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

View original post 472 more words


The Value-Added Tax Should Be Political Poison for Advocates of Limited Government

January 15, 2016

Tweeted this last night, but it’s worth its own post. There’s a lot to like about Ted Cruz, but his insistence that his new tax plan doesn’t contain a VAT, thus giving advocates of big government another revenue stream, is an annoying dodge. I wish he’d drop it, and the VAT.

International Liberty

It’s not my role to pick sides in political fights, but I am very interested in trying to make bad ideas radioactive so that politicians won’t be tempted to do the wrong thing.

This is why I’m a big fan of the no-tax-hike pledge. The folks in Washington salivate at the prospect of getting more of our money, but they are less likely to act on their desires if they’re scared that breaking their promises means they’ll lose the next election.

It’s also why I want the value-added tax (VAT) to become a third-rail issue. Simply stated, it would be a catastrophic mistake to give Washington an additional source of tax revenue. Especially since the European evidence shows that it’s a money machine to expand the welfare state.

Given my concerns, I was understandably distressed that two lawmakers (and presidential candidates) who normally support smaller government, Rand Paul

View original post 1,682 more words


The Value-Added Tax: A Nixonian Scheme to Fund Bigger Government

November 21, 2015

The VAT is to me an obviously bad idea, especially as long as there is also an income tax. But why Senators Cruz and Paul would support one is way beyond me.

International Liberty

In early 2013, a reader asked me the best place to go if America suffered a Greek-style economic collapse.

I suggested Australia might be the best option, even if I would be too stubborn to take my own advice.

Perhaps because of an irrational form of patriotism, I’m fairly certain that I will always live in the United States and I will be fighting to preserve (or restore) liberty until my last breath.

But while I intend to stay in America, there is one thing that would make me very pessimistic about my country’s future.

Simply stated, if politicians ever manage to impose a value-added tax on the United States, the statists will have won a giant victory and it will be much harder to restrain big government.

But you don’t have to believe me. Folks on the left openly admit that a VAT is necessary to…

View original post 1,184 more words


The Case Against the IRS and the “Progressive” Income Tax

December 16, 2014

Tax reform along the lines of some sort of flat tax or a national sales tax, along with reduction in the size of government, would go a long way towards generating prosperity here again. It would also make statist heads explode — a win-win situation!

International Liberty

Genuine tax reform would be the second-best fiscal policy reform to boost economic growth.*

With a simple and fair tax system, we could get rid of high tax rates that penalize productive behavior. We could eliminate the double taxation that discourages saving and investment. And we could wipe out the rat’s nest of deductions, credits, exemptions, preferences, exclusions, and other loopholes that bribe people into making economically unwise decisions.

When pushing for tax reform, I normally cite the flat tax, but there are many roads that lead to Rome. I’ve also pointed out that other tax reform plans have similar attributes. Here’s what I wrote, for instance, when comparing the flat tax and national sales tax.

In simple terms, a national sales tax (such as the Fair Tax) is like a flat tax but with a different collection point.the two plans are different…

View original post 1,238 more words


Theater of the Absurd: taxes force Spanish theater to sell porn to stay open

December 5, 2014

“Detrás de la puerta verde?”

Here’s another wonderful example of the ridiculous situations created when a bloated, unsustainable social welfare state forces politicians to tax anything and everything they can think of in order to feed the beast. In this case, a Spanish theater that presents the plays of Spain’s “Shakespeare” has to sell pornography to reduce its crippling tax burden:

Crippled by colossal tax rates and falling ticket sales, the Spanish cultural sector is taking creative action to cut its tax bill, including one theatre which has changed its main business to pornography to avoid having to pay high taxes.

The tax charged on cultural performances in Spain has shot up from eight to twenty-one percent since 2011 as the government attempts to balance the books, and has drawn a broader range of products into the local VAT-like ‘sales tax’. Some have noted the uneven application of the new higher taxes, which have hit high culture but not erotica and magazines.

Theatre director Karina Garantivá said: “It’s scandalous when cultural heritage is being taxed at 21 percent and porn at only at 4 percent. Something is wrong”. Her company, which performs works by the “Spanish Shakespeare” Pedro Calderón de la Barca has decided to circumvent the new, punitive taxes by registering as a distributor of pornographic magazines – and is offering free performances.

Punters buying €16 worth of hardcore-swingers magazine Gente Libre from the company receive a ‘free’ ticket to a performance of the highly regarded 17th century comic drama El Mágico Prodigioso.

Garantivá said the law as it stands made theatres feel as if they were “in a straitjacket, suffocated”, and that “We want people to ask what kind of a society makes this kind of decision. That they compare pornography and Calderón … and reach their own conclusions”.

A tax on “cultural performances?” That might make even gentry liberals here howl in outrage.

Ms. Garantivá asks the right question in the above highlight, but I have to wonder if someone raised in Spain’s all-encompassing social welfare system could easily come to the right answer? The problem is welfare statism itself, which spends far more than it can afford and faces continual pressure to spend even more to support an aging population, while dealing with a declining birth rate. The government’s increasing tax demands thus fall on a shrinking tax base, taking more per person. It’s a recipe for economic stagnation at best and collapse at worst. It’s a growing problem confronting much of Europe, but the people most burdened by the taxes often shriek the loudest at any effort to cut taxes and benefits to more rational levels. And we’re not all that far behind.

Meanwhile, you also have to wonder about politicians who tax “Shakespeare” more than smut.


Canada Shows How to Eliminate the Tax Bias against Saving

October 24, 2014

This will drive lefties who like to point to Canada’s health system as a model for the US crazy, but they’re much more free market-oriented than we are these days in other areas, and they treat savings in a more intelligent fashion. There are some very good ideas in here we should emulate, as well as looking at the Australian and Chilean national pension models as a replacement for the failing Social Security.

International Liberty

Since all economic theories – even Marxism and socialism – recognize that capital formation is a key to long-run growth, higher wages, and improved living standards, it obviously doesn’t make sense to penalize saving and investment.

Yet that’s exactly what happens because of double taxation in the United States, as can be seen by this rather sobering flowchart.

So how can we fix the problem? The best answer, particularly in the long run, is to shrink the burden of government spending so that there’s no pressure for punitive tax policies.

Good reform is also possible in the medium run. Policy makers could implement a big bang version of tax reform, replacing the corrupt internal revenue code with a simple and fair flat tax. That automatically would eliminate the tax bias against saving and investment since one of the key principles of the flat tax is that income…

View original post 1,120 more words


Obama’s new budget is a bad joke

February 13, 2012

Just as we expected it would be.

Phillip A Klein takes a look at it and compares it to Obama’s promises on entering office. Here’s his takeway:

Obama spent most of last year lecturing the country on how he supported a so-called “balanced approach” on deficit reduction. Time and again, he said he was ready to make real changes to Medicare, Medicaid and Social Security if only Republicans were willing to budge on the revenue side. He repeated this in a lot of speeches and insisted that behind the scenes he was really, really, ready to cut a deal with the GOP during the debt limit talks. But he never presented a tangible plan that could be scored by the CBO and evaluated next to Rep. Paul Ryan’s plan to reform entitlements and put the nation on a sustainable fiscal course. He had his chance with this budget. Instead, Obama decided to forgo tough choices so he could attack Republicans during an election year.

Bear that in mind: we have a president far more interested in his own electoral fate than the fate of the nation.

Meanwhile, James Pethokoukis accuses Obama of doubling-down on class warfare in this budget:

Here’s pretty much all you need to know about Obamanomics: In 2011, the Obama White House suggested raising the top dividend tax rate to 20 percent from 15 percent. Keeping the dividend rate at a relatively low level, the White House said, “reduces the tax bias against equity investment and promotes a more efficient allocation of capital.” Makes sense, right? Basic economics.

Yet in his brand-new, 2013 budget, Obama calls for taxing dividends as ordinary income, essentially raising the top rate all the way to 39.6 percent. And then when you tack on the 3.8 percentage point Obamacare surtax — and an additional 1.2 percentage point itemized deduction phase-out for high-end taxpayers — the rate rises to 44.6 percent.

So apparently Obama is now in favor of a greater bias against equity investment (and in favor of debt) and promoting less efficient allocation of capital. And this helps create an economy “built to last” in some way?

Of course, it doesn’t. Not at all. More like “built to fail.” Then again, Obama’s new budget isn’t about economic growth or cutting debt or creating a “built to last” economy. The Obama campaign is built around the idea of reducing inequality. So in his budget, Obama takes the populist whip to the wealthy and to business…

And to people who depend on dividends for their retirement, whether directly or through pension funds. Including the middle class.

Why does Barack Obama hate retired people?

(Crossposted at Sister Toldjah)