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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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Friday, November 30, 2007 ~ 2:11 p.m., Dan Mitchell Wrote: [Nations] that reformed substantially have had remarkable results. Ireland doubled incomes in a decade after dramatic reductions in the corporate tax rate; Spain integrated
millions of immigrants into its labour market after deregulation; Sweden improved schools by allowing choice; New Zealand achieved full employment by labour market deregulation; Icelandic banks are all over
Europe after privatisation and 16 countries introduced flat tax. ...Political hesitation is underpinned by several myths. One is that free market reforms have socially adverse consequences. This is not true. In
the countries that have reformed the most, the groups that benefited the most were usually low-income earners and the unemployed. They got jobs and higher incomes.
Thursday, November 29, 2007 ~ 4:22 p.m., Dan Mitchell Wrote: Mr. Thompson wants to abolish the death tax and the Alternative Minimum Tax and cut the corporate income tax rate to 27% from 35%.
But his really big idea is a voluntary flat tax that would give every American the option of ditching the current code in favor of filing a simple tax return with two tax rates of 10% and 25%. Mr. Thompson is
getting aboard what has become a global bandwagon, with more than 20 nations having adopted some form of flat tax. Most--especially in Eastern Europe--have seen their economies grow and revenues
increase as they've adopted low tax rates of between 13% and 25% with few exemptions. The main political obstacle to such a reform in
the U.S. has come from liberals, who favor punitive taxes for "class" reasons, and K Street corporate lobbyists who want to retain their
tax-loophole empires. ...We'd prefer a flat tax with one rate instead of Mr. Thompson's two. Once the concession is made that richer people
should pay a higher tax rate, the political temptation is always to raise the rate on the wealthy. The virtue of the single-rate flat tax isn't merely its efficiency but also its moral component: It treats all
taxpayers equally. If a person makes five times more money than his neighbor, he should pay five times more taxes, not 10 or 20 times more.
Wednesday, November 28, 2007 ~ 3:33 p.m., Dan Mitchell Wrote: Americans in the top one percent, like Americans in most income brackets, are not there permanently, despite being talked about and
written about as if they are an enduring "class" -- especially by those who have overdosed on the magic formula of "race, class and gender,"
which has replaced thought in many intellectual circles. At the highest income levels, people are especially likely to be transient at that level.
Recent data from the Internal Revenue Service show that more than half the people who were in the top one percent in 1996 were no longer there in 2005. Among the top one-hundredth of one percent,
three-quarters of them were no longer there at the end of the decade. ...Most income statistics do not follow given individuals from year to
year, the way Internal Revenue statistics do. But those other statistics can create the misleading illusion that they do by comparing income brackets from year to year, even though people are moving in and out
of those brackets all the time.
Tuesday, November 27, 2007 ~ 10:02 p.m., Dan Mitchell Wrote: At the insistence of the Portuguese EU presidency, all 27 EU leaders and their delegations will fly to Lisbon on 13 December for a special
signing ceremony of the bloc's new treaty - and then jet on to Brussels for a regular EU summit meeting the next day. The cumbersome travel arrangements allow Portugal to call the new treaty the 'Lisbon Treaty'
- but they have also led to criticism that EU leaders are setting a bad example by preaching about green values but then unnecessarily contributing to global warming through the short round trip. To reduce
at least part of the summit's carbon footprint, the Benelux leaders will board a Dutch government airplane when flying to and from Lisbon - something suggested by Mr Balkenende.
Monday, November 26, 2007 ~ 4:15 p.m., Dan Mitchell Wrote:
Monday, November 26, 2007 ~ 3:46 p.m., Dan Mitchell Wrote: Had Toni Vernelli gone ahead with her pregnancy ten years ago, she would know at first hand what it is like to cradle her own baby, to have
a pair of innocent eyes gazing up at her with unconditional love, to feel a little hand slipping into hers - and a voice calling her Mummy. But the very thought makes her shudder with horror. Because when Toni
terminated her pregnancy, she did so in the firm belief she was helping to save the planet. ...At the age of 27 this young woman at the height of
her reproductive years was sterilised to "protect the planet". Incredibly, instead of mourning the loss of a family that never was, her
boyfriend (now husband) presented her with a congratulations card. ..."Every person who is born uses more food, more water, more land, more fossil fuels, more trees and produces more rubbish, more
pollution, more greenhouse gases, and adds to the problem of over-population." While most parents view their children as the ultimate miracle of nature, Toni seems to see them as a sinister threat
to the future. ...Toni is far from alone. When Sarah Irving, 31, was a teenager she sat down and wrote a wish-list for the future. ...Sarah dreamed of helping the environment - and as she agonised over the
perils of climate change, the loss of animal species and destruction of wilderness, she came to the extraordinary decision never to have a
child. "I realised then that a baby would pollute the planet - and that never having a child was the most environmentally friendly thing I
could do." ...Mark adds: "Sarah and I live as green a life a possible. We don't have a car, cycle everywhere instead, and we never fly. "We
recycle, use low-energy light bulbs and eat only organic, locally produced food. "In short, we do everything we can to reduce our carbon footprint. But all this would be undone if we had a child.
"That's why I had a vasectomy. It would be morally wrong for me to add to climate change and the destruction of Earth.
Sunday, November 25, 2007 ~ 7:22 p.m., Dan Mitchell Wrote: The gross total of collected taxes in first 10 months this year was EUR 263.5mn or nearly 40% more than in the same period last year,
reported Montenegro Tax Administration. ...personal income taxes increased by 12.8%... Nearly EUR 29.7mn of corporate income taxes were collected which is 2.5 times more than in the same period last year.
Saturday, November 24, 2007 ~ 1:40 p.m., Dan Mitchell Wrote: Almost two thousand people who are too fat to work have been paid a total of £4.4 million in benefit, it emerged last night. Other payments
went to fifty sufferers of acne... Billions of pounds is being paid in benefits to people claiming to be unable to work because they suffer from depression, stress, fatigue and unknown or unspecified diseases.
...Frank Field, a former Social Security Minister, said last night that too many people were working the incapacity benefit system to avoid
work. "It is a racket, which governments have allowed to exist for far too long. I do not blame people for working the system, it is the job of
politicians to stop them doing it." ...The number on incapacity benefit has more than trebled since 1979... More than £2 billion was paid in
2006-07 for mental health complaints, including £518 million to those with what are described as "unknown and unspecified" diseases.
Friday, November 23, 2007 ~ 6:11 a.m., Dan Mitchell Wrote: The EC argues these cantonal company tax regulations restrict trade in goods between Switzerland and the EU, and distort competition. ...the
Swiss delegation, led by Alexander Karrer, Head of the Monetary Affairs and International Finance Division in the Federal Department of Finance, and including representatives from the cantons, argued
that Swiss taxes do not distort bilateral trade, because the types of company concerned in Switzerland have no, or at most subordinate, business operations which are taxed normally. ...Furthermore, the
Swiss emphasised that both domestic and foreign-controlled companies are entitled to take advantage of holding-company privileges. The European Commission is basing its legal argument against Switzerland
on the latter's alleged breach of state aid rules, which, in the EU, are in place to prevent member states from favouring certain companies and
industries with beneficial tax rules and subsidies. But the Swiss say that the EC's arguments rest on shaky very legal ground, pointing out that the country is neither an EU member or part of the Single European
Market, nor party to the competition regulations of the EC Treaty, including those on state aid. Moreover, Bern insists that even if the tax laws in question were covered by the 1972 Free Trade Agreement, they
would not fall under the EU's definition of state aid, because they do not favour certain companies or industries. Interestingly, the Swiss government recently released a report (http://www.efd.admin.ch/aktuell/medieninformation/00462/index.html?lang=en&m sg-id=15501) exposing the European Commission's hypocrisy. The full report is only available in French and German, but Pierre Bessard of the Institut Constant de Rebecque in Switzerland (http://www.institutconstant.ch/?lang=e) shared with me his useful analysis. On the broader issue, Pierre noted that the report revealed that "the EU allows many exceptions to its supposed prohibition of fiscal state aids, and allows generous subsidies while limiting tax competition, while Switzerland does not subsidizes businesses but allows greater tax competition, which leads to innovation in the public sector and relative government efficiency." And on the specific issue of state aid, Pierre also explains that the report reveals that "65% of state subsidies in the EU go to manufacturing and services, and only 26% to agriculture." In other words, the subsidies for business in the EU, which clearly do create an un-level playing field, are more than twice the size of the widely criticized subsidies from the Common Agricultural Policy. In Switzerland, by contrast, individual businesses do not receive handouts and instead are allowed to compete in a low-tax environment. At first glance, this Swiss-EC spat may seem interesting just to tax geeks, but do not be surprised if the United States is ensnared in this type of fight at some point in the future. Statist academics and policymakers already are making the argument that low tax rates "distort" trade by causing jobs and investment to migrate away from high-tax jurisdictions. It is not inconceivable to think that the European Court of Justice might accept this argument at some point, thus paving the way for more extensive tax harmonization in Europe. The next step would be the World Trade Organization. I hope my fears are misplaced, but experience teaches us that politicians are very clever at expanding the power of the state.
Friday, November 23, 2007 ~ 5:42 a.m., Dan Mitchell Wrote: The possibility of separating Guam from the federal tax code is one of the issues being examined by the 10-member Legislative Tax Review
Commission. De-linking from the U.S. tax code makes a lot of sense... If Guam is able to de-link from the U.S. tax code, the island would have the opportunity to be the economic model for the nation by
adopting the simplest tax there is -- a flat tax. A flat tax would greatly simplify the filing of taxes and increase our tax base. All income is
taxed once and at the same rate, meaning that everyone pays his or her fair share. It would also cut down on the bureaucracy and time spent filing, processing and collecting taxes. More importantly, it would
stimulate economic growth.
Thursday, November 22, 2007 ~ 3:00 p.m., Dan Mitchell Wrote: When the Pilgrims first settled the Plymouth Colony, they organized their farm economy along communal lines. The goal was to share
everything equally, work and produce. They nearly all starved. Why? When people can get the same return with a small amount of effort as with a large amount, most people will make little effort. Plymouth
settlers faked illness rather than working the common property. Some even stole, despite their Puritan convictions. Total production was too meager to support the population, and famine resulted. Some ate rats,
dogs, horses and cats. ...Gov. William Bradford in his diary...said, "began to think how they might raise as much corn as they could, and
obtain a better crop than they had done, that they might not still thus languish in misery. At length after much debate of things, [I] (with the
advice of the chiefest among them) gave way that they should set corn every man for his own particular, and in that regard trust to themselves. And so assigned to every family a parcel of land." The
people of Plymouth moved from socialism to private farming. The results were dramatic. "This had very good success," Bradford wrote,
"for it made all hands very industrious, so as much more corn was planted than otherwise would have been. By this time harvest was come, and instead of famine, now God gave them plenty..." What
private property does -- as the Pilgrims discovered -- is connect effort to reward, creating an incentive for people to produce far more. Then,
if there's a free market, people will trade their surpluses to others for the things they lack. Mutual exchange for mutual benefit makes the community richer.
Thursday, November 22, 2007 ~ 2:51 p.m., Dan Mitchell Wrote: A veteran political activist is facing 10 years in prison and a hefty fine for attempting to petition government for redress of grievances. The
latest news from Pakistan? No, this is happening in Oklahoma. Last month Paul Jacob, the former head of U.S. Term Limits and current head of Citizens in Charge, was led out of an Oklahoma City
courtroom in handcuffs after pleading not guilty to charges that he conspired to defraud the state. Oklahoma Attorney General Drew Edmondson, who's overseeing this bizarre prosecution, has accused Mr.
Jacob and two fellow petition organizers--Rick Carpenter of Oklahomans in Action and Susan Johnson of National Voter Outreach--of bringing out-of-state petition gatherers to Oklahoma to
collect signatures. ...Ironically, it is perfectly legal for opponents of a petition to solicit money and manpower from out-of-state. ...After the Oklahoma Supreme Court ruled, Attorney General Edmondson could
have let the matter die. Instead, he decided that the best use of scarce prosecutorial resources was to indict the petition campaigners. There's
reason to believe his decision has less to do with enforcing the law and more to do with warning activists to think twice before challenging political elites.
Wednesday, November 21, 2007 ~ 11:58 a.m., Dan Mitchell Wrote: The Law of the Sea Treaty, which awaits a ratification vote in the U.S. Senate, declares most of the earth's vast ocean floor to be "the common heritage of mankind" and places it under United Nations ownership "for the benefit of mankind as a whole." ...What's at stake are trillions of tons of vital minerals such as manganese, nickel, copper, zinc, gold and silver -- enough to supply current needs for thousands of years -- spread over vast seabeds constituting 41% of the planet's area. Senate ratification would signify U.S. agreement that the International Seabed Authority, a U.N. agency based in Jamaica, should own these resources in perpetuity. Why should we agree to this? ...Under the proposed treaty, ...the ocean mining companies -- whose science, exploration, technology, and entrepreneurship are being counted on to gather otherwise inaccessible riches -- are treated as mere servants of a world collective. In practice, under the treaty's explicitly socialist approach, mining companies operate as mere licensees who must render hefty application fees as well as continuing payments (read: taxes) and obtain prior approval at every stage of work, under regulations that emerge sluggishly from multinational committees. Licensees must also enrich a U.N.-operated competitor called, spookily enough, "The Enterprise." For every square mile of ocean bottom a licensee explores, half must be relinquished to The Enterprise, free of charge -- and the Enterprise gets to pick the better half. Others have made similar arguments, of course, but this column cleverly shows the danger of giving new powers to a socialist UN bureaucracy by drawing an analogy to the Homestead Act of 1862: A historical example of the proper principle in action is the Homestead Act of 1862. Farmers acquired property rights, i.e., private deeds, to
270 million acres of fertile Midwest prairie land by the productive act of farming it, parcel by parcel. Suppose, instead, that the U.S. government had issued only licenses, not deeds, for the acreage those
farmers carved out of wild prairie land. Then suppose the government had transferred half that hard-won acreage to "The Farm," a giant government-owned competitor whose field hands the farmers would be
expected to equip and train.
Wednesday, November 21, 2007 ~ 11:16 a.m., Dan Mitchell Wrote: About $4 of every $5 in the Senate bill go straight into the pockets of the growers of five commercial crops: corn, cotton, rice, soybeans and
wheat. The idea of subsidizing corn growers at today's prices makes about as much sense as government sending a check to every American who owns Google stock. But that's not all. The powerful sugar, honey
and dairy lobbies have also won expansions of their price supports. These government price guarantees come even though the World Trade Organization ruled last month that U.S. cotton subsidies violate
American trade agreements. Farm-state Senators have also broadened the constituency for farm welfare by allocating about $2 billion for fruit, vegetable and nut growers, who have rarely been on the dole in
the past. So the 2007 farm bill includes millions of dollars for California asparagus growers, Montana and Idaho chickpea and camelina (an oilseed used for biofuel) producers, and North Dakota
and Washington producers of dried peas, lentils and ckickpeas. Georgia peanut farmers will be eligible for an additional $360,000 each in aid next year. Even the preposterous wool and mohair subsidy
for goat herders, which was eliminated last decade in the Freedom to Farm Act, is resurrected under the guise of the National Sheep and Goat Industry Improvement Center. ... In a rare moment of
self-reflection, Iowa liberal and Senate Agriculture Chairman Tom Harkin recently admitted that farm subsidies are "very hard to justify when we're having record prices and incomes." No kidding.
Wednesday, November 21, 2007 ~ 10:44 a.m., Dan Mitchell Wrote: New York's tax bureaucracy...has made a refugee out of one of its most famous icons. ...Who can blame him? Florida has no personal income
tax, while New York's rate for the top bracket is 6.8%, rising to [10.5]% in New York City... That makes for one of the worst tax burdens in America -- and politicians are proud of it. ...New York tax
laws also take a notoriously wide view of "residency." Literally tens of thousands of people only work in-state Tuesday to Thursday each week
to avoid spending the requisite 184 days per year that would subject their full income to the state tax regime. And Albany's taxmen try to catch them with things like travel records, credit-card usage and phone
logs. ...state auditors don't dispute that his primary residence was in Florida before 2001 or after 2003, or even that he spent most of the year down south over the target period. Rather, they're employing the
more subjective "domicilery test." They point to Mr. Jeter's Manhattan apartment, his "numerous public statements professing his love for
New York," and allege he has "immersed himself in the New York community." Gosh. Yankee owner George Steinbrenner is also a primary resident of Florida, no doubt for the same reasons as Mr. Jeter
and who knows how many other professional athletes.
Tuesday, November 20, 2007 ~ 3:49 p.m., Dan Mitchell Wrote: Democrats say President Bush is being unfair by taking a strict line against their spending, even though he indulged the Republican
Congress during its decadent late period. ...Democrats are right that Mr. Bush and the GOP majority did a thorough job of undermining their fiscal credibility prior to 2006. But Democrats are now pursuing
their own escalation in federal spending, while insisting on a foolish consistency: Mr. Bush was wasteful then; ergo, he must be wasteful now. ...Their collision with Mr. Bush concerns the $22 billion they want
to spend above his request. The President's top line would increase nondefense discretionary spending by 6.9%, in nominal dollars--evidently not enough for Democrats. Their extra $22 billion is
usually preceded by "only," but once passed it becomes part of the permanent baseline upon which future increases are built. That means
that, five years out, federal outlays will have increased by at least $205 billion.
Tuesday, November 20, 2007 ~ 2:51 p.m., Dan Mitchell Wrote: The United Arab Emirates (UAE), Hong Kong and Russia have the most attractive personal tax regimes, according to a survey by
investment services firm Mercer. ...Belgium, Denmark and Hungary had the least attractive personal tax regimes. The survey of tax and benefits systems across 32 markets quoted tax rates based on the
average for a middle manager earning $91,000 per annum. ...European countries - other than Russia - dominated the ranks of countries with the least attractive tax regimes. Ireland was 18th, Spain 19th,
Switzerland 21st, France 22nd and Germany 29th. At the bottom were Hungary (30th), Denmark (31st) and Belgium (32nd), where single managers would have to pay tax and social security contributions of
48.5 per cent, 48.6 per cent and 50.5 per cent respectively.
Tuesday, November 20, 2007 ~ 2:33 p.m., Dan Mitchell Wrote: Lewis Hamilton has admitted that he will be moving to Switzerland for tax reasons, as well as to avoid the full glare of the public eye. The
22-year-old originally confirmed his decision to leave in October, citing privacy concerns only. But in an interview on ITV1 chat-show Parkinson, the McLaren driver confirmed that he would also be leaving
to enjoy Switzerland's lower tax rate. Hamilton made the admission after presenter Michael Parkinson pressed him on the issue. "Well, you
say you are going to avoid the photographers and all that, but I will imagine that you have been advised to do so because of the tax also,"
he asked. "Also, that definitely adds to it," Hamilton replied.
Monday, November 19, 2007 ~ 8:18 p.m., Dan Mitchell Wrote: If the supply-side tax rate reduction model is truly so abhorrent, why are so many nations around the world latching on to it? What explains
the Irish Miracle? Why are Germany, France and the U.K. slashing their corporate tax rates? Why are there 18 countries with flat taxes? Are their leaders deranged, or been bamboozled by crackpots? Perhaps
a better explanation is that they know intuitively what a new National Bureau of Economic Research study has found: Nations with low tax rates on business have statistically significant higher rates of new
business formation, investment and income. History is clearly not on the side of the antisupply-side attack dogs, and they're losing the policy
debate every day in political capitals around the world. Poland just announced it wants to implement a 15% flat tax by 2009. But the American left's obsession with the notion that tax rates don't matter
tells us something important about the future. They are preparing the ground for massive tax increases if and when they capture control of the presidency.
Monday, November 19, 2007 ~ 5:51 p.m., Dan Mitchell Wrote: Now globalisation has shattered that balance. Capital can move jurisdiction at will. The mechanisms of taxation and regulation that
can be used by the state have grown useless and atrophied. States cannot set the terms of operation for corporations that are free to relocate to more benign host countries. The balance of power has
slipped from democratic governments to globally mobile corporations, with states reduced to adopting beggar-my-neighbour policies of tax competition. ... Tax avoidance enables corporate tax avoiders to fail to
live up to their side of the 'social contract'. As Richard Murphy, Director of Tax Research LLC, succinctly puts it: "Tax is not a cost to
a company. It is a distribution out of profits. That puts tax in the same category as a dividend - it is a return to the stakeholders in the
enterprise. ...Corporations earn their "social license to operate" insofar as they contribute to the general good of the societies in which they
exist. ... When society and the market are no longer "under one roof" these sorts of problems emerge. ...The forward-looking approach is
instead to look for transnational regulatory mechanisms, operating at an EU level (in the first instance) or eventually perhaps even at a global level. ... More aggressive regulation, pursued at a European
level, could provide more government income.
Monday, November 19, 2007 ~ 4:14 p.m., Dan Mitchell Wrote: But what about the share of Gross Domestic Product (GDP) spent on health care, a metric of health system performance and value that
some consider definitive? The United States leads the pack in this regard, spending far more on health than other countries. Surely this puts the U.S. at a competitive disadvantage, doesn't it? No: It's the
other way around. America's high productivity gives us the ability to spend more on health care, especially the latest treatments and technologies, than other developed nations that labor under forms of
socialized health care. Robert L. Ohsfeldt and John R. Schneider of the American Enterprise Institute have determined that health spending increases at a constant rate of about 8% for every $1,000 increase in
GDP per capita. For example, if GDP rises from $30,000 per capita to $31,000, health spending increases by $232. But if GDP per capita rises from $40,000 to $41,000, health spending increases by $500.
Thus, because Americans earn so much more than people in other countries, it naturally follows that we spend more on health care. Consider four countries whose health-care systems are often held up as
admirable alternatives: Canada, Germany, France and Great Britain. Certainly, the U.S. spends significantly more on health care than those countries do, but these nations also earn significantly less income per
person. Look at it this way: Even after paying for our health care, Americans have far more money left over than their neighbors to spend on other goods and services. It works out to about $8,000 more than
the average German or Frenchman, and about $4,000 more than the average Canadian or Briton.
Sunday, November 18, 2007 ~ 8:28 p.m., Dan Mitchell Wrote: When Hurricane Katrina hit our southern coast, it was the worst natural disaster in American history, killing 1,800 people, forcing more
than a million to evacuate the area, and putting four-fifths of New Orleans under water. In the struggle to recover from this event, people turned to their insurance companies for help. Thousands of claims were
handled, but for some people there wasn't any coverage. The problem was they were not insured against flooding. Insurance companies' policies are quite clear on this, and state insurance departments,
including the ones in Mississippi and New Orleans, have approved these rules. The homeowners' policy issued by State Farm, for example, says that water damage from a flood, waves, tidal waves, or a tsunami
are not covered. ...Not content with these policies and rules, trial lawyers and politicians in Mississippi demanded that insurance companies should be required to pay for flood losses even though they
were not covered by the policies. ...In June Mr. Scruggs filed a lawsuit against State Farm saying that it engaged in racketeering, and Attorney General Hood filed a new civil lawsuit -- and then followed up
with another grand jury investigation contrary to his prior agreement with State Farm. ...In light of all this, State Farm announced earlier this year that it would no longer sell new homeowners' policies in
Mississippi, not to punish people there but because politicians had made it impossible to do business in an orderly way. In response, Attorney General Hood demanded that the governor order State Farm
to write new policies. Gov. Haley Barbour replied, quite reasonably, that he does not have the authority to tell a private company that it must do business in his state. ...most of the problems down in
Mississippi would have been resolved if the people of the Magnolia State had elected a new attorney general (instead, they threw out of office the states' insurance commissioner who had disagreed with Mr.
Hood). In Mississippi, remarkably, the attorney general has succeeded in making it seem like settling insurance claims is a crime.
Sunday, November 18, 2007 ~ 8:11 p.m., Dan Mitchell Wrote: The elimination of NCLB would be a significant step toward returning control of education to its proper place—local school districts. But the
problem of poor public education remains in many areas of the country. ...Teachers unions have a negative impact upon schools by creating an inflexible, often ideological, power bloc resistant to change,
criticism or the diminution of their power. ...What needs to occur is the abolition of the monopoly that public schools have over education. Monopolies never benefit the consumer; they benefit those who control
the monopoly. In this case those who control the monopoly include teachers unions, education bureaucrats and public school administrators. The consumer who is harmed by the monopoly is the
parent and child. ...Vouchers, along with other serious reforms, have the potential drastically to improve American education. Some states already are using vouchers and have met with good results.
Sunday, November 18, 2007 ~ 7:58 p.m., Dan Mitchell Wrote: Women are being given controversial "virginity repair" operations on the NHS, it emerged last night. Taxpayers funded 24 hymen
replacement operations between 2005 and 2006, official figures revealed. …Tory health spokesman Mike Penning expressed concern. …"nobody would understand is if taxpayers' money is being used to
fund operations of this kind for cultural or cosmetic reasons." Labour MP Ann Cryer said she was "absolutely horrified" to learn of the
phenomenon. …"We have to also ask whether our National Health Service should be providing this sort of facility. I don't think it should
be available on the NHS." The Department of Health said "certain cosmetic procedures" are available on the NHS "to secure physical or psychological health".
Saturday, November 17, 2007 ~ 5:12 p.m., Dan Mitchell Wrote: New York state tax officials want Jeter to fork over what could be hundreds of thousands — even millions of dollars— in back taxes and
interest for the years 2001 to 2003, when the baseball shortstop claimed residency in Florida, despite his high-profile presence in New York's sports and gossip pages during that time. … Jeter's agent, Casey
Close of Creative Artists Agency Sports, disputed tax officials' claim that the baseball star lived in New York during the time in question.
"As a Yankee, Derek has great affection for the people of New York and its amazing fans, but since the mid-1990s, he has made his home in Tampa, Florida," Close said in an e-mail to FOXNews.com. … The
ruling shows that Jeter has actually claimed Florida residency since 1994, though he first came up with the Yankees late in the 1995 season.
State officials aren't disputing those filings, even though Jeter became an increasingly prominent presence around town during that time period, often in the company of young starlets and other New York
celebrities. But the team captain's headline-grabbing purchase in 2001 of a $13 million apartment at the ultra-exclusive Trump World Towers on Manhattan's East Side may have been too much for tax collectors
to ignore.
Saturday, November 17, 2007 ~ 4:23 p.m., Dan Mitchell Wrote: Bulgarian lawmakers from the ruling three-way coalition are expected to rubber stamp on Friday the introduction of the flat tax in the
country starting from next year by amending the Taxation Act. ...In summer, the leaders of the coalition have agreed to scrap the existing
progressive taxation system with three income brackets and introduce a flat income tax of 10% starting from 2008.
Friday, November 16, 2007 ~ 7:00 p.m., Dan Mitchell Wrote: The Treasury study examined a huge sample of 96,700 income tax returns from 1996 and 2005 for Americans over the age of 25. The
study tracks what happened to these tax filers over this 10-year period. One of the notable, and reassuring, findings is that nearly 58% of filers
who were in the poorest income group in 1996 had moved into a higher income category by 2005. Nearly 25% jumped into the middle or upper-middle income groups, and 5.3% made it all the way to the
highest quintile. Of those in the second lowest income quintile, nearly 50% moved into the middle quintile or higher, and only 17% moved down. This is a stunning show of upward mobility, meaning that more
than half of all lower-income Americans in 1996 had moved up the income scale in only 10 years. Also encouraging is the fact that the after-inflation median income of all tax filers increased by an
impressive 24% over the same period. Two of every three workers had a real income gain--which contradicts the Huckabee-Edwards-Lou Dobbs spin about stagnant incomes. This is even more impressive when
you consider that "median" income and wage numbers are often skewed downward because the U.S. has had a huge influx of young workers and immigrants in the last 20 years. ... The Treasury study
found that those tax filers who were in the poorest income quintile in 1996 saw a near doubling of their incomes (90.5%) over the subsequent decade. Those in the highest quintile, on the other hand, saw only
modest income gains (10%). ... Only one income group experienced an absolute decline in real income--the richest 1% in 1996. Those households lost 25.8% of their income. Moreover, more than half
(57.4%) of the richest 1% in 1996 had dropped to a lower income group by 2005. ...The great irony is that, in the name of reducing inequality, some of our politicians want to raise taxes and other
government obstacles to the kind of risk-taking and hard work that allow Americans to climb the income ladder so rapidly.
Friday, November 16, 2007 ~ 6:41 p.m., Dan Mitchell Wrote: At the same meeting, ministers failed to convince Luxembourg to agree to a reform on taxation of electronic commerce, which is aimed at
shifting the place of taxation from the country where the supplier is located to that where the customer is located. Luxembourg currently applies the lowest VAT rate set at 15 percent, with the VAT revenues
on e-commerce annually bringing in 220 million euros to the state coffers. The contentious issues will be again discussed on 4 December, but according to various media reports Luxembourg prime-minister
Jean-Claude Juncker has already said he will not bow to pressure from his counterparts. "No finance minister would give up one percent of his
gross domestic product to make others happy", he was cited as saying by AFP.
Friday, November 16, 2007 ~ 5:55 p.m., Dan Mitchell Wrote: French president Nicolas Sarkozy has outlined a vision for Europe that would see "untramelled" capitalism pushed far down the political
hierarchy to be replaced by a focus on cultural and spiritual issues with more than a hint of European protectionism. ...Noting that "economic
values seem to win the day over other values," Mr Sarkozy said that it is a mistake to overlook culture. ...The French leader gave a lot of time
to protectionism - a concept that has fallen out of favour in the EU since the more market-oriented eastern member states joined the bloc in 2004, coupled with the current European Commission with its strong
liberal profile. "The word protection should be not be outlawed," said the president adding that "we must be able to protect ourselves as
much as others do." ...He went on to say that while Europe has chosen a market economy and capitalism, this should not give rise to "untrammelled capitalism."
Friday, November 16, 2007 ~ 4:32 p.m., Dan Mitchell Wrote: Railroad companies, horse-breeding businesses and golf courses are among those receiving European Union farm subsidies after changes
that were meant to modernize the bloc's agricultural support policy. The unintended consequences of reforms to the Common Agricultural Policy are highlighted in an official audit of the EU's EUR106.6 billion,
or $155.6 billion, budget for 2006, published Tuesday. For the 13th successive year the European Court of Auditors refused to sign off on the EU's overall accounts, pointing to deficiencies in bookkeeping. In
one area, it said 12 percent of regional spending, worth around EUR3.88 billion, was not properly accounted for. Of a sample of regional projects examined, spending on only 31 percent was found to
be completely free from error.
Thursday, November 15, 2007 ~ 7:45 p.m., Dan Mitchell Wrote: The IRS just released the numbers for 2005, and they show the top 1 percent of taxpayers paid almost 40 percent of the nation's total
income tax bill, and that the top 5 percent paid 60 percent of the taxes. This is normally considered an economic issue since people on the left argue that higher tax rates on the rich are a never-ending source of money for politicians, while people on the right explain that low tax rates encourage productive behavior and boost growth. But the disproportionate tax burden on successful taxpayers, combined with the fact that a huge share of the population does not pay any income tax, also is a moral or philosophical issue. As Walter Williams writes: The fact that there are so many American earners who have little or no financial stake in our country poses a serious political problem. The
Tax Foundation estimates that..."When all of the dependents of these income-producing households are counted, there are roughly 122 million Americans -- 44 percent of the U.S. population -- who are
outside of the federal income tax system." These people represent a natural constituency for big-spending politicians. In other words, if you
have little or no financial stake in America, what do you care about the cost of massive federal spending programs? Jonah Goldberg also is concerned about this development. In his Townhall.com column, he explicitly warns that the nation's social capital will be eroded if a large share of the population learn that the tax system is nothing more than a way to confiscate other people's money: ...our politics seem to be suffering from a "rich people curse." We treat the rich like a constantly regenerating pinata, as if they will never
change their behavior no matter how many times they get whacked by taxes. And we think everyone can live well off the treats that will fall to
the ground forever. ...Democrats keep telling the bottom 95 percent of taxpayers that America's problems would be solved if only the rich
people would pay "their fair share" of income taxes. Not only is this patently untrue and a siren song toward a welfare state, it amounts to
covetousness as fiscal policy. ...it's unhealthy for a democracy when the majority of citizens don't see government as a service they're reluctantly paying for but as an extortionist that cuts them in for a
share of the loot. These concerns may be somewhat overstated because there is still considerable income mobility in the United States, so many people who today are not paying tax presumably envision that they will be swept in the tax net in the future. But there probably is a tipping point, a level of taxation and redistribution that results in a permanent economic sclerosis. Indeed, some speculate that nations such as Italy are now incapable of reform because the electorate is dominated by people who have concluded that they have a right to live off the income of others.
Thursday, November 15, 2007 ~ 6:12 p.m., Dan Mitchell Wrote: People should stop having babies to combat global warming, a top Liberal Democrat said yesterday. Chris Davies reckons population
control would be far more efficient than trying to cut pollution. And the North West MEP wants his plan to be considered by the EU. He said all governments should look at measures to discourage people having
large families.
Thursday, November 15, 2007 ~ 4:32 p.m., Dan Mitchell Wrote: Experimentation in the states is good -- as long as a state makes its own taxpayers the guinea pigs. But Mr. Schwarzenegger and the
environmental lobby want to impose the costs of their climate-change gestures on everybody else: both on citizens in the rest of the country,
who never voted for Californian politicians, and especially on Detroit auto makers. ...In 2002 California passed legislation to limit the tailpipe emissions of greenhouse gases -- mainly carbon dioxide -- for
all cars and trucks sold in the state. By the end of 2005, the state got around to asking the EPA for permission. Over the years California has been granted about 40 waivers to the Clean Air Act, which allow
air-quality laws more stringent than national standards. ...California is demanding that the EPA...give the state its way on CO2 emissions. ...Mr. Schwarzenegger knows he's intruding on federal prerogatives, so
he is trying to jimmy the lock on the EPA backdoor. For the purposes of its lawsuit, California claims that it's not regulating fuel economy per se, only CO2 emissions. That's a meaningless distinction: Because
of fixed per-gallon carbon content, both measure the same thing. ...The reasons for a uniform fuel economy standard are obvious. The national
auto market can't be sliced up into 50 scraps, each with multiple sets of rules. It would be impossible to police, and the auto makers would be compelled to adopt the most stringent mandate. The federal
government can't cede de facto control of environmental policy, car design and pricing, and interstate commerce to the latest whim out of Sacramento. ...There is, however, one policy experiment that the
Governor could conduct that wouldn't require federal permission or hurt other states. Why doesn't he raise excise taxes so that gas costs $5 a gallon in his state? A direct tax on consumer consumption would
definitely cut down CO2 emissions. Then again, California's gas tax is already the highest in the nation and voters don't like paying $3 for gas now, so we'll see if Arnold gets off his butt for that one.
Wednesday, November 14, 2007 ~ 11:19 a.m., Dan Mitchell Wrote: Peter Mandelson, the EU Trade Commissioner and erstwhile British Labour minister, crossed over to the supply side during a speech at the
European Parliament on Monday. Explaining why trade liberalization would benefit poor countries, Mr. Mandelson addressed developing nations' claims that they might lose government revenues if they
reduced tariff levels. "The evidence," Mr. Mandelson said, "is that when tariffs come down, tariff revenue tends to go up." Arthur Laffer
couldn't have said it better himself. When you tax something you tend to get less of it, and a tariff is just a tax on imports. Lower tariffs, and
you'll probably get more imports -- and taking a smaller portion of a bigger pie often is better than taking a larger hunk of a tinier pie.
Wednesday, November 14, 2007 ~ 10:47 a.m., Dan Mitchell Wrote: The notion of central planners telling private entities how much they should charge for goods and services seems about as dated as that
"Government and Politics of the Soviet Union" course I took in 1987. Only the world's dwindling tanks of anti-capitalist moonbats, led by Venezuela's Hugo Chávez, still employ them. ... several
countries—nations that in recent years have purportedly moved from the darkness of command-and-control economies toward the light of market capitalism—are rolling out the blunt instrument of price
controls to combat inflation. ...Price controls, food subsidies, greater state control of the economy, a governor named Romney running for president. It seems like 1967, not 2007. And of course, price controls
create powerful disincentives for people and companies to invest in the sort of production capacity that could, in time, create the sort of competition that would help bring prices under control. This isn't a
good time to invest in a cattle farm in Argentina, a cheese plant in Russia, or a gasoline refinery in China. If the price controls continue much longer, these economies could see the revival of another
distressing factor that defined socialist economies in the 20th century: rationing.
Wednesday, November 14, 2007 ~ 10:04 a.m., Dan Mitchell Wrote: Not long ago the government released results of a test run last year to determine the efficiency of airport security at detecting fake bombs.
The Transportation Security Administration report reveals that screeners at LAX failed to find fake bombs in 75% of tests. Chicago O'Hare screeners failed more than 60%. But only 20% of the bombs
made it through security at the five U.S. airports allowed to use private firms to run their security screenings. Contractors for those five
airports are reimbursed for their actual costs, with profit from awards based on performance. ...So which screeners were more efficient — government employees or private ones? Now consider health care.
Great Britain's taxpayer-funded National Health Service (NHS) covers the medical needs of every British citizen in the country's population of 61 million. Yet 60,000 Britons traveled abroad for medical care in
2006. Another 70,000 are expected to do so this year. By 2010, experts estimate the number to increase to 200,000. ...Government agencies like FEMA go from inefficient overaction to inefficient under-action.
After California's 1994 Northridge earthquake, FEMA sent thousands of homeowners unsolicited checks up to $3,450 because they lived in zip codes supposedly hard-hit by the quake. When criticized, FEMA
defended their generosity and denied making mistakes in the giveaway, because they "received very, very few calls from people who felt they didn't need the aid." You think?!
Tuesday, November 13, 2007 ~ 4:09 p.m., Dan Mitchell Wrote: ...the House energy bill taxes oil to subsidize ethanol, drawing Senate opposition, while the Senate bill forces U.S. consumers to buy more
ethanol, drawing House opposition. Seems to us that the two chambers could simply agree that expanding on the already enormous subsidies for ethanol is a costly mistake and go home to enjoy Thanksgiving
dinner, but we don't pretend to fully understand the ways of Congress.
Tuesday, November 13, 2007 ~ 2:02 p.m., Dan Mitchell Wrote: Democrat Barack Obama said Sunday he will push for higher Social Security taxes if elected, viewing it as the best option for improving the
retirement program's finances. ...Obama also invoked his friend, billionaire Warren Buffett, who Obama said has expressed concern that he is paying less in Social Security taxes than anyone else in his office.
"And he has said, and I think a lot of us who have been fortunate are willing to pay a little bit more..."
Monday, November 12, 2007 ~ 1:05 p.m., Dan Mitchell Wrote: It's often said that the EU is undemocratic, in that its key decision-makers are unelected. But it's worse than that. The EU is
actually anti-democratic: it elevates busybodies, interest groups and lobbyists over the ballot box. ...Some 500 "representatives of civil
society" will come together to discuss where the EU should go next. And who are these "representatives of civil society"? Well, there's the
Young European Movement, the Union of European Federalists, the European Women's Lobby... pretty well any organisation prepared to tell the EU that what "the people" want is for Brussels to take more
power. Nor are these organisations that just happen to support political union. They are, in most cases, creatures of the EU, wholly dependent on Brussels for their income. ...The European Convention,
the body which, in 2002 and 2003, met to draw up the European Constitution, made a great show of inviting submissions from "the people". Nearly 200 organisations were asked for their opinion. And -
you guessed it - every one of these organisations was a puppet of the European Commission, reliant on the EU for its funding. No wonder they all told the Eurocrats what they wanted to hear. For their
directors, it wasn't so much a question of ideology as of paying the school fees. ...You see how the system works? The EU firehoses cash at
these organisations to lobby it, they tell it what it wants to hear, and it can then turn around and say that, far from being undemocratic, it is
giving a voice to the peoples of Europe. Millions are thereby drawn into the system, their livelihoods depending on the EU. And shall I tell you the best bit? You're paying for the whole racket.
Monday, November 12, 2007 ~ 12:17 p.m., Dan Mitchell Wrote: When for-profit management of public schools was first proposed in Philadelphia six years ago, many in that city were extremely skeptical,
if not aggressively hostile. So the Philadelphia School Reform Commission, the entity responsible for the innovation, gave only the 30 lowest performing schools to for-profit companies, while another 16
were given to nonprofit organizations, including two of the city's major universities (Temple and the University of Pennsylvania). Others were
reorganized by the school district itself. In effect, a competition was run among the three types of management -- for-profit, nonprofit, and government-run. Four years into the race, here are the results:
Students at schools managed by for-profit firms were roughly six months ahead in math than would be expected had the schools remained in the hands of the school district. In reading, students in
schools managed by for-profit firms were two months further along than they would have been if the schools had been under district control, though that difference was not large enough to give us
statistical certainty. Meanwhile the nonprofits -- and the school district's own reorganized schools -- did no better than expected.
Sunday, November 11, 2007 ~ 11:41 a.m., Dan Mitchell Wrote: Have you ever been to a Communist or former Communist country? If so I am sure you have seen street after street of government-funded
housing. Usually this consists of numerous drab apartment buildings crammed together with tiny apartments inside. But at least everyone is
"equal" and has housing, right? Historically, Americans have been averse to reliance upon governmental munificence, preferring instead to keep their hard-earned money and buy or build a house or
apartment that suited their lifestyle and their needs. For this reason, the Constitution does not enumerate the power to provide housing for anyone as a function of the Federal Government. How times have
changed. The House of Representatives passed H.R. 2895, the National Affordable Housing Trust Fund of 2007, by a vote of 264-148 on October 10. The bill would allocate up to $1 billion per year to
construct or repair 1.5 million low-income housing units in the next ten years. This is in addition to all of the low-income housing the Federal
Government already provides. ...In spite of the enthusiastic, feel-good rhetoric, the purpose of H.R. 2895 is similar to that of so much other
legislation that creates or expands entitlement programs. It produces a group of people beholden to the generosity of the Federal Government
for their daily needs. In other words, legislators create a solid voting bloc among their constituents who have an interest in maintaining them in power. It is as disgraceful to American politics as it is
disingenuous.
Saturday, November 10, 2007 ~ 9:11 p.m., Dan Mitchell Wrote: The state's tax rates are already among the highest in the country, and a major increase would sabotage efforts to expand local companies,
attract new businesses and retain college graduates, according to several panelists at the annual Financial Services Symposium yesterday. ...Lawmakers have been under increasing pressure from
anti-poverty advocates to protect social service programs, in part by raising taxes on the state's highest earners and companies. In particular, the advocates have targeted the capital gains tax, the
alternative flat tax ... But yesterday, top executives in the financial-services industry urged lawmakers to continue their efforts to limit annual property-tax increases and gradually eliminate the capital
gains tax.... "We have made tremendous gains, but the competition is fierce," Laurie White, president of the Greater Providence Chamber of
Commerce, said. "We cannot backslide on the tax equation." Kaplan, a former pharmaceutical executive and now the executive director of the
EDC, agreed. "We don't have a revenue problem, we have a spending problem," Kaplan said. "We have to resist the temptation to solve our budget issues with tax increases."
Friday, November 9, 2007 ~ 2:00 p.m., Dan Mitchell Wrote: Oregon reproduced the current Schip fracas in D.C. on the state level--and the referendum took a major shellacking, with voters siding
three to two against. Oregon's expansion was almost identical to the one backed by Congressional Democrats, so let's conduct a post-mortem, which may also be a portent. Like Beltway Democrats,
Governor Ted Kulongoski and his legislature wanted to broaden eligibility for Oregon's "Healthy Kids" Schip program to 300% of the federal poverty level. They would also allow all families to opt in,
regardless of income, though higher earners wouldn't get subsidies. Again like Congress, Salem intended to pay for the expansion with cigarette taxes, which would increase to $2.02 from $1.18 a pack. That
would be one of the highest state tobacco levies in the nation. ...There are political lessons here, in case anyone in Washington is paying attention. Voters are rightly concerned about health care and would
like everyone to have insurance, but they realize that government programs are very expensive. Americans also don't seem to want to pay for health-care reforms directly through higher taxes. In a roundup of other news, a separate WSJ column notes with approval that voters rejected a series of tax hikes in other states. The column also remarks on the self-imposed defeat of the tax-n-spend Republicans in the Virginia state senate: In Washington state, $47 billion in transportation spending, backed by tax increases to pay for them, went down to apparent defeat in a
referendum by what looked like a 10-point margin as we went to press. Voters in that blue state also affirmed an initiative to strengthen the
state's supermajority requirement for raising taxes, while rejecting a measure that would have made it easier to raise school taxes. Across the country in North Carolina, county-level referendums on imposing a
real-estate transfer taxes lost everywhere. ...Even in bluer than blue New Jersey, voters rejected a plan to borrow $450 million over 10
years to fund stem-cell research. With a $3 billion deficit, $33 billion in state debt and some of the highest property taxes in the universe, residents seemed to feel that more borrowing was merely feeding the
spending addicts in Trenton. ...Virginia Republicans lost control of the Senate for the first time in 12 years, and were all but wiped out in Northern Virginia's Fairfax County. Virginia Republicans have lost
their way by embracing the tax and spending agendas of successive Democratic Governors, and the result has been more and more Democrats in office.
Friday, November 9, 2007 ~ 1:25 p.m., Dan Mitchell Wrote: Expounding on his proposal for abolishing the income tax, Paul claims this would still leave the U.S. Treasury with roughly the revenues it had in 2000, in the final year of the Clinton administration. A post on the Paul campaign website explains that individual income taxes account for "approximately one third of federal revenue." Unfortunately for the tax slashers, the one-time Libertarian candidate for president is wrong on both counts. According to the Congressional Budget Office, individual income taxes represent between 45 and 49 percent of federal tax revenues, depending on the year. For financial year 2007, total receipts from individual income tax were in the region of $1.1 trillion dollars. If you eliminated all that revenue, the federal budget would shrink to the size it was around 1995. The Post's criticism is akin to condemning a book because the typesetting was not centered on a few pages. The real issue is whether America would be a stronger and more prosperous nation if government was reduced to the levels envisioned by the Founding Fathers. America climbed from agricultural poverty to middle-class prosperity before the income tax was adopted, and federal government spending (with the exception of times of war) stayed below 10 percent of GDP. The Post fixates on whether the Paul campaign has identified $1.1 trillion of savings to match the foregone revenue from eliminating the income tax. In attempt to figure out where the $1.1 trillion in annual savings is going to come from in a Paul administration, I talked yesterday
afternoon to the candidate's policy director, Joseph Becker. He pointed out that Paul has promised to bring troops home from Iraq and Afghanistan, eliminate the foreign AID bill, eliminate agriculture
subsidies, and get rid of the U.S. Education Department. A President Paul would, however, leave a residual military in place, to defend the homeland. Based on Paul's rhetoric and record, this presumably is not a problem. The candidate almost certainly would favor the elimination (or transfer to the states) of the Departments of Agriculture, Energy, Education, Housing and Urban Development, Transportation, Labor, Commerce, and Health and Human Services (what a joyous sentence to type!). Indeed, because he also would gradually turn entitlement programs into systems based on personal accounts (and shift welfare components back to the state and local levels), the long-term savings would significantly exceed the amount of money collected by the personal income tax. Ron Paul may not be a realistic candidate in today's America, but that is an unfortunate reflection on voters, not the candidate's platform.
Friday, November 9, 2007 ~ 11:51 a.m., Dan Mitchell Wrote: Gisele Bundchen wants to remain the world's richest model and is insisting that she be paid in almost any currency but the U.S. dollar.
...``Contracts starting now are more attractive in euros because we don't know what will happen to the dollar,'' Patricia Bundchen, the model's twin sister and manager in Brazil, said in a telephone interview
in September from Sao Paulo. She declined to discuss details of the arrangements last week, as did Anne Nelson, Bundchen's agent in New York at IMG Models. ...Wealthy clients at San Francisco-based Union
Bank of California have doubled their deposits in foreign currencies to $60 million the past two months as a hedge against a decline, said Bradley Shairson, head of currency and derivatives at the bank.
...That's the same strategy as sovereign wealth funds run by the largest exporters and oil producers, including China, Singapore and Qatar, said Stephen Jen, head of currency research at New York-based
Morgan Stanley. The funds may grow to $17.5 trillion by 2017 from $2.5 trillion now and shift more than $500 billion out of the dollar in the next three years in search of better returns, he said. ``We're all
thinking about diversifying out of the dollar,'' said Jen, who is based in London. ``It's a very logical thing.''
Thursday, November 8, 2007 ~ 1:50 p.m., Dan Mitchell Wrote: Many super-earners are also super-creative and bring enormous value. Places like the United Kingdom actively court wealthy foreign
nationals through extraordinary preferential treatment of their investment income. The ultra-rich are an ultra-mobile group, too. If you are earning $540,000 an hour, it does not take too long to save up
to buy an apartment, even in London. Anyway, there are limits to how much tax pressure the political system can apply to the ultra-rich. ...Rather than punitively taxing wealth, globalization strengthens the
case for shifting to a flat tax on income (or better yet consumption) with a moderately high exemption. Aside from the usual efficiency arguments, it is just going to become increasingly difficult and costly to
maintain complex and idiosyncratic national tax arrangements.
Thursday, November 8, 2007 ~ 1:17 p.m., Dan Mitchell Wrote: Lewis Hamilton will save more than £4million a year when he moves to his Swiss tax haven. The F1 driver, who missed out on becoming World
Champion by just one point, will earn an estimated £10million next season. Lewis, 22, has rented a £3,000-a-month apartment next to Lake Geneva, claiming he is quitting the UK due to intrusions in his
personal life. But he will avoid the UK's 40 per cent tax - paying just £180,000 to the Swiss state of Vaud where foreigners pay five times
their annual rent. The sports star, who will be living just 25 miles away from former McLaren rival Fernando Alonso, said: "I love England
and I'm happy to pay tax if I live there. Money isn't a decider - the quality of life is."
Thursday, November 8, 2007 ~ 12:56 p.m., Dan Mitchell Wrote: Although tax havens have existed for decades, the flight of capital took off with the removal of exchange controls. This has put politicians in a bind. They know that capital controls do not work. And they would not want the international shame of trying to reinstitute them, since they are now associated with incompetent governments in the third world. Yet many of them - particularly the ones from high-tax nations - resent the fact that cross-border capital flows promote tax competition between nations. This is why the tax harmonization schemes of the OECD and EC, which are designed to restrict cross-border capital flows, can be considered the modern version of the discredited model of capital controls. A second point worth pondering is that a significant share of global trade is intra-company: Over 60% of international trade now takes place between subsidiaries within transnational groups, according to the OECD. This gives the
corporations unprecedented ability to engineer their finances for the greatest tax advantage. The left complains that this makes it easy for companies to manipulate their internal prices so that profits appear where tax rates are low and deductions are maximized where tax rates are high. In this case, they are probably right, but efforts to stop this practice (through policies such as "transfer pricing" rules) are probably futile. In any event, the smart approach is the reduce the corporate tax rate so that companies want their profits recognized in America.
Thursday, November 8, 2007 ~ 10:42 p.m., Dan Mitchell Wrote: January 1, 2005, Georgia (the country, not the U.S. State) adopted a flat tax of 12%, replacing its previous four-bracket system. The flat tax
was augmented with a 20% tax on corporate profits, 20% on social insurance (reduced from 33%), and 18% (reduced from 20%) on VAT. The new, simpler system has had a dramatic effect on economic
growth, averaging 10% a year for the past three years, and taxpayer compliance. Tax revenue increased from 14.5% of GDP in 2003 to 22% in 2006, and should reach 24% in 2007. Between 2003 and 2007,
the reforms reduced the number of taxes from 22 to 7.
Wednesday, November 7, 2007 ~ 5:40 p.m., Dan Mitchell Wrote: Mr. Frank plans to hold a committee vote on his Mortgage Reform and Anti-Predatory Lending Act of 2007, which would impose new rules
and financial penalties on subprime lenders, while providing new lawsuit opportunities for distressed borrowers. ...Mr. Frank's proposal is a trial lawyer's dream. It would forbid banks from signing up
borrowers for "overly expensive loans"; require banks to make sure that the consumer has a "reasonable ability to repay the loan"; and
insist that loans must be "solely in the best interest of the consumer." This kind of murky language would invite litigation from every
borrower who misses a payment. If it becomes law we can expect to see billboards reading: "Behind on your mortgage? For relief, call
1-800-Sue-Your-Banker." Also for the first time, banks that securitize mortgages would be made "explicitly liable for violations of lending
laws." This is a version of secondary liability that holds the bundlers and resellers of mortgages responsible for the sins of the original
lenders. The reselling of mortgages has been a boon both to housing liquidity and risk diversification. So to the extent the Frank bill adds a
new risk element to securitizing subprime loans--and it surely will--the main losers will be subprime borrowers who will pay higher rates if
they can get a loan at all. ...for all the demonizing, about 80% of even subprime loans are being repaid on time and another 10% are only 30 days behind. Most of these new homeowners are low-income families,
often minorities, who would otherwise not have qualified for a mortgage. In the name of consumer protection, Mr. Frank's legislation will ensure that far fewer of these loans are issued in the future. ...The
Frank bill is essentially a Sarbanes-Oxley for housing, an attempt to punish business in general for the excesses of an unscrupulous few and the perverse incentives created by Washington policy.
Wednesday, November 7, 2007 ~ 4:48 p.m., Dan Mitchell Wrote: Anne Nelson, Bundchen's manager. Nelson tells us reports that Gisele wants to be paid in euros are "false." Nelson's take: "Some idiot in
Brazil reported something just to make news." Nelson points out that Gisele lives in New York City, and thus needs U.S. dollars for her big-city lifestyle. Of course, anyone who disagrees with Warren
Buffett's investment wisdom does so at their own risk. But we have to think Gisele gets enough U.S. dollars that she can absorb any potential weakness against the Euro. The CNBC story notes that she lives in New York City, which raises the issue of whether she is a resident of the US for tax purposes. This would be a major mistake since America probably has the world's worst tax system for people with global income. Being a selfless person concerned about the plight of the over-taxed entrepreneur, I want Gisele to know that I am willing to counsel her on how best to protect her earnings from rapacious government. Gisele, feel free to contact me at my Cato email address. I'm here for you in your time of need.
Wednesday, November 7, 2007 ~ 4:00 p.m., Dan Mitchell Wrote: ...the city of Minneapolis went the other direction, towards deregulating taxis. The number of allowed cabs will increase, and in a
few years all caps will be removed. Yes, Minneapolis is trying that always radical, always common-sense idea, the free market. So of course the taxicab cartel sued. In New York, cab drivers are upset
about too much government. In Minneapolis, the previously cartelized cab companies are upset about too little. A lot of small-business cab drivers are on the city's side, however. ...With a freer market, they
finally get the chance to work as cabbies in the previously heavily regulated Minnesota city. Into the fray came the Institute for Justice, a national group of lawyers defending individual rights. These lawyers
have a simple approach: they defend the freedom of contract, private property rights, that kind of thing. ...And they aim to bring back the
U.S. Constitution one case at a time. ...Their work has been successful. (So far.) U.S. Magistrate Judge Franklin L. Noel sided with the city and
IJ and against the taxi cartel. The judge was matter-of-fact: "The [established] taxi vehicle license holders do not have a constitutionally protected freedom from competition."
Tuesday, November 6, 2007 ~ 7:15 p.m., Dan Mitchell Wrote: Britain's Formula One sensation Lewis Hamilton will save £177million in tax over his driving career by leaving Britain for a secluded home in
Switzerland. A Sunday Express analysis of Hamilton's tax affairs over his working life shows privacy may not be the sole reason for his move to the tax haven. Switzerland is already home to fellow Formula One
aces Kimi Raikkonen and Michael Schumacher as well as F1 supremo Bernie Ecclestone. The analysis, conducted by leading advisory firm PricewaterhouseCoopers, shows Hamilton is poised to pay one of the
lowest tax rates in the world, thanks to Switzerland's superrich-friendly tax laws that also benefit such British stars as Phil Collins and James
Blunt. ...If he had stayed in his Hertfordshire home town of Stevenage, Hamilton would have paid almost £180million to the taxman, plus more than £1.5million in national insurance contributions. In
Switzerland he'll be paying only a fraction of that figure. Pricewaterhouse's calculations show that by benefiting from Switzerland's tax laws, 22-year-old Hamilton will pay less than one per
cent tax (0.6 per cent) on his earnings, a mere £200,000 a year or just £3million over his career.
Tuesday, November 6, 2007 ~ 6:10 p.m., Dan Mitchell Wrote: According to the Swiss embassy in London, anyone in Britain can take up residence in Switzerland under the bilateral agreement on the free
movement of persons between the EU and Switzerland, providing they can satisfy the authorities they have enough cash not to be a drain on the Swiss social security system. In practice, some people, such as Phil
Collins, find it easier than most. It's a mistake to think of Switzerland as a single country. Rather it's a region made up of 26 cantons, each of
which has extensive local autonomy and can negotiate tax levels with individuals. And although no one is supposed to benefit from a flat rate, regardless of earnings, unless they have worked in Switzerland for
at least 10 years, some cantons, such as Vaud, appear to be rather more flexible on this than others. Which is almost certainly why Hamilton is planning to move close to other racing drivers, including
Michael Schumacher, departing team-mate Fernando Alonso, Alain Prost and Jacques Villeneuve, who live in the area. ...Monaco has few people other than tax exiles living there, and Brits including Philip
Green, David Coulthard, Jenson Button and Roger Moore are prepared to put up with a mind-numbing quota of unbelievably petty bylaws to hang on to their cash. Some of those fluffy pioneers of online auction
democracy - the founding directors of eBay - have moved to Luxembourg, and a substantial number of the super-rich who have managed to find Liechenstein have taken up residence there. And then
there's Jersey, Guernsey and the Isle of Man... And remember that for some, the UK is a tax haven. "The UK is extremely attractive to
foreign nationals," Warburton points out, "as they get treated rather more leniently than UK citizens. If they keep their capital invested
outside this country, there is no tax or interest liable on capital gains. That's why London has become a centre for so many Russian oil billionaires.
Monday, November 5, 2007 ~ 1:48 p.m., Dan Mitchell Wrote: Of the 20 wealthiest nations, 13 of them are low-tax territories. ...In the past few years, politicians from the developed world have led a determined assault on tax havens. ...The Paris-based Organisation for Economic Co-operation and Development has led a series of attacks on the world's tax havens, accusing them of complicity in money laundering and of lacking transparency. At one point the French government advocated an international boycott of tax havens, arguing that EU banks should refuse to deal with them. ...Even the Vatican has joined the campaign. Pope Benedict XVI was reported last month to be working on a doctrinal pronouncement that will condemn tax evasion as "socially unjust", while the planned encyclical - the most authoritative statement a pope can issue - will denounce the use of tax havens and offshore bank accounts by wealthy individuals, on the grounds that they reduce the tax revenues raised for the benefit of society as a whole (although curiously the Vatican hasn't reacted so well to proposals by the Italian government to curb the Catholic church's own tax break). But instead of attacking tax havens, other countries should be trying to learn from them. The way they lead the global wealth rankings is testament to the power of lower taxes to raise overall living standards. The story explains that the demagoguery against low-tax jurisdictions - particularly regarding charges of money laundering - is false (something that is confirmed (http://www.freedomandprosperity.org/Papers/blacklist/blacklist.shtml) by both international bureaucracies and US government sources): ...though money laundering through the Cayman Islands may be a staple of popular fiction, there isn't much evidence for it in the real world. Most criminals launder the proceeds of the crimes domestically, since they are well aware that moving their money across borders only increases the chances of detection. Terrorists use traditional networks of money changers - not banks in Jersey. The article closes with an excellent summary of the key issues. Tax competition constrains politicians and it encourages policies that make ordinary people richer, and tax havens play a key role in this process: Low-tax territories provide an alternative to the high-tax world. They impose some discipline on governments elsewhere, restricting the
amount they can raise in taxes by providing an escape route. But more importantly, they demonstrate the ability of lower taxes to consistently
raise living standards, even in the most unpromising locations. Maybe it is time to stop hammering the tax havens - and start trying to learn from them instead.
Monday, November 5, 2007 ~ 1:35 p.m., Dan Mitchell Wrote: Who would have thought federal politics would come to this: Liberals and Conservatives competing over who would lower corporate taxes
the most! ...That...marks an amazing turn of fortune, an historic reversal of at least half a century of corporate-bashing tax increases, of surtaxes on taxes, of capital taxes piled on surtaxes rolled over from
year to year. ...there is certainly much to be said for Mr. Flaherty's corporate tax objectives. First he aims to get the federal tax rate down to 15% by 2012. Then he wants the provinces to join the national
corporate tax competition by cutting their rates to 10%, thus lowering Canada's nationwide corporate tax rate to 25%. That means, said Mr. Flaherty, that "Canada's corporate tax rate will become the lowest
among the major industrialized economies." It's a good objective -- for the economy, for growth, for innovation -- and a sign perhaps that
most Canadians have come to appreciate that nations and their citizens get rich by freeing business enterprises rather than by plundering them
for instant cash. ...Countries all over the planet are rushing to trim tax rates on business... Jack Mintz, of the University of Toronto, pointed
out yesterday that Italy has just slashed that rate by 4.5 percentage points. Other countries are cutting rates in large increments of up to seven percentage points, as in Germany. The new Flaherty cuts are
good, says Mr. Mintz, but not good enough. "Why not cut rates right away?" It's also not clear that 25% is low enough to maximize business
activity and attract business investment to Canada. In his recent tax competitiveness study for the C.D. Howe Institute, Mr. Mintz called for a national corporate tax rate of 20%. ...The next needed political
transformation: It's OK to cut taxes on the rich.
Monday, November 5, 2007 ~ 12:12 p.m., Dan Mitchell Wrote: Mr. Grassley, the Iowa Republican, slipped an amendment into a spending bill that would tax businesses that hire skilled immigrants an
additional $3,500 per visa to a total of $5,000 each. According to the National Foundation for American Policy, this represents a $3.1 billion tax increase over five years on some of America's fastest growing
companies. Companies employing foreign professionals who are here on H-1B visas already pay $1,500 per individual. The fee was originally
set at $500 in 1998, but at least past increases have also included a rise in the number of available visas. When Mr. Grassley floated this tax
back in April, it would have been part of a Senate bill that lifted the H-1B visa cap by 50,000 and put in place an escalator provision that allowed market demand to determine future increases. But the Grassley
Tax proposed last week includes no such trade-off, leaving the H-1B visa cap of 65,000 per year intact. ...So while even European bureaucrats are wising up to the importance of attracting global talent
to keep an economy competitive, a Republican Senator is joining liberal protectionists to move the U.S. in the opposite direction. Go figure. If
Congress can't see its way to fix our broken immigration system, the least it can do is not drive more jobs offshore.
Sunday, November 4, 2007 ~ 4:14 p.m., Dan Mitchell Wrote: The Senate Foreign Relations Committee voted 17-4 Wednesday to approve the Law of the Sea Treaty, meaning it's now up to 34 Senate
Republicans to send this giant octopus of a document back where it belongs. To wit, the bottom of the ocean. ...Or take concerns that the treaty's requirements on pollution are a back-door mechanism for
forcing U.S. compliance with the Kyoto Treaty and other global environmental pacts. Confronted with the argument, an Administration spokesman told the Senate that the treaty did not exercise jurisdiction
over land-based pollution. Replied Republican Senator David Vitter: "If it is . . . not covered by the treaty, why is there a section entitled,
'Pollution from Land-Based Sources'?" A good question, considering that Article 213 notes that countries "shall adopt laws and regulations and take other measures necessary to implement applicable
international rules and standards established through competent international organizations" to control such pollution. Note our emphasis. Critics are also right to be concerned about the powers of
direct taxation the treaty confers on the International Seabed Authority. The details of this innovation are buried in Article 13 of the
treaty's third annex, and contain a mix of "production charges" and annual million-dollar "administrative" fees. Such measures are all but
unprecedented for an international organization and have a potential for corruption, especially when the taxes can run as high as 70% of net proceeds.
Sunday, November 4, 2007 ~ 3:51 p.m., Dan Mitchell Wrote: ...commentators who oppose capital punishment assert that an execution has no deterrent effect on future crimes. Recent evidence,
however, suggests that the death penalty, when carried out, has an enormous deterrent effect on the number of murders. More precisely, our recent research shows that each execution carried out is correlated
with about 74 fewer murders the following year. ...The study examined the relationship between the number of executions and the number of murders in the U.S. for the 26-year period from 1979 to 2004, using
data from publicly available FBI sources. ...There seems to be an obvious negative correlation in that when executions increase, murders decrease, and when executions decrease, murders increase. In the early
1980s, the return of the death penalty was associated with a drop in the number of murders. In the mid-to-late 1980s, when the number of executions stabilized at about 20 per year, the number of murders
increased. Throughout the 1990s, our society increased the number of executions, and the number of murders plummeted. Since 2001, there has been a decline in executions and an increase in murders.
Saturday, November 3, 2007 ~ 6:00 p.m., Dan Mitchell Wrote: Utahans next week will decide by referendum whether to retain or jettison the nation's broadest school choice program. ...Utah spends
more than $7,500 per public school pupil ($3,000 more than the average private school tuition). The average voucher will be for less than $2,000. So every voucher that is used -- by parents willing to
receive $2,000 rather than $7,500 of government support for the education of their child -- will save Utah taxpayers an average of $5,500. And because the vouchers are paid from general revenues, the
departed pupil's $7,500 stays in the public school system. ...Opponents of school choice argue that it will produce less racially and socially diverse schools. But because students are assigned to public schools
based on where they live, and because residential patterns reflect income, most of Utah's public schools are either mostly wealthy and white or mostly nonwealthy and nonwhite. Utah's Office of Education
reports that the state's private schools -- which are operating one-third below full enrollment -- have a higher percentage of nonwhites than do
public schools. ...Intellectually bankrupt but flush with cash, the teachers unions continue to push their threadbare arguments, undeterred by the fact that Utah's vouchers will increase per-pupil
spending and will lower class sizes in public schools. Why the perverse perseverance? There are two large, banal reasons -- fear of competition and desire for the maximum number of dues-paying public
school teachers.
Friday, November 2, 2007 ~ 7:44 p.m., Dan Mitchell Wrote: Of all the government's farm-support programs, there are few as egregious as the tangle of loans, quotas and import tariffs set up to
protect the well-connected club of American sugar producers at the expense of American consumers and farmers in the developing world. This year's farm bill will add American taxpayers to the list of
casualties. …sugar supports cost American consumers — who pay double the average world price — more than $1.5 billion a year. The system also bars farmers in some of the poorest countries of the world
from selling their sugar here. The North American Free Trade Agreement is about to topple this cozy arrangement. Next year, Mexican sugar will be allowed to enter the United States free of any
quotas or duties, threatening a flood of imports. Rather than taking the opportunity to untangle the sugar program in this year's farm bill, Congress has decided to bolster the old system. Both the House bill,
which was passed in July, and the Senate version, which could be voted on as early as this week, guarantee that the government will buy from American farmers an amount of sugar equivalent to 85 percent of
domestic consumption — regardless of how much comes in from abroad. To add insult to injury, both also increase the longstanding price guarantee for sugar. …According to rough estimates from the
Congressional Budget Office, supports for sugar in the House bill could cost taxpayers from $750 million to $850 million over the next five years. Big Sugar is not the only beneficiary of this corporate welfare.
The farm bill is larded with subsidies and other rewards for agricultural producers. The eagerness of members of Congress to please their sugar
daddies is not surprising. Campaign donations from the sugar industry have topped $3 million in each of the last four political cycles.
Friday, November 2, 2007 ~ 5:32 p.m., Dan Mitchell Wrote: President Lech Kaczynski would veto a bill introducing a flat tax in Poland, one of the main electoral promises of the pro-business party
that defeated his brother, Prime Minister Jaroslaw Kaczynski, in elections last week. ...Polish financial markets have soared since the pro-business Civic Platform won elections last week, on expectations
the party would push harder for tax and fiscal reforms and fast adoption of the euro than the outgoing government.
Thursday, November 1, 2007 ~ 12:56 p.m., Dan Mitchell Wrote: In today's world, currency movements are directed in large part by protectionist sentiment. Granted, protectionism is no longer so much a
matter of tariffs or quotas for specific industries. Usually it's a unified effort to cheapen the dollar relative to foreign currencies so that (it's
hoped) U.S. exporters will gain a price advantage -- or overcome a price disadvantage. Belief in this theory lives on despite its preposterous implications. If we could make the dollar completely
worthless, the logic goes, domestic producers would wipe their foreign competitors off the map, and the U.S. economy would take over the world! The fallacy is that international prices are set by competition
and habitually compensate for currency changes. As many countries have found out, the end result of allowing the value of a currency to depreciate is hyperinflation and economic collapse -- as in Weimar
Germany in the 1920s and in Zimbabwe today. Nevertheless, too many people believe that what's good for exporters must be good for the whole economy. The fact that exports underperform when the economy
grows best, and outperform when the economy grows least, does not sway them.
Thursday, November 1, 2007 ~ 11:15 a.m., Dan Mitchell Wrote: Government schools in America fail while spending on average more than $11,000 per student. Utah spends $7,500. Think what an
innovative education entrepreneur would do with so much money. It's more than $150,000 per classroom! The answer to mediocre public schooling isn't to give a government monopoly more "teacher
development programs." The answer is competition. ...Competition and choice mean parent power. It's parents whom the education lobby really fears. The last thing it wants is a system in which parents choose
their children's schools. Parents might not choose the union-dominated establishment schools. Better not take that chance. ...Vouchers will make schools accountable to parents rather than a bureaucracy.
Principals and administrators will have to convince parents that they are doing a good job. That's real accountability. ...For over a century, American children have been in the hands of education bureaucrats.
For over 40 years, the government's system has been dominated by a protectionist teachers' union that puts itself ahead of the children entrusted to its members. The results are what we should expect from a
monopoly financed with money extracted from taxpayers: poor quality, lack of innovation and bored children. |
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