax revenue, and that $1 in
government tax revenue costs the private economy only $1. In fact, the cost to the private sector of providing the government an additional $1 in tax revenue is about $2.50, and in some
circumstances much more. Even academics on the left now acknowledge that taxes adversely affect economic performance and, therefore, when taxes go up, it is not just the private sector's
after-tax income that goes down; its pre-tax income suffers as well. Thus, when the question is, "How much does it cost the private sector
to provide government with another $1 in tax revenue?", the answer is $1 plus the amount by which people's incomes in the future are smaller than they otherwise would be, but for the negative effects
that the tax increase has on economic growth. Link to this Blog Entry
Tuesday, June 27, 2006 ~ 7:33 a.m., Dan Mitchell Wrote: New figures released on Thursday have revealed that the EU is falling far short of reaching its emissions targets under the
international climate change treaty, the Kyoto Protocol. Instead greenhouse gas pollution rose for the second year in a row, according to the Copenhagen-based European Environment Agency. ...Spain
and Italy were the biggest green sinners with the largest emission increases having plus 19.7 (4.8 %) and 5.1 (0.9 %) million tonnes respectively.
Monday, June 26, 2006 ~ 4:49 p.m., Sven Larson Wrote: Laurence Parisot, president of Medef, France's main employers' association, warned on Wednesday that the "acceleration of crises"
in the country over the past year and the current political turmoil was damaging the economy. In a television interview, Ms Parisot said that rejection of the European constitutional treaty in last year's
referendum, the outbreak of widespread rioting in urban ghettos in October, and the mass protests against the government's youth labour law this spring had unsettled French business. "Over the past
year we have seen a succession, an acceleration of crises, which is very worrying for the stability of our country, for economic growth," she said. ...Ms Parisot also criticised the government's indecisive
meddling in the corporate restructuring that is currently sweeping the eurozone's second biggest economy. "The state cannot be a player, the state cannot be the one capable of deciding everything, or
knowing how to do everything when it comes to management and the economy. Eric Chaney, Europe economist at Morgan Stanley, said: "In a rapidly changing world where France has to catch up with its
peers in terms of reforms, a weak and paralysed cabinet is the last thing we need."
Monday, June 26, 2006 ~ 8:51 a.m., Dan Mitchell Wrote: In the world of financial exchanges, the pace of globalization has been measured by the number of stock market listings that have been
lost to overseas competitors in places like London and Hong Kong. As CNBC commentator Jim Cramer recently pointed out, 23 of the 24 firms recently looking to raise more than a billion dollars in
capital chose to list overseas rather than in the U.S. For Chinese companies looking to raise billions of dollars from global investors, Hong Kong -- not New York -- is now the preferred venue. ... U.S.
financial markets are finally realizing that globalization can be an opportunity, and not just a threat. In this globalized world, the winners will be those that embrace financial innovation and create
less onerous regulatory regimes for investors. Link to this Blog Entry
Monday, June 26, 2006 ~ 8:44 a.m., Dan Mitchell Wrote: A recent Associated Press headline was, "Current Account Trade Deficit Posts Unexpectedly Large Improvement." It fell by 6.5
percent. But why assume that was an improvement? After all, the current account deficit "improved" during every recession, and even moved into surplus during the worst recessions of 1975 and 1980-81.
... One of the most persistent myths about semi-free trade or globalization is the idea that countries with trade deficits must be losing manufacturing jobs to countries that run trade surpluses.
Japan and Germany have run chronic trade surpluses for many years, particularly in manufactured goods, making it easy to find out if this theory works. From 1992 to 2005, according to the Bureau of
Labor Statistics, the number of manufacturing jobs fell by 16.3 percent in the United States, from 20.1 million to 16.3 million. But the number of manufacturing jobs fell by 24.1 percent in Germany
(from 10.7 million to 8.1 million) and by 27.2 percent in Japan (from 15.7 million to 11.4 million). Chronic trade surpluses were a sign of capital flight, not industrial might. Since 1992, industrial production
has increased 11.5 percent in Japan, 18.9 percent in Germany and 59.7 percent in the United States. People in Japan and Germany sold goods to the United States in order to get the dollars they must have
to invest in the stronger U.S. economy.
Monday, June 26, 2006 ~ 8:13 a.m., Dan Mitchell Wrote: Much of the world's media portrayed the victory of the socialist party SMER in the Slovak elections on Saturday as the voters' rejection of
the free market reforms pursued by the current center-right government. ...The truth is more complicated. First, the election turnout was only 54.67 percent. In contrast, it was 70.07 percent in
2002. It is true that SMER increased its support from 13.46 percent in 2002 to 29.14 percent this year, but the low turnout means that SMER had its program endorsed by about 14 percent of the eligible
voters - not exactly a ringing endorsement of a return to socialism. ... the three parties of the center right can count on 65 seats in the Slovak parliament of 150 seats. They will be 11 seats short of a
majority but powerful enough to be a strong opposition, or form a part of the next government. The socialists will have 50 seats. They will thus be 26 seats short of a majority in parliament. ... The upshot
of the election is that under the Slovak voting system, elections don't conclude the process of political horse-trading. They begin that process. True, Fico will get the first crack at forming a government,
but that does not mean much. In 1998 and 2002, Meciar won the elections, but could not form the government. Instead, it was the second largest party in parliament that formed the government. In
both cases, that party was Mikulas Dzurinda's party. Will history repeat itself? One can only hope.
Sunday, June 25, 2006 ~ 5:13 p.m., Dan Mitchell Wrote: ... many developed countries continue to milk their citizens -- both as taxpayers and consumers -- to prop up uncompetitive but coddled
farmers. The headline figure is the $280 billion, or EUR225 billion, that wealthy nations handed out to farmers in 2005. The, ahem, honor roll goes like this: The European Union spent the most on its
farmers last year, $133.8 billion. Next was Japan at $47.4 billion, and then the U.S. at $42.7 billion. Those three account for four-fifths of the rich world's agricultural subsidies. In relative terms
Switzerland, which is not an EU member, spent the most on its farmers: Subsidies made up a whopping 68% of its farm economy. The Swiss were followed by Iceland at 67% and Norway at 64%. EU
subsidies equaled 32% of the bloc's farm economy last year; in the U.S., the figure was 16%. ... farm liberalization shouldn't hinge on whether or how much other trade partners lower their barriers to
Western goods and services. The people of Europe, America, Japan and elsewhere would benefit from any move to free up agricultural trade, even a unilateral one.
Saturday, June 24, 2006 ~ 8:43 p.m., Dan Mitchell Wrote: Democrats in Congress unveiled their 2006 campaign agenda last week, laying claim to the mantle of "fiscal responsibility." The GOP's
spendthrifts have handed them this political opening, which makes it all the more disappointing that Democrats are falling back on an old
confidence trick. Their ruse goes by the name of "pay-as-you-go" budgeting, which has the political virtue of sounding as if spending
won't be able to exceed revenue. ... Paygo rules, to use the Beltway argot, were in place from 1990 until they expired in 2002, so we know how they work. And in practice all they really do is constrain
tax cuts, not new spending. That's because paygo rules apply only to new or expanded entitlement programs, not to those that already exist and grow automatically with user demand. Thus spending for
Medicare, growing this year at an astounding 15% annual rate, would continue to run on autopilot. Ditto for Medicaid. So-called "discretionary" programs (education, Defense) that Congress
approves each year are also exempt. Democrats somehow forget to disclose that those notorious "earmarks" stuffed into spending bills are also exempt from paygo.
Friday, June 23, 2006 ~ 7:37 a.m., Dan Mitchell Wrote: Last year, nine out of 10 black and Latino fourth-graders scored below proficiency in reading and math. Eighth-graders fared worse.
Just 8% of black eighth-graders are proficient readers, and 7% are proficient at math. For eighth-grade Latinos, the numbers are 9% and 6%, respectively. You might think that a Democratic mayor in a
Democratic city would garner plenty of establishment support for fixing a system so poorly serving members of a traditional Democratic constituency. Think again. In April, Mr. Villaraigosa
announced a school reform plan that calls for "more mayoral oversight for the purpose of ensuring accountability." His proposal has met nothing but denunciation from his fellow liberals. Currently,
public education in L.A. is controlled by an elected seven-member school board, which not only appoints the superintendent but also holds sway over everything from teachers contracts and budgets to
curriculum, collective bargaining and the hiring and firing of principals. Under Mr. Villaraigosa's proposal, these core duties would be turned over to the superintendent, who would answer primarily to
the mayor. This is unacceptable to the United Teachers of Los Angeles, the local union that currently controls the school board by fielding candidates and financing what are low-turnout elections. The
status quo is great for union power; it just doesn't do much for kids. But then again the unions long-ago put their own clout above education quality. ...the National Center for Education Statistics puts
per-pupil spending in the district at more than $10,000, which is above both the state average of $8,700 and the national average of $9,300.
Friday, June 23, 2006 ~ 6:15 a.m., Dan Mitchell Wrote: Tax Freedom Day arrived five days earlier in 2006 compared to last year as tax cuts filtered into the system, although Canadians must
still effectively work for almost half of the year before all of their tax liabilities are paid, according to the Fraser Institute, the free market
think tank. This year, Canadians started working for themselves on June 19th. Last year, it was June 24th and the latest that Tax Freedom Day has ever fallen in Canada was on June 25th, in 2000.
..."Although this year marks a reversal of the recent upward trend in taxation, Tax Freedom Day falls over a month and a half later than
it did 45 years ago," noted Niels Veldhuis, senior research economist at the Institute. ...According to the Institute, tax relief announced in
the 2006 federal budget has contributed to the decline. The reduction in the Goods and Services Tax (GST) from 7 percent to 6 percent accounted for one day of the five day decrease in Tax Freedom Day.
In addition, many provincial governments also reduced taxes in 2006. ...This year's study found that...the top 30 percent of income earners paying 65.9 percent of all taxes and earning 59.1 percent of all
income, while the bottom 30 percent of all income earners pay 4.7 percent of all taxes and earn 9.4 percent of all income.
Thursday, June 22, 2006 ~ 8:50 a.m., Dan Mitchell Wrote: High taxes and record budget increases are hardly foreign to overburdened New Jersey residents. In the past four fiscal years,
state leaders raised taxes by more than $3 billion and went on a spending splurge that left a $4 billion to $5 billion hole in the budget. ...a dreary history for New Jersey taxpayers. Over the last several
years they have endured a plague of tax and fee increases to drive record spending growth. Worse, even when revenues declined 23 percent from fiscal 2000 to 2002, spending zoomed by 21 percent.
...Corzine...campaigned as a fiscal conservative who would bring spiraling property taxes back in line and finally help struggling taxpayers. In 2005 he vowed, "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." ...Corzine [has proposed] a $1.8 billion "revenue enhancement" (including higher taxes on sales, real estate, and
tobacco) and bloat general-fund outlays by 9.2 percent, further handicapping the state's poor business environment. ...Corzine's package is the largest among the 11 governors proposing revenue
increases this year, even as twenty state executives are seeking (mostly modest) tax reductions while the remainder have no major changes on their agendas.
Thursday, June 22, 2006 ~ 8:17 a.m., Sven Larson Wrote: Facing mounting problems over its inability to deliver the A380 superjumbo plane on time, Airbus appears set to request state aid for
the development of a midsize jetliner in what some analysts described as a rescue package. A move toward development loans from governments for the midrange A350 jet would almost certainly
worsen a bitter trans-Atlantic dispute over the different forms of government support received by Airbus and its American rival, Boeing. European governments have been signaling that such aid
would be forthcoming, even as the United States trade negotiator warned last week that the move could lead to a full-scale battle at the World Trade Organization. ...In October, European governments
deferred a decision on subsidy payments for the A350 in a good-will gesture to Washington as talks to resolve the subsidy dispute got under way. But less than a month before ministers are to review the
freeze, ahead of the Farnborough air show in England on July 17, the talks still have not yielded an agreement on limiting government support, direct or indirect, to the world's two main aircraft makers.
Thursday, June 22, 2006 ~ 7:44 a.m., Dan Mitchell Wrote: Of the $6.3 billion that FEMA handed out, as much as $1.4 billion -- nearly a quarter of the total -- went to crooks and con artists.
According to the Government Accountability Office, FEMA paid millions of dollars to prison inmates, to people who listed cemeteries or post office boxes as their damaged homes, and for property that
its own inspectors reported was nonexistent. Some people collected thousands of dollars in rent assistance even though they were staying in hotels paid for by FEMA. One man ran up an $8,000 government
tab at the Pagoda Hotel in Honolulu, for example, yet was paid $2,358 to cover his rent for the same period. Debit cards issued by FEMA to cover emergency expenses, the GAO reported, were
frequently used for purchases "that did not appear to meet legitimate disaster needs." Like diamond jewelry. And fireworks. And season
tickets to the New Orleans Saints, a bottle of champagne at Hooters, $300 worth of "Girls Gone Wild" videos, and a Caribbean vacation. And that doesn't include the 381 debit cards, worth $762,000, that
FEMA simply -- lost. This is what comes of turning charity into a government function. It is what comes of believing that a centralized government agency can respond to a local disaster more effectively
than a multitude of private individuals acting on their own initiative and using their own judgment. It is what comes of letting politicians vow, as President Bush did after Katrina, to spend "whatever it
costs" on post-disaster relief and rebuilding. Presidents didn't always talk that way. When Congress in 1887 appropriated funds to buy seed for drought-stricken farmers in Texas, President Grover Cleveland
vetoed the bill. Nowhere did the Constitution authorize public expenditures for personal benevolence, he wrote in his veto message. "The friendliness and charity of our countrymen can always be relied
upon to relieve their fellow-citizens in misfortune. Federal aid in such cases encourages the expectation of paternal care on the part of the government and weakens the sturdiness of our national character."
Wednesday, June 21, 2006 ~ 11:49 a.m., Sven Larson Wrote: In the end, realization of the neoliberal tax ideology is leading inexorably to social disintegration with unforeseeable political
consequences. This is why, when we discuss tax policy in general and international taxes in particular, we are talking not only about money
but also about the possibility of (re)gaining policy space and political options. In a situation in which the scope and reach of national policy instruments is declining under the conditions imposed by
globalization, international taxes must be seen as having a major potential for use in regulating globalization. International taxation is an important approach to developing alternatives to the neoliberal
paradigm and at the same time an indispensable component of a post-neoliberal world order. Link to this Blog Entry
Wednesday, June 21, 2006 ~ 10:38 a.m., Sven Larson Wrote: Alabama was the first of twelve states that have passed legislation to prohibit state and local governments from using eminent domain to
take private property for economic development purposes. However, Alabama's new law created an exception that allows seizure of property that the state or local government considers "blighted."
This is a loophole that many believe can easily be exploited, particularly by local governments motivated to designate property as "blighted" if the property is more valuable for economic
development. An attempt to correct this problem with an amendment to the Alabama Constitution passed the House but died in the Senate during the last legislative session. At the federal level, last November
the U.S. House of Representatives passed The Private Property Rights Protection Act of 2005 by an overwhelming vote of 376 - 38. Despite the fact that polling indicates that anywhere from 90 to 97
percent of the public are opposed to taking private property for development purposes, the bill remains stalled in the Senate. Link to this Blog Entry
Wednesday, June 21, 2006 ~ 8:41 a.m., Dan Mitchell Wrote: Germany's Finance Minister Peer Steinbrueck has finalised plans for important corporate tax reforms which, if approved, will bring about
a substantial cut in one of the most onerous company tax burdens among developed nations. Under the proposals presented by Steinbrueck to Chancellor Angela Merkel, which have been leaked to
the German media, the headline rate of corporate tax paid by Germany's largest companies, currently set at 25%, will fall to a rate of between 12.5% and 16%. While Steinbrueck intends to leave the
local corporate tax system in place, which adds on average an additional 13% to a company's corporate tax bill, the aim is to bring the overall burden below 30%, thereby making Germany a much
more attractive country in which to locate a company. Currently, the combined corporate tax rate paid by big companies in Germany is almost 40% - one of the highest in the world.
Tuesday, June 20, 2006 ~ 1:23 p.m., Sven Larson Wrote: In general, tax reforms that increase the rewards from work can encourage labour force participation. However, for budgetary
reasons, general cuts in taxes on labour income need to be accompanied by increased taxes on goods and services or on other types of income, or by lowering public spending. Targeted tax cuts
for some under-represented groups, which are found to have a powerful effect on whether they work, can also be financed by imposing higher taxes on the income of other groups - in which case
stronger work incentives for some go hand-in-hand with less rewards for work effort for others. ...Macroeconomic policy should aim at price stability and sustainable public finances so as to keep interest
rates low and encourage investment and labour productivity, thus strengthening economic growth with potential beneficial effects on employment; where the state of government finances permits,
improvements in public finances may be used to reduce taxes or increase spending in areas that have the most beneficial impact on growth and employment. ...Unemployment benefit replacement rates
and duration, as well as social assistance benefits provided to individuals who can work, should be set at levels that do not discourage job search excessively and, especially where they are
relatively generous, be made conditional on strictly enforced work-availability criteria as part of well-designed "activation" measures; moderate benefit sanctions should be part of such an
activation strategy.
Tuesday, June 20, 2006 ~ 7:41 a.m., Dan Mitchell Wrote: [National Rifle Association President] LaPierre has been charting the U.N. gun-ban movement since the mid-1990s... The philosophy of
these groups, LaPierre said, is that the right to own a gun should be solely the right of governments, and they despise the fact that the United States remains a country in which private citizens can keep a
handgun at their bedsides. ... a disarmed people can do nothing when its armed government or militias turns on it. The U.N. has no response about what to do about that, LaPierre said, citing the Tutsis
in Rwanda, the people of Darfur, and the Muslims of Bosnia. "All they offer is a global socialist fantasy...If there were no guns, there would be no poverty, there would be no child hungry, there would be
no violence. It's the same global socialist fantasy we saw in the 20th century, " he said. "Under the U.N. gun-ban policy, they have no
solution for when the government goes bad; they have no answer for how to be liberated from a tyrant or a dictator; they have no answer for what oppressed people should do...Their whole philosophy is give
up your arms and your freedoms and we'll protect you." ... Though some Democrats have learned recently that it doesn't pay to be on the wrong side of the Second Amendment come election time, LaPierre
doesn't believe the American left is about to give up on gun control. The U.N. is just another vehicle for the same old policies, he said.
Tuesday, June 20, 2006 ~ 7:32 a.m., Dan Mitchell Wrote: Helsinki will work on raising tax on alcohol across the European bloc when Finland takes over the rotating EU presidency from Austria on
1 July, Finnish prime minister Matti Vanhanen has said. ... Earlier this month, the European Commission came out with an "Alcohol in Europe" report mapping out the health and economic impact of
alcohol in the 25-member union. ...One of the recommendations to curb the rising alcohol trend in Europe is to raise taxes.
Monday, June 19, 2006 ~ 8:55 a.m., Dan Mitchell Wrote: If we look at how well it serves its sick citizens, American medicine excels. Prostate cancer is a case in point. The mortality rate from
prostate cancer among American men is 19%. In contrast, mortality rates are somewhat higher in Canada (25%) and much higher in Europe (up to 57% in the U.K.). And comparisons in cardiac care --
such as the recent Heart and Stroke Foundation of Canada study on post-heart-attack quality of life -- find that American patients fare far better in morbidity. Say what you want about the problems of
American health care: For those stricken with serious disease, there's no better place to be than in the U.S. Socialized health-care systems fall short in these critical cases because governments strictly ration
care in order to reduce the explosive growth of health spending. As a result, patients have less access to specialists, diagnostic equipment and pharmaceuticals. Economist David Henderson, who grew up in
Canada, once remarked that it has the best health-care system in the world -- if you have only a cold and you're willing to wait in your family doctor's office for three hours. But some patients have more
than a simple cold -- and the long waits they must endure before they get access to various diagnostic tests and medical procedures have been documented for years. Montreal businessman George Zeliotis,
for example, faced a year-long wait for a hip replacement. He sued and, as the co-plaintiff in a recent, landmark case, got the Supreme Court of Canada to strike down two major Quebec laws that banned
private health insurance.
Monday, June 19, 2006 ~ 8:43 a.m., Sven Larson Wrote: In 2005 the Census Bureau surveyed employees in metropolitan statistical areas (MSAs) to determine the numbers of workers covered
by collective bargaining agreements. The data was compiled for the total workforce and for public sector employees. The MSA union membership survey data was broken out into Right to Work (RTW)
state and non-Right to Work states. For the total workforce survey, 63 of the 253 MSAs in the U.S. had at least 500 respondents, enough to make reliable statistical inferences. Of the 63 MSAs, 35 are located
in non-Right to Work states while 28 are in Right to Work states. In the Pittsburgh MSA, 16 percent of all surveyed employees were covered by a union contract. The 35 non-RTW metro areas have an
average unionized workforce of 16 percent while the RTW states have an average unionized workforce of 8 percent. The difference in job growth over the last five years is striking. The RTW metro areas
grew 6 percent while the non-RTW metro areas managed to eke out a mere 0.7 percent gain, with Pittsburgh posting a 0.9 percent decline in jobs. Obviously, correlation of RTW with stronger job growth is
not absolute proof of causality but when combined with many other studies showing the same type of disparity, it is a potent argument in favor of Right to Work.
Monday, June 19, 2006 ~ 8:11 a.m., Dan Mitchell Wrote: Ethanol's problem is that it is expensive to make and provides far fewer miles per gallon than gasoline. So its supporters have worked
the political system to subsidize ethanol, and more recently to force Americans to buy it. U.S. taxpayers today pay twice for ethanol: once in crop subsidies to corn farmers and again in a 51-cent subsidy for
every gallon of ethanol. Without such a subsidy, ethanol simply wouldn't be cost competitive with gasoline. Then last year, Congress went further and passed a new ethanol mandate, requiring drivers to
use at least 7.5 billion gallons annually by 2012. The immediate consequence of this new mandate was higher gasoline prices this spring, since the ethanol industry was ill-equipped to meet the new
demand. Ethanol must also be carried by truck or rail, rather than through pipelines, and it requires special blending facilities. All this has both raised prices and created gas shortages around the country.
But rather than blame their new mandate for the higher prices, the Members of Congress blamed, of course, Big Oil. Ah, but what about the other alleged virtues of ethanol? One favorite is that every gallon
of ethanol will supplant a gallon of gasoline imported from tyrannical Mideast oil regimes. ...Sorry. The most widely cited research on this subject comes from Cornell's David Pimental and Berkeley's Ted
Patzek. They've found that it takes more than a gallon of fossil fuel to make one gallon of ethanol--29% more. That's because it takes enormous amounts of fossil-fuel energy to grow corn (using fertilizer
and irrigation), to transport the crops and then to turn that corn into ethanol. The Saudis ought to love the stuff.
Sunday, June 18, 2006 ~ 1:04 p.m., Dan Mitchell Wrote: Whether it's pushing through the biggest tax increase in Germany's postwar history (including a three-percentage-point VAT hike) or
introducing red tape rather than cutting it (viz. a costly anti-discrimination law), the coalition of Christian Democrats and Social Democrats almost manages to make one feel nostalgic for the
previous Red-Green government. At least back then, there were no false hopes. ... [A] bone of contention is how to repair welfare reforms adopted by the previous government and get the long-term
unemployed back to work, even if at a lower pay grades than their previous jobs. A number of loopholes have allowed the jobless to get around the welfare laws, costing the government billions in
unexpected handouts. The governors called for a wholesale reform of the reform, whereas the Merkel government agreed to address just some of the problems. ... The government is obsessed with reducing
the budget deficit, hence the tax hikes, rather than in looking for ways to make it easier for companies to hire workers and grow their business. The next big reform is supposed to address Germany's
exploding health care costs. While the two parties still disagree on how to overhaul the mandatory health insurance system, they already agree on one thing: It will cost taxpayers more money.
Sunday, June 18, 2006 ~ 10:44 a.m., Sven Larson Wrote: Anders Fogh Rasmussen, the Danish liberal prime minister, has unveiled an ambitious proposal for the world's two biggest economies
to form a free trade zone. During a visit to the US, where he addressed the Berkeley, University of California, Mr Fogh Rasmussen suggested the creation of a "transatlantic marketplace without
barriers to trade and investment." "Let us not forget that the EU and the United States are responsible for two fifths of world trade. We
are each other's largest trading and investment partners," Mr Fogh Rasmussen said in the speech focussed on globalisation. As much as 85 per cent of US global investments in professional, scientific and
technical services are placed in the EU, he noted. "Globalization is a fact and we have to embrace it by going on the offensive both nationally and through international cooperation."
Saturday, June 17, 2006 ~ 6:54 p.m., Dan Mitchell Wrote: ...the FDA doesn't have the authority to require restaurants to label the number of calories, set portion sizes on menus or prohibit
allowing customers from taking home a doggie bag. That's for right now, but recall that cigarette warning labels were the anti-tobacco zealots' first steps. There are zealots like the Washington-based
Center for Science in the Public Interest who've for a long time attacked Chinese and Mexican restaurants for serving customers too much food. They also say, "Caffeine is the only drug that is widely
added to the food supply." They've called for caffeine warning labels, and they don't stop there. The Center's director said, "We could envision taxes on butter, potato chips, whole milk, cheeses and
meat." Visions of higher taxes are music to politicians' ears. How many Americans would like to go to a restaurant and have the waiter tell you, based on calories, what you might have for dinner? How
would you like the waiter to tell you, "According to government regulations, we cannot give you a doggie bag"? What about a Burger King cashier refusing to sell french fries to overweight people? You
say, "Williams, that's preposterous! It would never come to that." I'm betting that would have been the same response during the 1970s had
someone said the day would come when cities, such as Calabasas, Calif., and Friendship Heights, Md., would write ordinances banning outdoor smoking. Tyrants always start out with small measures that
appear reasonable.
Saturday, June 17, 2006 ~ 2:19 p.m., Dan Mitchell Wrote: ...chancellor Wolfgang Schussel, believes a pan-European referendum could be the way to revive the stranded EU constitution. In an
interview with Germany's Bild am Sonntag, Mr Schussel said "I can well imagine a referendum that takes place simultaneously in all EU states. The constitution would be accepted if the majority of the
European population and the majority of states approves it." ...The leaders of France and Germany at an informal bilateral meeting near Berlin last week (6 June) agreed that the constitution should be
tackled in the first half of next year, when Germany is running the EU for six months. "We have agreed that the constitutional treaty will be reviewed during the German presidency, after a period of
reflection," said German chancellor Angela Merkel after the meeting.
Friday, June 16, 2006 ~ 8:49 a.m., Dan Mitchell Wrote: A House of Representatives (http://search.breitbart.com/q?s=%22House Houston divorce lawyer Mark Lipkin says he can't recall anyone paying for his services with a FEMA debit card, but congressional
investigators say one of his clients did just that. The $1,000 payment was just one example cited in an audit that concluded that up to $1.4 billion - perhaps as much as 16 percent of the billions of dollars in
assistance expended after Hurricanes Katrina and Rita - was spent for bogus reasons. The Federal Emergency Management Agency also was hoodwinked to pay for season football tickets, a tropical
vacation and a sex change operation, the audit found. Prison inmates, a supposed victim who used a New Orleans cemetery for a home address and a person who spent 70 days at a Hawaiian hotel all
were able to get taxpayer help, according to evidence that gives a new black eye to the nation's disaster relief agency. ...The investigative agency said it found people lodged in hotels often were
paid twice, since FEMA gave them individual rental assistance and paid hotels directly. FEMA paid California hotels $8,000 to house one individual - the same person who received three rental assistance
payments for both disasters. In another instance, FEMA paid an individual $2,358 in rental assistance, while at the same time paying about $8,000 for the same person to stay 70 nights at more than
$100 per night in a Hawaii hotel. ...FEMA paid millions of dollars to more than 1,000 registrants who used names and Social Security numbers belonging to state and federal prisoners for expedited
housing assistance. The inmates were in Louisiana, Texas, Alabama, Mississippi, Georgia and Florida. FEMA made about $5.3 million in payments to registrants who provided a post office box as their
damaged residence, including one who got $2,748 for listing an Alabama post office box as the damaged property. The GAO told of an individual who used 13 different Social Security numbers -
including the person's own - to receive $139,000 in payments on 13 separate registrations for aid. All the payments were sent to a single address.
Friday, June 16, 2006 ~ 8:36 a.m., Dan Mitchell Wrote: Sweden's unemployment rate is 15 per cent, three times the figure being used by the government, according to new research from
McKinsey Global Institute, the think tank. The consultancy's calculations indicate unemployment is set to rise further, with between 100,000 and 200,000 jobs outsourced to cheaper countries
over the next 10 years if no corrective action is taken. The numbers cast a pall over Sweden's international reputation as a thriving welfare state with low unemployment and will help focus attention on
jobs ahead of September's national elections. ... The ageing population would put the public sector under "intolerable pressure"
unless productivity improved, it added. "If nothing else changes, the resulting increase in welfare costs would become too large to finance
through the current tax system in only 10 to 20 years," McKinsey said. It forecast municipal income tax rates would have to rise from about 30 per cent to about 50 per cent, arguing that these rises would
not be accepted by the public as welfare and health services would decline. Free-market capitalism and the welfare state, particularly one where the labor market is as highly regulated as it is in Sweden, are
incompatible - an inconvenient truth, as it were, that we might one day have to relearn the hard way. Funding the welfare state is a massive strain on a free economy. Entitlements and the
administrative bureaucracy to manage it must be paid for. The only way to do that, aside from printing more currency, is to tax and tax again the wealth-, prosperity-creating private sector. That's a recipe
for stagnation, not growth. Sweden's slope became most slippery from 1960 to 1980, when public spending increased from 31% of the economy to 60% in order to keep the Swedes rolling in the
government payments they have become dependent on and to fund the bloated public sector. That was deadly to the private sector and contributed to an economic erosion, the effects of which are still
being felt. Once thought to be the promised land, Sweden today ranks about equal with the fifth-poorest U.S. state in per capita income. Likewise, among the wealthy nations that make up the OECD, it
slipped from fifth in income in 1970 to 15th in 2004. ...The rot is alarming, not only for Sweden, but also for the U.S. If it's not careful, the U.S. will take the same well-trod path to stagnation as Sweden.
That's especially true if it doesn't rein its growth in entitlement spending, bureaucracy and regulations. Sweden is seen as the proverbial "third way", combining the openness and wealth creation of capitalism with the redistribution
and safety nets of socialism. It is the best of both worlds. But things in Sweden are not as good as the advocates would like to believe. Long the paragon of social democracy, the Swedish model is rotting from
within. ... Sweden's economic success story began in the late 19th century, after a fundamental political shift towards free markets and free trade. Swedish traders could export iron, steel and timber, and
entrepreneurs created innovative industrial companies that became world leaders. Between 1860 and 1910, real wages for factory workers rose by about 25 percent per decade, and public spending in
Sweden didn't surpass 10 percent of GDP. ... as late as 1950 the total tax burden was no more than 21 percent of GDP, lower than in the United States and Western Europe. ... These policies, and the fact
that Sweden stayed out of two world wars, meant that the economy yielded amazing results. Sweden was rich: In 1970 it had the fourth-highest per-capita income in the world, according to OECD
statistics. But at this stage the Social Democrats began to radicalize... Social assistance was expanded and the labor market became heavily regulated. Public spending almost doubled between 1960 and 1980,
rising from 31 percent to 60 percent of GDP. This was also the time when the model began to run into problems. From 1975 to 2000, while per-capita income grew by 72 percent in the United States and
64 percent in Western Europe, Sweden's grew by no more than 43 percent. By 2000, Sweden had fallen to 14th in the OECD's ranking of per-capita income. If Sweden were a state in the United States, it
would now be the fifth poorest. ... Swedes are healthier than almost any other people in the world, but they are also out sick more often than any other people, according to available data. In 2004, sickness
benefits absorbed 16 percent of the government budget, while health absenteeism has doubled since 1998. With a sickness benefit of up to 80 percent of a recipient's income (depending on his or her wage
level), it is not surprising that there is an epidemic of absenteeism. Moreover, about 10 percent of the working-age population has retired with disability benefits. A researcher at the main trade union,
LO, recently left his job when he was not allowed to publish his estimate that close to 20 percent of Swedes are unemployed, either openly or hidden in labor-market projects, long-term sick-leave and
early retirement. ... The Swedish model has survived for decades, but the truth is that its success was built on the legacy of an earlier model: the period of economic growth and development preceding
the adoption of the socialist system. ... The system of high taxes and generous welfare benefits worked for so long because the tradition of self-reliance was so strong. But mentalities have a tendency of
changing when incentives change. The growth of taxes and benefits punished hard work and encouraged absenteeism. Immigrants and younger generations of Swedes have faced distorted incentives and
have not developed the work ethic that was nurtured before the effects of the welfare state began to erode them. When others cheat the system and get away with it, suddenly you are considered a fool if
you get up early every morning and work late. According to polls, about half of all Swedes now think it is acceptable to call in sick for reasons other than sickness. Almost half think that they can do it
when someone in the family is not feeling well, and almost as many think that they can do it if there is too much to do at work. Our ancestors worked even when they were sick. Today, we are "off sick"
even when we feel fine.
Friday, June 16, 2006 ~ 7:34 a.m., Sven Larson Wrote: Bolivian President Evo Morales said Monday that privately held mines that have not seen any investment should be returned to the
government. "We have the obligation to recuperate mines the government has licensed where there hasn't yet been one peso invested," said Morales without giving any details as to which mines
he was referring to. Morales, speaking to members of a mining union, said he has asked his economic advisers to prepare an executive order on the matter and asked the union for suggestions. On Sunday,
Morales said his leftist government would take control of a former state-owned tin smelting plant currently run by the Switzerland-based company Glencore International AG.
Thursday, June 15, 2006 ~ 8:59 a.m., Dan Mitchell Wrote: The negotiating teams of the Civic Democrats (ODS), the Christian Democrats (KDU-CSL) and the Greens (SZ) reached agreement on
some programme issues, such as the flat income tax, maintenance of two VAT levels and lowering of social insurance payments, the daily Hospodarske noviny writes today. ...The government policy statement
wants to replace the present four income tax levels by a single one, but it will not call it flat tax, which is the term the ODS election platform used. "We're discussing how to call this change. It is
important for us to maintain some progression and this can be done even with one tax rate," Greens head Martin Bursik told the paper. ...As for the pension reform, the KDU-CSL promotes the view that
people should save money through private accounts obligatorily, whereas the ODS and the Greens believe this should be done only voluntarily.
Thursday, June 15, 2006 ~ 8:52 a.m., Sven Larson Wrote: Europe's revamped fiscal rules have failed to force governments to start balancing their books leaving public finances exposed, it will be
claimed on Tuesday. Joaquin Almunia, EU monetary affairs commissioner, is due to say that finance ministries have not kept their promises under the new-look stability and growth pact to use the
good times to put their finances in order. One year after the pact was rewritten, Mr Almunia is to argue that the loosened fiscal code has worked better than expected in bringing the worst budgetary
offenders like Germany and France into line. But he will say that the revised pact has so far failed in a second key objective: forcing countries with moderate deficits to use the recovery to restore their
budgets to balance. In a report to be published on Tuesday, Mr Almunia will say. "On average the structural balance for the EU [in 2006] will not improve and for some member states will even
deteriorate, turning the fiscal stance expansionary and pro-cyclical. Mr Almunia and Jean-Claude Trichet, European Central Bank president, fear that a failure to consolidate finances now could leave
them in a very fragile state if Europe is hit by a downturn. They argue that balanced budgets are needed to prepare Europe for the costs of an ageing population and to pay for economic reforms.
Wednesday, June 14, 2006 ~ 12:16 p.m., Sven Larson Wrote: In an April 12 guest opinion piece for the state's largest newspaper, three state lawmakers argued for establishing "affordable and
effective health care" as a fundamental right for every Oregonian. But what Rep. Mitch Greenlick, D-Portland, gubernatorial candidate Sen. Ben Westlund, I-Tumalo, and Sen. Alan Bates, D-Ashland, are
really advocating is a new, massive entitlement program where the state government, the taxpayers, should somehow be made responsible to provide health care for all. Presumably these elected
officials chose to use the language of rights rather than entitlements because "rights" are popular while "entitlements" have earned a
negative reputation. Our rights define what we are free to do without interference. In the Declaration of Independence the founders list life,
liberty and the pursuit of happiness as among our inalienable rights. Notice that these rights are not goods or services, not housing or health care, not education or food. The right to life, for example,
does not mean that someone has to provide you with food and water; it means that you are free to work to earn your food and water and others may not steal them from you once you have them. ...The
founders understood that rights are intrinsic ("endowed by their Creator" was their phrase); they belong to the people and cannot be given or taken away by the government. The principle function of
government is to recognize and secure these rights, rights that are paid for by the lives and struggles of those who established and fought for our independence and freedom. Entitlements, on the other
hand, are obligations placed on one group of people to pay for benefits to another group.
Wednesday, June 14, 2006 ~ 8:36 a.m., Dan Mitchell Wrote: At least half of the popular fallacies about economics come from assuming that economic activity is a zero-sum game, in which what is
gained by someone is lost by someone else. But transactions would not continue unless both sides gained, whether in international trade, employment, or renting an apartment.
Wednesday, June 14, 2006 ~ 7:12 a.m., Dan Mitchell Wrote: The EU's richest landowners could face sweeping cuts in EU handouts with agriculture commissioner Marian Fischer Boel set to
propose a ceiling on Common Agricultural Policy (CAP) payments to individual holdings. The move would hit, among others, the English royal family - one of the country's biggest landowners - with Queen
Elizabeth and Prince Charles receiving in 2003-2004 around £1 million (EUR1.5 million) in CAP subsidies. ...Any money taken away from large landowners would be diverted into "rural development"
funding, which is intended to help to "modernise" rural communities and increase employment off the land. ...figures by international NGO Oxfam show that the biggest French farming businesses pocket
the vast majority of EU agricultural subsidies. Oxfam research released late last year revealed that the top 15 percent of French farming companies consume 60 percent of the direct payments from
the EU's coffers.
Tuesday, June 13, 2006 ~ 8:58 a.m., Dan Mitchell Wrote: The Civic Democrats (ODS) will probably push through the flat tax in a possible future coalition government with the Christian Democrats
(KDU-CSL) and the Greens, the Aktualne.cz internet server writes today. ...KDU-CSL chairman Miroslav Kalousek told the server that the new coalition partners agree with the Civic Democratic Party on
taxes. "All the three parties want to lower direct taxes," he said. ...The ODS and the KDU-CSL agreed on the need to limit bureaucracy. Both parties plan to cancel the IT Ministry and reduce
the Regional Development Ministry.
Tuesday, June 13, 2006 ~ 8:20 a.m., Dan Mitchell Wrote: Dozens of major British companies are working on plans to move their headquarters overseas in an effort to escape Chancellor Gordon
Brown's war on tax avoidance. Senior partners from all the 'big four' accountancy firms have told Financial Mail that they are working with large corporations to shift their base offshore... one of the
biggest insurers at Lloyd's of London, has struck a deal with the Revenue to transfer its base to Bermuda, a move that could mean a substantial boost to profits. ...Already, rival Catlin has moved to the
offshore tax haven and pays only 11% of profits in tax compared with nearly 30% for Hiscox - though a 'lighter touch' regulatory regime is believed to have played a key part in the decision to move
abroad. Ireland and the Netherlands, which has introduced tax incentives to lure big business, are other destinations attracting the attention of British company bosses.
Monday, June 12, 2006 ~ 8:52 a.m., Dan Mitchell Wrote: ...since 1992 there's been a loss of 391 million jobs; however, during those years, America created 411 million new jobs, for a net gain of
20 million. A Dartmouth University Tuck School of Business study found that companies that send jobs abroad ended up hiring twice as many workers at home. Most new jobs created are higher-paid. The
Bureau of Labor Statistics reports that two-thirds of the 30 fastest-growing occupations require high-skilled workers such as environmental engineers, software engineers, and service jobs in
education and health care. As to the gripe about the loss of manufacturing jobs, I wonder how many textile workers ever wished to themselves, "I hope my little girl grows up to be a sewing machine
operator"? I'm guessing their wish is their little girl becomes a nurse, a teacher or an accountant, all service jobs.
Monday, June 12, 2006 ~ 8:25 a.m., Dan Mitchell Wrote: Americans favor repealing the death tax not because they think it will help them directly. They're more principled than that. Two-thirds of
the public wants to repeal it because they think taxing a lifetime of thrift due to the accident of death is unfair, and even immoral. They also understand that the really rich won't pay the tax anyway because
they hire lawyers to avoid it. For proof that they're right, they need only watch the current debate. The superrich or their kin--such as Bill Gates Sr. and Warren Buffett--are some of the loudest voices
opposing repeal. Yet they are able to shelter their own vast wealth by creating foundations or via other crafty estate planning. Edward McCaffery, an estate tax expert at USC Law School, argues that "if
breaking up large concentrations of wealth is the intention of the death tax, then it is a miserable failure." Do the Kennedys or Rockefellers look any poorer from the existence of a tax first created
in 1917? The real people who pay the levy are the thrifty middle class and entrepreneurs who've built up a modest nest egg or business and are hit by a 46% tax rate when they die. Americans want family
businesses, ranches, farms and other assets to be passed from one generation to the next. Yet the U.S. has one of the highest death tax rates in the world. By far the largest supporter of preserving the
death tax is the life insurance lobby, which could lose billions of dollars from policies written to avoid the tax. . . . special credit belongs to four Democratic Senators who voted against repeal yesterday after they'd run for office pledging the
opposite. They are Evan Bayh of Indiana, who perhaps had in mind Democratic Presidential primary voters, not the home folks who elected him; Mary Landrieu of Louisiana; Mark Pryor of Arkansas;
and Ron Wyden of Oregon. These flip-floppers voted not only to retain the tax but to increase it -- from zero in 2010 back to 55% in 2011 and forever after.
Monday, June 12, 2006 ~ 8:00 a.m., Sven Larson Wrote: The IMF representative said there was no easy way to reduce Latvia's high domestic demand and its effect on the economy, since,
as a member of the EU and the Exchange Rate Mechanism II, Latvia's monetary policy instruments are limited. But there is still hope, she added. If the government postponed its planned personal
income tax cut, Latvia could possibly reduce its high domestic demand. The IMF has suggested that Latvia introduce a personal income tax from money gained in real estate transactions, since
people are currently being encouraged to invest, which fuels mortgage lending.
Monday, June 12, 2006 ~ 7:08 a.m., Dan Mitchell Wrote: State voters rejected a $2.4 billion ballot initiative that would have taxed the rich to pay for preschool, but Hollywood director Rob
Reiner pledged to keep pushing for early education as part of much-needed school reform. ...With 90 percent of statewide precincts reporting, the measure had the support of just 39 percent of voters.
Proposition 81, a $600 million library improvement bond, also failed. With most precincts reporting, the ballot initiative was backed by 47 percent of voters. The preschool initiative would have imposed a 1.7
percent tax increase on individual incomes over $400,000 and couples' incomes exceeding $800,000.
Sunday, June 11, 2006 ~ 5:55 p.m., Dan Mitchell Wrote: In 1990 a group of gang members pulled a Seattle man from his bicycle and beat him. He used his legally-registered handgun to shoot
one of the assailants and stop the attack. In 2002 a West Seattle woman shot an intruder who had broken into her home and was beating her roommate. In 2003 an elderly Tacoma man confined to
his bed shot an intruder who had kicked in his door and attacked him. In 2004 a Spokane woman awoke one morning to discover an intruder in her house, whom she held at gunpoint until the police
arrived. In all of these cases, if it were not for the legal use of guns in self-defense, the victims would likely be dead. ...In 1997 Britain banned handguns, and between 1998 and 2003 gun crimes doubled.
According the British Home Office, between 1997 and 2001 homicides increased by 19% and violent crime increased by 26%, while in the U.S. those same crimes fell by 12%. Between 2000 and
2001, robbery increased by 28% in Britain but only 4% in the U.S. Domestic burglary increased by 7% in Britain, but only 3% in the U.S. In 1996 Australia enacted sweeping gun control laws. In the six
years following, violent crime rates rose by 32%. Canada isn't faring well under its stringent gun control laws. Today Canada's violent crime rate is more than double that of the U.S. The fact that during
this time right-to-carry laws were expanding in the U.S. makes these statistics all the more telling. Now 40 states issue permits for individuals to carry guns. Violent crime rates are steadily declining in
the U.S. Research-and common sense-show the "right-to-carry" by honest citizens deters crimes against persons and property. ...There was a federal assault weapons ban in place from 1994 to 2004. The
Bureau of Alcohol, Tobacco, and Firearms says the ban did not reduce crime nationally. Criminals who wanted to obtain such weapons found easy ways to get them in spite of the ban. Moreover,
law enforcement research shows these guns are used in only about 1% of violent crimes. The National Institute of Justice found in the 1980s and again in 1997 that only 2% of criminal guns come from
gun shows. A report by Handgun Control, Inc., (hardly a friend of gun rights) found only two of 48 big-city police chiefs said guns bought at shows were a major problem in their cities. Research shows
at least 2.5 million protective uses of guns each year in the U.S. Guns are used about three to five times as often for defensive purposes as for criminal purposes. Most often the mere sight of a gun prevents a
crime from occurring or getting worse.
Sunday, June 11, 2006 ~ 3:11 p.m., Sven Larson Wrote: A proposal likely to appear on the November ballot would change Michigan law to mandate annual inflationary education expenditures.
But the results of government education spending over the last several decades have shown little that would lead us to think simply spending more would improve schools. In large part, this is because
schools generally operate without significant institutional incentives for producing improved results. Consider this: In what service sector have inputs more than doubled over three decades, while outputs
have remained stagnant? If you answered, "Public education," go to the head of the class. In both Michigan and the nation at large, the
amount spent per student in public education has more than doubled since 1970, even after inflation is factored out. Compare that doubling of expenditure to students' performance on the federally
administered National Assessment of Educational Progress. The most recent average reading and mathematics scores on that test are virtually identical to the scores in the early 1970s.
Saturday, June 10, 2006 ~ 6:22 p.m., Sven Larson Wrote: As regards fiscal consolidation, relying to a relatively large extent on revenue increases raises important issues. Consolidation driven by
expenditure cuts (including the abolishment of distorting tax expenditures) tends to be more durable and favourable to growth. The increase in VAT, however, should be placed in the specific
context of German consolidation which started some years ago with strong emphasis on expenditure control, in association with cuts in direct taxation that increased the structural deficit. Hence, it will be
crucial to pursue a credible consolidation strategy via public sector reform, designed to generate positive confidence effects.
Friday, June 9, 2006 ~ 11:41 a.m., Sven Larson Wrote: Zero-based budgeting attempts to bring some accountability to government and is useful in telling taxpayers and their elected
officials what the government agencies do and where they spend their money. But what it does not do is tell taxpayers how well agencies do their job or how well they spend their resources. That is the fatal
fundamental flaw in assuming that zero-based budgeting as a stand-alone program will work. For example, in the first year of required zero based budgeting those of us who sat through
appropriation hearings listening to the Oklahoma Department of Human Services (DHS) discuss their increases in child support collections were no doubt impressed with the program. Forcing
deadbeat dads to help pay their children's expenses is something everyone supports, and the fact that more money is available for needy children certainly justifies the program. What zero-based
budgeting didn't require DHS to report was that if Oklahoma's efficiency at collecting on these deadbeats would have merely matched the 50-state average, DHS would have collected 44 percent
more for Oklahoma children. ...If it is portrayed in Ohio that zero-based budgeting contributes to reining in government spending, it should be noted that Oklahoma state appropriations rose by nearly
20 percent and $1 billion dollars in the three years since inception.
Friday, June 9, 2006 ~ 9:19 a.m., Sven Larson Wrote: Lawmakers recently added an amendment to business tax legislation requiring employers with more than 100,000 employees (only
Wal-Mart qualifies) to report the number of employees who are either themselves or their families receiving benefits under Medicaid or the Texas Children's Health Insurance Program (CHIP). It is a
predictable first step: embarrass employers who do not provide health insurance to their employees. Texas is following the lead of states like Maryland, which requires employers with more than
10,000 people to spend at least 8 percent of payroll on health care. Of course, lawmakers there already show interest in expanding the requirement to other smaller employers. The vaunted,
recently-adopted Massachusetts plan features an employer penalty in that state of almost $300 per employee without health insurance. And a bill passed by a committee in the Colorado Senate (though since
amended) would have required employers with 500 or more employees and their dependents on Medicaid to disclose how much they spend on health care. In reality, lawmakers are desperate for
relief from soaring Medicaid costs and increasing caseloads. Pinning the blame on an employer is easier than accepting responsibility for government's role in increasing Medicaid rolls through the
incremental expansion of the program and bad regulatory policies governing the private market. Texas employers should not be fooled into thinking this is only about Wal-Mart, or assume they will be
immune to such requirements. In fact, many policymakers would gladly require employers to provide employees' coverage if it would take the heat off lawmakers to address Medicaid, CHIP and other
systemic health care problems - or at least create a distraction for the public.
Thursday, June 8, 2006 ~ 8:48 a.m., Dan Mitchell Wrote: Kinder Morgan unveiled the largest management-led buyout in history this week, with top executives proposing a $13.5 billion deal
that would make the oil and gas pipeline company a closely held firm. Let's hope this event isn't lost on Congress, whose regulatory fervor is one reason many companies are fleeing the U.S. public capital
markets. ...Private equity is booming, and sweeping up U.S. business in the process. Fifteen years ago, a handful of private-equity firms managed a few billion; today, more than 250 firms control some
$800 billion in capital. Buyouts magazine, which tracks private-equity deals, estimates that nearly $175 billion in new money flowed into U.S.-based private-equity firms last year alone, including giants such
as Blackstone, KKR and the Carlyle Group. ...At least part of the strength of private equity is a direct result of the problems besetting
public markets. Public-to-private deals are in fact lengthy and costly and can lead to unpleasantness with shareholders--often via lawsuits. The fact that so many companies have nonetheless been willing to
take the plunge speaks volumes about how eager they are to escape the increasing burdens of public-company regulation. Sarbanes-Oxley has been the last straw for some, with its auditing and reporting
requirements imposing major new costs, especially on smaller companies. This has already played a part in the remarkable slowdown in U.S. initial public offerings. Today's largest IPOs are
taking place mainly on foreign markets, away from the reach of U.S. regulators. ...191 public companies--worth $146 billion in deal value--have gone private since June 30, 2002, shortly before Sarbox
went into effect. ...All things being equal, it shouldn't matter whether corporations are choosing private or public equity; the more choice,
the better. But it's troubling that the current trend is being driven as much by regulatory excess as market opportunity.
Thursday, June 8, 2006 ~ 8:00 a.m., Dan Mitchell Wrote: Those who remember Frank Keating from his Oklahoma City days might be surprised that he could be the man to save the estate tax.
He was a conservative governor of a conservative state. ...Keating as governor was no fan of the estate tax. "I believe death taxes are un-American," Keating wrote in the Spring 2002 newsletter of
Americans for Tax Reform. "They are rooted in the failed collectivist schemes of the past and have no place in a society that values entrepreneurship, work, saving, and families. I commend President
Bush for putting us on course to end the federal Death Tax. We intend to do the same in Oklahoma." But the Frank Keating walking the halls of Congress these days is a different man, who seems to
have "grown" since coming to Washington after his term ended in Oklahoma City. ...The former Oklahoma governor now heads the American Council of Life Insurers <http://www.acli.com/ACLI/About+ACLI+nonmember/Frank+Keati ng%27s+Biography.htm> (ACLI), and is a registered lobbyist for
them on tax issues, including the death tax. ... ACLI wants the estate tax preserved. Aside from Keating's personal populist and intestinal views on the tax, life insurers have a clear financial interest in
preserving the estate tax. Life insurance done right is a prime form of estate planning, as are annuities-two products sold by the companies which pay Keating's salary. Both products would become far less
appealing if Uncle Sam weren't threatening to tax a hefty portion of your estate upon your demise. ...conservatives are fighting against Met Life and Prudential. Alongside the insurers is Warren Buffett,
who gets to frame his support of the death tax as a philanthropic concern while getting bargains on family-owned companies such as the Buffalo News and Dairy Queen that sell at bargain prices thanks
to the death tax. Buffet's Berkshire Hathaway is also in the insurance business. This week there will be a battle for the hearts of Republican senators. On one side are the conservatives who will try to hold the
GOP to their promises to abolish this tax President Bush has derided for years as unfair. On the other side will be big business, which sees in the death tax, as in so many cases, just how big government and
higher taxes can serve its purposes.
Thursday, June 8, 2006 ~ 7:37 a.m., Sven Larson Wrote: With the appointment of his "Start Strong Pre-K Council," Governor Tim Kaine has ramped up his campaign for universal pre-school, in
which all Virginians would subsidize preschool for the children of millionaires and low-income parents alike. The price tag is $300 million per year. ...the argument in favor of universal preschool is on
extraordinarily weak ground. Nearly every study cited by his "Smart Beginnings" campaign looked exclusively at the effect of pre-school
on low-income, at-risk student populations. In some cases, nearly 20 percent of the mothers had been arrested. Huge numbers were unmarried teen-age mothers, or involved children deemed at risk for
"retarded intellectual functioning." For example, a study of the Perry Preschool Project concluded that taxpayers got a return on
investment of $7.16 for every dollar spent. But all of the children had IQs in the range of 70 to 85. Children had to have a parent at home
during the day. The study looked at only 123 children. And in more than 40 years, no other study has produced similar results. Will the
General Assembly really spend $300 million a year on the basis of one study of 123 extremely low-income children?
Wednesday, June 7, 2006 ~ 12:07 p.m., Sven Larson Wrote: In the face of strong pressure from the European Commission, six European phone companies have said they will cut costs for roaming
fees when consumers use their mobile abroad. Germany's T-Mobile, Orange in the UK, Italy's Wind, Telecom Italia, Norway's Telenor along with Sweden's TeleSonera all agreed on Thursday (1 June) to
cap wholesale rates. Combined these companies have around 200 million mobile customers in Europe. The move is the latest effort by mobile firms to appease Brussels after the commission signalled its
intention to force down "excessive" charges with regulation that could by next summer entirely eliminate charges for receiving a call in another EU country. ...However, Brussels is expected to regulate
anyway with [Commission spokesman] Mr Selmayer quoted by Marketnews as saying "This shows that there is a lot of flexibility in the roaming market for further price reductions". The commission's
"intention is therefore to make this happen with a regulation", he added.
Wednesday, June 7, 2006 ~ 8:30 p.m., Dan Mitchell Wrote: As a thought experiment, what do you think would happen in America if we were to take the wealthiest 20 percent of our
population and exile them -- er, us. As part of this exile, we would have to leave all our physical possessions and financial assets behind. Suppose that the 50 million of us are given a country of our own with
enough space but no other tangible resources. If you really believe the Class Oppression view, then you would think that without the 50 million hoarder-oppressors, everyone else would be better off, and in
their new country the hoarder-oppressors would be in poverty. Instead, my guess is that in twenty years, American poverty would be worse. Meanwhile, in their new country, the hoarder-oppressors
would be debating the problem of illegal immigration from other countries, including America. Something resembling this thought-experiment has been occasionally tried with ethnic Chinese
in parts of Asia or Jews in various countries. I believe that the lesson is that expelling wealthy groups tends to leave others worse off, not better off. ...If the tendency of government were to expand on its
successes and cut back on its failures, then I probably would not remain a libertarian. Imagine politicians saying, "Gosh, the GI bill worked, but for the children who need it most, public schools fail. So
let's make K-12 education more like the GI bill, and switch from government-provided schools to vouchers." Unfortunately, that thought-experiment has no basis in reality. Instead, politicians have
been captured by the teachers' unions. ...Government programs persist not because they help to alleviate social problems but because they develop political constituencies. Thus, we have a food stamp
program, when the number one nutritional problem among the poor appears to be obesity. I am not saying that I don't think that poor people need help obtaining food. But a program that was focused on
poor people rather than as an indirect way to aid the farming constituency would probably operate rather differently than our existing food stamp program.
Wednesday, June 7, 2006 ~ 8:16 p.m., Dan Mitchell Wrote: Letitia Hoadley White arrived on Capitol Hill 25 years ago as a 22-year-old receptionist with a bachelor's degree in fashion design,
fresh from a job at Women's Wear Daily. ...When she left the Hill three years ago, she quickly became K Street's queen of earmarks, as those provisions are known, landing tens of millions of federal dollars
lobbying for her clients. ...While working for Mr. Lewis, Ms. White helped direct several hundred million dollars in contracts to clients of Mr. Lowery's firm. The firm and its clients, meanwhile, accounted for
more than a third of the $1.3 million Mr. Lewis's political action committee has raised since 2000. ...an analysis by Keith Ashdown of Taxpayers for Common Sense, which tracks such expenditures,
identified earmarks in the current fiscal year benefiting more than two-thirds of Ms. White's 53 clients. The earmarks have financed projects like machine cognition research in Florida and ammunition
manufacturing in Kansas. Their value is more than $230 million. ...Ms. White's success at securing such earmarks has enabled her to earn some of the highest fees on K Street, the lobbyists' corridor. In
2003, the year she left Mr. Lewis's office, her clients reported paying her fees totaling $850,000, according to lobbyist disclosure forms filed with Congress. And in 2005, her fees had grown to more than
$3.5 million, according to the forms.
Tuesday, June 6, 2006 ~ 8:53 a.m., Dan Mitchell Wrote: One of the most telling examples of the social destructiveness of the left's welfare-state vision can be found among the white slum
dwellers in Britain described in the brilliant and insightful book "Life at the Bottom" by Theodore Dalrymple. There it is not possible to
blame social degeneracy on slavery, racism or any of the other things cited as causes of the behavior and consequences found among blacks in American slums. Yet the results are virtually identical, right
down to children beating up classmates for trying to get an education. The vision of the left, full of envy and resentment, takes its worst toll on those at the bottom -- whether black or white -- who
find in that paranoid vision an excuse for counterproductive and ultimately self-destructive attitudes and behavior.
Tuesday, June 6, 2006 ~ 8:44 a.m., Dan Mitchell Wrote: Taxpayers who gripe about long returns have nothing on General Electric Co., which filed a 24,000-page tax return this month. ...If GE
had sent paper forms, the return would have stacked up eight feet high. Instead, it took up 237 megabytes. ...GE's senior tax counsel said it cost between $500,000 and $1 million to develop a system for
electronic filing.
Tuesday, June 6, 2006 ~ 7:11 a.m., Dan Mitchell Wrote: The House Appropriations Committee, under scrutiny in influence-peddling investigations, is a revolving door for staff
members who later go to work as lobbyists trying to influence their former bosses. At least 46 former appropriations aides registered as lobbyists after leaving their congressional jobs since 1998, according
to records compiled by the Center for Public Integrity, a Washington-based watchdog group. That compared with 36 for the House Ways and Means Committee and 34 for the House Energy and
Commerce panel. Appropriations Committee members ``get to decide where tens of billions of dollars go, and they get to decide where that money goes, in many cases, in secret,'' said David Sirota, former
spokesman for Democrats on the appropriations panel and author of a book about the influence of corporate money on Congress.
Monday, June 5, 2006 ~ 11:17 a.m., Sven Larson Wrote: Seeking to expand students' horizons, one Colorado school district has unveiled a creative plan to enlist the services of "real world"
specialists who don't have the time to acquire a teaching license. Leaders of the Douglas County School District two weeks ago announced to the Colorado State Board of Education their intention
to request waivers from the state's teacher licensure requirements. ...the district wants to hire nontraditional "real world" teachers, including community members highly skilled in engineering and
foreign exchange instructors who can offer more languages to students. However, most of these busy professionals do not have the time or interest to wade through the lengthy process and paperwork
to become licensed. Colorado's charter schools by law can easily request the State Board to waive licensure requirements so they can find more teachers with specific content knowledge and experience.
Larger school districts, such as Douglas County, need a majority of affected teachers, administrators, and accountability committee members to sign on to a request before receiving waivers. ...[The]
Denver Post reported that officials in the state's largest teachers union are against Douglas County's innovative proposal. While the Colorado Education Association (CEA) does not represent Douglas
County teachers, it represents teachers in a majority of large districts and frequently lobbies the State Board. ...licensure does not guarantee the content knowledge or intellectual abilities needed to
provide the best instruction.
Monday, June 5, 2006 ~ 10:05 a.m., Yesim Yilmaz Wrote: Today, Wal-Mart said it was considering introducing corn-based ethanol engine fuel in its 383 filling stations in the United States. The
fuel's advantage is that it comes from a renewable source, unlike gasoline made from crude oil. But it's 85 percent ethanol, and not many car models can burn it. You'd only buy such a car if you knew
you'd be able to fill up anywhere you might be. Right now, though, filling stations are adopting ethanol a few at a time, so you don't have that assurance...Wal-Mart can solve the problem, precisely
because of the ubiquity that is so often maligned as a death-knell for smaller stores. If Wal-Mart starts supplying the corn-based fuel all over the country, people will have that assurance of availability.
They'll buy the cars and come to Wal-Mart to fill up.
Sunday, June 4, 2006 ~ 3:11 p.m., Yesim Yilmaz Wrote: At the moment, many politicos and media elites are telling us the world's nations must spend quite literally trillions of dollars to stop
global warming. But the scientists who study such things cannot get their models to agree on whether the present warming is temporary, and part of the normal climatic variability, or something
fundamentally different. There has been very little serious research to see if benefits of global warming, such as more rainfall, longer growing seasons, healthier climates and extended outdoor sports, will
outweigh the costs. Could this possibly be because if global warming were found to be beneficial, there would be no need for political action and a transfer of wealth and liberty to the governing class?
...The data show, from 1940 until 1975, the world was getting cooler, and there were many articles about the coming ice age, including one on the cover of Newsweek. ...Nobody, including Al Gore, knows the
optimum global warming, and what we should do about it, if anything, because the data and models cannot provide those answers.
Saturday, June 3, 2006 ~ 1:24 p.m., Dan Mitchell Wrote: Slovakia was getting ready to catch up with other countries under Prime Minister Mikulas Dzurinda. On the staff of Ivan Miklos, the
finance minister, in 2004, Bruncko helped introduce the famous 19 percent flat tax. He was there when the country's major industries were privatized, when the health and pension systems were reformed.
Job protection measures -- laws making it difficult for employers to sack their employees at short notice -- were eliminated overnight by Miklos and his staff. Bratislava has transformed... Only ten years
ago, the capital city was as gray as socialism itself. Now boutiques, pizzerias, sushi parlors and cocktail bars crowd the renovated city center. There is full employment here. The country may have come to
capitalism late, but it has become a model country in record time -- an Ireland of the East. Experts are predicting six percent economic growth for this year; unemployment has fallen from 18 to 11 percent
during the past three years. Foreign corporations, especially those in the automobile industry, are waiting in line to invest. Kia, Volkswagen and Peugeot Citroen are all profiting from low...taxes
and rejoicing over investment assistance. People are already talking of a "Detroit of Europe."
Friday, June 2, 2006 ~ 12:09 p.m., Sven Larson Wrote: Various state legislators and interest groups around the United States are pushing for increases in the minimum wage. In California, for
example, even Republican Gov. Arnold Schwarzenegger now advocates raising the state minimum wage from its current $6.75 an hour to $7.75 by July 2007. But when the minimum wage law
confronts the law of demand, the law of demand wins every time. And the real losers are the most marginal workers - the ones who will be out of a job. ...The law of demand says that at a higher price, less
is demanded, and it applies to grapefruit, cars, movie tickets and, yes, labor. Because a legislated increase in the price of labor does not increase workers' productivity, some workers will lose their jobs.
Which ones? Those who are the least productive. Minimum wage laws mostly harm teenagers and young adults because they typically have little work experience and take jobs that require fewer skills.
That's why economists looking for the effect of the minimum wage on employment don't look at data on educated 45-year-old men; rather, they focus on teenagers and young adults, especially black teenagers.
Friday, June 2, 2006 ~ 8:36 a.m., Dan Mitchell Wrote: If there's any conspiracy involved in today's high gasoline prices, it's a conspiracy of cowardice and stupidity by the U.S. Congress.
Opening a tiny portion of the coastal plain of the Arctic National Wildlife Refuge in Alaska to oil and gas production, according to the U.S. Geological Survey's mean estimate, would increase our proven
domestic oil reserves by approximately 50 percent. The Pacific, Atlantic and eastern Gulf of Mexico offshore areas have enormous reserves of oil and natural gas, but like the Alaska reserves, they
have been put off limits by Congress. Plus, the U.S. Office of Naval Petroleum and Oil Shale Reserves estimates the world supply of oil shale at 1.6 trillion barrels, of which 1.2 trillion barrels are in the
United States. Because of costly regulations and political restrictions, U.S. nuclear energy production is a fraction of what it might be. Nuclear power creates 75 percent of France's electricity, nearly 50
percent of Sweden's and only 20 percent of ours. Nuclear energy is very safe. That's something to keep in mind when we hear of tragic deaths of coal miners. There would be fewer mining deaths if we used
less coal and more nuclear power for electricity generation.
Friday, June 2, 2006 ~ 7:28 a.m., Dan Mitchell Wrote: A European Parliamentary working group is considering a proposal by Alain Lamassoure, member of the centre-right European People's
Party, to introduce a tax on SMS text messages and emails as an alternative source of revenue for the European Union's budget. Under Lamassoure's proposal, a tax of about 1.5 cents would be
levied on text messages, and a 0.00001 cent levy on every e-mail sent. ...Earlier in the month, the working group on the 'future financial resources of the Union' reached a "broad agreement" that
there is a need for the existing own-resources system which funds the European Union's budget to be replaced by a scheme more understandable to the public, possibly a new tax. Support for an EU
tax to fund the bloc's budget has been growing since the eventual agreement between member states on the current seven-year budget last December exposed the system's obvious flaws; at present, the EU
budget is funded through a combination of import duties, value added tax revenues and direct contributions from member states - the so-called "Gross National Income resource" which is calculated
according to wealth. Parliamentarians have been suggesting a variety of sources from which the EU budget could be funded, including corporate profits and flight levies.
Thursday, June 1, 2006 ~ 8:59 a.m., Dan Mitchell Wrote: In an effort to raise revenues, tax writers in Congress added a last-minute provision that retroactively increased taxes for
Americans living abroad. But the sudden imposition of new taxes has surprised overseas taxpayers, and it has employers concerned about the added cost. ...The change, which is retroactive to the beginning of
2006, is expected to raise taxes on Americans abroad by $2.1 billion over the next 10 years. ...While the move will have limited effect on Americans living in countries with high tax rates - European
countries, for example - those living in low tax jurisdictions with high housing costs - like Bermuda, the Middle East, Singapore and Hong Kong - will be hit hardest, partners at two major accounting firms
said. Over all, the bill raises taxes on overseas Americans by about 6 percent, but most individuals will pay nothing more, while others will see their taxes quadruple. For Kristine Kraabel, a gift shop owner in
Singapore, and her husband, who is now the regional human resources director there for an American company, the new legislation will more than triple their American tax bill. Their tax
adviser calculates that they will owe $20,000 to $25,000 more in United States taxes, up from $5,000 last year, even as they pay $20,000 in Singapore taxes.
Thursday, June 1, 2006 ~ 8:51 a.m., Dan Mitchell Wrote: What is fair, for example, about telling someone that he will be unable to distribute his hard-earned money, which has already been
taxed once, to his heirs as he sees fit? Such a person has zero incentive to accept an estate tax for which he sees no justification. He will do his best to try to avoid this tax through every legal means
necessary, after which he may be inclined to consume more than he otherwise would, or just quit working sooner than otherwise. And while there's nothing wrong with consuming one's assets, if such
consumption comes at the expense of capital that would otherwise be put to better use, such consumption is suboptimal. Recent empirical work on the disincentive effects of estate taxes has proven these
phenomena true. And that gets to our first point about the supposed budgetary benefits of such a tax. Since an estate tax is really just another name for a tax on capital income, then there is certainly no
justification for such a tax. I, and others, have written before in these pages about the inefficiency of capital income taxes, and there's no need to revive those arguments here, except to say that we can only
grip the neck of our vibrant economic goose so tightly before it eventually dies and quits laying those golden eggs.
Thursday, June 1, 2006 ~ 8:07 a.m., Sven Larson Wrote: One of the reasons Massachusetts feels compelled to address the high cost of health insurance is that the state has some of the highest
premiums in the country - largely as a result of its own doing. In 1996, Massachusetts implemented numerous market killing reforms including: A standardized benefit plan for HMOs, PPOs, and
indemnity plans in the individual market; Guaranteed issue and modified community rating in the small group and individual markets; A bureaucratic rate review process. The result of the 1996
reforms was predictable: approximately 20 health insurers stopped marketing plans in Massachusetts. Others didn't leave but stopped underwriting individual policies. The reforms led to higher insurance
rates for everyone. The 2000 Medical Expenditure Survey showed that small groups in Massachusetts face the highest family health insurance rates in the nation. Individuals purchasing insurance in the
individual (i.e., non-group) market fared no better. According to the 2004 eHealthInsurance report, "The Most Affordable Cities for Family Health Insurance," Boston is the least affordable city for
family coverage in the nation. And a 2005 eHealthInsurance report comparing single coverage found Boston came in next to last. The problem looks even worse when you compare plans across state lines.
Again turning to the online brokerage service eHealthInsurance, a Blue Cross PPO policy for a family of four (parents both age 35) with a $250 deductible in Lacrosse, Wisconsin - recently named the highest
health care cost region in the nation by the U.S. Government Accountability Office - costs $618 per month. Comparable coverage in Boston ($250 deductible for 35-year-old parents of a family of
four) costs $1,438. So it isn't surprising that Gov. Romney wanted to do something. The problem is that neither he nor the Legislature has learned anything from a decade of bad health insurance reforms.
Thursday, June 1, 2006 ~ 7:53 a.m., Dan Mitchell Wrote: What is clear after four years experience with the Act is that the costs have been far higher than anyone expected. Worse yet, ...those costs
have been born disproportionately by small publicly held corporations. ...Since SOX became law, our economy and capital markets have suffered from higher compliance costs in several ways:
The number of companies going private (so-called "going dark") has increased dramatically, with many firms citing SOX compliance costs as a principal reason for choosing to do so. A growing number of
firms choosing to rely on retained earnings or private equity rather than raising money by going public via an IPO. Pre-SOX, 9 out of the ten largest IPOs had a US component; in the last year, 9 out of the
10 largest were entirely foreign.
Thursday, June 1, 2006 ~ 7:30 a.m., Sven Larson Wrote: EU ministers have given the green light to a controversial law to open up Europe's services sector, despite a last-minute attempt by
new member states to push through some pro-market measures. ...[Most] of "new" member states - with the support of Luxembourg and the Netherlands - tried hard to break away from the limits set by
the parliament and push through some last-minute modifications to allow more liberalisation of the sector. Apart from a set of technical and legal details, they wanted to delete a provision stating that
member states can protect their national sectors from foreign services providers where it is crucial for public policy, healthcare and environment protection. |
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