CF&P E-mail Update, November 22, 2004

The Market Center Blog

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Center for Freedom and Prosperity's E-mail Update

1) CF&P Leads Congressional Effort to Curtail OECD Tax Harmonization Campaign

2) Richard Rahn:  OECD Funding Battle Heats Up: Will Lawmakers Protect American Interests or Side with French?

3) OECD Funding Under Attack for Anti-American Tax Policies

4) Dan Mitchell: Bush Victory Boosts Tax Competition

5) Wall Street Journal trumpets liberalizing impact of jurisdictional competition

6) OECD endorses tax competition ... but be careful of the fine print

7) Dan Mitchell Explains How Tax Cuts Have Helped America

8) Single rate should be cornerstone of tax reform

9) Dan Mitchell:  US Continue Move Toward Flat Tax

10) Tax competition forces better tax policy in Europe

11) Flat tax best reform for US and UK

12) Waste, fraud, and abuse: A government tradition

13) More government equals less prosperity

14) The deadly impact of government health regulation

 

1) CF&P Leads Congressional Effort to Curtail OECD Tax Harmonization Campaign

Greedy politicians could cause elimination of OECD. The Bureau of National Affairs reports that the US Congress intends to curtail the tax harmonization jihad of the Organization for Economic Cooperation and Development. The Paris-based bureaucracy is a typical international organization, with bloated salaries and left-wing bias. But the gravy train may soon derail now that US lawmakers have decided to protect America's interests:

[Excerpt from the Bureau of National Affairs article:]

Sen. Judd Gregg (R-N.H.) is open to changing or dropping controversial language in an appropriations bill (S. 2809) that could cut off U.S. funding for the Organization for Economic Cooperation and Development, but only if opponents of the language can make a sufficient case for doing so, a Gregg aide told BNA Nov. 9. ..."Senator Gregg's position has been that these OECD policies are hurting competition," the Gregg aide told BNA in an interview. "If people can convince us otherwise, then we certainly would be willing to change it or take it out," the aide said. "But we haven't heard anything that is all that convincing." ...The business community appears to be drawing battle lines, with a coalition of free-market groups lobbying hard for the language and several international business groups adamantly opposed to pulling U.S. support for the OECD. The free-market groups say drastic measures may be needed to stop what they see as invasive OECD policies, while international groups say those drastic measures would undermine the tax treaty process and the participation of U.S. business in the creation of international tax and fiscal policy. At issue are OECD's efforts in recent years to list low-tax jurisdictions as tax havens and to convince those countries to share information on nonresident investors. Those efforts have been attacked for years by free-market groups such as the Heritage Foundation and the Center for Freedom and Prosperity (CFP), both of which lobbied vigorously for the language to pull the OECD funding. Dan Mitchell, a senior fellow at the Heritage Foundation, told BNA Nov. 9 this is merely the beginning of a concerted effort to stop OECD's tax harmonization program by striking at the funds it gets from the United States. "This is the first skirmish," Mitchell said. "The real war starts next year." ...Mitchell said he does not believe the tax treaty process would be affected by this and pointed out that "the purpose of this isn't to de-fund the OECD, it's to get the Fiscal Affairs Committee to drop these tax policing efforts." Regardless of the outcome for the provision in the next several weeks, the fact that it was put in the bill to begin with signals "a reservoir of ill will toward the OECD on Capitol Hill." With Congress likely to move more to the right following the recent U.S. elections and a political climate likely to be focused on containing spending, "if I were a bureaucrat over at the OECD in Paris right now, I'd be worried," Mitchell said. CFP Executive Director Andrew Quinlan told BNA Nov. 8 that he and the groups with whom he works are very encouraged by the provision's inclusion in the appropriations bill. He acknowledged it is broad, but said that may be necessary to get rid of the OECD's efforts to get low-tax jurisdictions to reveal investor information. [Link to full article below:]

November 12, 2004, Bureau of National Affairs, By Alison Bennett, Battle Looms Over Move to Tie U.S. Funding For OECD to Halt of Tax Harmonization Effort
http://pubs.bna.com/ip/BNA/DER.NSF/9311bd429c19a79485256b57005ace13/8d3bcda6289 f97c985256f49001351e5?OpenDocument   (subscription required)

CF&P Market Center Blog:
http://www.freedomandprosperity.org/blog/2004-11/2004-11.shtml#125

 

2) Richard Rahn: OECD Funding Battle Heats Up: Will Lawmakers Protect American Interests or Side with French?

[Excerpt from Richard rahn's Washington times article:]

The U.S. economy, as well as the economies of many other low tax rate nations, could be severely damaged were the OECD's Fiscal Affairs Committee to succeed in its antitax competition agenda. Even worse, much of the world's population would see its standards of living fall if the high tax advocates succeeded. Fortunately, with the urging of more than 30 public policy organizations, the U.S. Senate Appropriations Committee has approved a funding bill that would prohibit the OECD from receiving U.S. taxpayer funds if OECD has tried "to identify, report on, or penalize any country that encourages foreign investment through tax incentives."

As you would expect, the OECD and the French are unhappy with the Senate action, and are trying to use their influence in the U.S. government and the news media to stop it. For years, the French have been able to influence certain officials in both the State and Treasury Departments to favor the interests of French statists over those of U.S. citizens. It has now been revealed, as part of the investigation into the Iraqi "oil-for-food program," that certain U.S. State and Treasury Department officials were, at least, partially aware of the massive duplicity and undermining of U.S. policy by the French, yet did nothing. Despite clear evidence of massive financial and human rights corruption on the part of the French, there are still those in State and Treasury who toe the French line and are fighting for the OECD funding, without demanding the necessary changes in the Fiscal Affairs Committee.

Most members of Congress and representatives of interested public policy organizations have no desire to kill the OECD's legitimate statistical collection and reporting. However, the only way Congress can get the attention of the OECD and its allies in the State and Treasury Departments is to deny the OECD funding. The sensible compromise would be for the OECD to agree to cease and desist from all activities designed to discourage tax competition, and for the Treasury Department to withdraw its related French-inspired, proposed interest reporting regulation in exchange for U.S. funding of the OECD. Under this compromise, the taxpayers of the world would win, but the French socialists would lose -- a win-win for economic growth and human rights.  [Link to full article below:]

November 4, 2004, The Washington Times, By Richard W. Rahn, Halting French economic thrust
http://www.washingtontimes.com/commentary/20041103-090134-9083r.htm

 

3) OECD Funding Under Attack for Anti-American Tax Policies

[Excerpt from Worldwide Tax Daily:]

The U.S. Senate Appropriations Committee has approved a funding bill that contains language barring the U.S. government from funding the OECD if the OECD has tried to identify, report on, or penalize any country that encourages foreign investment through tax incentives.

The U.S. Senate Appropriations Committee has approved S. 2809, a funding bill that contains language barring the U.S. government from funding the OECD if the OECD has tried to identify, report on, or penalize any country that encourages foreign investment through tax incentives. The United States currently contributes approximately US $60 million to the OECD, or 25 percent of the multinational organization's budget.

...The full Senate has yet to consider S. 2809, the fiscal 2005 appropriation for the Departments of Commerce, Justice, and State and the U.S. federal judiciary. the Appropriations Committee reported S. 2809 out on September 15.

... Dan Mitchell, an economist at the conservative Heritage Foundation think tank in Washington, and Andrew Quinlan, president of the Center for Freedom and Prosperity, along with a contingent of pro-market tax groups, have been lobbying the U.S. government for several years to take the OECD to task for what Mitchell calls its "anti-U.S. agenda." Nevertheless, the Senate committee's action took them all by surprise.

"Our goal was to influence whatever happens next year in terms of the budget introduced by the administration and the outcome of the appropriations process," Mitchell said. "But because there's been such receptivity to our message even without us asking, things have started moving along much faster than we thought, and that's why we have this Senate committee language."

Mitchell said. ". . . the whole purpose is to send a shot across the bow and let the OECD know that we're getting a little bit tired that they continue to push these antimarket initiatives." [Link to full article below:]

October 8, 2004, Worldwide Tax Daily, by Cordia Scott, U.S. Senate Appropriations Bill Would Revoke OECD Funding Over Tax Policy
http://www.freedomandprosperity.org/Articles/wtd10-08-04/wtd10-08-04.shtml

 

4) Dan Mitchell: Bush Victory Boosts Tax Competition

[Excerpt from Dan Mitchell's Sovereign Society commentary:]

Republican election victories were greeted with dismay in Paris and Brussels, but not merely because of foreign policy differences.

Bureaucrats at the European Union (EU) and Organization for Economic Cooperation and Development (OECD) had more reasons than most to be disappointed with the outcome. Acting at the behest of high-tax welfare states such as France and Germany, these international bureaucracies have been trying to curtail tax competition. President Bush's re- election, combined with big Republican gains in Congress, is a major setback for advocates of so-called 'tax harmonization.'

Let's begin with a little history. In the late 1990s, both the EU and the OECD launched an assault on tax competition These bureaucracies argued that it was 'unfair' when jobs and capital migrated from high- tax nations to low-tax jurisdictions. To stop this process, the EU and OECD urged various forms of tax harmonization, ranging from cartelized tax rates to indirect forms of harmonization such as the collection and sharing of confidential data on cross-border investment.

This effort had significant momentum, especially since the Clinton administration was ideologically sympathetic. Indeed, Pres. Clinton's Treasury secretary even referred to tax competition and capital mobility as the 'dark side of globalization.' [Link to full article below:]

November 17, 2004, The Sovereign Society -- Offshore A-Letter, , by Dan Mitchell, Bush Victory Boosts Tax Competition
http://www.freedomandprosperity.org/Articles/ss11-17-04/ss11-17-04.shtml

 

5) Wall Street Journal trumpets liberalizing impact of jurisdictional competition

Wall Street Journal trumpets liberalizing impact of jurisdictional competition. George Melloan of the Wall Street Journal notes that competition between nations plays a critically important role in promoting good economic policy. It is encouraging that so many experts - both inside and outside of government - understand the value of competition in the United States, but it is still worrisome that international bureaucracies like the European Union and the Organization for Economic Cooperation and Development prefer statist policies such as tax harmonization:

[Mr. Melloan writes:]

Just as U.S. states once did -- and still do -- national governments are increasingly forced to adopt policies that recognize the need to compete with other governments. This competition among governing entities to make their jurisdictions good hosts to business is fostering global economic development in much the same way that it once fostered the growth of the now-robust U.S. economy. As with other organizations, governments need competition to force greater efficiency. It also helps control the natural tendency -- dating back to the larcenous kings of centuries ago -- to pry open the cash boxes of the private sector. That's why globalization is hated by socialists and other worshipers of state ascendancy the world over. They don't like these constraints but know that the penalty for resisting them is severe. [Link to full article below:]

October 26, 2004, The Wall Street Journal, by George Melloan, In Economic Terms at Least, It's a Good World
http://online.wsj.com/article/0,,SB109875358196655508,00.html?mod=opinion

CF&P Market Center Blog:
http://www.freedomandprosperity.org/blog/2004-10/2004-10.shtml#275

 

6) OECD endorses tax competition ... but be careful of the fine print

The OECD has been one of the leading advocates of tax harmonization, but the Paris-based bureaucracy now pretends to be in favor of tax competition (if only to protect its bloated budget). But even when speaking to pro-tax reform audiences, OECD officials can't resist saying only "fair competition" should be allowed. In other words, high-tax welfare-states like France and Germany should be protected from capital flight.

[Excerpt from BNA article:]

The changing global economy has stimulated a wave of tax reform in almost every country in the Organization for Economic Cooperation and Development, Jeffrey Owens, director of OECD's Center for Tax and Policy Administration, said Nov. 18. Owens said changes that have swept OECD countries over the past decade still are in progress in many nations, with global integration creating tremendous pressures for countries to make their tax structures competitive. "There is a huge need for countries to provide a competitive environment," Owens said at a conference on global tax reform sponsored by the National Tax Foundation. "Investment has become much more sensitive to tax differentials." In an interview following his speech, Owens explained competitive pressures have led to a nearly worldwide trend toward reducing corporate tax rates, lowering top marginal rates, and reducing tax distortions. ...he told practitioners, "I think there is a debate going on about how you have a peaceful co-existence between national tax systems." While tax competition can be a favorable influence on the tax policy process in individual countries, Owens said, "to be helpful, I think it has to be fair competition." [Link to full article below:]

November 19, 2004, Bureau of National Affairs, By Alison Bennett, Global Integration Sparks Tax Reform In Countries Across OECD, Owens Says
http://pubs.bna.com/ip/BNA/der.nsf/is/a0b0b7u1k0   (subscription required)

CF&P Market Center Blog:
http://www.freedomandprosperity.org/blog/2004-11/2004-11.shtml#225

 

7) Dan Mitchell Explains How Tax Cuts Have Helped America

[Excerpt from Dan Mitchell's Ripon Forum article:]

During the 2000 campaign, George W. Bush promised significant tax relief: he has kept his promise. President Bush's tax cuts are sound policy. By lowering tax rates and reducing the double-taxation of savings and investment, President Bush has improved the economy.

The 2003 tax cut was especially beneficial. It reduced the double-taxation of dividends and capital gains. The policy also resulted in accelerating the income tax rate reductions approved in 2001 so that they took effect in 2003 not in 2004 and 2006 as originally scheduled. This was very important since the original rate-reduction schedule had been encouraging investors and entrepreneurs to postpone productive activity.

The economy is affected by more than just tax policy, but there is little doubt that the Bush tax cuts have made America more competitive. The United States has just enjoyed the strongest 12 months of economic growth since the Reagan boom. Moreover, the unemployment rate has dropped from 6.3 percent in June, 2003 to 5.4 percent today. This unemployment rate is far below the level of joblessness in other industrialized nations (France and Germany, for example, suffer from double-digit unemployment), and is also lower than the average unemployment rate in the United States during the 1970s, 1980s and 1990s.

The Bush tax cuts are also commendable because they shift the internal revenue code in the direction of fundamental reform. Proposals such as the flat tax and the national sales tax are based on common principles: low tax rates and no double-taxation of savings and investment. [Link to full article below:]

Winter 2004, Ripon Forum, bt Dan Mitchell, The Bush Boom: Tax cuts spur growth and boost competition
http://riponsoc.org/forum/winter/bushboom.pdf

 

8) Single rate should be cornerstone of tax reform

Alan Reynolds explains that a low flat rate is important, not only because it reduces the tax penalty on productive behavior, but also because it makes it much easier to have a simple and fair tax code.

[Excerpt from Alan Reynolds' commentary:]

The main economic reason for a single, low marginal tax rate is that graduated tax rates impose rising penalties on additions to income, and therefore on additions to national output. Punish added income and you punish added output -- economic growth. A single tax rate puts a lid on marginal tax rates -- on the share of added earnings a worker, saver or entrepreneur gets to keep. In terms of incentives, however, there is no clear reason to prefer a flat tax of 25 percent to progressive rates of 15, 20 and 25 percent. A flat tax is not necessarily better than a low tax. Yet there are at least seven technical reasons for preferring a single tax rate, regardless how the tax base is defined (consumption, income or both). These reasons have to do with making the tax system simpler, fairer, more efficient, less vulnerable to political manipulation, and less prone to tax avoidance and evasion.  [Link to full article below:]

November 18, 2004, Townhall.com, By Alan Reynolds, The case for one tax rate
http://www.townhall.com/columnists/alanreynolds/ar20041118.shtml

CF&P Market Center Blog:
http://www.freedomandprosperity.org/blog/2004-11/2004-11.shtml#196

 

9) Dan Mitchell: US Continue Move Toward Flat Tax

[Excerpt from Dan Mitchell's Washington Times article:]

The recently enacted corporate tax bill has attracted a lot of criticism, but the legislation actually is rather impressive considering the political obstacles. All things considered, it's a case of good, better, best.

Good: The legislation will force the European Union to eliminate more than $4 billion of taxes on American exports. Better: A substantial portion of the bill is devoted to much-needed tax reforms that will boost U.S. competitiveness. Best: These provisions represent another step on the road to a simple and fair flat tax.

One of the least appreciated aspects of the Bush presidency is that the tax cuts of the last four years have moved the United States toward genuine tax reform, as can be seen by reviewing two of the most important principles of the flat tax: First, there should be just one tax rate and it should be very low. This ensures fairness by treating everyone equally, and it promotes growth by minimizing the tax burden on productive behavior. Second, no income should be taxed more than once. This feature eliminates the bias against saving and investment and ends the double-taxation of income earned outside U.S. borders.

Based on these two principles, the Bush tax cuts deserve high grades. The 2001 tax cut, for instance, lowered tax rates and began the process of repealing one of the worst examples of double-taxation, the death tax. The 2002 tax cut lowered the "depreciation" tax penalty on new investment. The 2003 tax cut accelerated tax rate reductions and substantially lessened the double taxation of dividends and capital gains. Last, but not least, the 2004 corporate tax bill reduced the double-taxation of income earned in other nations.

All of these changes have moved the United States closer to a flat tax.  [Link to full article below:]

October 29, 2004, The Washington Times, By Daniel J. Mitchell, Shift toward flat taxes
http://www.washingtontimes.com/commentary/20041028-091158-4440r.htm

 

10) Tax competition forces better tax policy in Europe

Bruce Bartlett's Townhall.com column looks at the significant tax rate reductions that have occurred in Europe. Interestingly, while the U.S. has an overall advantage, European nations generally have lower tax burdens on corporate income:

[Excerpt from Bruce Bartlett's Townhall.com column:]

...European tax cuts have included meaningful cuts in individual income tax rates for the rich -- the most controversial element of Bush's program. According to the OECD, 17 of 30 countries cut tax rates on the rich between 2000 and 2003... Among those countries with the largest rate reductions are the Netherlands, which reduced its marginal tax rate on the wealthy from 60 percent to 52 percent; Luxembourg, where the rate fell from 47.15 percent to 38.95 percent; and Belgium, which dropped its rate from 60.5 percent to 53.5 percent. Germany's rate fell from 53.8 percent to 51.17 percent, and in France it went from 61.25 percent to 56.09 percent. ...17 of 30 OECD countries cut corporate tax rates between 2000 and 2003 -- but this time not including the United States, where the rate was unchanged at 39.4 percent (including state and local governments). The most dramatic reductions occurred in Germany, Iceland and Ireland. In Germany, the rate was cut from 52 percent to 42.2 percent, a reduction of 23 percent. In Iceland, the rate fell from 30 percent to 18 percent -- a reduction of 40 percent. And in Ireland, the corporate rate was lowered from 24 percent to 12.5 percent -- a 48 percent reduction. ...Although Bush's reduction in the top rate on dividends received by individuals to 15 percent was highly controversial, the United States still has one of the highest tax rates on dividends. Only eight countries have higher rates, with 21 having lower rates. Indeed, the average for all OECD countries is well below the rate here -- 46.4 percent versus 51.3 percent. [Link to full article below:]

November 16, 2004 , Townhall.com, by Bruce Bartlett, Tax cuts here and abroad
http://www.townhall.com/columnists/brucebartlett/bb20041116.shtml

CF&P Market Center Blog:
http://www.freedomandprosperity.org/blog/2004-11/2004-11.shtml#166

 

11) Flat tax best reform for US and UK

One of America's most well-known bloggers issues a strong endorsement of fundamental tax reform. Sullivan correctly explains that a flat tax is both morally and economically superior to the corrupt systems that plague the US and UK today.

[Excerpt from Andrew Sullivan's blog:]

...the post-election has turned on something that barely registered in the campaign. Yes, the president had referred to it in broad terms. But it had never really featured in any of the debates, had been largely absent from the president's stump speech, and was barely debated in the press or the blogosphere. The great missing issue? Tax reform. Or rather, a hugely ambitious attempt to transform the American tax system into a flat tax paradise. Of all the ideas being batted around in Washington, it remains the smartest of the president's second term objectives. And if they care about winning the next British election, the Tories will watch very closely. And, even better, follow suit. ...the Forbes-style flat tax on incomes is the most attractive. The reason is simple. If you believe that markets are the most effective way to apportion wealth and investment, the job of government is to stay as far out of the way as possible. That means not trying to micro-manage the economy with tax incentives for this activity, tax write-offs for another form of business, and endless tax shelters for various corporate interests. This amounts to a passive form of industrial policy - and it almost always increases inefficiency. By setting a single rate for all forms of income and consumption, you remove any extraneous intervention in the way the market operates. ...In Washington, the entire lobbying industry, with its massive incentives to pour money into the political system in order to buy favorable treatment, is entirely dependent on a complicated tax code. It's all but impossible to fight this system one loophole at a time. The powerful sum of individual interests greatly outweighs the broader but less palpable common good. That's why, since the last major tax reform of 1986, the U.S. tax code has slowly become ever-more complex and ever-more corrupt. Walk down K Street in D.C. or visit a major law and lobbying firm in downtown Washington, and you wll see the congealed wealth of all this corruption. Lunchtime in the capital city is a buzz of various lobbyists securing new and intricate corprate exemptions in this part of the tax or regulatory code or another. ...a liberal also opposes punitive or "progressive" taxation, because it means the government discriminates on the basis of personal success. If we get rid of different rates of taxation, and we're all taxed at the same proportionate rate, the successful and hard-working still pay far more into the public coffers than the unsuccessful. They're just not penalized even further by a higher rate.  [Link to full article below:]

November 14, 2004, Andrewsullivan.com, by Andrew Sullivan, Flat Tax Now! In the U.S. and the U.K.
http://www.andrewsullivan.com/main_article.php?artnum=20041114

CF&P Market Center Blog:
http://www.freedomandprosperity.org/blog/2004-11/2004-11.shtml#154

 

12) Waste, fraud, and abuse: A government tradition

A Cato Institute paper on government cost overruns from last year is still very relevant - and will probably be relevant 100 years from now. Politicians have very little incentive to control costs since they are spending other people's money.

[Excerpt from Chris Edwards' Cato report:]

Large cost overruns are commonplace in government construction projects, procurement, and entitlement programs. Politicians and officials routinely deceive taxpayers by low-balling cost estimates to win initial spending approval. Then, when programs go over budget and do not work as promised, politicians place the blame on particular management blunders by the bureaucracy and private contractors. But the evidence indicates that cost overruns and program failure are not isolated errors; they are systematic and widespread in the federal government. Federally funded projects often turn into debacles plagued by large cost overruns, as illustrated by a wide range of examples in Table 1. For example, Boston's Central Artery project, the Big Dig, has been grossly mismanaged, as described by a recent Boston Globe investigation. The state government bailed out bungling Big Dig contractors 3,200 times instead of demanding accountability. Contractors were essentially rewarded for delays and overruns with added cash and guaranteed profits. The project's estimated total cost rose from $2.6 billion in 1985 to $14.6 billion today. ...Governments are wasteful users of resources because they tend to replace competition with monopoly and market pricing with bureaucratic regulations. Also, since public officials do not risk their own personal funds, they are more likely to support unsound schemes and be less interested in keeping programs on budget. [Link to full article below:]

September 2003, Cato's tax and Budget Bulletin, by Chris Edwards, Government Schemes Cost More Than Promised
http://www.cato.org/pubs/tbb/tbb-0309-17.pdf

CF&P Market Center Blog:
http://www.freedomandprosperity.org/blog/2004-11/2004-11.shtml#161

 

13) More government equals less prosperity

The former Chairman of the President's Council of Economic Advisers explains that government spending is damaging to the economy, not deficits. This demonstrates why it is so important to reform entitlement programs and reduce the growth of government.

[Excerpt from Glenn Hubbard's Wall Street Journal article:]

Research by Eric Engen of the American Enterprise Institute and Jonathan Skinner of Dartmouth College, among others, concludes that a large government share in the economy reduces growth through the large tax burdens it ultimately requires along with regulatory intrusions. In the presidential campaign, President Bush correctly identified the substantial increase in the size of government that Sen. Kerry proposed. But the second Bush term faces challenges as well. In the near term, forceful statements about ways to control discretionary spending would be useful. Over the longer run, the spending problem lies in the entitlement programs. The Congressional Budget Office projects that over the next 40 years, Social Security and Medicare spending will increase to consume an additional 10% of GDP annually. This rise would be equivalent to a 50% increase in the federal government's share in the economy. While Social Security reform is, rightly, a domestic policy priority for the president, a shift to personal accounts alone will not solve the program's funding gap. And the bigger problem lies in the Medicare program, where fundamental reform of health-care markets to make consumers more cost-conscious (as in recently enacted Health Savings Accounts) is a vital first step. This discussion differs from the "deficits" debate during the campaign. The federal budget deficit is simply the difference between two variables over which the president and Congress have some control -- spending and taxes. Over time, choosing "deficit reduction" through spending restraint or raising taxes implies significant differences in future economic growth. The Engen-Skinner study finds that a balanced-budget increase in government spending and taxes -- as deficit reduction through tax increases implies -- would reduce U.S. output growth markedly. Indeed, closing the long-term entitlement funding gap through tax increases could reduce output growth by as much as one percentage point annually in the long run.  [Link to full article below:]

November 9, 2004, The Wall Street Journal, By R. Glenn Hubbard, The Second-Term Economy
http://online.wsj.com/article/0,,SB109996639858168494,00.html?mod=opinion (subscription required)

CF&P Market Center Blog:
http://www.freedomandprosperity.org/blog/2004-11/2004-11.shtml#094

 

14) The deadly impact of government health regulation

A Cato Institute study calculates the onerous gross and net burden of government regulation of the health care sector. These regulations push up the cost of health insurance, leading to seven million uninsured Americans. Even more troubling, the higher health care costs associated with excessive regulation lead to 4,000 net premature deaths.

[Excerpt from the Cato Institute's study:]

...the total cost of health services regulation exceeds $339.2 billion. This figure takes into account regulation of health facilities, health professionals, health insurance, drugs and medical devices, and the medical tort system, including the costs of defensive medicine. Moreover, this approach allows for a calculation of some important tangible benefits of regulation. Yet even after subtracting $170.1 billion in benefits, the net burden of health services regulation is considerable, amounting to $169.1 billion annually. In other words, the costs of health services regulation outweigh benefits by two-to-one and cost the average household over $1,500 per year. The high cost of health services regulation is responsible for more than seven million Americans lacking health insurance, or one in six of the average daily uninsured. Moreover, 4,000 more Americans die every year from costs associated with health services regulation (22,000) than from lack of health insurance (18,000). The annual net cost of health services regulation dwarfs other costs imposed by government intervention in the health care sector. This cost exceeds annual consumer expenditures on gasoline and oil in the United States and is twice the size of the annual output of the motion picture and sound recording industries. [Link to full article below:]

October 4, 2004, Cato's Policy Analysis, by Christopher J. Conover, Health Care Regulation: A $169 Billion Hidden Tax
http://www.cato.org/pubs/pas/pa-527es.html

CF&P Market Center Blog:
http://www.freedomandprosperity.org/blog/2004-11/2004-11.shtml#224

 

Best regards,

Andrew Quinlan
Center for Freedom and Prosperity
President
202-285-0244
quinlan@freedomandprosperity.org
www.freedomandprosperity.org

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