Two Heartening Responses to Seattle’s Self-Destructive Tax Grab

May 4, 2018

There’s hope for Seattle, yet.

International Liberty

I wrote last July about how greedy politicians in Seattle, Washington, were trying to impose a local income tax.

That effort has been stymied since there’s anti-income-tax language in the state constitution (Washington is one of nine states without that punitive levy), but that doesn’t mean the city’s tax-and-spend crowd has given up.

There’s a proposal for a new scheme to impose a “head tax” on successful companies.

The top three percent of the high grossing businesses in Seattle will carry the load of Seattle’s proposed employee head tax. Backers are calling it the “Progressive Tax on Business.” The tax will apply only to those companies with $20 million or more annually in taxable gross receipts as measured under the City’s Business and Occupation tax. The city estimates that will be 500 businesses. …the tax is based on total revenues and not net-income. …Councilmember Mike Obrien has been pushing…

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Markets, Choice, and the Economic Illiteracy of Bernie Sanders and Jeremy Corbyn

March 5, 2018

And it’s not just Sanders and Corbyn: most of the Left seems to have almost deliberately forgotten basic economics.

International Liberty

Not all leftists are alike.

I speculated a couple of years ago that there were four types of statists and put them on a spectrum. I put “rational leftists” at one end. If you wanted to pick a nation that represents this mindset, think Sweden. Nice, civilized, market-oriented, but plenty of redistribution.

On the other end of the spectrum were three less-palatable types.

  1. The “totalitarians,” which means a dictatorial state-run economy, as represented by the Soviet Union and China.
  2. The “socialists,” a democratically elected form of a state-run economy, as represented by post-WWII United Kingdom.
  3. The “crazies,” which I confess is a catch-all category to capture visceral, unthinking, and punitive intervention.

And for that final category, I listed Bernie Sanders and Greece as representatives.

And if you want to know why I listed Sanders, here’s some of Jeffrey Tucker’s FEE column from 2015.

Bernie Sanders, that sweet old…

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Welfare, Taxes, the Nanny State, and Supply-Side Economics

March 10, 2017

Remember, welfare traps people in poverty. It’s not a hand helping you up: it’s a hand grabbing your ankle and holding you back.

International Liberty

What’s the right way to define good tax policy? There are several possible answers to that question, including the all-important observation that the goal should be to only collect the amount of revenue needed to finance the legitimate functions of government, and not one penny above that amount.

But what if we want a more targeted definition? A simple principle to shape our understanding of tax policy?

I’m partial to what I wrote last year.

the essential insight of supply-side economics…when you tax something, you get less of it.

I’m not claiming this is my idea, by the way. It’s been around for a long time.

Indeed, it’s rumored that Reagan shared a version of this wisdom.

I don’t know if the Gipper actually said those exact words, but his grasp of tax policy was very impressive. And the changes he made led to very good results

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French President Approaches Cliff, Steps on Accelerator

January 19, 2016

France has been dirigiste since Louis XIV centralized all power under him, and the French leadership has been trapped in that intellectual straitjacket ever since. The idea of lowering the burden of government and letting market forces work is probably inconceivable to President Hollande — and most of his people.

International Liberty

When I wrote back in 2012 that France was committing fiscal suicide, I should have guessed that President Hollande would get impatient and push for even more statism.

Sure enough, the BBC reports that France’s President has a new plan. The ostensible goal is to reduce unemployment, but the practical effect is to expand the size and scope of government.

President Francois Hollande has set out a €2bn (£1.5bn) job creation plan in an attempt to lift France out of what he called a state of “economic emergency”. Under a two-year scheme, firms with fewer than 250 staff will get subsidies if they take on a young or unemployed person for six months or more. In addition, about 500,000 vocational training schemes will be created.

Needless to say, if subsidies and handouts were the key to job creation, France already would have full employment.

In reality, real jobs are created

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Minimum Wage Mandates Help Workers…into the Unemployment Line

December 17, 2015

Progressive city councils (Hello, Seattle and Los Angeles!) and state governments (Hiya, California!) have a lot to answer for: pricing out of the job market the very people they claim to want to help — young people and the poor.

International Liberty

As you can see from this interview, I get rather frustrated by the minimum wage debate. I’m baffled that some people don’t realize that jobs won’t be created unless it’s profitable to create them.

You would think the negative effects of a higher minimum wage in Seattle would be all the evidence that’s needed, but I’ve noted before that many people decide this issue based on emotion rather than logic.

So even though we have lots of evidence already that wage mandates cause joblessness (especially for minorities), let’s add to our collection.

Here are some excerpts from a Wall Street Journal column by Professor David Neumark from the University of California Irvine.

Economists have written scores of papers on the topic dating back 100 years, and the vast majority of these studies point to job losses for the least-skilled. They are based on fundamental economic reasoning—that…

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Prediction: Gridlock for the Next Two Years, but that’s Better than the Alternative of Expanding Government

January 28, 2015

If Congress and the administration can’t agree to do anything good, then doing nothing is the next best solution. Or, as Reagan (I think) once said, “Don’t just do something, stand there!”

International Liberty

There’s a lot of navel-gazing analysis in Washington about whether to expect some sort of bipartisanship over the next two years.

I find such discussions very irritating because they assume that you automatically get good results when Republicans and Democrats both agree on a policy. My reaction, to put it mildly, is “these people are f@*&#^@g crazy!!!”

Was it progress when Republicans and Democrats conspired to bail out their contributors on Wall Streetwith TARP?

Was it progress when Republicans and Democrats joined hands to impose Bush’s no-bureaucrat-left-behind education scheme?

Was it progress when the first President Bush broke his read-my-lips promise and sided with Democrats to boost taxes and spending in 1990?

So you can see why I instinctively like gridlock. Simply stated, it’s better to do nothing if the alternative is to have more bad laws that expand the burden of government.

But perhaps I’m being too…

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Why Social Security is a Ponzi scheme, and how to fix it

September 13, 2011

My blog-buddy ST did a great job yesterday calling out former Governor Romney and Congresswoman Bachmann for their hypocrisy in attacking Governor Perry for calling Social Security a “Ponzi scheme.” As she pointed out, not only have liberals been saying that same thing, but so have Romney and Bachmann. While it’s disappointing, it’s hard for me to work up outrage over this; politics ain’t beanbag, as they say, and primaries in particular seem to lead people to say anything to win. On the other hand, when what they say is dishonest, it needs to be called out.

And this was dishonest.

Anyway, as a follow-on to that post, here’s a video from Dan Mitchell of the Cato Institute showing why Social Security is not only a Ponzi scheme, but also a flat-out terrible deal for current workers, retirees, and especially ethnic minorities. Then Mitchell introduces the way to fix the system — private retirement accounts:

Be sure to read Mitchell’s related post.

The way forward to a stable retirement system is clear, but it will take tremendous efforts to get past the Left’s demagoguery and the fear it engenders.

And we certainly don’t need conservatives adding to it.

RELATED: Well, if demagoguing Social Security wasn’t bad enough, Michele Bachmann may be torpedoing her own campaign by seeming to join the “Jenny McCarthy Anti-Vaccination Club for Kooks.” Even if if she’s only repeating misinformation she heard, it’s still bad. Her campaign needs to get this clarified, fast. See also Moe Lane.

(Crossposted at Sister Toldjah)


Silent-but-eloquent: the case for economic freedom

July 5, 2011

Here’s a neat video from one of the evil Koch brothers (1) laying out fact after fact arguing that countries with greater levels of economic freedom, defined as small government, the rule of law, free trade, and the protection of property rights, regularly and vastly outperform statist regimes:

No, your computer’s sound isn’t messed up; it’s a silent movie. Scratch that. It turns out the mute had somehow been activated on this computer. This really is a “talkie.”

I think this video cuts to the heart of those policies that create prosperity — and the jobs that go with it.

Remember that in 2012.

via Dan Mitchell, who has another related video on his site

Footnote:

(1) The latest entry in the Left-Liberal demonology. Remember, gentlemanly elderly billionaires who want less government intrusion into our lives so we can all be free to prosper are EVIL!!! because… well, because.

Edit: Fixed some erroneous information and adjusted accordingly.

(Crossposted at Sister Toldjah)


Restraining Leviathan III: when the IRS goes wild

April 24, 2011

Here’s a question, the answer to which may just be a hearty “WTF?” Why does the IRS want to turn US banks into deputy tax collectors for foreign governments?

Under a proposed regulation, the Internal Revenue Service would order banks to report interest on deposits from foreign investors, not to the US government, but to the home government of the depositor.

What’s the problem, you ask? There are five, but I’ll list two here:

  1. Foreign depositors have put trillions of dollars in US banks because of the very fact that we don’t report interest payments to their governments. Yes, it’s tax avoidance on their part, but the moneys deposited here help grow our economy through loans and investment capital. If this regulation is enacted, foreign depositors will have every reason to move their fortunes elsewhere, to places like Hong Kong or the Caymans, which don’t threaten to rat them out to their governments. That loss would be a tremendous blow to our already ailing economy and banking sector.
  2. Even worse, this regulation overturns established US law. Congress mandated this safe-harbor for foreign deposits 90 years ago in recognition of the benefits an inflow of capital would bring, and that law has been reaffirmed by our democratically elected legislators at least twice since then. Yet now a bureaucratic agency want to undue laws enacted by the legislature through simple fiat.

WTF, indeed.

Dan Mitchell of the Cato Institute has produced a video that goes into these and three other reasons why this regulation shows the IRS is Stuck On Stupid:

This proposed regulation and the harm it will do have attracted the attention of Congress, who’ve reacted in bipartisan opposition to this dumb idea. For example, Senator Rubio said in a letter to President Obama:

At a time when unemployment remains high and economic growth is lagging, forcing banks to report interest paid to nonresident aliens would encourage the flight of capital overseas to jurisdictions without onerous reporting requirements, place unnecessary burdens on the American economy, put our financial system at a fundamental competitive disadvantage, and would restrict access to capital when our economy can least afford it. …I respectfully ask that Regulation 146097-09 be permanently withdrawn from consideration. This regulation would have a highly detrimental effect on our economy at a time when pro-growth measures are sorely needed.

You can read more reactions to this bureaucratic usurpation at Mitchell’s International Liberty, though I have no doubt the statists in the Congressional Progressive Caucus think it’s just peachy.

LINKS: Other posts on Leviathan government.

(Crossposted at Sister Toldjah)


Four reasons why big government is bad government

February 8, 2011

Via Dan Mitchell, here’s another video from the Center for Freedom and Prosperity. This one explains why the growth of government is harmful to a nation’s prosperity:

Check out Mitchell’s post for some related interesting videos.

BTW: A message was making its way around Twitter last night; by “retweeting” it, one asks Speaker Boehner to post a live debt clock (like this one) in the House chamber. I like it.

(Crossposted at Sister Toldjah)


Why a flat tax is a good idea

January 31, 2011

I believe I’ve posted this before, but, since tax season is fast approaching with all its wrangling over this rule and that deduction, I thought it worthwhile to offer again. In it, the Cato Institute’s Dan Mitchell explains how a flat tax would work and why it would be better for the country than the current Byzantine system we have:

And, speaking of those Mitchell mentions who benefit from the current tax code, I’m sure the tax-prep industry would just hate this.

via International Liberty

(Crossposted at Sister Toldjah)


Want to save Social Security? Privatize it.

January 16, 2011

Everyone who hasn’t been hiding under a rock knows that the two main pillars of our social welfare system, Medicare and Social Security, are in big trouble and threaten to wreck the nation’s finances. With regard to Social Security, Dan Mitchell suggests the way to save the program is to let everyone have private accounts:

Mitchell mentions several countries that have had success privatizing their social pension system. Chile is just one example of a country where privatization has worked wonders. Isn’t it time we took a hard look at doing the same thing, instead of just demagoguing the issue?

RELATED: Jimmy Bise at The Sundries Shack says “We’ll fix Social Security Over Their Dead Bodies.” Take no prisoners.

(Crossposted at Sister Toldjah)


Why Keynesian economics is wrong

November 30, 2010

Progressive economics (and, sadly, the economics of some otherwise sensible Republicans) is based on the idea that, in an economic downturn, one relies on government spending to increase domestic consumption in order to stimulate the economy. Sadly, as the history of the 1930s, 1970s and, now, the early 21st century shows, that really doesn’t work. In this video from the Center for Freedom and Prosperity, the AEI’s Hiwa Alaghebandian explains how Keynesian economics, and thus the entire economic policy of the Obama administration, has it all backwards:

As her former internship supervisor, Dan Mitchell, writes:

The main insight of the mini-documentary is that Gross Domestic Product (GDP) only measures how national output is allocated between consumption, investment, and government. That’s useful information in many ways, but if we want more output, we should focus on Gross Domestic Income (GDI), which measures how national income is earned.

Focusing on GDI hopefully would lead lawmakers to consider ways of boosting employee compensation, corporate profits, small business income, and other components of national income. Focusing on GDP, by contrast, is misguided since any effort to boost consumption generally leads to less investment. This is why Keynesian policies only redistribute national income, but don’t boost overall output.

The analysis in this video also helps explain why Obama’s so-called stimulus was a flop. The White House genuinely seemed to think a bigger burden of government spending was going to create jobs, but the real-world numbers show higher joblessness.

The basic idea is that increased income leads to increased consumption, not the other way around. One would think this would be common sense, but that apparently assumes a level of economic literacy all too uncommon amongst our policy-makers.

LINKS: MEP Daniel Hannan sums it up in 11 words.

Via International Liberty

(Crossposted at Sister Toldjah)


An easy way to balance the budget without tax increases

October 5, 2010

The current deficit of the United States -the difference between the federal government’s expenditures and its revenues- is roughly 1.3 trillion dollars, according to the Department of Commerce. That’s how much the government has to borrow in order to finance crucial services, such as Barbara Boxer’s research trips. Members of the Statist Democratic Party tell us that the only way to close this deficit is to raise taxes, whether through higher levies on “the rich” (the definition of which is rather broad) or some form of a value-added tax on top of everything else, or a combination of both.

Dan Mitchell of the Cato Institute calls “bull” on this. In this short video, he shows how one could easily balance the budget by doing something almost unheard of in Washington: showing some restraint.

In earlier years, even the minimal method Dan recommends would have been almost unthinkable, let alone eliminate whole departments of the government. But, if the elections next month and in 2012 turn out to be the true populist, anti-establishment wave that it seems to be building into, we may yet see some restraint at least in Washington’s wastrel ways.

(Crossposted at Sister Toldjah)


Evidence that big government hurts the economy

June 30, 2010

In this Center for Freedom and Prosperity video, Dan Mitchell provides graphic evidence that government growth beyond a certain point actually hurts a nation’s economic performance:

While Mitchell doesn’t explain why this is true (something he does in other videos), the reason seems clear: government spending is inherently wasteful as money is often diverted to sub-optimal, politically oriented  purposes (such as vanity airports and bridges to nowhere), and that money is not disciplined by market forces. In other words, national governments’ wasteful deployment of capital is not punished by those governments’ going out of business. Furthermore, this money is taken out of private hands and consequently is no longer available for productive uses such as investing, saving, and job creation.

That isn’t to say all government is bad. By providing open markets, the consistent rule of law, and a strong protection of property rights, government actually helps create the conditions for prosperity. Beyond that point, however, it becomes a parasite, sucking the lifeblood from its host, the private sector.

If Mitchell and other free-market economists are right (and I strongly suspect they are), then one of the best things the federal government could do would be to reduce federal spending from its current 40% of GDP to about 15-20 percent.  That, however, is something that will not happen under the Democrats, and I have to wonder if even a Republican government would have the courage to make the needed cuts, given all the political oxes that would have to be gored.

Probably not, until the national consensus itself changes. And that may not be as far off as you think.

(via International Liberty)


How the minimum wage costs jobs

June 14, 2010

In this video from the Center for Freedom and Prosperity, another of Dan Mitchell‘s former interns, Orphe Divounguy, gives us a lesson in how rising minimum wages, while seemingly good for the worker, actually kill job opportunities:

He makes several good points:

  • For workers with no real skills, for example, teenagers just entering the job market, a high minimum wage makes them not worth what the employer is required to pay them.
  • Minimum wages disproportionately hurt minorities, who often come from poor environments. Even if they’re willing to work to learn skill and prove themselves, the high minimum wage locks them out of the market.
  • A minimum wage makes some sense as a floor if it’s beneath the prevailing market wage, but a minimum wage higher than that inevitably leads to higher unemployment as the cost of labor gets beyond what an employer can afford.
  • Businesses aren’t charities. If a worker costs more than the revenue he generates, the employer won’t hire him.

I can’t imagine we’ll ever see a rollback or elimination of the minimum wage, however. Then again, these are not normal times and, with so many people unemployed, perhaps enough people can be convinced.


An example of American exceptionalism in action

June 5, 2010

Arthur Brooks in the Wall St. Journal on what the Greek demonstrations tell us about the differences between Americans and Europeans:

Many Europeans also expect others to work so they can live. The International Social Survey Programme asked Americans and Europeans whether they believe “It is the responsibility of the government to reduce the differences in income between people with high incomes and those with low incomes.” In virtually all of Western Europe more than 50% agree, and in many countries it is much higher—77% in Spain, whose redistributive economy is in shambles. Meanwhile, only 33% of Americans agree with income redistribution.

Simply put, Europeans have a much stronger taste for other people’s money than we do. This is vividly illustrated by the recent protests in the U.S. and Greece.

Why are citizens rioting and striking in Greece? Despite the worst economic crisis in decades, labor unions and state functionaries demand that others pay for the early retirements, lifetime benefits and state pensions to which they feel entitled. In America, however, the tea partiers demonstrate not to get more from others, but rather against government growth, public debt, bailouts and a budget-busting government overhaul of the health-care industry.

In other words, the tea partiers are protesting against exactly what the Greeks are demanding. It is an example of American exceptionalism if there ever was one.

(via Dan Mitchell)


Working for the tax man, UK edition

May 28, 2010

The British TaxPayer’s Alliance has posted a good video illustrating how long a typical UK resident has to work during the average day before starting to earn money for himself. It may not be America, but, pay attention; Obama and his allies want to put us on the same path.

(via Dan Mitchell)


Get rid of the capital-gains tax

May 3, 2010

As an investor (and one who believes that private investment is the best way for Americans to secure their retirement), I’ve never liked the capital-gains tax.  Dan Mitchell presents another Center for Freedom and Prosperity video on why the CG tax should be eliminated:

Dan offers six reasons, and I think they’re all sound.

LINK: More at Hot Air.


Government unions vs. the taxpayers

April 3, 2010

Larry Kudlow talks to Dan Mitchell about the startling disparity between compensation in the public vs. the private sectors: