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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 Heritage Foundation, respectively.

The Market Center Blog

Observations and insights on the global fight
for economic freedom and prosperity

CF&P's Market Center Blog Archives
May 2004

Monday, May 31, 2004 ~ 12:30 p.m., Dan Mitchell Wrote:
EU savings directive is a "tax only for dummies." The bureaucrats in Brussels will not enjoy reading this article from the Neue Zuricher Zeitung. The story outlines the myriad ways of avoiding the EU's savings tax directive:

Tax experts say banks and financial advisors have for months been looking for ways to circumvent tax obligations in the recently-concluded bilateral agreements with the EU. "There are a lot of loopholes in the EU's taxation directive, which underpins the agreement between the EU and Switzerland," Thomas Jaussi, a Basel-based tax specialist with accounting firm KPMG told swissinfo. ...The bilateral accords, agreed after Switzerland received guarantees that the deal would not compromise banking secrecy, include the introduction of a withholding tax on interest earned by EU residents with savings in Switzerland. The levy ranges from 15 to 35 per cent. Of that, three quarters will be sent to EU tax authorities, with Switzerland keeping the rest to cover costs. However, it will not apply to income from dividends, share funds, insurance policies, derivatives and gold. ...Government bonds issued before March 2002 are also exempt, providing a loophole that at least one bank has openly sought to exploit. ...A second source of weakness – according to tax experts - is the fact that the EU levy is not "withheld" at the source, but by the "paying agent". "Normally, this will be a bank," said Jaussi. But if the paying agent is outside Switzerland or the EU, the tax will not be levied. ...Some analysts predict that only those who are not wealthy enough to afford good advice or set up a foundation will be hit with the new levy. ...The Zurich-based "Tages-Anzeiger" newspaper this week described the new system as a "tax only for dummies".
http://nzz.ch/2004/05/29/english/page-synd4962356.html

Monday, May 31, 2004 ~ 10:34 a.m., Dan Mitchell Wrote:
Hayek gets well-deserved tribute. Friedrich Hayek was one of the world's greatest economists. Not only did this Nobel Laureate produce an amazing volume of influential work, but he also is largely responsible for the destruction of socialism. Arnold Beichman writes in the Washington Times:

This is the 60th anniversary of the publication of "Road to Serfdom," by Friedrich Hayek. It is one of the most important books of the 20th century, as important as the publication of "Das Kapital" was, in its malign way, in the 19th. ...For Hayek, competition was the surest way for an economic system to work and competition could exist only under a free market system. In other words, as economist John Cassidy put it, "By allowing millions of decision-makers to respond individually to freely determined prices, it allocated resources, labor, capital, and human ingenuity — in a manner that can't be mimicked by a central plan, however brilliant the central planner.... The view of capitalism as a spontaneous processing machine — 'telecommunications system' was how Hayek referred to it — was one of the real insights of the century." Mr. Cassidy suggested, "It is hardly an exaggeration to refer to the 20th century as the Hayek century."
http://www.washingtontimes.com/commentary/20040529-110730-9182r.htm

Monday, May 31, 2004 ~ 4:45 a.m., Dan Mitchell Wrote:
Canada politician has secret plan to benefit the United States. The leader of the New Democratic Party has proposed a wide-ranging series of destructive tax increases to finance bigger government. If these misguided proposals are enacted after the next election, more of Canada's productive people will fell to the United States and other lower-tax jurisdictions. Combined with the story this blog covered yesterday, it appears that Canadian leftists are unwilling to compete in the global economy:

Setting out its election platform this week, Canada's New Democratic Party, a possible ally of the ruling Liberal Party should they fail to win enough votes to form the next government, has committed itself to raising taxes in order to pay for ambitious public spending plans. ...Under a package of "fair tax measures" intended to net the government an estimated $9.5 billion, the NDP is proposing a surtax on bank earnings, a new top tier of income tax, an inheritance tax and the "rolling back" of corporate tax cuts.
http://www.tax-news.com/asp/story/story.asp?storyname=16162

Sunday, May 30, 2004 ~ 2:33 a.m., Dan Mitchell Wrote:
Banking secrecy does not hinder war against terrorism. John Carlos Zarate, deputy assistant secretary for terrorist financing and financial crime at the US Treasury Department, was recently interviewed by a Swiss news service. Zarate was specifically asked whether Swiss privacy laws interfered with the fight against Al-Qaeda. His answer to that question - and his other comments - demonstrate the dishonest nature of OECD demagoguery against tax havens. Zarate said:

We have not seen banking secrecy as a hindrance. If there is a suspicion of terrorist links, the Swiss government and even the private sector is more than willing and able to track the flow of money. The prosecutor's office has done a very good job of accessing accounts and information that is relevant to their and our own investigations.... What we have done - largely thanks to the cooperation of countries like Switzerland - is debilitate al-Qaeda to the extent that we think they are having great trouble raising money and moving it around the world. The less money they have now, the less able they are to recruit and train for future activities. ...The Swiss government has done a very good job of respecting the principles that they consider to be important while still remaining nimble with respect to accessing and sharing information and taking action to dismantle terrorist support networks.
http://www.swissinfo.org/sen/swissinfo.html?siteSect=111&sid=4963133

Saturday, May 29, 2004 ~ 1:43 a.m., Dan Mitchell Wrote:
Slovak leader slams tax harmonization. Ivan Miklos has done a remarkable job as Slovakia's Finance Minister, pushing through reforms in tax policy, pension policy, and welfare policy. These policies have helped Slovakia's economy begin to prosper. Needless to say, he does not want his nation's future prosperity jeopardized by French and German tax harmonization schemes, as indicated by the report from Tax-news.com:

"Harmonisation means higher tax levels. That's not bringing Europe forwards," Slovak finance minister Ivan Miklos told Handelsblatt. "That is totally unacceptable for us," he added. "We simply dismiss any efforts leading to harmonization in the area of taxes." In a bid to stimulate investment at home and from abroad, Slovakia has recently introduced a 19% flat rate tax, which includes personal and corporate income tax, a level which compares sharply with Germany's 38.8% company tax rate. Other new EU entrants have chosen a similar low tax path with business taxes.
http://www.tax-news.com/asp/story/story.asp?storyname=16165

Friday, May 28, 2004 ~ 10:44 a.m., Dan Mitchell Wrote:
Savings tax cartel facing new obstacles. The bureaucrats in Brussels have been forced to water-down their cherished savings tax cartel, and now Tax-news.com is reporting that it won't go into effect in 2005. This is good news. Even though the proposal has been emasculated, it still represents a step in the wrong direction:

Despite having reached a hard fought deal with Switzerland concerning the adoption of the Savings Tax Directive, the European Union has warned that a lack of an agreement with other third countries may prevent the directive being implemented on time next year. ...However, EU finance ministers are set to decide whether appropriate equivalent measures are in place in other third countries, namely Liechtenstein, Monaco and Andorra, and reports indicate that the prognosis is unlikely to be optimistic. Meanwhile, a deal presented by San Marino was said to be "good, but not perfect."
http://www.tax-news.com/asp/story/story.asp?storyname=16160

Friday, May 28, 2004 ~ 9:18 a.m., Dan Mitchell Wrote:
Higher gas taxes only help politicians. Some leftists say that higher taxes on gasoline will help protect America from gyrating energy prices. But as Bruce Bartlett explains for Townhall.com, this is an absurd notion:

The idea that a higher gasoline tax will help our energy situation is ludicrous. All European countries have far higher gasoline taxes, and they are just as vulnerable to increases in the price of oil as we are. If a higher oil price translates into a 50-cent per gallon increase in gasoline prices (net of tax), then the Europeans and we are both going to pay 50 cents more per gallon.
http://www.townhall.com/columnists/brucebartlett/bb20040528.shtml

Friday, May 28, 2004 ~ 12:19 a.m., Dan Mitchell Wrote:
More evidence of European uncompetitiveness. The EU Observer reports on a new survey showing that the 25 countries of the European Union produce only 29 of the world's top 100 companies. The United States, by contrast, is home to more than half of these companies. This is a very damning indictment of European competitiveness since American companies are hindered by a high corporate tax rate and a terrible worldwide tax system. But even though US policy leaves much to be desired, America is a free market Mecca compared to welfare states of Europe:

A "league table" of the most valuable companies in the world - drawn up by the Financial Times Deutschland - has shown that EU companies have a long way to go to be genuine world beaters. ...Overall, the 25 member states of the EU could muster only 29 companies in the top 100, compared to 55 from the US. The top EU performer was the UK, with nine companies in the top ten. France and Germany follow with six and five respectively.
http://euobserver.com/?aid=16315&rk=1

Thursday, May 27, 2004 ~ 4:11 p.m., Dan Mitchell Wrote:
More tax harmonization from Brussels. If nothing else, the European Commission deserves credit for consistency. It seems that they want to tax every possible aspect of human activity, and they seem to believe that all taxes need to be harmonized so that the "internal market" can function. The latest example of this perverse thinking is a call for harmonized alcohol taxes. The bureaucrats complain that differential tax rates lead some consumers to escape high taxes in their home countries, but it never occurs to them that those countries should lower tax rates. The Bureau of National Affairs reports:

The European Union should harmonize taxation rates on alcohol sales in order to remove the considerable distortions to the single market that currently exist because of the huge range in excise duties on various beverages, the European Commission said May 26. Despite huge tax discrepancies--in the case of spirits, taxes range from $2 to $15--the commission said it was holding off on a legislative proposal until EU member states can find a consensus on a unified approach to the issue, especially since any new law must get the unanimous support of all 25 EU member states. "Although most member states agree that the proper functioning of the single market requires further approximation there is not agreement on how this should be achieved," the commission said in a statement. ...Apart from distorting the single market, the wide range in excise duties on alcohol sales is perpetuating fraud, the commission said. "It is clear to all that the widely divergent levels of alcohol taxation in member states ... facilitate fraud and smuggling, but without the agreement of all member states nothing can change," said Taxation Commissioner Frits Bolkestein in a statement. "A full debate is needed to establish whether there is now any consensus for improvements to the present situation."
http://pubs.bna.com/ip/BNA/der.nsf/is/a0a8u5r2v3

Thursday, May 27, 2004 ~ 12:49 p.m., Dan Mitchell Wrote:
More evidence of tax competition, more bad news for Germany and France. No wonder the French and Germans are sounding more hysterical with each passing day. It seems that there is a new announcement of major tax cuts every week, and Serbia is the latest example. Serbia still has lots of problems, to be sure, so it is unlikely that this move will have a big impact. Nonetheless, this Tax-news.com story about a 10 percent corporate tax rate must cause heartburn in Paris, Berlin, and Brussels:

The Serbian government intends to cut the country's corporate taxes to the lowest level in Europe, Finance Minister Mladjan Dinkic announced on Tuesday....the government hopes that a reduction of the corporate tax rate from the current 14% to 10% will attract foreign investment, cut corporate tax evasion, and boost economic growth. ...This follows a recent spate of tax cutting activity in central and eastern Europe and the Balkans, a trend which has angered relatively high-taxing EU members such as France and Germany...
http://www.tax-news.com/asp/story/story.asp?storyname=16144

Thursday, May 27, 2004 ~ 12:30 p.m., Dan Mitchell Wrote:
The Mouse that Roared. In 1959, Peter Sellers starred in a comedy about a tiny nation that believes it can get rich from foreign aid by losing a war to the United States. The twist to the movie ("The Mouse that Roared") is that the tiny invading army accidentally gets possession of a "Doomsday Bomb" and the US has to surrender - thus ruining the plan. Today, there is a new mouse roaring. Liechtenstein is refusing to surrender to the European Union, creating the possibility that the proposed savings tax cartel will collapse. The EUPolitix story also notes that the EU is excusing the US from any obligation to participate and that the bureaucrats are willing to move forward on the assumption that Switzerland will eventually comply with the misguided agreement:

An EU law cracking down on untaxed expat savings is being held up by other countries refusing to come on board, an EU official has told EUPolitix.com. ...it can only come into force if five other territories, Switzerland, San Marino, Lichtenstein, Andorra and Monaco, agree to similar rules by the end of June. An official present at a closed meeting of EU ambassadors on Wednesday told this website that Lichtenstein is now refusing to co-operate. "There are no real signs for optimism", he said. ...On the positive side, fears that the law could be held up by Switzerland's slow legal procedure may have been unfounded. But EU ministers are likely to accept a "letter of confirmation" that the law will be ratified to get around the problem, the official said, although if the issue goes to a referendum it may not be possible to guarantee a positive outcome in Switzerland.
http://www.eupolitix.com/EN/News/200405/89bc0b85-c9e5-4412-a146-7e dec7c60f8b.htm

Thursday, May 27, 2004 ~ 10:59 a.m., Dan Mitchell Wrote:
Europe's excessive benefits subsidize unemployment. The National Center for Policy Analysis has a new publication comparing unemployment in the United States and Europe. The most amazing number is that Europe's lowest unemployment rate in the last dozen years is higher than America's highest unemployment rate over the same period. There are many reasons for Europe's stagnation, including a tax system that penalizes productive behavior and a benefit system that undermines incentive:

Over the last 12 years, America's worst unemployment rate was better than Europe's best unemployment rate. ...In the recent economic downturn, Americans have been concerned with the length of time it takes unemployed people to find new work. Although our own performance is less than we could - and should - strive for, it is better than Europe's by a country kilometer. ... Europeans dislike layoffs, and they make it very costly for companies to dismiss workers. The result is actually harmful to the unemployed. Because it is so expensive for a company to terminate an employee, firms are very hesitant to hire workers in the first place. ...Economist Stephen Nickell surveyed the research on European unemployment. He concluded that the greatest effects on unemployment come from "...generous unemployment benefits that are allowed to run on indefinitely, combined with little or no pressure on the unemployed to obtain work..."
http://www.ncpa.org/pub/ba/ba475/

Thursday, May 27, 2004 ~ 9:45 a.m., Dan Mitchell Wrote:
Taxpayers benefit when government workers have to compete. The Bush Administration has a program requiring competitive bidding to carry out certain government activities. The good news, according to the Washington Post, is that this procedure is expected to save taxpayers more than $1 billion over the next five years:

An OMB report released yesterday found that such competitions, the cornerstone of President Bush's "competitive sourcing" initiative, cost federal agencies $88 million in fiscal 2003. But they are projected to bring savings of $1.1 billion in reduced personnel costs and overhead during the next five years, the report said. ...Stan Z. Soloway, president of the Professional Services Council, said savings would be even greater with "real competition." ... "In the private sector there is tremendous concern about the credibility of the process and the program, since very little real competition seems to be taking place." Chris Jahn, president of Contract Services Association of America, said, "The deck is being stacked against private companies."
http://www.washingtonpost.com/wp-dyn/articles/A55583-2004May25.html

The bad news, however, is that the figure should be much higher - a sentiment expressed by some of the people quoted in the Washington Post. A 2002 Cato Institute report revealed that the federal government does a very bad job weeding out unfit workers. Combined with pay and benefit packages that greatly exceed private sector compensation levels, the federal workforce is very uncompetitive:

...just 434 civilian federal workers were fired for poor performance in 2001. Just 210 nondefense workers, or 0.02 percent (1 in 5,000), were fired for poor performance. Firing rates were similarly low in prior years, and are low across all agencies. ...the rate of "involuntary separations" is only about one-fourth as high in the federal government as in the private sector. ...Surveys find that most federal workers do not believe that the best qualified people are the ones receiving promotions. A study by the OPM concluded that "the federal white-collar pay system sends and reinforces the message that performance does not matter." Thus, federal workers put in time, automatically move up the pay scales, and are nearly immune from dismissal. ...it can often take 18 months or longer to fire employees, thus requiring a major commitment of time and effort from managers. ...There is an ingrained federal culture to score virtually all workers highly-the Merit Systems Protection Board has found that just 1 percent of federal workers are rated below "fully successful" in annual reviews. False high scores create a hurdle for new managers trying to prove that worker performance has actually been poor.
http://www.cato.org/pubs/tbb/tbb-0211-10.pdf

Thursday, May 27, 2004 ~ 8:17 a.m., Dan Mitchell Wrote:
Canada surrenders. Canada already suffers a brain drain of talented people who prefer the lower tax burden in the US. To a logical person, this suggests that Canada should lower tax rates. Unfortunately, the current Prime Minister and Liberal Party leader (in the socialist definition of the word, not the European tradition of classical liberalism) just announced that he has no intention of trying to remain competitive. Tax-news.com has the story:

As the Canadian general election campaign starts in earnest, Prime Minster Paul Martin poured cold water on the prospect of future big tax cuts under his stewardship, stating at the weekend that the country can no longer afford to compete with the United States on tax. In a commercial that began airing on Sunday night, Martin declared a wish to govern a Canada that is "prosperous yet generous of spirit. You can't have a country like Canada with the taxation levels of the United States..."
http://www.tax-news.com/asp/story/story.asp?storyname=16124

Wednesday, May 26, 2004 ~ 1:22 p.m., Dan Mitchell Wrote:
Victims of communism may finally get a memorial. By any standard, communism has been a horrific experiment. As many as 100 million people may have perished thanks to dictatorial brutality in Marxist nations, and many more have suffered economic and political deprivation. Along with fascism and socialism, communism is one of the tragic mistakes of the 20th century. Thanks to longtime conservative activist (and my Heritage Foundation colleague) Lee Edwards, the victims of communism may soon be recognized by a memorial. A column in the Wall Street Journal tells the story of this much-overdue development:

...there soon may rise a memorial that marks the price of tyranny--specifically, the 100 million people said to have died during the Cold War. If a federal planning board approves the site in July, the Victims of Communism Memorial finally may have a home ...The memorial will now consist of a replica of the Goddess of Liberty erected by the martyred Chinese students of Tiananmen Square. Theirs was white, and this version will be built of bronze but covered with a white patina so that it doesn't turn green over time. An eternal flame will burn in front. On either side, bronze tablets will display quotations from the likes of Presidents Truman, Kennedy and Reagan, as well as Pope John Paul II, Vaclav Havel and Lech Walesa. Sculptor Thomas Marsh has offered to work for free. The total cost will be about a half million dollars. Private sources will supply the cash...
http://www.opinionjournal.com/la/?id=110005127

Wednesday, May 26, 2004 ~ 12:29 p.m., Dan Mitchell Wrote:
The French continue to push for centralization and bureaucracy. In an article in the EU Observer, the French Foreign Minister warns that France will not accept a Constitution that fails to grant enough new powers to the unelected bureaucrats in Brussels. Not surprisingly, he also criticizes the British for refusing to surrender their fiscal sovereignty:

French foreign minister Michel Barnier expects a successful outcome to the negotiations on the Constitution but has warned that France will not accept a text 'on the cheap'. [Barnier] described the British demand for unanimity in tax matters as "unfortunate".
http://euobserver.com/?aid=16272&rk=1

Wednesday, May 26, 2004 ~ 10:12 a.m., Dan Mitchell Wrote:
Even the business community in Europe is brain-dead. In yet another article about Europe's failure to compete with the United States, EU bureaucrats state that Europe's economic problems can only be solved if government gets even bigger. This is akin to arguing that you should try to lose weight by gorging on donuts and cheeseburgers all day. But what is really amazing about this story in the EU Observer is that a representative of the business community also claimed that more spending was needed to boost growth! These people must be smoking crack:

Commission President Romano Prodi on Tuesday (25 May) called for a "radical change" in EU economic policy if it is to succeed in its ambitious goal to overhaul the US and become the "most competitive economy in the world by 2010" - its so-called Lisbon strategy. ...Echoing his sentiments, competition commissioner Mario Monti asked, "how can we seriously try to become the most competitive economy in the world if we do not put our money where our mouths are"? ...Giacomo Regaldo, representing businesses and employers, said that "the budgeters do not have the confidence of the business world or of consumers". He called into question the spending proposed by the European Commission for the EU budgetary period 2007-2013, asking whether it was sufficient to boost slow growth in Europe....The beleaguered Lisbon strategy was established in 2000 - at the height of the dot-com boom - but by common consent among politicians, economists, business leaders and trades unions, has been little short of a total failure. Growth rates in the US have consistently outstripped those in Europe and the EU falls behind America on almost every measure of competitiveness.
http://euobserver.com/?aid=16257&rk=1

Wednesday, May 26, 2004 ~ 9:42 a.m., Dan Mitchell Wrote:
New movie definitely belongs in the fiction category. The left is hoping that a new movie, The Day After Tomorrow, will build support for radical moves to fight the alleged problem of global warming. But this is like hoping that Independence Day would build support for new weapons to fight space aliens - allowing the world of make-believe to triumph over reality. A Cato Institute expert dissects the absurd premise of this new movie in USA Today:

Global warming causes the Gulf Stream to shut down. This current normally brings tropical warmth northward and makes Europe much more comfortable than it should be at its northerly latitude. The heat stays stuck in the tropics, the polar regions get colder, and the atmosphere suddenly flips over in a ''superstorm.'' The frigid stratosphere trades places with our habitable troposphere, and in a matter of days, an ice age ensues. Temperatures drop 100 degrees an hour in Canada. Hurricanes ravage Belfast. Folks in Japan are clobbered by bowling-ball-size hailstones. If we had only listened to concerned scientists and stopped global warming when we could. Each one of these phenomena is physically impossible. Start with the Gulf Stream. Carl Wunsch, a professor of physical oceanography at Massachusetts Institute of Technology, knows more about ocean currents than most anyone. He thinks the nonsense in The Day After Tomorrow detracts from the seriousness of the global-warming issue. So he recently wrote in the prestigious science journal Nature that the scenario depicted in the movie requires one to ''turn off the wind system, or to stop the Earth's rotation, or both.'' The stratosphere will become the troposphere when all three laws of thermodynamics are repealed. Hailstones can't reach bowling-ball size because their growth is limited by gravity. Hurricanes can't hit Belfast because the intervening island of Ireland would destroy them.
http://www.usatoday.com/usatonline/20040525/6229574s.htm

Wednesday, May 26, 2004 ~ 8:14 a.m., Andrew Quinlan Wrote:
The hyper-sensitive French whine about a few jokes. The French are willing to engage in sordid under-the-table deals with brutal dictators like Saddam Hussein, but they reach for the smelling salts when confronted with a few jokes by Colorado Governor Bill Owens. The Denver Post reports on the gall of these Gauls:

France's U.S. Embassy blasted Gov. Bill Owens on Monday for "unfortunate and ill-informed" jokes about the French. Keynoting Saturday at the Michigan Republican Party Convention, Owens quipped, "You know why they planted those big trees along the boulevard in Paris? So the invading armies could march in the shade." And, he continued, "You know why the new French navy has glass-bottom boats? So it can see the old French navy." ...Nathalie Loiseau of the French Embassy in Washington... admonished Colorado's two-term governor for "uselessly practicing French bashing for the purpose of playing politics." Owens delivered his riffs to a crowd of 2,000 Michigan Republicans after contrasting President Bush's leadership with that of likely Democratic presidential nominee John Kerry. Kerry, he said, "would wait for a permission slip to be filled out by the United Nations and initialed by France" before rebuilding Iraq. ...Communications director Sean Duffy said [c]oncerns about Owens' jokes are "kind of bewildering," Duffy added, "because he had a standing ovation in the hall."
http://www.denverpost.com/Stories/0,1413,36~53~2169586,00.html

Tuesday, May 25, 2004 ~ 5:03 p.m., Dan Mitchell Wrote:
New York is near the top of the list, but not in a good way. Ever wonder why so many entrepreneurs and investors flee New York and move to places like Florida? The answer is that New York punishes productive behavior with confiscatory taxes. Tax-news.com reports on a new survey showing that only Wisconsin and Rhode Island have worse policies that New York:

The state of New York has gained the dubious distinction of being one of the most 'wealth-hostile' states in the US, according to the findings of a recent survey. he poll, conducted by Bloomberg's Wealth Management magazine, found that the state ranked 49th in a league table measuring the tax burden in each state, with only Wisconsin and "tax hell" Rhode Island producing worse results. By using an identical set of six tax parameters, the survey found that the most wealth-friendly state was Wyoming, where these parameters produced a tax bill of $7,259. By comparison, the same tax calculations resulted in a bill of $56,419 in Rhode Island.
http://www.tax-news.com/asp/story/story.asp?storyname=16109

Tuesday, May 25, 2004 ~ 4:33 p.m., Dan Mitchell Wrote:
Cosby condemned for supporting individual responsibility. Bill Cosby is one of America's most well-known and well-liked entertainers, and he has invested much of his own time and money to improve educational opportunities for other African-Americans. Yet this track record was not enough to protect him from criticism when he pointed out that some of the problems in the black community are caused by self-destructive choices. The Wall Street Journal, Tom Sowell, and Clarence Page make similar - and correct - observations:

Mr. Cosby had issued a statement pointing out that most of the news accounts dropped the context within which his remarks were delivered: a 50% high school dropout rate for inner-city African-American males that he rightly characterized as an "epidemic." In other words, Mr. Cosby's argument is that 1) a 50% black dropout rate ought to be regarded as a national scandal in a post-Brown America; and 2) dysfunctional behavior is dysfunctional whatever one's skin color. Surely it says something about Mr. Cosby's critics that they are more disturbed by his speaking out than they are about the underlying crisis he's trying to address.
http://online.wsj.com/article/0,,SB108544219283320206,00.html?mod=opini on

Bill Cosby has provided a lot of laughs for millions of Americans over the years but black "leaders" were not laughing after he lashed out at those black parents who buy their children expensive sneakers instead of something educational. He also denounced both those children and those adults in the black community who refuse to speak the king's English. ...Bill Cosby and the black "leadership" represent two long-standing differences about how to deal with the problems of the black community. The "leaders" are concerned with protecting the image of blacks, while Cosby is trying to protect the future of blacks, especially those of the younger generation.
http://www.townhall.com/columnists/thomassowell/ts20040525.shtml

Mr. Cosby violated what I call "BPC," black political correctness. We should not hang our dirty laundry out in public, according to BPC, especially in front of white folks - as if white folks didn't already know when our clothes are not clean. Instead of candidness in our public self-appraisals, BPC tells us to sound like President Bush does on Iraq: If we've made any mistakes, we can't remember what they are.
http://www.washingtontimes.com/commentary/20040524-090324-9874r.htm

Tuesday, May 25, 2004 ~ 3:15 p.m., Dan Mitchell Wrote:
Gordon Brown's socialist crusade hurts England. Chancellor of the Exchequer Gordon Brown sometimes uses the right rhetoric, but he apparently does not understand that bad policies have real consequences. His latest tax increase is driving lots of money from London to Jersey. The Financial Times reports on the adverse impact of Brown's most recent mistake:

Property funds are shifting billions of pounds from the UK to Jersey to avoid new tax rules that come into force within weeks. The rules, part of a government crackdown on tax avoidance, will require limited partnerships to pay 4 per cent stamp duty on transactions. An estimated £17bn ($30bn) of UK property is owned by limited partnerships; vehicles used by the industry in part because they have not had to pay stamp duty. ...Among the groups making the move to Jersey is Morley Fund Management. It is set to move the ownership of five of its 10 property limited partnerships, controlling more than £2.5bn, offshore in the next few weeks. Four are partnership funds with listed companies; two with Capital and Regional and one each with Ashtenne and Quintain. Legal & General, the life assurer, is also looking at moving offshore some of its seven property limited partnerships, which have £2bn under management. Aberdeen Property Investors, being bought by Arlington, is doing likewise with four partnerships controlling £700m of property, part of its £4.2bn under management. Lend Lease, the Australian company which co-owns and manages Bluewater, one of Britain's biggest shopping centres, confirmed that it was setting up an offshore scheme.
http://news.ft.com/servlet/ContentServer?pagename=FT.com/StoryFT/FullSto ry&c=StoryFT&cid=1084907760939

Tuesday, May 25, 2004 ~ 11:22 a.m., Dan Mitchell Wrote:
Schroeder's economic illiteracy. Kevin Hassett of the American Enterprise Institute pulls no punches, stating that German Chancellor Gerhard Schroeder is "economically illiterate" for supporting tax harmonization. Hassett correctly notes that harmonization might stop jobs and capital from leaving Germany for places like Estonia and Slovakia, but it would accelerate the shift of money to non-EU jurisdictions - much as will happen if the EU's infamous savings tax directive is ever implemented:

German Chancellor Gerhard Schröder's bid to stop new member states charging attractively low rates of corporate tax could damage the EU's wealth, a leading American tax expert has warned. Kevin Hassett, the director of economic policy of the American Enterprise Institute, a Washington think-tank, said the US "envies" the EU system which currently allows countries to compete for investment by setting their own corporate tax levels. But he told European Voice that listening to Schröder and getting rid of tax competition in the Union would wipe out one of its advantages at a stroke - and would rob new member states of any chance of competing by attracting capital away from the EU's economic powerhouses. At the same time, it would help to drive capital away from the continent, towards more receptive regions such as Malaysia, Singapore, Taiwan or China. "Schröder's idea is about as bad as any other idea I have seen from that government," said the former Federal Reserve Bank economist. "It is economically illiterate.
http://www.aei.org/research/nai/news/newsID.20400,projectID.11/news_det ail.asp

Tuesday, May 25, 2004 ~ 10:34 a.m., Andrew Quinlan Wrote:
As if the UN's oil-for-food scandal wasn't bad enough. The UK's Independent is reporting on widespread sexual abuse by UN "peacekeepers." Helping Saddam loot billions of dollars from Iraq was a low point for the United Nations, but the bureaucracy is showing that it is capable of even worse behavior:

Teenage rape victims fleeing war in the Democratic Republic of Congo are being sexually exploited by the United Nations peace-keeping troops sent to the stop their suffering. The Independent has found that mothers as young as 13 - the victims of multiple rape by militiamen - can only secure enough food to survive in the sprawling refugee camp by routinely sleeping with UN peace-keepers.
http://news.independent.co.uk/world/africa/story.jsp?story=524674

Tuesday, May 25, 2004 ~ 9:12 a.m., Dan Mitchell Wrote:
Has Russia surrendered to EU extortion? Environmental fundamentalists are pushing the Kyoto treaty on global warming, even though there is no scientific consensus that global warming exists. And even if there is some warming, it is unclear if it is caused by human activity or that it would have adverse consequences. Equally important, even Kyoto advocates admit that it won't have much impact on so-called greenhouse emissions. These are some of the reasons why Russia has rejected the treaty. But now it appears that Russia is willing to compromise its own future in order and support the scheme in order to buy EU support for WTO membership. The Wall Street Journal bemoans this development:

The Kyoto treaty on global warming lurched back to life Friday after Vladimir Putin performed the Heimlich maneuver. The Russian President announced that in return for European help in getting Russia into the World Trade Organization, he looked forward to speeding his country's ratification of the Kyoto pact. ...Until now, Russia has been smart, looking beyond potential short-term gains from trading emission rights to the long-term costs of the treaty. Those add up to hundreds of billions of dollars per year across the world economy, in addition to the opportunities forgone for real economic development. All this, dreamed up in the United Nations hothouse, would be in hope of slowing climate change by a smidgen, if at all. But now Mr. Putin has had a change of heart. "The EU has met us halfway in talks over the WTO, and that cannot but affect positively our position on the Kyoto Protocol," he said, promising to "speed up" Russia's ratification process. And while he didn't set a date, he went further than ever before toward a commitment to ratification.
http://online.wsj.com/article/0,,SB108544013713620126,00.html?mod=opini on

Tuesday, May 25, 2004 ~ 8:05 a.m., Dan Mitchell Wrote:
Tax competition between states leads to significant national migration. The Arizona-based Goldwater Institute has released a comprehensive study showing that over one million Americans have left high-tax states and moved to low-tax states. This process rewards states with lower tax burdens and imposes much-needed discipline on fiscally profligate states:

For Americas Founders, a federalist system was paramount to protecting and enhancing the exercise of personal liberty. By making the jurisdictions to which people are subject smaller, federalism opens the door to numerous freedoms. Theoretically, someone who has grown frustrated with the actions of their state government may choose to relocate to a state whose policies they prefer. ...Strong evidence suggests that people exercise their options by moving into states with low tax burdens and favorable business climates, and exiting states with high tax burdens, poor business climates... Over the years examined, the 10 states with the lowest overall tax burdens (Alaska, New Hampshire, Delaware, Tennessee, Alabama, Texas, Florida, South Dakota, Nevada, and Colorado, respectively) enjoyed a total net gain of more than 1,300,000 residents resulting from across-state migration. The nine states and the District of Columbia with the highest total tax burdens suffered a total net loss of more than 1,700,000 residents as a result of migration. ...states contemplating increasing their tax burdens should not ignore the fact that higher taxes will drive a portion of their citizens to live, work, and do business elsewhere, to the peril of the states long-term fiscal health. States such as Florida and Nevada have profited enormously as havens for tax refugees from other states. States like California and New York have created an exodus of their businesses and citizens to other parts of the country.
http://goldwaterinstitute.org/pdf/materials/444.pdf

Tuesday, May 25, 2004 ~ 7:26 a.m., Dan Mitchell Wrote:
Americans put freedom first. One of yesterday's blog entries mentioned the Pew report and how it confirms left-wing press bias, but there is some good news in the survey. A strong majority of Americans - as well as a similar majority of local journalists - stated that individual freedom is more important than a government safety net. Even national journalists, who generally are very left wing in their political outlook, are more likely to pick individual freedom over government paternalism. This report is yet another sign that the political spectrum in America is more favorable to liberty than it is in Europe. Indeed, it would not be surprising to find out that "right-wing" Germans and French would score to the left of "left-wing" US national journalists.

There is more common ground between news professionals and the public in attitudes toward individual freedom and government assistance for needy people. Identical majorities of local journalists (58%) and the public (58%) say it is more important that Americans be free to pursue their goals without government interference, than that government guarantee that no one is in need. National journalists are divided over this question  49% place higher priority on freedom from government interference while 42% say it is more important that the government play an active role to guarantee aid to the needy. Opinion among Internet journalists divides along similar lines: 51% believe freedom from government interference is more important; 43% say a government guarantee of aid for the needy is more important.
http://people-press.org/reports/display.php3?PageID=829

Monday, May 24, 2004 ~ 8:55 p.m., Dan Mitchell Wrote:
Criminals love gun control. John Lott of the American Enterprise Institute has a column discussing the left's retreat from the gun control issue. There are two possible reasons. First, leftists may have figured out that attacking 2nd amendment rights is not politically popular. The second possibility is that they are getting discouraged by the big increases in crime in places where gun control is implemented. The numbers are amazing, as Lott explains:

Crime did not fall in England after handguns were banned in January 1997. Quite the contrary, crime rose sharply. Yet, serious violent crime rates from 1997 to 2002 averaged 29 percent higher than 1996; robbery was 24 percent higher; murders 27 percent higher. Before the law, armed robberies had fallen by 50 percent from 1993 to 1997, but as soon as handguns were banned, the robbery rate shot back up, almost back to their 1993 levels. Australia has also seen its violent crime rates soar after its Port Arthur gun control measures in late 1996. Violent crime rates averaged 32 per cent higher in the six years after the law was passed (from 1997 to 2002) than they did the year before the law in 1996. The same comparisons for armed robbery rates showed increases of 45 percent. The 2000 International Crime Victimization Survey, the most recent survey done, shows that the violent crime rate in England and Australia was twice the rate in the US.
http://www.foxnews.com/story/0,2933,120638,00.html

Monday, May 24, 2004 ~ 4:18 p.m., Dan Mitchell Wrote:
Voters choose anti-tax candidates. Citizens for a Sound Economy reports that the recent Oregon primary resulted in several victories for supporters of limited government and individual freedom. Even powerful incumbents were defeated once CSE explained that they were on the wrong side:

Oregon CSE PAC targeted and won 6 state house races. All were clear-cut examples of "tax fighters" verses "tax increasers." The highest profile of these was the Kim Thatcher vs. Vic Backlund race. ...As Chair of the House Education committee [Backlund] has attempted to dismantle Oregon's charter school law and was the deciding vote on the largest tax increase in Oregon history (Measure 30). Kim Thatcher on the other hand, is a long time CSE member and loyal supporter. And while it was believed by the lobby and political elite in Oregon that Backlund was untouchable, thanks in large part to the efforts of CSE, Thatcher beat Vic Backlund 60.28%-39.72% even though she was outspent 2 to 1.
http://www.cse.org/informed/issues_template.php?issue_id=1769

Monday, May 24, 2004 ~ 10:15 a.m., Dan Mitchell Wrote:
The EU's corrupt Parliament. The International Herald Tribune has a lengthy story about the lavish perks and benefits provided to member of the European Parliament. Some of the freebies should be criminal offenses, including the ability to get travel reimbursements that are 10 times higher than actual costs. The EP may be even worse than the US Congress, and members of both institutions are so pampered that they almost always lose touch with the concerns of average people:

...the legislature's well-oiled system of perks and privileges, which might make a corporate president smile in recognition: chauffeured cars; daily and monthly stipends that can add tens of thousands of euros to basic salaries; jobs for relatives paid out of a E150,000 (about $180,000) a year secretarial allowance; free health care; pensions that, as one legislator put it, can put "gin on the terrace"; and, most stunningly, a travel expense procedure that reimburses legislators for as much as 10 times the amount of their airfare ticket prices. According to payroll and expense records obtained by the International Herald Tribune and The New York Times, a legislator can add well over E100,000 to a base salary when all the tax-free benefits are calculated.
http://www.iht.com/articles/521419.html

Monday, May 24, 2004 ~ 9:29 a.m., Dan Mitchell Wrote:
The high cost of government regulation. Responding to a handful of corporate scandals a couple of years ago, politicians thought they could improve corporate governance by imposing new regulations. But it turns out the costs of the Sarbanes-Oxley Act are much greater than the ostensible benefits. Bruce Bartlett writes in today's Washington Times about the high costs of the legislation and the perverse consequences on job creation and entrepreneurship:

[Financial Executives Institute] admits the compliance cost jumped sharply between its 2003 and 2004 surveys, as companies became more aware of what they had to do. On May 19, Maurice Greenberg, chairman of AIG, the world's largest insurance company, told shareholders Sarbanes-Oxley was costing them $300 million yearly. General Electric recently said it was paying $30 million per year in compliance costs. According to a new study by the law firm Foley & Lardner, the average cost for being a public company with sales of less than $1 billion increased $1.6 million last year due to Sarbanes-Oxley. There was also an unquantifiable loss of productivity because senior executives must spend so much time dealing with the law's requirements. Scott McNealy, Sun Microsystems' chief executive officer, calls Sarbanes-Oxley "buckets of sand in the gears of the market economy." The Foley study found 20 percent of companies surveyed were considering going private, eliminating public shareholders, to avoid Sarbanes-Oxley costs. Ed Nusbaum, CEO of accountants Grant Thornton, explains: "By going private, companies can greatly reduce their level of risk associated with shareholder litigation, while cutting costs and regaining a sense of control and confidentiality."
http://www.washingtontimes.com/commentary/20040523-094456-4910r.htm

Monday, May 24, 2004 ~ 8:14 a.m., Dan Mitchell Wrote:
First Howard Stern, next Rush Limbaugh. Some conservatives want the Federal Communications Commission to go after "shock-jock" Howard Stern for his racy program. This is a rather inconsistent attitude since most conservatives correctly highlight the importance of individual responsibility. If people don't want to listen to Stern, they can turn the radio dial. And if they are worried about their kids listening, they should be more attentive parents. At the very least, they should understand that once the government gets the power to block programming, that power will be used to persecute conservatives. John Fund discusses the issue in today's Wall Street Journal:

Sean Hannity, the talk-show host who is second only to Rush Limbaugh in popularity, warns that conservatives who applaud crackdowns on indecency should beware that liberals will also try to use a revitalized FCC to bring back restrictions on political speech. "I predict a backlash by liberals against free speech that will lead to calls for a new Fairness Doctrine mandating equal time, all in an effort to silence their critics," he told the New Media Seminar. "The solution to indecency," Mr. Hannity says, "is technology and choice." ...Regardless of what direction the indecency debate takes, many people believe there will be a growing fuss over the political speech that everyone used to agree was at the core of the First Amendment. "We have a Supreme Court that's upheld the McCain-Feingold restrictions on political ads 30 or 60 days before an election, so other political speech may be up for grabs," says Mr. Medved. "The struggle talk radio hosts should be warning people about is the effort to stifle political speech."
http://www.opinionjournal.com/diary/?id=110005119

Monday, May 24, 2004 ~ 7:42 a.m., Dan Mitchell Wrote:
Is anyone surprised to find out that the press tilts left? The establishment media is extremely biased, as any patron of the Media Research Center's good work already knows. What is interesting, however, is that journalists at national media outlets are willing to admit their bias. A recent Pew Research Center study shows a left-wing bias of nearly 5-1 according to Editor and Publisher:

Those convinced that liberals make up a disproportionate share of newsroom workers have long relied on Pew Research Center surveys to confirm this view, and they will not be disappointed by the results of Pew's latest study released today. ...At national organizations (which includes print, TV and radio), the numbers break down like this: 34% liberal, 7% conservative.
http://www.editorandpublisher.com/eandp/news/article_display.jsp?vnu_conte nt_id=1000517184

Sunday, May 23, 2004 ~ 4:21 p.m., Dan Mitchell Wrote:
Gibraltar already has lost much of its sovereignty. The leader of the Tory Party in England recently visited the "Rock" and pledged that Gibraltar would never be turned over the Spain if Conservatives govern the United Kingdom. These certainly are strong words, but they may not mean much since Gordon Brown and EU bureaucrats already have done a good job undermining Gibraltar sovereignty:

As Gibraltarians prepare to cast their first votes in the upcoming European Parliamentary elections, the leader of Britain's Conservative Party, Michael Howard, has pledged that a Tory government would "never surrender" Gibraltar's sovereignty. "There are those who would wish to overturn 300 years of history and separate Gibraltar from the United Kingdom. The Conservatives will not let Gibraltar down," stated Mr Howard during his one day visit to the Rock earlier this week. He added: "My pledge to you today is a simple one. The Conservatives will never surrender Gibraltar's sovereignty without the specific mandate of the people of Gibraltar."
http://www.tax-news.com/asp/story/story.asp?storyname=16083

Sunday, May 23, 2004 ~ 10:45 a.m., Dan Mitchell Wrote:
Canadian politicians avoid government-run health system. This is probably not an admirable trait, but leftists have a remarkable ability to be hypocritical. They support high tax rates, but they are very aggressive users of special tax preferences to protect their own income and wealth. They support gun control, but they tend to live in gated communities or high-rises with private security. And, as this Wall Street Journal column reveals, they like imposing government-run health care on ordinary citizens, yet they conveniently make sure they have access to high-quality care from the private market:

If this sounds like a two-tier health-care system, with some folks going to clinics that take Medicare and others going to private clinics where they pay their own way, that's because it is. ...A case in point is Canadian Prime Minister Paul Martin, Canada's most powerful and hard-line advocate of a monopoly government system and also a patient at Medisys. If the prime minister were living by the one-size-fits-all system he swears by, he, of course, could not go to Medisys since his Medicare card wouldn't cover his visit. The prime minister's office insists that he never pays his own medical bills -- this being something to brag about in Canada. For "anything not insured under Medicare he relies on his medical benefit provided to him as an employee of the government of Canada," his office told me. Yet this hardly absolves Mr. Martin from the charge that he is a consumer operating on a different tier than most of the rest of Canada. After all, it is government privilege that lets him into Medisys. Ordinary Canadians would either need to carry private insurance -- only allowed for nonessential services -- or pay out of their own pockets. As it turns out, even in egalitarian Canada, some are more equal than others.
http://online.wsj.com/article/0,,SB108509308825117436,00.html?mod=opini on (subscription required)

Saturday, May 22, 2004 ~ 9:15 a.m., Dan Mitchell Wrote:
White House caves in to Democrats...again. With a few exceptions, the Bush Administration has a disturbing track record of capitulating to the left. Judicial nominations are the latest example. The President received almost nothing in exchange for surrendering his power to make appointments when Congress is in recess. The Wall Street Journal expresses its disappointment:

Senate Democrats are crowing that their deal this week with the White House on judicial nominations is a victory, and well they should. ...Mr. Bush has agreed not to make any more judicial recess appointments for the duration of his term, and in return the Senate minority will deign to allow votes on 25 of the non-controversial Presidential nominees they've blocked for months. However, the minority will continue its filibusters -- unprecedented in U.S. history on non-Supreme Court judicial nominees -- blocking several of the best Bush appointees from getting votes on the Senate floor. All of these nominees have 50 votes of support, including some from Democrats, but are being blocked from traditional Senate advice and consent by 41 liberals. A Senate minority has in effect made itself a judicial co-nominator with a nationally elected President.
http://online.wsj.com/article/0,,SB108509554046717555,00.html?mod=opini on (subscription required)

Friday, May 21, 2004 ~ 1:47 p.m., Dan Mitchell Wrote:
Bush economist highlights importance of lower tax rates. Many people now understand that lower tax rates help the economy by boosting incentives to engage in productive behavior, but they also have other beneficial effects. Lower tax rates implicitly reduce the value of special tax breaks, thus minimizing the distortionary effect of these policies on economic decision making. Lower tax rates also reduce incentives to avoid and evade taxes, an elementary insight that seems beyond the grasp of bureaucrats in Paris and Brussels. The Bureau of National Affairs reports on recent comment by Professor Harvey Rosen of the Council of Economic Advisers:

Reductions in marginal tax rates enacted in 2001 and 2003 enhance economic growth, reduce excess burden on taxpayers, and remove some of the incentive to pursue tax avoidance schemes, and therefore legislation should be enacted to make them permanent, Harvey Rosen, a member of the of the White House Council of Economic Advisers, said May 20. Speaking to the National Tax Association Spring Symposium, Rosen said taxes not only impose a cost to taxpayers in the amount paid to the government but, by distorting their behavior, influence such decisions as the amount of labor supplied and the amount to save. Business owners make decisions in part based on tax considerations, and the degree to which those considerations stunt wealth and welfare outside of amounts paid to the government is commonly referred to as the excess burden, which depends on the marginal tax rate levied on an activity and is a pure waste to the economy, Rosen said. Tax cuts have significantly reduced the amounts that must be paid to the government, and losses of income due to tax-induced behavior, though hidden, are real and large, he said. ...He also drew a correlation between higher marginal tax rates and increased tax avoidance and tax evasion, saying that balancing the costs and benefits of partaking in such activities is fundamental in a taxpayer's reaching such a decision. The greater the marginal tax rate, the greater the benefit, he said.
http://pubs.bna.com/ip/BNA/der.nsf/is/a0a8t7w0k3 (subscription required)

Friday, May 21, 2004 ~ 10:40 a.m., Dan Mitchell Wrote:
Sovereignty promotes peace and competition. Jerermy Rabkin of Cornell University has a new book, The Case for Sovereignty: Why the World Should Welcome American Independence (http://www.aei.org/publications/bookID.769/
book_detail.asp), explaining why national sovereignty is desirable. The American Enterprise newsletter discusses the new book and notes that international bureaucracies are inherently anti-market institutions that are incapable of fighting tyranny:

Rabkin contends that state sovereignty, contrary to prevailing opinion in many European capitals, strengthens rather than jeopardizes world peace. Governments that seek to live in peace respect the sovereignty of their neighbors. Sovereign states have the right to respond to acts of external aggression; international bodies cannot provide a substitute for sovereignty precisely because they do not have forces of their own to combat aggression. Achieving peace requires focusing on states and methods that directly threaten peace, whether through nations supporting international terrorism or organizations like al Qaeda trying to acquire weapons of mass destruction. In Rabkin's view, state sovereignty ensures global competition rather than domination.
http://www.aei.org/news/filter.,newsID.20544/news_detail.asp

Friday, May 21, 2004 ~ 9:16 a.m., Dan Mitchell Wrote:
A defeat for the Constitution. America's Founding Fathers wanted to protect people from government abuses, which is one of the reasons why law enforcement authorities are required to present evidence and get a warrant from a judge before violating someone's privacy. Unfortunately, this cherished right is being undermined by Bush Administration tax officials. The IRS has won the "right" to obtain confidential records without any evidence of wrongdoing. Commentators correctly would scream if law enforcement sought warrants to harrass minorities because they may have committed an unknown crime, yet almost nobody is objecting to this erosion of Constitutional rights:

Jenkens & Gilchrist, a Dallas-based law firm, surrendered the names of its tax shelter customers to the Internal Revenue Service yesterday under a federal court order, the agency's third legal victory of its kind in a month. ..."This is yet another in a string of victories in the tax shelter battle," the I.R.S. commissioner, Mark W. Everson, said. The I.R.S. has won rulings ordering the law firm of Sidley Austin Brown & Wood and the accounting firm KPMG to disclose names of tax shelter clients.
http://www.nytimes.com/2004/05/19/business/19tax.html

Thursday, May 20, 2004 ~ 6:25 p.m., Dan Mitchell Wrote:
The reward for endless inaccuracy. Environmental groups are infamous for their Chicken-Little, sky-is-falling rhetoric, but there never seem to be any adverse consequences because journalists rarely bother to review the historical record. Ronald Bailey of Reason magazine writes in the Wall Street Journal about the laughably inaccurate record of Paul Ehrlich:

Environmentalist Paul Ehrlich has proved himself to be a stupendously bad prophet. In 1968 he declared: "The battle to feed all of humanity is over. In the 1970s, the world will undergo famines--hundreds of millions of people are going to starve to death." They didn't. Indeed, a "green revolution" nearly tripled the world's food supply. In 1975, he predicted that, by the mid-1980s, "mankind will enter a genuine age of scarcity," in which "accessible supplies of many key minerals will be facing depletion." Far from it. Between 1975 and 2000 the World Bank's commodity price index for minerals and metals fell by nearly 50%. In other words, we abound in "key minerals." Naturally, Mr. Ehrlich has won a MacArthur Foundation genius award--and a Heinz Award for the environment. (Yes, that Heinz: Teresa Heinz Kerry is chairman of the award's sponsoring philanthropy.) ...In 1971, Mr. Ehrlich told Look magazine: "When you reach a point where you realize further efforts will be futile, you may as well look after yourself and your friends and enjoy what little time you have left. That point for me is 1972." What is Greek for "this is ridiculous"?
http://www.opinionjournal.com/la/?id=110005103

Thursday, May 20, 2004 ~ 3:50 p.m., Dan Mitchell Wrote:
Bureaucratic Hell in Belgium. The Wall Street Journal reports on the smothering level of red tape in Europe. Belgium probably has the most inane regulations, which may explain why it was selected as the home of the European Commission:

Bureaucracy is a chronic European disease, visible in countless ways from the three months it takes to start a business in Italy to the half-dozen forms needed to change an address in France. Simplifying procedures and getting rid of redundant laws could increase productivity and thus boost overall gross domestic product in the European Union by 7%, according to calculations by Ireland's Ministry of Finance. ...Belgium has perhaps the continent's worst case of bureaucratitis. A multiethnic nation of 10 million, this 174-year-old country's solution to its diversity has been a complex and often-confusing division of power for different areas of life among 589 communes, some 50 cabinet-level ministers and seven separate governments that represent the national government; the French, Dutch and German language groups; and the Brussels, Flemish and Walloon regions.... For two centuries, even before the Belgian state was born, official documents submitted to a local authority had to be accompanied by a conform copy -- another document stamped and approved by an individual's home commune, or local district. In 2003, communes issued 700,000 conform copies. "That's a lot of time taken off work" by Belgians who needed to visit commune offices to request and pick up extra paperwork... Belgium residents are required to pay administrative fees -- for a new passport, for example, or a change of address -- with fiscal stamps. The stamps are purchased at any post office and used to pay fees at local government offices, which in turn submit them to the federal government for cash. Napoleon wrote the rule because he didn't trust local administrations to handle money. Two centuries later, it still exists. Belgians buy EUR125 million ($148.2 million) of fiscal stamps every year.
http://online.wsj.com/article/0,,SB108474055398512664,00.html (subscription required)

Thursday, May 20, 2004 ~ 2:58 p.m., Dan Mitchell Wrote:
Irish reject tax harmonization. Not surprisingly, the Irish government is telling Germany and France that it has no interest in surrendering its competitive advantage by acquiescing to tax harmonization. Ireland used to be the "Sick man of Europe," but now is known as the "Celtic Tiger" thanks to dramatic tax rate reductions. Unemployment has dropped from 15 percent to 5 percent, and Ireland is now the second richest nation in the European Union. Tax-news.com reports:

As certain EU member states seek to check tax competition in an expanded EU, Ireland's Prime Minister Bertie Ahern last week rejected calls for corporate taxes to be harmonised. "Tax harmonisation in my view, and tax issues, are a matter of competence of member states and should remain so," commented the Taoiseach, after talks in Lisbon with Prime Minister Jose Manuel Durao Barroso. Ahern's remarks were made shortly before France and Germany announced proposals to introduce a uniform system for calculating a company's tax base within the EU, and to establish a 'tax corridor' within which corporate tax rates in the Union should be set.
http://www.tax-news.com/asp/story/story.asp?storyname=16064

Thursday, May 20, 2004 ~ 1:45 p.m., Dan Mitchell Wrote:
French think tank explains that lower tax rates are key to successful amnesty program. France wants to lure flight capital back to the country, but the politicians are so greedy that they won't fix the problems - oppressive taxes - that created the problem. As a result, France's Enterprise Institute warns that a tax amnesty program won't work:

France should repeal the wealth tax assessed annually on its richest citizens before going forward with a proposed tax amnesty on the repatriation of foreign capital, according to a new report issued May 18 by a pro-business think tank. ...The new report from the Enterprise Institute, an influential think tank funded by France's leading companies, suggests that the amnesty plan is doomed for failure unless the government radically reforms the various taxes on wealth. The Enterprise Institute suggested that wealthy taxpayers will ignore any amnesty plan if the government fails to address the tax issues that provoked capital flight in the first place.
http://pubs.bna.com/ip/BNA/der.nsf/is/a0a8t5a2x4 (subscription required)

Thursday, May 20, 2004 ~ 11:19 a.m., Dan Mitchell Wrote:
More bad news for the EU savings tax cartel. It appears that the European Union's loophole-ridden savings tax directive won't go into effect for at least one more year. Bloomberg and the Bureau of National Affairs are reporting that the January 1, 2005, deadline is unrealistic:

Switzerland won't meet the European Union's Jan. 1 deadline for imposing a tax on foreign bank accounts, raising the risk of a further delay to the EU's crackdown on tax evasion. ``It won't be possible to be ready definitively on Jan. 1, but we think it will be possible to find arrangements that enable the European Union to respect these timetables,'' Swiss President Joseph Deiss said at a Brussels press conference with European Commission President Romano Prodi.
http://quote.bloomberg.com/apps/news?pid=10000085&sid=afenIiQZiijc&re fer=europe

Swiss President Joseph Deiss said that, while Switzerland has no intention of becoming an EU member in the near future, it "very much supports" the major European project. He said the Swiss government would do everything in its power to make sure the agreements are ratified by the end of May, so that they can be presented to the Swiss Parliament by year's end. Deiss said he was encouraged by banks' positive response so far to the tax accord but noted that a referendum, which is out of the government's hands, could stall final ratification. Even if Switzerland is unable to ratify the deal by January, Deiss said he remains optimistic it will still be possible for the European Union to tax EU savings abroad starting then.
http://pubs.bna.com/ip/BNA/der.nsf/is/a0a8t4d9m2 (subscription required)

Thursday, May 20, 2004 ~ 9:42 a.m., Dan Mitchell Wrote:
Low-tax jurisdiction continue to attract financial services. Tax-news.com reports on the growth of the hedge fund industry and notes that a recent survey finds that the overwhelming majority of these institutions are chartered in so-called tax havens. The left has always argued that lower tax rates have no impact on economic activity, but this head-in-the-sand attitude must be increasingly difficult to justify:

...total assets under administration in hedge funds broke through the $1 trillion mark this month, Alternative Fund Services Review has reported. ...The survey's analysis of the geographical spread of hedge funds in terms of domicile shows that the industry continues to favour offshore jurisdictions, with the Cayman Islands the clear leader at 42%, followed by Bermuda with 11%, Luxembourg with 10% and the British Virgin Islands with 6%.
http://www.tax-news.com/asp/story/story.asp?storyname=15984

Thursday, May 20, 2004 ~ 8:27 a.m., Dan Mitchell Wrote:
The tax competition bandwagon is picking up speed. It seems that hardly a week goes by without additional evidence coming to light about the liberalizing impact of tax competition. The Czech Republic has been a bit slow in the shift to lower tax rates and tax reform, but now their corporate tax rates may fall to 22 percent. Not surprisingly, German politicians are upset, as Tax-news.com reports:

In a move likely to aggravate neighbouring Germany, the Czech Finance Minister Stanislav Springl indicated last Friday that corporate taxes may be cut to 22% after the year 2006. Currently standing at a rate of 28%, Czech corporate taxes are due to be cut to 24% by 2006, but Springl announced whilst speaking at a conference of Czech and Slovak entrepreneurs last week that the government may cut the levy further beyond 2006 by one or two percentage points.
http://www.tax-news.com/asp/story/story.asp?storyname=16067

Thursday, May 20, 2004 ~ 7:59 a.m., Dan Mitchell Wrote:
French politicians thinks Europe needs more government. Most people know that if you are in a hole, the first thing to do is stop digging. French politicians apparently cannot grasp this simple concept. Europe's economy is lagging because government is big a bloated, yet the former French Finance Minister want to increase the EU budget by more than 50 percent. The EU Observer reports on this plan for accelerated suicide:

Europe is undergoing a "triple crisis" and that to improve the situation will cost twice as much as some member states - notably the "big three" - are prepared to pay. The document - which was presented to Commission President Romano Prodi today - is the result of a "round table" of experts led by former French finance minister Dominique Strauss-Kahn and consists of "50 proposals for tomorrow's Europe". ...He advocates in the report: "The budget of the union should move progressively from now on to two percent of GDP to allow all of the propositions presented in this report to come into operation". The budget of the union is currently capped at 1.24 percent of GDP - a ceiling that Mr Strauss-Kahn would like to see scrapped.
http://euobserver.com/?aid=16152&rk=1

Thursday, May 20, 2004 ~ 7:18 a.m., Dan Mitchell Wrote:
Washington Post unknowingly makes a good point. Multinational corporations do substantial business in low-tax jurisdictions according to a recent Washington Post report. The left-leaning column asserts that this must be evidence of clever tax planning by big business. But the data in the story simply confirm that low-tax regimes generate more economic activity and create more opportunities to make money:

...subsidiaries of U.S. corporations operating in the top four tax havens (the Netherlands, Ireland, Bermuda and Luxembourg) had 46.3 percent of their profits in those countries in 2001, but only 9 percent of their employees and 12.6 percent of their plant and equipment.
http://www.washingtonpost.com/wp-dyn/articles/A34787-2004May17.html

Wednesday, May 19, 2004 ~ 11:43 p.m., Dan Mitchell Wrote:
Advertisement for the Libertarian Party. USA Today has a damning article showing that Republicans are becoming the tax-n-spend party on the state level. This blog has remarked on Quisling Republicans in Virginia and Ohio, but that may be just the tip of the iceberg:

The Republican Party, long the champion of less government and low taxes, has backed large boosts in spending and taxes in many states where the GOP controls the legislature, the governor's mansion or both. On average, the largest spending increases from 1997 through 2002 occurred in states where Republicans controlled both branches, according to a 2003 analysis
http://www.usatoday.com/news/opinion/editorials/2004-05-16-our-view_x.ht m

Wednesday, May 19, 2004 ~ 9:23 p.m., Dan Mitchell Wrote:
European Commission continues push for corporate tax harmonization. A Brussels bureaucrat recently argued that the EU needs a harmonized tax base. This is not a completely nutty idea, but the EU wants the wrong approach. Companies presumably would like to use one definition of taxable income, rather than the 25 rules that theoretically might be required today. But the way to achieve this goal is to permit countries to use the tax base of their home country. This achieves all the simplicity the European Commission purports to favor, yet avoids the risk that a European-wide tax base would become a vehicle for higher tax burdens. The Bureau of National Affairs discusses the issue:

A single European Union-wide company tax base is the best means of eliminating the tax obstacles that could prevent businesses from reaping the full benefits from the enlarged internal mar