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The views expressed by Andrew Quinlan and Dan Mitchell on this weblog are solely their own and are not necessarily those of their employers, The Center for Freedom and Prosperity Foundation and The Cato Institute, respectively. |
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The Market Center Blog |
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Observations and insights on the global fight |
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CF&P's Market Center Blog Archives |
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Saturday, June 30, 2007 ~ 3:11 p.m., Dan Mitchell Wrote: Warren Buffett, perhaps the most successful investors of modern times and one of the world's wealthiest men, has spoken out against the US tax system which allows him to pay
proportionately less of his multi-million dollar annual income in taxes than his cleaning lady. Addressing attendees at the $4,600-a-place fund-raising dinner for the Hilary Clinton presidential campaign,
Buffett, who runs investment group Berkshire Hathaway and is reputedly worth $52 billion, told the 600 Wall Street bankers and money managers that: "(We) pay a lower part of our income in taxes than our
receptionists do, or our cleaning ladies, for that matter. If you're in the luckiest 1 per cent of humanity, you owe it to the rest of humanity to think about the other 99 per cent." According to Buffett,
he makes no use of tax shelters to mitigate his tax liability, but still managed to pay an average tax rate of 17.7% on his $46 million income last year. By comparison, his secretary, who earned $60,000, paid
tax at 30%.
Friday, June 29, 2007 ~ 5:26 p.m., Dan Mitchell Wrote: The Fairness Doctrine was codified in 1949 when the Federal Communications Commission required broadcasters to present
controversial issues in a fair and balanced manner. The effect was that broadcasters avoided political discussions, lest they court government
fines and perhaps the loss of a federal license. The doctrine was finally thrown out by the FCC in the 1980s after it had become widely recognized as a muzzle on political debate. One result was that talk
radio began to flourish, led by Rush Limbaugh. Radio airwaves aren't ideological, but conservatives tend to dominate the talk genre. Perhaps this is because conservative listeners have few other broadcast media
outlets, or perhaps their leading radio lights are simply better. Liberal talkers have tried to compete but have mostly flopped, led by Al Franken and Air America. This seems to frustrate Democrats, whose
response is that if you can't join 'em, shut 'em up by restoring the Fairness Doctrine. California's Dianne Feinstein floated the idea on
"Fox News Sunday" this week. And Dick Durbin of Illinois said the doctrine needs to be reinstituted because "I have this old-fashioned idea
that when Americans hear both sides of the story, they're in a better position to decide." Both sides? Does he mean this in the way both sides
are presented on CNN, National Public Radio, PBS, the main broadcast networks, Hollywood, or nearly every major metropolitan newspaper in the U.S.? Does anyone honestly believe that liberals lack for outlets
across the breadth of American media?
Friday, June 29, 2007 ~ 5:03 a.m., Dan Mitchell Wrote: The new treaty signed in Brussels was a clear change in the constitutional relationship between Britain, the other states of Europe
and the central authority of the union. Any such change, Blair clearly undertook at the election two years ago, would be put in a referendum to the British people. He can squirm but he cannot pretend now that a
link between the new treaty and his previous pledge is "completely and utterly absurd". What was negotiated in Brussels was a new European
framework, not a housekeeping measure. It replicates the failed 2004 constitution for the foreseeable future. There is to be a single European president and, de facto, a foreign secretary, with the dignities and
authority to speak on Britain's behalf, make treaties, join the United Nations, carry a "legal personality" and have enforcement powers.
...Forty areas of regulatory authority are no longer subject to national veto and move to qualified majority voting, including transport, energy,
sport and a further range of industry regulation. The new treaty even dilutes the original purpose of the union by dropping from its mission, at
France's insistence, a commitment to "undistorted competition", a victory for the corporatist/protectionist Europe much favoured by the
Franco-German axis. ...Merkel renamed the constitution a "treaty" only to relieve the leaders of the need to honour the letter of their
commitment to referendums. That Blair should be party to this trick is sadly symbolic of his office, leaving with a broken promise concealed
behind a slippery verbal mendacity. The point is not whether the treaty is more or less radical than Maastricht, which had no referendum, but that he promised one. ...Those in favour of the treaty are against a
referendum because they think they may lose it. They want Europe to stutter forward in secret ways that confirm the suspicion of all that emanates from Brussels.
Thursday, June 28, 2007 ~ 3:16 p.m., Dan Mitchell Wrote: David Brooks is a bright guy, so I wonder how he can blame the free market for failing in this way. He continues, "Despite all the incentives,
30 percent of kids drop out of high school and the college graduation rate has been flat for a generation." Excuse me, but why is that the market's fault? Government dominates education in America. K-12
education is a coercive, often rigidly unionized government virtual monopoly that fights every attempt to experiment with free-market competition. Brooks writes that Hamiltonians like him "think
government should help people get the tools they need to compete." But when has government ever been good at that? He claims the state can
"increase the quality of human capital" by, for example, providing "Quality preschool [to] help young children from ... disorganized
homes. ... " Really? What is the chance that it would be "quality" preschool if government runs it? Even the acclaimed Head Start has not
been shown to have any lasting effect on academic performance. ...When I asked Brooks why a government that performed as ineptly as FEMA did after Hurricane Katrina will be better at running preschools,
he said, "Some lives are so screwed up, it's hard to make them worse." Government coercion almost always makes things worse. It discourages
individual effort, and sucks capital away from more productive uses. ...America became an economic power despite, not because of, Hamiltonian intervention. Hong Kong and much of East Asia went from
abject poverty to affluence in a few decades not because their governments gave people "tools they need to compete" -- they didn't -- but because they exercised limited powers.
Thursday, June 28, 2007 ~ 1:14 p.m., Dan Mitchell Wrote: Eurostat said the E.U.'s tax burden remained below the high of 41.0% reached in 1999. The tax burden last increased in 2003. Taxes on work
rose to 35.2% from 35.1% in the E.U., and to 36.8% from 36.2% in the euro zone. Eurostat said the decline in labor taxes that began at the
turn of the century had come to a halt "despite a wide consensus on the desirability of reducing labor taxes." E.U. governments have agreed
that persuading more Europeans to work is essential if the bloc is to remain economically competitive with the U.S. and Asia. Cutting taxes on work is seen as a vital step in that direction. Eurostat said that
although taxes on work remained below the 2000 high of 36.5%, they are "much higher...than in the other main industrialized economies."
...there is growing evidence of tax competition between E.U. members that is pushing tax rates down. In general, new E.U. members from eastern Europe have lower top rates of income and corporation tax.
Fearing that companies may move production to the new members, some older members of the E.U. have begun to cut corporation tax rates, including Germany and the U.K..
Thursday, June 28, 2007 ~ 10:41 a.m., Dan Mitchell Wrote: I don't want - and you shouldn't either - any government official or bureaucrat deciding which cable shows are good for me, and which
ones are not. Much of this "I'm from the government and I'm here to help you" attitude derives from the supposed negative impact such
programs have on children, but Census figures show that only one-third of American households have children 18 or under. Chairman Martin favors regulating all households to accommodate this relatively small
percentage. ...It amazes me that some conservatives who preach against "big government" control of our lives think nothing of rushing in to ask
big government to control our entertainment choices. ...One expects government regulation and control during a Democratic administration, but a Republican administration is supposed to be dedicated to the free
market. The FCC's own study shows that in an ideal a la carte world, consumers would get 20 channels, but would pay the same price as today's 150 channels. Only those who don't mind buying one egg and
paying for a dozen would be comfortable with such a deal. Those on the right who favor this proposed regulation had better think of the consequences. If the FCC and not the market control your
entertainment choices, would a Democratic president and his (or her) appointees to the FCC feel emboldened to control the political dialogue?
Wednesday, June 27, 2007 ~ 12:11 p.m., Andrew Quinlan Wrote: Sens. Lamar Alexander, R-Tenn., and Thomas R. Carper, D-Del., want to permit the future taxation of Internet services... Since 1998, an
existing Federal moratorium placed on unfair state and local taxes on Internet access and commerce has protected the average Internet surfer, small and large businesses, shoppers, students, seniors, policy
experts, researchers and many others from multiple and discriminatory taxes on their varying levels of Internet usage. Twice, this moratorium has been extended in Washington, in 2001 and 2004, both times with a
large number of bipartisan co-sponsors and ultimately, bipartisan votes on the House and Senate floors. Unfortunately, the current Internet tax moratorium is again set to expire in late November 2007. Sens. Ron
Wyden, D-Ore., and John McCain, R-Ariz., and Reps. Anna Eshoo, D-Calif., and Bob Goodlatte, R-Va., have introduced legislation to make this moratorium permanent. ...Wireless consumers overwhelmingly want
to prevent more taxes on wireless, currently paying on average over 14 percent in monthly taxes, fees and surcharges. ...Without permanence, state and local governments could soon view booming Internet access
and commerce trends as an easy target for additional tax revenues to fund ever-expanding state and local spending. This potential is especially alarming, given the high level of taxes already imposed upon
other communications services across the board, particularly wireless service.
Wednesday, June 27, 2007 ~ 11:32 a.m., Dan Mitchell Wrote: Deputy Prime Minister and Minister of Finance and Economic Development, Rama Sithanen has announced the introduction of a flat
corporate income tax, as the government strives to create conditions for "robust, sustained and inclusive growth" whilst opening the economy,
facilitating business, and accelerating the transition to global competitiveness. ...Central to attaining this goal is the reduction of corporate tax to a flat rate of 15%, a measure which has been brought
forward by two years to July 1, 2007. This flat rate will also apply for personal income tax. Initially, the government had planned to reduce
corporate tax in stages, starting with a cut in the top rate to 22.5% last year, to 20% this year and to 15% by 2009. ...the Finance Minister
stated...."We...have a system that is now geared towards rewarding effort and entrepreneurship."
Wednesday, June 27, 2007 ~ 11:00 a.m., Dan Mitchell Wrote: EU leaders began their meeting with a constitutional text. Then, over many hours, they added endless footnotes, protocols and
"clarifications", which became more important than the original text itself. The result is almost impossible to read or understand. And that is
entirely intentional. Many things happened at the summit. But perhaps the most important was that the EU finally abandoned the idea that it wants ordinary Europeans to understand what it is doing. ...once
Europeans were told what the EU was really doing, they were often horrified. The new, admirably transparent constitution was rejected by large majorities in referendums in France and the Netherlands in 2005.
...European leaders have gone through the constitution painstakingly replacing anything that is too clear with something more obscure. The
word "constitution" itself has been ditched in favour of "reform treaty". The word "law" is being dropped in favour of "regulation, directive and
decision". ...In producing a document that is stuffed with nonsense like this, the EU is reverting to its true nature.
Wednesday, June 27, 2007 ~ 9:28 a.m., Dan Mitchell Wrote: Two additional member states have left the door open to opt out of a charter boosting the civil and social rights of EU citizens, it has emerged from the small print contained in the recently agreed outline for a new EU treaty. A report in today's Irish Times newspaper says that both Ireland and Poland have kept open the option of joining London, which secured a strong protocol limiting the application of the charter in the UK. ...The 54-article charter enshrines the right to strike and engage in collective bargaining as well as saying citizens are entitled to daily and weekly rest periods during work, the right to preventative health care and paid maternity leave. ...London particularly feared the strike clause, believing that the European Court of Justice could use the charter in legal judgements in labour law extending the EU's powers in this area. ...Jo Leinen, German socialist MEP and head of the parliament's constitutional affairs committee, said on Monday (25 June) that British citizens are "second class citizens in terms of protection of their rights." http://euobserver.com/9/24355/?rk=1
Tuesday, June 26, 2007 ~ 5:23 p.m., Dan Mitchell Wrote: A recent study by the Institute for Justice compared the demographic characteristics of 184 areas targeted by eminent domain to the
surrounding communities. The report shows that eminent domain disproportionately affects poor, ethnic minorities with lower levels of education. Minorities comprised 58% of the population in areas
targeted by eminent domain, compared to 45% in the surrounding communities. The median income of residents targeted by eminent domain is less than $19,000 per year, compared to more than $23,000
elsewhere. And 25% live at or below the poverty line, versus only 16% elsewhere. New Jersey resident Jim Keelen doesn't need statistics to define eminent-domain abuse. His home and business, located one block
away from the Atlantic Ocean, have been slated for seizure by local government officials. His business, J&M Keelen Transportation Co., runs special-education transportation for public schools in two local
counties. If the government is successful in seizing his property, Mr. Keelen and his 85 employees -- most of them low-income minorities --
will be forced to vacate their office, a restored historical building, so that private developers can tear it down and put up condominiums in its
place. His home, located next door, would be torn down as well. ...If the consequences of Kelo seem surprising, they were anticipated. In her powerful dissent in the case, Justice Sandra Day O'Connor wrote that
"fallout from this decision will not be random." She predicted that "the government now has license to transfer property from those with fewer
resources to those with more." Two years later, her predictions are coming true, and short of a Supreme Court reversal, more legislative protection for property rights is needed.
Tuesday, June 26, 2007 ~ 4:44 p.m., Dan Mitchell Wrote: Starting July 1, residents and drivers in Northern Virginia and Hampton Roads will be taxed by regional governments in which they have little
say or influence. It's all part of a tax hike the Republican-controlled legislature enacted earlier this year. ...This is not the first tax increase
Republicans in Richmond have gotten behind in recent years. Back in 2004 they pushed through a record-setting $1 billion tax increase, much to the delight of then Gov. Mark Warner, a Democrat who is now high
on the list of potential vice presidential candidates. That tax hike was all the more dismaying because it came not long before the state was found to have a similarly sized surplus -- and not long after voters
rejected a nearly identical tax hike on the ballot. ...That's the backdrop to primary elections that took place earlier this month, when conservatives ousted two incumbent liberal Republican senators and
came within 300 votes of unseating the powerful Senate Majority Leader Walter Stosch. ...Two other liberal Republicans -- Russell Potts and John Chichester -- knew they likely wouldn't survive the primaries
and are retiring this year instead. All told, the ranks of spend-happy Senate Republicans could be cut in half come November.
Monday, June 25, 2007 ~ 3:13 p.m., Dan Mitchell Wrote: ...there is much more to government's reach in the economy than direct spending. The costs to the public of complying with federal health, safety, environmental and economic regulations appear nowhere in the federal budget. Economist Mark Crain's research for the U.S. Small Business Administration finds that in 2006 regulatory compliance cost Americans $1.14 trillion. Astoundingly, that approaches half of last year's total federal spending of $2.6 trillion, and exceeds 9% of U.S. GDP... Agencies publish regulations in the Federal Register, the daily depository of all federal rules and regulations. In 2006, the Register swelled to 74,937 pages, the second-highest level in history (the highest was 2004). Within those pages, agencies issued 3,718 final rules. ...the 60-plus federal departments, agencies, and commissions are at work on 4,052 more rules. Of these, agencies report 139 are "economically significant," which means they will cost at least $100 million - often far, far beyond - while 787 are expected to affect small businesses. ...Almost 4,000 new rules every year is a lot of "regulation without representation." http://www.ibdeditorials.com/IBDArticles.aspx?id=267404965324754
Monday, June 25, 2007 ~ 2:05 p.m., Dan Mitchell Wrote: Around 15,000 labor union members protested in downtown Prague Saturday against the government's proposed tax reforms and cuts in
welfare spending. ...If approved, a 15-percent flat tax on personal income would be introduced in 2008. Currently, the personal tax rate ranges from 12 percent to 32 percent, depending on income. The
corporate tax rate would be cut from 24 percent to 19 percent by 2010. The draft also includes cuts in social benefits, unemployment benefits, maternity leave payments and health care spending. The labor unions
claimed that only the wealthy would benefit from the proposed changes.
Monday, June 25, 2007 ~ 11:40 a.m., Dan Mitchell Wrote: The European Union's 50-year-old commitment to "undistorted competition" has been scrapped from a list of the bloc's objectives in a
French coup that lawyers argue could undermine Brussels' fight against protectionism and illegal state aid. Nicolas Sarkozy, French president,
secured the change, on the eve of an already tense Brussels summit to allay concerns in his country that the EU has become too "Anglo-Saxon". …In the original constitution, one of the Union's main
objectives was listed as "an internal market where competition is free and undistorted". France has now persuaded Berlin to put a full stop after the words "internal market" in the new treaty. …By contrast "full
employment and social progress" will remain Union objectives, offering possible cover to a country wanting to prop up a failing company or engineer a merger of "national champions". Mr Sarkozy will hail the
change as proof that the constitution – rejected in a French referendum in 2005 – is dead and that the new version is more "social".
Sunday, June 24, 2007 ~ 9:38 p.m., Dan Mitchell Wrote: Bulgaria, Estonia, Finland, Sweden and the U.K. have opened their postal markets completely; Germany and the Netherlands have said
they plan to do so soon. Brussels began liberalization efforts back in 1997 and a 2002 law envisioned an open postal market by January 1, 2009. Yet five years after that tentative deadline was set, and with 18
months still to go, the likes of France's La Poste complain that they need more time to prepare. It's unclear what exactly they will be able to
accomplish in those extra two years that they couldn't manage in the first dozen. One safe bet is they'll continue piling up easy profits to use in new businesses they've started. To take one example, La Poste,
Deutsche Post and others have used the proceeds from their letters monopolies -- a €90 billion business in Europe -- to open banks. In the
meantime, consumers increasingly have to break the bank just to send a letter. In the 10 members of the EU-15 that haven't completed or planned postal liberalization, the average stamp price rose by 7
European cents, or about 18%, between December 2001 and February 2007, according to data from the Free and Fair Post Initiative. In the five countries that have liberalized, the average price fell by 2 cents, or
about 4%. Studies show that full market opening, including cross-border competition, could drive prices down by as much as 20% to 25%.
Saturday, June 23, 2007 ~ 7:19 p.m., Dan Mitchell Wrote: Chancellor Angela Merkel, who campaigned for labor market deregulation, agreed late Tuesday to expand the reach of minimum
wage laws. From just construction and building cleaners, perhaps as many as 12 sectors will now be subject to yet unspecified minimum wages. The new rules are designed for sectors and companies not
covered by collective bargaining agreements between employers and trade unions that set wages. Germany is one of the few European countries without a national minimum wage. The best news from the
cabinet meeting was that the Social Democrats failed to push one through. But the Chancellor caved enough to do serious economic damage. Up to 4.5 million workers could be eventually covered by the
new rules, according to Labor Minister Franz Müntefering, a Social Democrat. Special committees and administrators will be tasked with selecting the sectors and the level of minimum wage. It will hurt people
it's supposed to benefit the most -- the unskilled, who already are having a rough time finding jobs. The 22% unemployment rate among those without professional qualifications is more than twice the national
average.
Saturday, June 23, 2007 ~ 1:24 p.m., Dan Mitchell Wrote: Some academics are yet to be convinced and argue that the risk of a criminal being executed for murder is so remote that, "It is hard to
believe that fear of execution would be a driving force in a rational criminal's calculus in modern America." Yet, before trying to answer whether this risk to criminals is significant, let's first consider how
another group that faces similar dangers reacts to the risk of death. Academics classify being a police officer as an "extremely dangerous"
job. In 2005, 55 police officers were murdered on the job, while another 67 were accidentally killed. With nearly 700,000 full-time, sworn law enforcement officers in the United States, the murder rate of police
officers comes to 1 in 12,500, a ratio that jumps to 1 in 5,600 when we include accidental deaths. …The risk that a violent criminal faces from
execution is much greater than the risk of a police officer being killed. In 2005, there were almost 16,700 murders in the United States and 60
executions. That translates to one execution for every 278 murders. In other words, a murderer is 20 times more likely to be executed than a
police officer is to be deliberately or accidentally killed on duty. Those who argue that the death penalty has no effect on violent crime assume
that the risk of execution in no way deters criminals from committing capital crimes. While criminals, just like police officers, are naturally
less adverse to danger than, say, school teachers or accountants, the notion that it is irrational for them to take into account such an enormous additional risk is irrational. But a non-trivial issue is how to
define the execution rate. It actually matters a lot. When defined as executions per murder committed, academics find that the death penalty deters murders and saves lives.
Friday, June 22, 2007 ~ 2:26 p.m., Dan Mitchell Wrote: Tony Blair faces a stark choice at his last EU summit. He can stand up for the country that trusted him with power in three general elections.
Or he can sell us down the river to the faceless EU politicians and bureaucrats who run Europe. …Mr Blair's vaunted "red lines" won't protect the United Kingdom from the relentless erosion of power by our
EU masters. Whatever written guarantees are offered in the coming days, Britain would be folding its hand into a European superstate. …Gordon Brown may not be in Brussels — but he will have the final say
on how the result is sold at home. We have been promised a referendum. The incoming Prime Minister cannot allow this deal to go through without one. A columnist in the same paper outlines the many ways in which the EU Constitution gives more power to Brussels and threatens the UK's more open economy: …the Reform Treaty, is virtually the same as the rejected EU Constitution. It will rob us of powers to set our own laws and put
industry back 30 years. …Early drafts of the document show Britain will surrender 30 per cent of its voting power in EU meetings. This will make it far harder to stop barmy EU diktats becoming UK law.
Britain's vetoes will be axed in as many as 51 areas. …The power to set tax and spend policy could also be stripped away. The Commission also
wants to rob us of our right to set social security payments. Experts say the draft Treaty would mean huge changes to British law. They say a Charter of Fundamental Rights would become more legally-binding
than UK law. The Charter will also lumber Britain's economy with job-destroying EU laws.
Friday, June 22, 2007 ~ 1:55 p.m., Dan Mitchell Wrote: Gates seems unaware that these problems can't be eliminated in the simplistic way he advocates. He told the grads, "The market did not
reward saving the lives of these children [in poor countries], and governments did not subsidize it. So the children died because their mothers and their fathers had no power in the market and no voice in
the system." What is Gates talking about? Can he name one poor country that permits the free market to operate? The problem is not that the market doesn't make it profitable to save lives -- it most
certainly does. The problem is that Third World countries have overbearing, corrupt governments that are obstacles to private property and freedom. That's why the children's parents have no voice or power.
...Maybe the Gates Foundation's private charity will work wonders, but more government-to-government subsidies won't do the trick. The trillions spent in foreign aid have little to show for it. As William
Easterly writes in "The White Man's Burden: Why the West's Efforts to Aid the Rest Have Done So Much Ill and So Little Good," "Economic
development happens, not through aid, but through the homegrown efforts of entrepreneurs and social and political reformers. While the West was agonizing over a few tens of billion dollars in aid, the citizens
of India and China raised their own incomes by $715 billion by their own efforts in free markets". ...Gates faults the free market for problems caused by governments. What constricts the reach of the free
market is the state. .. You want poor countries to get rich, Bill Gates? Work for free-market reform.
Friday, June 22, 2007 ~ 10:10 a.m., Dan Mitchell Wrote: By almost every measure, Europeans do work less and relax more than Americans. According to data from the Organization for Economic
Co-operation and Development, Americans work 25% more hours each year than the Norwegians or the Dutch. The average retirement age for European men is 60.5, and it's even lower for European women. Our
vacations are pathetically short by comparison: The average U.S. worker takes 16 days of vacation each year, less than half that typically taken by the Germans (35 days), the French (37 days) or the Italians (42
days). ...For most Americans, work is a rock-solid source of life happiness. Happy people work more hours each week than unhappy people, and work more in their free time as well. Even more tellingly,
people with more hours per day to relax outside their jobs are not any happier than those who have less non-work time. In short, the idea that
our heavy workloads are lowering our happiness is twaddle. Obviously, there is a point beyond which work is excessive and lowers life quality. But within reasonable bounds, if happiness is our goal, the American
formula of hard work appears to function pretty well. This may be one reason why Americans tend to score better than Europeans on most happiness surveys. For example, according to the 2002 International
Social Survey Programme across 35 countries, 56% of Americans are "completely happy" or "very happy" with their lives, versus 44% of
Danes (often cited in surveys as the happiest Europeans), 35% of the French and 31% of Germans. Those sweet five-week vacations and 35-hour workweeks don't seem to be stimulating all that much félicité. A
good old-fashioned 50-hour week might be a better option.
Thursday, June 21, 2007 ~ 1:30 p.m., Andrew Quinlan Wrote: Despite this great American success story, the politicians and government bureaucrats (most of whom never had an innovative idea in
their lives and are too timid to ever take the risk of investing in a new venture) are in the process of killing the golden goose. The IPO market
in the U.S. is drying up and moving to other countries. Venture capital firms are shutting down or reducing their investments. Legislation, such
as the Sarbanes-Oxley bill, has made it prohibitively expensive to take a company public. ...The average wireless tax burden is about 14 percent
in the U.S. compared to the approximate 7 percent tax rate on other goods and services, not counting the income, property and all the other taxes paid by companies. Discriminatory taxation against a product
that greatly adds to the productivity of business and makes all of our lives better by giving pleasure and greatly reducing the time response to medical and other emergencies is not the product of clear thinking
minds. ...In a rare show of good judgment, Congress passed a moratorium on Internet taxation a few years ago. But some in Congress now want to allow state and local governments to tax parts of Internet
services, and have proposed weakening the Internet tax ban. They argue that state and local governments need money, even though those tax collections are at an all-time high as a percentage of gross domestic
product (GDP), and much of what states and localities spend is wasted. ...There is some hope. Republican Sens. John McCain of Arizona and Jim DeMint of South Carolina and Rep. Mary Bono of California have
proposed a moratorium on any further cell phone tax discrimination, but so far, there has been little support from the Democrats. The crown jewels of the American economy are being destroyed. You can bet, as
the U.S. loses its competitive lead, those same ignorant and venal politicians who killed the golden goose will then scapegoat those who had a constructive hand in the great innovations.
Thursday, June 21, 2007 ~ 1:11 p.m., Dan Mitchell Wrote: Country A takes a $3 billion stake like any other investor in a company's initial public offering. Country B doesn't bother with such
capitalist niceties and instead arbitrarily changes its tax law to grab a share of the IPO's income stream. Who would have guessed that Country A is Communist China and Country B is America? Yet that's
exactly what's happening in the case of the Blackstone Group, the big private equity firm that is floating a $4.75 billion IPO as early as this
week. The Chinese are behaving like good capitalist investors, while the U.S. Congress is playing the role of confiscatory commissars. Congressional staffers don't even bother to hide the tax bill's arbitrary
nature, calling it "the Blackstone bill" and preparing to pass it without hearings, Treasury analysis or debate in tax-writing committees. Asked
why he is undertaking this exercise, Montana's Democratic Senator Max Baucus candidly explained "because it's in the news so much. . . .
There's an awful lot of money there." Maybe Blackstone should have floated its IPO in Beijing, or at least London. ...Under the Baucus-Grassley proposal, Blackstone's investment income would be
taxed first at a 35% corporate tax rate on, say, American Widget Company when it earned the profits; taxed again when those profits are passed on to Blackstone at another 35% corporate income tax rate; and
then taxed a third time at a 15% capital gains tax when Blackstone distributes its earnings to partners and shareholders. Surely Senators Baucus and Grassley don't favor triple taxation? ...The 35% U.S.
corporate tax rate is one of the highest in the world... If Congress really wanted to stop this corporate tax "leakage," it'd reduce the corporate
rate for all companies to 15% or so. Ireland and other countries have done this to their great economic and fiscal benefit. The tax arbitragers would be quickly unemployed and these tax fights with millions of
dollars spent on lobbyists and legal expenses would cease. The evidence around the world is that a low, flat tax rate increases compliance and might yield considerably more income than today's 35% rate with its
Swiss cheese of exceptions.
Thursday, June 21, 2007 ~ 12:29 p.m., Dan Mitchell Wrote: A rule of law regime would require that we scrap the Internal Revenue Code in its current form. What justification is there for different tax
treatment of one American because he has a higher income, minor children or receives his income from capital gains instead of wages? Equal treatment would require Congress to figure out the cost of the
constitutionally authorized functions of the federal government, divide it by the adult population and send us each a bill for our share. You say,
"What about the ability-to-pay principle of taxation to pay for the cost of government?" That's just a politics of envy concept that would be
revealed as utter nonsense if applied to any other cost. Would you apply the ability-to-pay principle to, say, gasoline or food purchases where
different prices are charged to different people depending on how many dependents they had...? The fact that Americans have become ruled by
orders and special privileges helps explain all the money and graft that we see in Washington. We've moved away from a government with limited powers, as our Founders envisioned, to one with awesome
powers. Therefore, it pays people to spend huge amounts of money to influence Congress in their favor, that is, get Congress to grant them privileges denied to other Americans.
Thursday, June 21, 2007 ~ 11:03 a.m., Dan Mitchell Wrote: "Wouldn't it be easier to dissolve the people and elect another in their place?" This satirical comment from Bertolt Brecht, the German poet,
playwright and communist, is gloriously apposite to the proposed resuscitation of a rejected European Union constitution in Brussels this week. It is ironic that Angela Merkel, Germany's chancellor and a
former citizen of East Germany, should have entered this trap. For it was of this regime that Brecht complained in the poem, written in response to the workers' uprising of June 1953. ...As Jean-Claude
Juncker, prime minister of Luxembourg, a glorified local government, remarked before the referendums: "If it's a Yes, we will say 'on we go',
and if it's a No, we will say 'we continue'." He was right. A true "European", he knows that the purpose of the EU is to make
democracy impossible. ...So cynical an exercise needs burning necessity, not mere convenience, to justify it. What then is this necessity? Little
that I can see, apart from maintaining the drive towards an ever more federal Europe. ...Under the envisaged system a proposal would pass if 55 per cent of members representing 65 per cent of the population were
in favour. Are these ideas in and of themselves essential? The answer is Yes only if you believe the big problems confronting the EU are an
insufficient supply of "rights" and an insufficient capacity to make decisions, impose laws on recalcitrant member states and throw its
weight about on the world stage. For the net effect of these proposals is to extend the powers of the European Court of Justice and make it easier to pass European laws where qualified majority voting now
applies and extend it to sensitive new areas. My own view is the opposite: we have no need to make it easier to pass laws at any level of government, certainly not excluding the European one. What is
proposed is also far more than a mere "tidying up" exercise. It is no trivial matter for British (or other) citizens to accept the legitimacy of
laws on immigration or criminal justice imposed, against their government's consent, by the governments of the other members. ...Would a new treaty justify a referendum, at least in the UK? Yes, is
my answer. People are perfectly able to understand whether a new treaty involves an important transfer of power to an unelected commission, a cartel of European governments and a remote
parliament. ...The arrogance of European elites must not be permitted to reign unchecked for ever.
Wednesday, June 20, 2007 ~ 10:06 p.m., Dan Mitchell Wrote: 'We have entered a new era in energy markets," according to Iowa Sen. Charles Grassley, the top Republican on the Senate Finance Committee.
This new epoch "requires a dramatic shift away from tax incentives for oil and gas production," he said. Apparently we also have entered a new
era in arithmetic, because Grassley calls the $29 billion in oil taxes the Senate will consider in its energy bill this week a "narrow change" that
will "have little if any effect on domestic production" of oil. This from someone who earlier this month called oil companies "childish" for
refusing to sit idly by while Washington fleeces them - and, ultimately, the hundreds of millions of Americans who are their customers. The idea
is for Big Oil to foot the bill for huge tax credits and incentives for wind and solar power, hybrid vehicles and biofuel. But by joining the
committee's Democrats in the 15-to-5 vote "punishing" Big Oil with massive taxes, Republicans such as Grassley, Olympia Snowe of Maine, Gordon Smith of Oregon and Pat Roberts of Kansas are actually
hurting drivers. ...Alternatives to fossil fuels are worth developing for the long term, but what's truly "childish" is the wide-eyed belief on the
part of Grassley and others in ethanol as a feasible alternative fuel. (To protect his state's beloved but uneconomical corn-fuel industry,
Grassley just helped keep a 54-cents-a-gallon tariff on imported ethanol from being removed. That tariff actually contributes to high gas prices and to our energy dependence on the oil of foreign enemies in the
Middle East and Venezuela's Hugo Chavez.)
Wednesday, June 20, 2007 ~ 9:19 p.m., Dan Mitchell Wrote: Starting tomorrow, Canadians have paid off the total tax bill imposed on them by government and can finally start working for themselves,
according to The Fraser Institute's annual Tax Freedom Day calculations. "If you look at the average Canadian family's total tax bill, each and every dollar they earn before June 20 would be required
to pay the taxes owing to all levels of government. It takes until June 20 before they begin earning money for themselves," said Niels Veldhuis,
The Fraser Institute's Director of the Centre for Tax Studies. ...This year Tax Freedom Day falls four days earlier than in 2006. The latest Tax
Freedom Day in Canadian history was in 2000, when it fell on June 25. Tax Freedom Day moved forward to June 17 in 2001 before steadily retreating to June 24 in 2005 and 2006. "Even with the recent
improvements, Tax Freedom day still falls almost two months later than in 1961, the earliest year for which we have calculations," Veldhuis
said. ...Tax Freedom Day varies from province to province, depending on the taxation levels of each provincial government. Alberta enjoys the earliest Tax Freedom Day on June 1, followed by New Brunswick and
Prince Edward Island (June 14), BC and Manitoba (June 16), Ontario and Nova Scotia (June 19), and Saskatchewan (June 22). Quebec has the second-latest Tax Freedom Day, on June 26, while Newfoundland
and Labrador wait the longest, until July 1.
Wednesday, June 20, 2007 ~ 8:42 p.m., Dan Mitchell Wrote: It's fashionable these days, for Democrats and even some Republicans to style themselves as "fiscal conservative" to advocate the end of
government red ink. Some of them mean well, to be sure. Certainly, no one wants to see a budget deficit forever — or one that expands to a point that it impairs our government's ability to function. But we're so
far from that right now it's easy to think those who push for the immediate elimination of the deficit have another agenda entirely. …Last year, the deficit hit $248 billion. Sounds like a lot, but in a $13.6
trillion economy, it's not. It's the equivalent of a $900 dollar credit card charge for someone with a $50,000 income. As a share of GDP, the budget deficit last year was 1.9%. That's down from 3.6% in 2004 and
below the long-term average of 2.5%. This year, says the CBO, the deficit will be about $177 billion, or 1.3% of GDP. …For those who argue the deficit is such a bad thing that we need to raise taxes to get
rid of it, this too is wrong. As Nobel-winning economist Edward Prescott has noted, workers are highly sensitive to tax rates. They work and earn more when rates fall, less when they rise. It's common sense.
Wednesday, June 20, 2007 ~ 3:28 p.m., Dan Mitchell Wrote: Europeans leaders [are] selling their citizens the same bill of goods that French and Dutch voters firmly rejected in 2005. The sleight of hand
here is to pretend that the two-year "reflection period" has produced something different, which the EU hopes voters will buy without even
insisting on a serious discussion of its merits. Referendums won't be necessary to ratify this version, claim German Chancellor Angela Merkel & Co., who want to strike a deal at their summit later this week.
… This little fraud is plain for all to see. In April, a letter from Ms. Merkel to her EU colleagues that spelled it all out was leaked. The German leader, who holds the rotating six-month presidency of the
Union, suggested using "different terminology without changing the legal substance" of the Constitution to revive the document. …No less than the framer-in-charge of the EU Constitution, former French
President Valéry Giscard d'Estaing, blasted Europe's leaders. By making only cosmetic changes to the draft produced by the convention
that he headed, "public opinion will be led to adopt, without knowing it, the proposals that we dare not present to them directly," he wrote last
week in Le Monde. "It will reinforce the idea among European citizens that European construction is a machinery organized behind their backs
by jurists and diplomats." …So why would Europe's leaders invest so much scheming energy in this? All their hype that Europe can't function
without a new constitution is just that. After all, under the current governing framework, the EU has managed to pull off such feats as taking in 12 new, mostly ex-Communist countries. Brussels has seen
none of the bottlenecks in adopting new laws that the rejected Constitution's proponents warned of. In fact, the EU is running more smoothly with 27 members than it did with 15, according to a study
from Sciences Po in Paris, which analyzed the speed at which regulations are approved in Brussels. The motivation, as in any multigovernmental institution, is self-evident: The EU wants to get
bigger. …Why national leaders are so eager to sign away more of their sovereign prerogatives to Brussels is harder to understand. Perhaps they dream of holding that powerful new EU president job one day
themselves.
Tuesday, June 19, 2007 ~ 11:19 a.m., Dan Mitchell Wrote: Tony Blair wants to hand the European Union radical new powers in his last act as Prime Minister, it emerged today. The Prime Minister has
welcomed controversial plans to bring back the troubled EU constitution by the back door - totally bypassing the need for public referendums on sweeping new powers for Brussels. ...Britain's voting
rights would be reduced by a third under the scheme and our hard-won veto on European directives would be torn up. Britain could also lose the right to impose quotas on immigration. ...the report makes clear the
EU would still develop a single legal personality...fuelling Eurosceptic fears of a further whittling away of national status in Europe. ...the
German Presidency expects to see a charter of fundamental rights given legal force as part of any reform package.
Tuesday, June 19, 2007 ~ 10:32 a.m., Dan Mitchell Wrote: Bulgarian socialists will discuss plans to impose a flat tax rate at the party congress that starts on Saturday, the event's agenda shows. ...The
Socialists are the senior partner in the three-way ruling coalition and hold half of the 16 ministerial portfolios. The party has singled out
lowering the individual tax burden as one of its main priorities and will consider two proposals to achieve that goal. The first option is to lower
the tax brackets to 10%, 16% and 24%, respectively. The second is to impose the 10% flat tax for all income above a certain tax-exempt amount.
Monday, June 18, 2007 ~ 6:11 p.m., Dan Mitchell Wrote: Many EU residents who previously banked in Gibraltar, Cayman Islands or Switzerland have moved their portfolio to places not covered
by the OECD, including Hong Kong and Singapore. The recent abolition of estate tax in Hong Kong has made it an even more attractive option worthy of consideration by those seeking to secure their assets and
protect them from unfair taxation. ...More than 73,000 new Hong Kong companies were incorporated last year and there are now more than 800,000 companies on the Hong Kong companies register. ...And while
the OECD continued its efforts to crack down on tax havens, the head of one Hong Kong trust company said he did not see the point. Jacques Scherman, managing director of Sovereign Trust (Hong Kong), said:
"Tax havens are already intensely scrutinised and subject to strict anti-money laundering regulations. I do not think further scrutiny will
achieve any useful end. "No client has ever come to us with a question like 'how can I arrange my affairs in such a way that I pay more tax?' or
'please can you assist me to set up a structure that conforms in every respect to the OECD's rules and regulations?'
Monday, June 18, 2007 ~ 5:54 p.m., Dan Mitchell Wrote: Public spending in Germany, as a percentage of total economic output, has fallen sharply in the past three years and is fast approaching British
levels, according to a finance ministry study. The report, obtained by the Financial Times, shows state expenditures reached 45.6 per cent of gross domestic product last year, compared with 44.1 per cent in the
UK, which is generally thought of as a low-tax, low-spending economy. … Instead of focusing on the fiscal deficit - the difference between state
expenditures and revenues - the report concentrates solely on spending. The spending-to-GDP ratio fell from 47.1 to 45.6 per cent between 2004
and 2006, making Germany the fourth-smallest spender in the eurozone. The same ratio rose from 42.7 to 44.1 in the UK over the same period.
… "Good progress has been made in the recent past, mainly in cutting public sector headcounts," said Winfried Fuest, economist at the
business-funded IW economic institute. But he expressed worries about government being tempted "to spend more now that the economy is doing better".
Sunday, June 17, 2007 ~ 4:14 p.m., Dan Mitchell Wrote: Writing in French daily Le Monde, Valéry Giscard d'Estaing said EU leaders should not be afraid to tell citizens that they are essentially
trying to preserve the text of the constitution that was rejected by French and Dutch voters two years ago. "If governments agree on a simplified treaty preserving the essential institutional advances, they
should not be afraid to say so and write so." Pointing to the likelihood that the original constitution will be divided up with its "innovative
elements" tacked on to the current Nice and Maastricht treaties and technical parts put into a non-descript treaty, the former French
president noted that the public would then be "led to adopt, without knowing it, the proposals that we dare not present to them 'directly'."
While noting that it might be a good exercise in "presentation" he went on to criticise that it will "reinforce the idea among European citizens
that European construction is a machinery organised behind their backs by jurists and diplomats."
Sunday, June 17, 2007 ~ 3:57 p.m., Dan Mitchell Wrote: The Senate is debating another energy bill -- and the direct cost to the government is already estimated at between $140 billion and $205
billion over 15 years in subsidies, tax preferences and loan guarantees. Most of it will go to "alternative" energy. …On alternative fuels, the
global warmists usually make common cause with those who believe the U.S. must become "energy independent." Thus the heap of money being shoveled into corn ethanol and other more fantastic schemes like
"biofuels." But the goals of the two coalitions are often in tension, if not outright contradiction. CTL [coal-to-liquid] by itself will do nothing to
reduce greenhouse gas emissions, and at worst doubles the carbon emissions volume over petroleum. …Supporters of subsidies claim the private sector will never finance "transformational" research into
"clean" energy because of the risks, high upfront costs and long delays for a return on investments. But the private sector has also produced
many incremental energy improvements. Such an approach beats sinking untold taxpayer dollars into unproven technologies. …The coal-to-liquid subsidy rush is one more sign that taxpayers will be the
biggest losers in our current energy panic. Our politicians will even subsidize carbon-emitting coal in the name of reducing dependence on
carbon-emitting but unsubsidized oil. The "alternative" fuels campaign is on its way to becoming the biggest corporate welfare scheme in U.S. history.
Saturday, June 16, 2007 ~ 6:06 p.m., Dan Mitchell Wrote: The Federal Emergency Management Agency overpaid victims of the Gulf Coast hurricanes by at least $485 million… Disaster aid records
show that FEMA has so far recovered $15.6 million — about 3 cents for every dollar its auditors have identified as being improperly paid. …Audits suggest the overpayments go beyond what FEMA is trying to
recover. The Government Accountability Office, Congress' investigative arm, estimated that the improper aid payments may total $1 billion.
Friday, June 15, 2007 ~ 11:49 a.m., Dan Mitchell Wrote: As someone who lived under communism for most of his life, I feel obliged to say that I see the biggest threat to freedom, democracy, the
market economy and prosperity now in ambitious environmentalism, not in communism. This ideology wants to replace the free and spontaneous evolution of mankind by a sort of central (now global)
planning. The environmentalists ask for immediate political action because they do not believe in the long-term positive impact of economic growth and ignore both the technological progress that future
generations will undoubtedly enjoy, and the proven fact that the higher the wealth of society, the higher is the quality of the environment. They
are Malthusian pessimists. …I agree with Professor Richard Lindzen from the Massachusetts Institute of Technology, who said: "future generations will wonder in bemused amazement that the early 21st
century's developed world went into hysterical panic over a globally averaged temperature increase of a few tenths of a degree, and, on the basis of gross exaggerations of highly uncertain computer projections
combined into implausible chains of inference, proceeded to contemplate a roll-back of the industrial age". The issue of global warming is more about social than natural sciences and more about
man and his freedom than about tenths of a degree Celsius changes in average global temperature.
Friday, June 15, 2007 ~ 11:30 a.m., Dan Mitchell Wrote: Tax rates are falling all over the globe -- even in Sweden. The exception is the U.S. Congress, which is scrambling to find some way, any way, to
raise them. Last week, Democrats on the House Ways and Means Committee released a draft of their tax plan that would raise the highest income tax rate by 4.3 percentage points to 39.3% immediately.
And because the proposal doesn't extend the Bush tax cuts, the highest income tax rate would rise to the neighborhood of 44% after 2010. This
would lift the top federal income tax rate higher than it was even under Bill Clinton. And get this: For families with incomes between $250,000
and $500,000, the "marginal" tax rate paid on the next dollar of earned income could soar to 80%, or in some cases even above 100%. Why?
Because when income rises above $250,000, some taxpayers would be kicked into the Alternative Minimum Tax -- which means that they lose tens of thousands of dollars of write-offs for state and local tax
deductions, marriage penalty relief, certain child credits, and so on. The value of the lost deductions can exceed the value of the extra income
earned. So some Americans could pay more than $1 in taxes for every $1 they earn under the House tax plan. …The wealthiest 1% of Americans already pay more than one of every three income tax dollars
into the Treasury. Under the Ways and Means proposal, the share of all income taxes paid by the top 1% would rise to nearly 40%. The top 2% would pay roughly as much as the bottom 98% of all taxpayers. …A
44% top marginal rate would reduce U.S. competitiveness by reducing the after-tax return on investment. Less investment means fewer jobs and lower wages.
Friday, June 15, 2007 ~ 9:38 a.m., Dan Mitchell Wrote: Tax revenues will be about 18.5% of GDP this year — above the average of 18.2% since 1960. As for inflation-adjusted tax revenues —
a little-used but equally telling statistic — they'll reach an all-time high of $2.013 trillion. That's higher even than in the last year of the dot-com
boom. And by the way, it's an astounding 26% gain since 2003 — after inflation. What about the claim that tax cuts "lose" revenues for the
government? Also not true. What is true is that by creating a dynamic of powerful economic growth, lower taxes expand the economy and, therefore, overall tax revenues. They do this by giving people more
incentives to work, save, invest and innovate — all drivers of long-term economic growth.
Friday, June 15, 2007 ~ 8:17 a.m., Dan Mitchell Wrote: The House voted largely along party lines Wednesday to support a tax restructuring plan that expands the sales tax base to lower the income
tax rate — a plan Republicans warned would cause a revolt back home when people realize how it affects their day-to-day purchases. …it gives
tax relief to Mainers of all income-levels and stabilizes the tax system that currently relies on sales in just 24 categories. That limited base
makes sales tax revenue very volatile and leaves the state short on cash when the economy slows. On the other hand, the state has the seventh
highest income tax rate in the country and that discourages businesses from moving here and retirees from making the state their full-time
home. The plan would rebalance that system. "This plan will provide a tremendous economic boost to the state of Maine," Piotti said. "It will
be a huge stimulus for people in state who want to expand and for people out of state looking to do business…" …The proposal would raise more than $230 million in sales-related revenue by expanding the
5 percent sales tax base to a long list of currently exempt services; raising the meals and lodging tax from 7 to 8 percent; increasing the
real estate transfer tax on a sliding scale based on the property's selling price; and doubling the excise tax on beer and wine. That money, in
turn, would be used to lower the state's graduated income tax to a flat tax of 6 percent.
Thursday, June 14, 2007 ~ 2:12 p.m., Dan Mitchell Wrote: The steady drumbeat of DNA exonerations - pointing out flaws in the justice system - has weighed against capital punishment. The moral
opposition is loud, too, echoed in Europe and the rest of the industrialized world, where all but a few countries banned executions years ago. What gets little notice, however, is a series of academic
studies over the last half-dozen years that claim to settle a once hotly debated argument - whether the death penalty acts as a deterrent to murder. The analyses say yes. They count between three and 18 lives
that would be saved by the execution of each convicted killer. …"Science does really draw a conclusion. It did. There is no question
about it," said Naci Mocan, an economics professor at the University of Colorado at Denver. "The conclusion is there is a deterrent effect." A
2003 study he co-authored, and a 2006 study that re-examined the data, found that each execution results in five fewer homicides, and commuting a death sentence means five more homicides. "The results
are robust, they don't really go away," he said. "I oppose the death penalty. But my results show that the death penalty (deters) - what am I
going to do, hide them?" Statistical studies like his are among a dozen papers since 2001 that capital punishment has deterrent effects. They all
explore the same basic theory - if the cost of something (be it the purchase of an apple or the act of killing someone) becomes too high, people will change their behavior (forego apples or shy from murder).
Thursday, June 14, 2007 ~ 1:41 p.m., Dan Mitchell Wrote: About six million Flemish subsidize four million Walloons with billions of euros a year through transfer payments. Such generosity could
exhaust a homogenous society, let alone a linguistically riven one like Belgium. …the Christian Democrats' first-place showing suggests that most Flemings would be content with a better fiscal deal, not a
redrawing of the borders. …Belgian unemployment is about 8%, but this figure masks huge regional differences. Joblessness is 6.6% in Flanders
and almost triple that in Wallonia, at 18%. Flemings fret that their high taxes and work ethic subsidize the Socialist lifestyle of their southern
brothers. Mr. Leterme suggests that the two federal regions should have a greater say over economic policies, including labor and health policy. The Walloons would then have to assume greater responsibility over
their affairs. Devolution is more democratic, too, bringing government closer to the people. With the rise of the EU and smudged borders, regions from Scotland to Catalonia have felt emboldened to wrest
powers from national capitals.
Thursday, June 14, 2007 ~ 10:33 a.m., Dan Mitchell Wrote: …the simple fact that one of the surest ways to leave a kid "behind" is to hand him over to the government. Americans want universal
education, just as they want universally safe food. But nobody believes that the government should run nearly all of the restaurants, farms and supermarkets. Why should it run the vast majority of the schools -
particularly when it gets terrible results? Consider Washington, home of the nation's most devoted government-lovers and, ironically, the city
with arguably the worst public schools in the country. Out of the 100 largest school districts, according to the Washington Post, D.C. ranks third in spending for each pupil ($12,979) but last in spending on
instruction. Fifty-six cents out of every dollar go to administrators who, it's no secret, do a miserable job administrating, even though D.C.
schools have been in a state of "reform" for nearly 40 years. …what would be so terrible about government mandating that every kid has to
go to school, and providing subsidies and oversight when necessary, but then getting out of the way? The government gives poor people food stamps. Would poor people be better off or worse off if, instead of being able to use their food stamps
at any supermarket, they were forced to use them at a government store? There's abundant evidence that suggests consumers are better off when providers of goods and services are driven by the profit motive
where survival requires a constant effort to get and keep customers. …The solution to America's education problems is not more money, despite the claims of the education establishment. Instead, it's the
introduction of competition that could be achieved through school choice. Most people agree there should be public financing of education, but there is absolutely no case to be made for public production of
education. We agree there should be public financing of F-22 fighters, but that doesn't mean a case can be made for setting up a government F-22 factory. A school choice system, in the form of school vouchers or
tuition tax credits, would go a long way toward providing the competition necessary to introduce accountability and quality into American education. What's wrong with parents having the right, along
with the means, to enroll their children in schools of their choice?
Wednesday, June 13, 2007 ~ 12:29 p.m., Dan Mitchell Wrote: Dan Mitchell of that center for misinformation has an article in this week's Business and Finance magazine in Ireland. Unfortunately I can
find no web link. The best the Center can offer is a link to some extraordinary claims on its web site. I'll take the liberty though of reproducing the conclusions form Mitchell's article. I'm sure he won't
mind: Tax havens, wherever they are based, promote good fiscal policy and protect human rights. The anti-tax competition campaigns of international bureaucracies, by contrast, are based on bad economics
and dubious morals. If high-tax nations want to reduce tax evasion, they should fix their tax systems. Thanks to tax competition, this process already is under way, but many politicians from high-tax
governments - particularly in Europe - are fighting to preserve their uncompetitive welfare states. The narrow and selfish agenda of these politicians should not be allowed to undermine the valuable role of tax
havens in the global economy. This is true if: 1) Good fiscal policy is little or no tax; 2) Human rights revolve around privacy of financial data, and nothing else; 3) The promotion of economic well-being by
reducing inequality is bad economics and dubious morally; 4) Welfare states are bad; 5) Caring for others is selfish. Tax Havens: Myth Versus Reality Behind the tax haven taboo (Business and Finance) Murphy Dodges Debate with Mitchell
Wednesday, June 13, 2007 ~ 11:35 a.m., Dan Mitchell Wrote: Democrats are taking notice of one salient fact: Many of those who will be hit with an average tax hike of $3,161 this year are Democrats. It's
one thing to support taxes "on the rich," quite another to support taxes that have hit high-tax, Democratic blue states. That said, Democrats
have a problem. They want to spend more, and to them the AMT is just too juicy a source of revenue to cut. So instead of seeking to get rid of it, as many economists propose, Democrats basically want to replace
the AMT with a 4.3% surtax on the wealthy - that is, those with incomes $500,000 and higher. All very predictable for a party that believes raising taxes will help the economy, not hurt it. But it's foolish on a
number of levels. For one, history shows that tax hikes on the rich don't raise much if any revenue. Turns out the rich got that way by being smart. They find ways to shelter money, but at great cost to the
economy. ...The Democrats' us-against-them rhetoric is an insult to every hard-working family whose providers have gone to school, worked hard, played by the rules and saved to climb the income ladder.
That 4.3% surcharge on the "rich" is really a tax on success.
Wednesday, June 13, 2007 ~ 9:19 a.m., Dan Mitchell Wrote: Being a shrewd bunch, the private equity industry presumably has gotten the message: When vast new fountains of wealth open up in the
economy, Congress must receive its ransom in campaign donations. Delivering the wagged finger were none other than Max Baucus and Charles Grassley, chairman and ranking member of the Senate Finance
Committee, who've taken to musing aloud about how the tax code's treatment of private equity's lately fabulous profits might be revised. The bipartisan nature of the initiative should reassure readers that
there's no philosophical issue here. It's purely bidness. You, private equity, have been remiss in your patriotic duty. Cough up. Anyone who
recalls the junk bond wars of the 1980s will notice a pattern. Then too, Congress was awash in proposals for taxing the takeover industry: by
eliminating the interest deduction for junk bond interest, by imposing an excise tax on assets acquired in a hostile takeover, etc. These ideas
came to naught, not least because of the fright the proposals put into the stock market. But the endless debate unlimbered a delicious flow of campaign dollars from all concerned. …the message has been received.
Private equity has now set up a Washington trade group and has opened its pockets to politicians, with Barack Obama being a special heartthrob. Oh, happy day for members of the House and Senate tax
committees, who lived for years off the junk bond wars and now will live for years off the private equity plutocrats.
Tuesday, June 12, 2007 ~ 11:53 a.m., Dan Mitchell Wrote: A five-storey office block in the Cayman Islands on Wednesday became the unlikely focus of US congressional concern over offshore tax havens
as lawmakers ordered government inspectors to fly to the Caribbean to inspect "shady transactions" in the building. Ugland House, a nondescript structure on Grand Cayman island, is home to over 12,000
companies, according to the Senate finance committee. ...Mr Baucus has now asked officials from the Government Accountability Office to travel to the Caymans to investigate Ugland House. May 2007, The Facts about Company Formation in the Cayman Islands, by Ted Bravakis, Cayman Islands Government
Tuesday, June 12, 2007 ~ 11:00 a.m., Dan Mitchell Wrote: ...disputes over public money and how to spread it fairly are rife across large tracts of Europe, eroding national solidarity, feeding separatism, encouraging populism, and generating friction between Europe's wealthy centres of excellence and their less fortunate national hinterlands. The rich bits of Europe are revolting. And it is some of the most successful and attractive cities on the continent that are in the revolutionary vanguard. From the fashion and finance mecca of Milan to the hi-tech centre of Munich, from the world's diamond capital, Antwerp, to the vibrant coastal hub of Barcelona, Europe's most dynamic cities and regions are increasingly rebelling against "subsidising" the poorer parts of their countries, demanding to keep their home-grown wealth, and causing headaches for central governments. ...In Italy, the centre-left government of Romano Prodi has just received a drubbing in local elections, particularly in the north, not least because the north perceives Rome as the agent pilfering its hard-earned cash only to hand it over to the "spongeing" south where the Mafia and Camorra soak up the subsidies. ...In Belgium, Flemish nationalists complain that the public sector payrolls in Wallonia are twice the size of those in Flanders. "It's majority socialist in the south, the last Soviet republic in Europe," says Filip Dewinter, the Vlaams Belang leader. "They're stealing our money with the collaboration of the government in Brussels. We're a hard-working people, very prosperous, low unemployment, and we're giving them EUR12bn (Ł8bn) every year to finance their social security. We can stand alone." In Germany, the wealthy southern states of Bavaria and Baden-Württemberg balked at the Berlin government's health service reforms last year because they had to pay more into the national kitty than poorer parts of Germany. In Britain, in the debate over Scottish devolution or independence, the wealthy south-east appears increasingly aggrieved over the Barnett formula that ordains higher per capita public spending in Scotland than in England. http://www.guardian.co.uk/eu/story/0,,2099899,00.html
Monday, June 11, 2007 ~ 12:39 p.m., Dan Mitchell Wrote: Modern humans first emerged about 100,000 years ago. For the next 99,800 years or so, nothing happened. Well, not quite nothing. There
were wars, political intrigue, the invention of agriculture -- but none of that stuff had much effect on the quality of people's lives. Almost everyone lived on the modern equivalent of $400 to $600 a year, just
above the subsistence level. True, there were always tiny aristocracies who lived far better, but numerically they were quite insignificant. Then
-- just a couple of hundred years ago, maybe 10 generations -- people started getting richer. And richer and richer still. Per capita income, at
least in the West, began to grow at the unprecedented rate of about three quarters of a percent per year. A couple of decades later, the same
thing was happening around the world. ...Rising income is only part of the story. One hundred years ago the average American workweek was over 60 hours; today it's under 35. One hundred years ago 6% of
manufacturing workers took vacations; today it's over 90%. One hundred years ago the average housekeeper spent 12 hours a day on laundry, cooking, cleaning and sewing; today it's about three hours.
...The moral is that increases in measured income -- even the phenomenal increases of the past two centuries -- grossly understate the real improvements in our economic condition. The average middle-class
American might have a smaller measured income than the European monarchs of the Middle Ages, but I suspect that Tudor King Henry VIII would have traded half his kingdom for modern plumbing, a lifetime
supply of antibiotics and access to the Internet.
Monday, June 11, 2007 ~ 11:11 a.m., Dan Mitchell Wrote: The lower chamber of the Czech parliament agreed Thursday to consider the government's proposed tax reforms and cuts in welfare
spending, rejecting a motion by the opposition to dismiss the draft in its first reading. The draft, which has to win parliament's approval in a
final vote this summer, includes cuts in social spending meant to lower the budget deficit and prepare for the adoption of the euro. If approved,
a 15 percent flat tax on personal income would be introduced in 2008. Currently, the personal tax rate ranges from 12 percent to 32 percent, depending on income. The corporate tax rate would be cut from 24
percent to 19 percent by 2010. ...The draft also includes cuts in social benefits, unemployment benefits, maternity leave payments and health care spending. ...It was not clear whether Prime Minister Mirek
Topolanek, whose Civic Democratic Party governs in coalition with the Christian Democrats and the Greens, can win parliamentary approval for the reform in the final vote, scheduled for this summer. In the
200-seat lower chamber, the coalition holds only 100 seats.
Sunday, June 10, 2007 ~ 8:15 p.m., Dan Mitchell Wrote: For those who commit physical crimes against others based on race, religion, or sexual orientation I have no sympathy. But the notion that
government can punish thoughts and opinions, even offensive ones, is frightening. ...the Local Law Enforcement Hate Crimes Prevention Act of 2007, this bill would pour federal resources into prosecutions based
on suspicions about a person's thoughts and beliefs, not just his alleged criminal act(s). While criminal law treats all violent acts equally, the
proposed law would additionally punish the accused for any prejudice they might have toward the victim. Instead of ending discrimination, this bill would create a judicial caste system in American society by
creating categories where some victims are given more consideration and attention than others. This is a direct affront to the equal protection
provision of the U.S. Constitution. ...We lock people up for criminal acts. That penalty is already established in law. This bill would allow government to further punish them for their alleged beliefs. ...The
question we face is if the federal government should have the power to lock people away for beliefs flowing from their religion. Think it can't happen? In Sweden, a pastor was imprisoned for 30 days for simply
expressing his faith's view of homosexuality in a sermon. In Canada, Christian leaders received a hefty fine for expressing the same view over the radio. And right here in America, in Philadelphia eleven people
were arrested and prosecuted for sharing the Christian gospel at a homosexual rally. No violence was committed in any of these situations. They were simply punished for expressing their faith.
Saturday, June 9, 2007 ~ 6:14 p.m., Dan Mitchell Wrote: ...the Fair Pay Act...is the result of profoundly unserious economic thinking. That Obama put his name to it has to give pause. ...June
O'Neill, a certifiably female economist who served as director of the Congressional Budget Office under President Clinton, wrote a peer-reviewed paper for the American Economic Review (May 2003),
trying to account for the pay gap. What she found was that women are much more likely over the course of their lives to cut back their hours or
quit work altogether than men. That matters, because even though the BLS was comparing full-time workers, if you go part-time or take years
out of the labor force, that has an effect on earnings down the line, due to loss of seniority or missed promotions. ...All told, women are more
than twice as likely to work part-time as men and over the course of their lifetimes, work outside the home for 40% fewer years than men. That accounts for a significant chunk of the pay gap. Then there is a
more subtle factor. ...The simple fact is - and there is nothing nasty or conspiratorial about it - the sexes continue to choose different avenues
of study and different types of jobs. Here's an illustrative example. ...Men make up about 80% of engineering majors. Women predominate among liberal arts majors - whose salaries start at a little more than
$30,000. Putting it all together, OąNeill figures that these differences - in choice of work, years in the workforce, and hours of work - could account for as much as 97.5% of the differences in pay between men
and women. ...Discrimination occurs when people are barred from professions for which they are qualified, or paid less for doing the same job. It is not discrimination to freely make a choice that has an
undeniable economic consequence. ...The theory behind the Fair Pay Act is that the labor market intentionally sets wages in a way that is unfair to women - and apparently we are so stupid that we fall right into
this trap, repeatedly making non-rational choices (not just different ones). Again, the facts suggest otherwise. Since 1979, as more women have entered and stayed in the labor force for longer periods, the pay
gap has narrowed, from 63% then to 81% now. Over the same period, according to the BLS, women's earnings have grown much faster than those of men. Women who work part-time actually make more than men
who work part-time; and never-married women make almost exactly as much (96.7%) as never-married men. ...The Fair Pay Act takes a sledgehammer to deal with this gnat-sized differential. Under its
provisions, the Equal Employment Opportunity Commission (EEOC) would create criteria determining whether a given job is dominated by one sex; employers would have to send the EEOC every year a listing of
each job classification, the race and sex of those holding such jobs; how much they are paid; and how such pay was determined. The goal of all
this is to ensure that people in "equivalent" jobs are paid similar wages. ...And who would decide what is equivalent? The federal government, of
course. Forget the price signal: Congress is on the job! ...The premise of the Fair Pay Act is that it is the duty of government to decide what a
job is worth; but value is something that a free market is brilliant at apportioning. First-year chemical engineers make $60,000 because that is what their employers have to pay in order to win their services.
Libraries can get excellent new staff for less. Librarians, male and female alike, know this; they may wish it were different but unequal is
not the same thing as unfair. ...there is nothing so wrong with [the labor market] that the federal government needs to wade in, classify every single job for every company with more than 25 employees, and then
assume the right to micro-manage every decision over pay. It's hard to overstate just how radical a policy this is: replacing a well-functioning
system that is regarded as a source of U.S. competitive advantage with statist, centralized, bureaucratized mechanism of a kind more familiar to, say, East Germany in the 1980s than to the 21st century American
private sector. The Fair Pay Act is, in short, madness.
Friday, June 8, 2007 ~ 1:53 p.m., Dan Mitchell Wrote: New York City's business tax rate dwarfs those of other cities and needs to be reviewed to make the city more competitive, according to a new
report by the nonpartisan Citizens Budget Commission. Business taxes in the city are more than double those in Westchester Country and more than 70% higher than those in Los Angeles, the study found. The
average effective business tax rate in the city is 7.5%. It is 5.2% in Houston, 5.1% in Boston, and 5% in Newark and Miami. The report noted that the discrepancy in tax rates between New York and other
cities would be even greater had the analysis included several other taxes paid by city businesses, including the commercial rent tax, the real
property transfer tax, and the mortgage recording tax. …The study says the city can afford a tax reduction, as it has a surplus of more than $4
billion. This is the third consecutive year the city has collected a surplus exceeding $3.5 billion.
Friday, June 8, 2007 ~ 12:15 p.m., Dan Mitchell Wrote: European finance ministers yesterday failed to agree on new rules for examining unfair tax competition between member states, after protests
from the Netherlands, Belgium and Hungary. Dutch junior finance minister Jan Kees de Jager refused to back an expansion of the role of an EU tax working party led by former British minister Dawn
Primarolo, saying there was a lack of transparency. De Jager said the group treats small EU countries more harshly than the big member states. The group has criticised Dutch tax measures nine times since its
foundation in 1997.
Friday, June 8, 2007 ~ 11:00 a.m., Dan Mitchell Wrote: German finance minister Peer Steinbrück yesterday accused Ireland of...engaging in unfair tax competition. In a stinging public attack on
Irish corporate tax policy, Mr Steinbrück said states such as Ireland risked jeopardising the EU idea if they continued in this manner. ...The
criticism from Germany, which holds the six-month rotating presidency of the EU, followed a discussion on a proposal to harmonise the EU corporate tax base. Ireland strongly opposes this idea... At yesterday's
meeting in Luxembourg, Ireland, along with several other member states, restated their trenchant opposition to the measure. The Government fears that harmonising the base on which corporate tax is
levied will inevitably lead to a harmonisation of the corporate tax rate. ...Germany has long been a staunch critic of Ireland's low corporate tax
policy, which it accuses of unfairly attracting investment from abroad. But rarely has a German minister spoken out so publicly against it.
Thursday, June 7, 2007 ~ 1:58 p.m., Dan Mitchell Wrote: Last year more than 155,000 Germans emigrated from their native country. Since 2004 the number of ethnic Germans who leave each year
is greater than the number of immigrants moving in. ...In a survey conducted in 2005 among German university students, 52 percent said they would rather leave their native country than remain there. ...Some
complain that the tax rates in Germany are so high that it is no longer worthwhile working for a living there. ...The situation is similar in other
countries in Western Europe. Since 2003, emigration has exceeded immigration to the Netherlands. In 2006, the Dutch saw more than 130,000 compatriots leave. ...In Belgium the number of emigrants
surged by 15 percent in the past years. In Sweden, 50,000 people packed their bags last year -- a rise of 18 percent compared to the previous year
and the highest number of Swedes leaving since 1892. In the United Kingdom, almost 200,000 British citizens move out every year. Americans who think that the European welfare state is the model to
follow would do well to ponder the question why, if Europe is so wonderful, Europeans are fleeing from it. European welfare systems are redistribution mechanisms, taking money from skilled and educated
Europeans... a German sociologist at the University of Bremen, warns European governments that they are mistaken if they assume that qualified young ethnic Europeans will stay in Europe. "The really
qualified are leaving," Mr. Heinsohn says. "The only truly loyal towards France and Germany are those who are living off the welfare system,
because there is no other place in the world that offers to pay for them... It is no wonder that young, hardworking people in France and Germany choose to emigrate," he explains.
Thursday, June 7, 2007 ~ 1:04 p.m., Dan Mitchell Wrote: ...whatever politicians do, whether it's rent controls to produce "affordable" housing, or price controls to eliminate "price-gouging,"
the result is a calamity worse than the original problem. For example, two of the most costly housing markets are the rent-controlled cities of San Francisco and New York. If you're over 40, you'll remember the
chaos produced by the gasoline price controls of the 1970s. Socialist agendas have considerable appeal, but they produce disaster, and the more socialist they are, the greater the disaster. ...Free markets,
characterized by peaceable, voluntary exchange, with respect for property rights and the rule of law, are more moral than any other system of resource allocation. ...Liberals love to talk about this or that
human right, such as a right to health care, food or housing. That's a perverse usage of the term "right." A right, such as a right to free speech, imposes no obligation on another, except that of
non-interference. The so-called right to health care, food or housing, whether a person can afford it or not, is something entirely different; it
does impose an obligation on another. If one person has a right to something he didn't produce, simultaneously and of necessity it means that some other person does not have right to something he did
produce. That's because, since there's no Santa Claus or Tooth Fairy, in order for government to give one American a dollar, it must, through intimidation, threats and coercion, confiscate that dollar from some
other American. ...The act of reaching into one's own pockets to help a fellow man in need is praiseworthy and laudable. Reaching into someone else's pocket is despicable and worthy of condemnation.
Thursday, June 7, 2007 ~ 12:26 p.m., Dan Mitchell Wrote: EU finance ministers meeting in Luxembourg on Tuesday (5 June) urged France to stick to its EU deficit reduction targets amid concerns
about the implications of president Nicolas Sarkozy's tax-cutting plans. ...Mr Juncker's warning is in response to plans announced by Mr
Sarkozy last month to give the country a "fiscal shock" by undertaking a series of tax-cutting measures likely to cost up to EUR20 billion. The
proposed measures include almost entirely scrapping inheritance tax and cutting tax on overtime.
Thursday, June 7, 2007 ~ 11:50 a.m., Dan Mitchell Wrote: Last month the Democrats who run the Legislature in St. Paul pushed through a big tax and spending increase in their $35 billion state
budget. Last week Mr. Pawlenty responded by vetoing all six of the spending and tax bills the Democrats sent him. The usual media and interest group suspects are upset, but Mr. Pawlenty is rallying his own
supporters and making himself a defender of the taxpaying middle class. …The Democratic plan would have raised the state's top marginal income tax rate to 9.7% from 7.85%. That's right up there with
California, New York and New Jersey in the top five of confiscatory taxation states. Democrats also proposed a gas tax hike, a new real estate tax, and a tax on cell phones. In all, Democrats wanted to raise
some $5 billion in income taxes, and new taxes on gas, beer, real estate transactions, cell phones and even a strange new death tax: a tripling of
taxes on hearses. These would have raised taxes by about $2,000 for every income tax filer in the state. …One reason Congressional Republicans were run out of their majority was because they lost their
"brand" identity as conservative fiscal stewards. Mr. Pawlenty narrowly survived re-election in that dreadful Republican year. Now he's shrewdly expending political capital to good effect to beat back
Democratic tax-and-spend policies that could damage Minnesota for years to come. Are Republicans in Washington paying attention?
Wednesday, June 6, 2007 ~ 2:16 p.m., Dan Mitchell Wrote: Luxembourg, which has become a center for e-commerce in Europe because of its low sales tax, held off an assault on that lucrative
business Tuesday by the rest of the European Union. At a meeting of EU finance ministers in the small but prosperous duchy, Luxembourg refused to agree to a lifting of the tax advantages that have prompted
iTunes, Skype, eBay and other big Internet companies to set up shop there. That effectively blocked the package, because adoption of tax measures requires unanimous agreement by all 27 EU members.
Telecommunications companies, satellite broadcasters and other companies providing online services apply a value added, or sales, tax based on where the company is established, not where the customer is.
That makes Luxembourg, where VAT on Internet-related sales is 15 percent, an attractive place to operate. ...EU ministers had hoped for a deal that would force companies to charge sales tax on services
delivered online at the rate set in the country where they are bought. Such a move could prove a boon to tax collectors in countries like Germany and France. ...This is not the first time that the Grand Duchy
has been at the center of controversy over tax rates. For years French and German savers have invested their cash in Luxembourg and avoided tax on interest income.
Wednesday, June 6, 2007 ~ 12:41 p.m., Dan Mitchell Wrote: In a move aimed at creating a friendlier investment climate and making the economy more competitive, the Albanian government approved a
fiscal package last week that includes implementing a 10% flat tax -- the lowest level in Southeast Europe. Corporate taxes will also be slashed to 10%. …Advocates of the move say it will bring many
benefits. In addition to attracting Foreign Direct Investment, they say, it will encourage the legalisation of the shadow economy and simplify tax
collection. Economic activity increases, and so does honest reporting of income, while tax evasion drops. …The government hopes to implement the legislation by July 1st, with the exception of the corporate tax
reduction, which will be implemented January 1st, 2008. The Democratic Party-led government has already instituted various tax reductions during the past two years. The most important of these was
the reduction of social security contributions from businesses, from 29% to 20%, and a lowering of taxes on small businesses.
Wednesday, June 6, 2007 ~ 11:37 a.m., Dan Mitchell Wrote: The average Briton is effectively paying ten pence more on the pound in income tax as a result of Gordon Brown's ten years in charge of the
nation's purse strings, according to a new report. The study by business advisers Grant Thornton attributes about 70% of this increase in the tax burden to so-called 'fiscal drag', also known as 'bracket creep'
whereby the government fails to adjust marginal income tax brackets in line with wage inflation, meaning more taxpayers have been dragged into the higher income tax bands during Brown's tenure at the Treasury.
This effect also applies in other areas of taxation, such as inheritance tax, where house prices have rocketed during the last ten years, but the threshold at which IHT becomes payable has, comparatively, barely
moved. The government's own figures show that 3.5 million taxpayers now pay tax at the higher rate of 40% - a 58% rise since the Labour government came to power in 1997. …And despite Brown's decision to
decrease the rates of corporate and personal income tax by 2% in his last budget before succeeding Tony Blair as Prime Minister, tax advisers say that lost revenue will be clawed back and more through
less-publicised tax changes elsewhere. Francesca Lagerberg, head of Grant Thornton's national tax office, noted: "Despite headline announcements in this year's Budget of dropping the basic rate of
income tax, aligning national insurance contributions and reducing mainstream corporation tax, the reality is that other increases will lead
to a maintenance of the status quo." "Aligning national insurance to a higher tax threshold will in total eat away most, if not all of the savings
generated from cutting the basic rate of income tax by 2 pence to 20 pence from April 2008," she added.
Tuesday, June 5, 2007 ~ 7:11 a.m., Dan Mitchell Wrote: The Law of the Sea Treaty, deep-sixed years ago by the Reagan Administration, resurfaced last month when President Bush issued a
statement urging its ratification. Let's hope the Senate sends it back to the bottom of the ocean. Launched by the United Nations in 1982, the Law of the Sea Treaty creates a new global bureaucracy to manage the
ocean and its resources, with disputes settled by a new global court. Twenty-five years later, with Oil for Food and other U.N. follies behind us, the prospect of handing management of two-thirds of the Earth's
surface over to another unaccountable international body is, if anything, even less attractive. ...It is not in the national interest of the U.S. to have its maritime or economic power subject to the whims of a
highly politicized U.N. bureaucracy often driven by an anti-American agenda. Nor is it in its interest to be a party to another treaty that other signatories might flout with impunity.
Tuesday, June 5, 2007 ~ 6:54 a.m., Dan Mitchell Wrote: The idea for the city clowns came from comedian Mona Ratalahti, occupational well-being trainer Riita Harilo, and its godmother was
Kirsi Koski, head of the Mayor's office. Koski has worked as the city's head of personnel for three years. "I have thought about what would be
the core of well-being. Yes, it is laughter", Koski says. "It is all right to laugh at craziness - at what is not said out loud in business discussions."
Ratalahti feels that a clown nose "changes us and the viewer in such a way that forces people to look at things differently". ...Tampere's city
clowns are the 41st idea that the "Creative Tampere" programme has decided to support. The programme has a budget of EUR 12 million to back corporate ideas worthy of development. The EUR 25,000
earmarked for the clowns makes it possible for four artists, who have mostly worked alone, can concentrate on joint projects.
Monday, June 4, 2007 ~ 12:35 p.m., Dan Mitchell Wrote: ...most companies are paying much more to the Big Four today. As a result, shareholders earn less than they would otherwise. Companies
contemplating an IPO reportedly give serious consideration to exchanges on other continents, notably in London or Hong Kong. Employees, exhausted by the amount of time and energy they devote to
compliance-oriented chores that corporations have piled on top of their existing job descriptions, have become both discouraged and risk averse. And all of the above, taken together, would appear to have
rendered us less competitive as an economy. My own company (SVB Financial Group, which trades on the Nasdaq) is likely indicative. In 2006 we paid over $20 million to the Big Four (including what is left of
Arthur Andersen), for an average of about $17,000 per employee. This is more than five times as much as we paid them only three years ago. ...everybody seems to be operating from a position of fear, of rejection
or remonstrance. ...Neither companies nor auditors can really understand all of the primary accounting pronouncements coming out of the FASB, the number of which has gone from 104 in 1989 to 159
today. Many of them are 50 pages or more in length with accompanying interpretations that may be 10 times as long as the pronouncement itself. ...The SEC is contributing to the fear factor as well, and in many
of the same ways as the PCAOB.
Monday, June 4, 2007 ~ 11:11 a.m., Dan Mitchell Wrote: Canton Obwalden's degressive tax system, aimed at attracting wealthy residents, has been ruled unconstitutional by the Swiss Federal Court. The country's highest court said on Friday that degressive income taxes ran counter to constitutional measures designed to ensure taxation according to economic performance. ...Obwalden had adopted a degressive income tax system which meant that the richer you are, the less you pay. Those earning over SFr300,000 ($233,000) per year, for example, had a tax rate as low as one per cent. It was introduced in 2006 following a cantonal vote as a way of boosting the fortunes of Obwalden, one of the poorest cantons located in Switzerland's mountainous centre. ...Friday's court ruling comes in response to a case brought by Communist parliamentarian Josef Zisyadis - who moved to Obwalden to oppose the tax charges... The Finance Ministry said that the court's decision would neither change the system of tax competition between the cantons nor encourage tax harmonisation. It emphasised that federalism and tax competition were essential parts of Swiss identity that also made the country more attractive for foreign companies. http://www.swissinfo.org/eng/front/detail/Court_strikes_down_Obwalden_ta x_break_for_rich.html?siteSect=105&sid=7884347&cKey=118071541400 0
Monday, June 4, 2007 ~ 8:34 a.m., Dan Mitchell Wrote: The Irish Taxation Institute (ITI) has called for political, business and representative groups to unite against moves to harmonise European
taxes. ITI made the call on a day when the German Presidency of the EU hosted a meeting in Berlin on the subject of the Common Consolidated Corporate Tax Base or CCCTB. Commenting on the
issue, Mark Redmond, CEO of the ITI said moves towards a common means of paying corporate taxes in the EU is bad for Ireland and bad for Europe. "The more you harmonise taxes, the more tax rates will
rise, the more compliance costs will rise and the more unemployment will rise. The proposals put forward to date remain vague. They fail to come clean on the burden they will bring on both domestic and
international businesses and they fail to address the widely held belief that it will mean higher corporate tax rates by the backdoor," he warned.
Sunday, June 3, 2007 ~ 2:44 p.m., Dan Mitchell Wrote: As tax reform sweeps the world, Canada stands resolutely on guard for high rates. ...the two essential principles of good government remain
unchanged: (1) If you want more of something, subsidize it; (2) if you want less of something, tax it. ...Britain's Margaret Thatcher, a conservative, was the first leader in Europe to cut corporate rates. In
the 1980s, she reduced them from 52 per cent to 35 per cent. This was the catalyst. As KPMG observed last year in a global review of corporate taxes, once Britain acted, "other [European] countries
seemed compelled to do the same." ...In 1987, Denmark went from 50 per cent to 30 per cent. In 1991, Sweden went from 60 per cent to 28 per cent. In 1992, Norway went from 51 per cent to 28 per cent. In
1993, Finland went from 43 per cent to 25 per cent. Germany and France, bastion countries of Europe, fiercely resisted, trying to turn tax competition into a criminal conspiracy. Yet, in 2000, Social Democrat
chancellor Gerhard Schroeder cut Germany's corporate federal rate from 40 per cent to 25 per cent. (Combined with local and regional corporate taxes, the country's rate remained one of the highest in the
world at 40 per cent.) Now, finally, Germany has capitulated, surrendering unconditionally, cutting its combined rate from 40 per cent to 30 per cent. ...France, in turn, will cut its corporate rate, now 33 per
cent, by "a minimum of five percentage points" - assuming French President Nicolas Sarkozy, a conservative, keeps this promise. Spain's
socialist Prime Minister, Jose Luis Rodriguez Zapatero, has announced that he will cut rates by as much as France. In the past 14 years (1992-2006), KPMG calculated that the average corporate tax rate in
the world has fallen by almost one-third - from 38 per cent to 27 per cent. The economic evidence, the company said, indicates that the
countries that adopted lower rates had tended to "do better" than the countries that had not.
Sunday, June 3, 2007 ~ 11:43 a.m., Dan Mitchell Wrote: For a nation that invented the term "guest worker" for its immigrant labourers, Germany is facing the sobering fact that record numbers of
its own often highly-qualified citizens are fleeing the country to work abroad in the biggest mass exodus for 60 years. Figures released by Germany's Federal Statistics Office showed that the number of
Germans emigrating rose to 155,290 last year - the highest number since the country's reunification in 1990 - which equalled levels last experienced in the 1940s during the chaotic aftermath of the Second
World War. ...Leading economists and employers say the trend is alarming. They note that many among Germany's new breed of home-grown "guest workers" are highly-educated management
consultants, doctors, dentists, scientists and lawyers. ...Fed up with comparatively poor job prospects at home - where unemployment is as high as 17 per cent in some regions - as well as high taxes and
bureaucracy, thousands of Germans have upped sticks for Austria and Switzerland, or emigrated to the United States. ...More than 18,000 Germans moved to Switzerland last year. The US was the second most
popular destination with 13,245, followed by Austria with 9,309. Switzerland already has a resident German population of 170,000. ...Claus Boche, a 32-year-old executive, left the west German city of
Paderborn two-and-a-half years agoto take up a job with a Swiss management consulting firm. He now lives in Zurich. "Nearly everything is less bureaucratic and more go ahead than in Germany,"
he said. "I also pay about 40 per cent less tax. I have no plans to go back." ...Thomas Bauer, a labour economist from Essen, was scathing
about Germany's employment conditions. "Germany is certainly not attractive when compared to other countries in Europe," he said. "The
taxes are too high, the wages are too low and feelings of jealousy towards high-income earners is widespread. This is a special deterrent to the highly qualified."
Saturday, June 2, 2007 ~ 6:16 p.m., Dan Mitchell Wrote: Senator and Democratic presidential candidate Hillary Clinton has unveiled her economic vision. Should she be given the power to
implement it, we can say goodbye to the prosperity and opportunity we have enjoyed since the Reagan years. …Clinton said she prefers a
"we're all in it together" society: "I believe our government can once again work for all Americans. It can promote the great American
tradition of opportunity for all and special privileges for none." Doesn't such a society already exist elsewhere? It's called socialism, where
government has sought to make all things economically equal and the only equality is that all are equally poor. Wasn't defeating such a society precisely why we fought and won the Cold War? Why does Senator
Clinton wish to embrace the principles of the losing side? …Her assertion is bunk, but it is the typical class warfare bunk that comes from rich white liberals who want to take money from one group of
people and give to others who didn't earn it in hopes they will become loyal Democratic voters. This is not the philosophy that made America
what it is. This is not a land of equal outcome, but of equal opportunity commensurate with one's talents, interests and drive. …I am not robbed by people who have more money than me. I am robbed by a government
that wants to penalize my industry and give increasing portions of what I earn to people who do not emulate my principles, morals and ethics. …
Saturday, June 2, 2007 ~ 4:37 p.m., Dan Mitchell Wrote: …capital and skilled labour are highly mobile these days. Countries compete aggressively for both with lower and lower tax rates. …The
OECD says this competition for lower corporate and personal tax rates will continue. "Globalization favours greater tax competition," the
OECD report says. "It encourages the pursuit of efficiency gains in tax systems - by shifting tax burdens away from capital and labour and
toward property and consumption." …In a single decade, competition has reduced corporate tax rates around the world, the OECD report
notes, "in some countries by a considerable amount." In 1996, the highest corporate tax rate in the world was 60 per cent; in 2006, the
highest rate is 40 per cent. …What will the highest rate be a decade hence? Twenty per cent? Ten per cent? Zero per cent? …Whatever the number, it will be much less than 28 per cent and it will necessarily
determine Canada's rate - unless we are not interested in attracting investment capital and highly skilled workers from abroad (or keeping our own from going abroad). Mr. Flaherty's commitment to lower our
corporate rate to 30 per cent over the next five years means his success will in fact ensure failure. You can't pass the puck to the spot where the
receiver now is - he won't still be waiting there. Mr. Flaherty needs to pass ahead to the receiver's future position, which requires a corporate
rate of less than 20 per cent by 2011. This ought to be easy. No country has yet hurt itself by reducing tax rates, corporate or personal. …the OECD report tracks the steep decline in corporate rates in one, the
subsequent compelling rise in tax revenue in the other. In one decade, the world effectively cut its corporate tax rate in half - and doubled the
revenue it gets from it. This is the Laffer Curve, vindicated again. The Laffer Curve expresses a simple, incontrovertible proposition: that decreases in tax rates can increase tax revenue.
Friday, June 1, 2007 ~ 1:28 p.m., Dan Mitchell Wrote: Is it possible, then, that the writers who have spent the past few years predicting Europe's collapse could be wrong? The short answer is: no.
Even a corpse has been known to twitch once or twice before the rigor mortis sets in. The longer answer is provided by Walter Laqueur in "The
Last Days of Europe," one of the more persuasive in a long line of volumes by authors on both sides of the Atlantic chronicling Europe's
decline and foretelling its collapse. …In the economic field, Europe is celebrating a growth rate of 2.5% annually; in the U.S. a similar pace is
regarded as a crisis. Meanwhile unemployment remains brutally high and productivity stagnant. Mr. Laqueur notes that Europeans sometimes embrace their economic sluggishness as part of their "soft
power" appeal: all those 35-hour weeks, long vacations and generous social benefits. But the long-term cost of their welfare states--and their
confiscatory tax rates--may eventually make such luxuries unaffordable. …as Mr. Laqueur observes, museums are filled with the remnants of vanished civilizations. Abroad, the U.S. has long surpassed Europe in
power, influence and economic dynamism; Asia may do so before long. At home, a profound demoralization has set in, induced in part by the continent's ruinous past century.
Friday, June 1, 2007 ~ 1:01 p.m., Dan Mitchell Wrote: ...the world has seen its share of all-in-it-together societies that have failed. The Soviet Union, East Germany, North Korea and the worker's
paradise/island prison of Cuba enter the mind right away. Then there are the teetering soft-socialist systems of Europe, while socialist/communist power grabs now sapping the wealth and strength
of Zimbabwe and Venezuela are contemporary lessons that can't be ignored. Given these examples, do we really want to turn America into another experiment in collectivism? Are we willing to trade hard-won
freedoms for government-provided security? ...An entitlement mentality has corrupted our nation and left-leaning politicians such as Clinton, as
well as cynical chameleon opportunists, are skilled at exploiting the feelings of those who are driven by envy or guilt. The root problem of a
socialist - or village or nanny - state is that it robs people of their humanity and removes the incentives that bring economic progress. It
produces a soul-draining apathy. The cradle-to-grave system that is the hallmark of socialism provides no motivation for its beneficiaries to work harder, longer and smarter - all keys to greater prosperity.
Irresponsibility, inefficiency and waste - enemies of economic expansion - are encouraged when property is wholly or mostly owned by the state rather than private individuals or corporations.
Friday, June 1, 2007 ~ 12:12 p.m., Dan Mitchell Wrote: …if you're an FDA official, what are your incentives in terms of whether to approve or disapprove the marketing of a drug that has a
tremendous benefit to some patients and poses a health threat to others? Former FDA Commissioner Alexander Schmidt hinted at the answer when he said, "In all our FDA history, we are unable to find a
single instance where a Congressional committee investigated the failure of FDA to approve a new drug. But the times when hearings have been held to criticize our approval of a new drug have been so
frequent that we have not been able to count them. The message to FDA staff could not be clearer." There's little or no cost to the FDA for not approving a drug that might be safe, effective and clinically
superior to other drugs for some patients but pose a risk for others. My question to FDA officials is: Should a drug be disapproved whenever it
poses a health risk to some people but a benefit to others? To do so would eliminate most drugs, including aspirin, because all drugs pose a health risk to some people.
Friday, June 1, 2007 ~ 10:47 a.m., Dan Mitchell Wrote: He's one of Quebec's highest-profile tax avoiders - moving to Ireland, and then to Switzerland to avoid paying Canadian and Quebec income
taxes. For the last few weeks, successful songwriter Luc Plamondon is also the owner of an Order of Canada pin, presented to those who, through their achievements, set an example for other Canadians.
Ironically, the presentation of Plamondon's Order of Canada pin by Governor-General Michaelle Jean in a private ceremony last month comes as the Conservative government is moving to crack down on tax
avoidance by Canadian companies. …some MPs, such as Liberal finance critic John McCallum, say they see nothing wrong with electing a residence outside Canada to avoid Canadian taxes, others, like New
Democrat MP Pat Martin, strongly condemn the practice. "I call it economic treason to be a tax fugitive," said Martin, suggesting that Plamondon return his Order of Canada pin. …In 1999, three years
before he was named to the Order of Canada, Plamondon moved to Ireland, saying he was doing it to avoid high federal and provincial taxes in Canada and to take advantage of its special tax breaks for
artists. "There is an enormous number of writers and musicians from around the world who have moved to Ireland because of the tax savings," Plamondon said when he sold his Montreal home. …Among
the other residents of the Montreux area is Canadian singer Shania Twain, also an Order of Canada recipient. …David Perry, senior research associate with the Canadian Tax Foundation, said countries
like Canada, which has higher tax rates than some other countries, risk having some of their most successful citizens elect to live outside the
country of their birth. "Any country that has had a very high level of taxation on the rich ... soon finds itself exporting that type of talent." A
minority of wealthy Canadians elect to reside outside the country to escape its taxes, and the practice is less common than it once was, he said. However, it nevertheless increases the frustration for other
Canadians left to bear the tax burden, he said.
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