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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. |
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The Market Center Blog |
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Observations and insights on the global fight |
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CF&P's Market Center Blog Archives |
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Friday, June 30, 2006 ~ 8:50 a.m., Dan Mitchell Wrote: Russian Finance Minister Alexei Kudrin has dismissed a suggestion by the country's audit chief that Russia would benefit from a return to a tiered system of income tax whereby
higher incomes would be taxed at a higher rate - at least in the short term. Sergei Stepashin, the head of Russia's Audit Chamber told a conference last week that such a progressive system of income tax was
fairer, and would bring Russia into line with "global practice" where the more one earns, the more one pays in tax. Stepashin said this could be put in place by 2008/9. Finance Minister Kudrin
responded to the proposal by stating that a progressive tax scheme in Russia "would not work for long", and would be a retrograde step that inhibits economic growth. ...Such a step would also run
counter to the trend in Central and Eastern Europe, which has led the way in sweeping away complex tax systems in favour of simpler flat taxes to attract investment. Russia was one of the early flat tax
pioneers, putting in place its 13% flat income tax in 2001, but many other countries in the region have since gone further than Russia by pegging both personal and corporate income taxes together at one level.
In Russia, corporate tax is set at 24%.
Friday, June 30, 2006 ~ 7:56 a.m., Sven Larson Wrote: Tax expenditures worth hundreds of billions of dollars have helped create this increasingly dysfunctional insurance system. If we hope to
improve the system, we cannot simply add new subsidies on top of the existing structure. The open-ended tax exclusion has contributed to the moral hazard problem of insurance that leads to excessive
coverage and excessive use of services. The tax subsidy coupled with employer contributions disguises the true cost of health insurance, causing workers to buy more coverage than they might otherwise.
...Redirecting current tax expenditures could promote the purchase of insurance and encourage more efficient use of health services, but any reform risks upsetting the insurance arrangements of millions of
workers. Capping the exclusion to finance tax credits for those most in need is a conceptually straightforward approach that could only be accepted if those with higher incomes were prepared to pay more for
their own health insurance. The right tax reform recognizes that political reality and balances the need for institutional improvements in health insurance with the need to maintain some stability in the
insurance market. Such a reform is essential if we hope to resolve the larger problems of the health sector.
Friday, June 30, 2006 ~ 7:12 a.m., Dan Mitchell Wrote: The recent House of Lords decision found that Andre Agassi is liable to pay UK tax on all sponsorship income accrued at the British
tournament. This extra-territorial taxation, which will threaten many foreign stars with higher tax rates, may discourage them from competing in the UK claims Miles Dean, managing director of IFS.
The impact of such a talent drain would be disastrous, effectively relegating Wimbledon from its position as the "jewel in the crown" of
the international tennis circuit to a niche tournament for UK based players and rising stars, says Mr Dean. He explains: "The Lords' decision to give the Revenue carte blanche to assess the tax due on
sponsorship payments made from one non-UK company to another - in respect of UK based activity such as Wimbledon - could backfire massively if it deters the best in international sporting talent from
performing in the UK." "On the face of it, the Revenue could make millions from this judgement. However, as the principles of this landmark ruling are applied to other international sports stars and
entertainers performing in UK it will ultimately prove to be very counter productive, seriously damaging the UK's reputation as a destination for top sporting and entertainment events.
Thursday, June 29, 2006 ~ 9:00 a.m., Dan Mitchell Wrote: ...not all insurgencies are bad. It is hardly surprising that infamous regimes such as those in Syria, Cuba, Rwanda, Vietnam, Zimbabwe,
and Sierra Leone support these regulations. Yet, banning guns to rebels in totalitarian countries is like arguing that there is never anything such as a just war. In hindsight, would Europeans really
have preferred that no resistance was put up as Hitler rolled across Europe? Should the French or Norwegian resistance movements simply have given up? Surely this would have minimized war
causalities. Many countries already ban private gun ownership. Rwanda and Sierra Leone are two notable examples. Yet, with more than a million people hacked to death in those countries over seven
years, were their citizens better off without guns? ...There is a second reason to reject a ban on small arms. Even in free countries, where
there is little risk of a totalitarian regime, gun bans all but invariably result in higher crime. In the U.S., the states with the highest gun ownership rates have by far the lowest violent crime rates. And
similarly, over time, states with the largest increases in gun ownership have experienced the biggest drops in violent crime. Research by Jeff Miron, now at Harvard, in which he examined
homicide rates across 44 countries, found that countries with the strictest gun control laws also tended to have the highest homicide rates. ...Bans haven't even work in totalitarian countries, even after
having been in place for decades. The former USSR banned private ownership of guns after the Communist revolution and still had much higher murder rates than the U.S. The USSR's murder rates during its
last 15 years, from 1976 to 1991, were between 21 and 48 percent higher than ours. Did eliminating access to weapons fail simply because the USSR wasn't totalitarian enough? So why the perverse
effects? We all want to take guns from criminals, but regulations that primarily disarm law-abiding citizens, not criminals, can actually make crime more likely to occur.
Thursday, June 29, 2006 ~ 8:26 a.m., Sven Larson Wrote: The U.S. and Arizona constitutions require government to compensate property owners whenever it seizes their land. However,
government often passes laws and regulations that depress property values or completely prevent the use of private property, essentially taking the property without explicitly taking title to it. In these
instances, loopholes in judicial interpretation of the constitution often allow government to escape having to compensate property owners. These "regulatory takings" became so severe in Oregon that, in
2004, voters overwhelmingly approved a law called Measure 37, which required the government to pay people whenever it conscripted their land for public purposes, even if it did not seize the title
outright. This law followed an earlier attempt, called Measure 7, which, despite overwhelming popular approval, was deemed unconstitutional in 2002 by the Oregon Supreme Court. But in
February 2006, the court upheld Measure 37, leading many defenders of private property rights to hope that similar reform might be possible to protect home and business owners in other states. In this
report, Timothy Sandefur, author of the forthcoming book Cornerstone of Liberty: Property Rights in 21st Century America (Cato Institute), examines whether a regulatory takings law could be enacted in Arizona.
Wednesday, June 28, 2006 ~ 8:34 a.m., Dan Mitchell Wrote: To be competitive in the global marketplace, US tax policy needs to focus on offering tax treatment that is comparable, if not more
favourable, than that which is offered by other nations competing for investments, according to Craig Barrett, Chairman of Intel, the semiconductor manufacturer. ...Barrett...noted other countries with
considerable tax advantages, including: Ireland, with its 12.5% corporate tax rate and a 20% research tax credit... By comparison, the US has a 35% corporate tax rate, few investment incentives, and
relatively uneconomic and uncompetitive depreciation treatment, the Intel chief told lawmakers. ...According to Barrett, a critical issue that Intel considers when deciding where to locate a new wafer
fabrication plant is that it costs $1 billion dollars more to build, equip, and operate a factory in the US than it does outside the US - the largest portion of which is attributable to taxes. ...Barrett argued
that there are several potential solutions to close the gap in tax competitiveness between the US and the rest of the world. These include a corporate rate reduction, an investment tax credit (ITC),
full expensing of a factory in year one (or expensing plus a write-off of an additional percentage above and beyond the facility's cost), or a combination of these items. Link to this Blog Entry
Wednesday, June 28, 2006 ~ 8:17 a.m., Sven Larson Wrote: In order to fix Medicaid, policy makers need to understand what's wrong with the existing system. In one sense its problems are simple.
The checks and balances of a traditional marketplace are absent. In real markets, buyers spend their own money and act in their own interest, seeking to purchase the best quality goods and services they
can find at the best prices they can obtain. Likewise, sellers acting in their own interests market their products/services at the highest possible price. Furthermore, because reducing their cost of
production increases their profit/income, they have an incentive to continually innovate and become more efficient.
Wednesday, June 28, 2006 ~ 8:00 a.m., Dan Mitchell Wrote: When the Arizona legislature concludes its 2006 session in a few days, it will set a record for school-choice legislation by enacting four new
or expanded programs allowing disadvantaged children to attend private schools. Even more remarkable: The programs were enacted in a state with a Democratic governor. Yet Arizona is not an
aberration. Already in 2006, a new Iowa corporate scholarship tax credit bill was signed into law by Gov. Tom Vilsack; and in Wisconsin, Gov. Jim Doyle signed a bill increasing the Milwaukee
voucher program by 50%. Gov. Ed Rendell may expand Pennsylvania's corporate scholarship tax credit program, as he did last year. Messrs. Vilsack, Doyle and Rendell are all Democrats. ...
Once the Rubicon is crossed and legislators vote to adopt a school choice program--no matter how small or targeted--it becomes easier to support a new one, or expand the old one, the next time around.
Hence, of the seven new school choice programs enacted last year, six were in states that already had school choice. The seventh was a program for disadvantaged children in Utah, which was expanded
this year. ... Another factor inducing a more supportive or tolerant attitude toward school choice among Democrats is that they are running out of viable alternatives. The U.S. Department of Education
reported recently that three million children are attending chronically failing schools--that is, schools that have failed to satisfy minimal state standards for at least six consecutive years.
Tuesday, June 27, 2006 ~ 1:02 p.m., Sven Larson Wrote: [The] UN views itself as the emerging global government, and like all governments, it needs money to operate. The goal, which the UN
readily admits, is to impose a comprehensive set of global laws on all of us- laws that supersede sovereign national governments. To do this, the UN needs a global military, a global police force,
international courts, offices around the globe, and plenty of highly-paid international bureaucrats. All of this costs money. Rest assured that the UN is absolutely serious about imposing a global
tax. In fact, it has been discussing a global currency tax for years. The "Tobin tax," named after the Yale professor who proposed it,
would be imposed on all worldwide currency transactions. Such a tax could prove quite lucrative for the UN. The Tobin tax is not the only idea being considered. Some have suggested taxing all airline travel
or carbon emissions. The ultimate goal is an income tax, which will be imposed after we've all swallowed the concept of UN taxing authority. Fortunately, the House of Representatives last week passed
my language in the 2007 Foreign Operations bill that prohibits the Treasury from paying UN dues if the organization attempts to implement or impose any kind of tax on US citizens. But that only
protects us for another year. Given the stated goals of the UN, it would be foolish to believe the idea of a global tax will go away. Link to this Blog Entry
Tuesday, June 27, 2006 ~ 8:57 a.m., Dan Mitchell Wrote: Voters are still being misled and government is still taxing and spending on the false assumptions that $1 spent on a bridge-to-nowhere costs $1 in tax revenue, and that $1 in
government tax revenue costs the private economy only $1. In fact, the cost to the private sector of providing the government an additional $1 in tax revenue is about $2.50, and in some
circumstances much more. Even academics on the left now acknowledge that taxes adversely affect economic performance and, therefore, when taxes go up, it is not just the private sector's
after-tax income that goes down; its pre-tax income suffers as well. Thus, when the question is, "How much does it cost the private sector
to provide government with another $1 in tax revenue?", the answer is $1 plus the amount by which people's incomes in the future are smaller than they otherwise would be, but for the negative effects
that the tax increase has on economic growth. Link to this Blog Entry
Tuesday, June 27, 2006 ~ 7:33 a.m., Dan Mitchell Wrote: New figures released on Thursday have revealed that the EU is falling far short of reaching its emissions targets under the
international climate change treaty, the Kyoto Protocol. Instead greenhouse gas pollution rose for the second year in a row, according to the Copenhagen-based European Environment Agency. ...Spain
and Italy were the biggest green sinners with the largest emission increases having plus 19.7 (4.8 %) and 5.1 (0.9 %) million tonnes respectively.
Monday, June 26, 2006 ~ 4:49 p.m., Sven Larson Wrote: Laurence Parisot, president of Medef, France's main employers' association, warned on Wednesday that the "acceleration of crises"
in the country over the past year and the current political turmoil was damaging the economy. In a television interview, Ms Parisot said that rejection of the European constitutional treaty in last year's
referendum, the outbreak of widespread rioting in urban ghettos in October, and the mass protests against the government's youth labour law this spring had unsettled French business. "Over the past
year we have seen a succession, an acceleration of crises, which is very worrying for the stability of our country, for economic growth," she said. ...Ms Parisot also criticised the government's indecisive
meddling in the corporate restructuring that is currently sweeping the eurozone's second biggest economy. "The state cannot be a player, the state cannot be the one capable of deciding everything, or
knowing how to do everything when it comes to management and the economy. Eric Chaney, Europe economist at Morgan Stanley, said: "In a rapidly changing world where France has to catch up with its
peers in terms of reforms, a weak and paralysed cabinet is the last thing we need."
Monday, June 26, 2006 ~ 8:51 a.m., Dan Mitchell Wrote: In the world of financial exchanges, the pace of globalization has been measured by the number of stock market listings that have been
lost to overseas competitors in places like London and Hong Kong. As CNBC commentator Jim Cramer recently pointed out, 23 of the 24 firms recently looking to raise more than a billion dollars in
capital chose to list overseas rather than in the U.S. For Chinese companies looking to raise billions of dollars from global investors, Hong Kong -- not New York -- is now the preferred venue. ... U.S.
financial markets are finally realizing that globalization can be an opportunity, and not just a threat. In this globalized world, the winners will be those that embrace financial innovation and create
less onerous regulatory regimes for investors. Link to this Blog Entry
Monday, June 26, 2006 ~ 8:44 a.m., Dan Mitchell Wrote: A recent Associated Press headline was, "Current Account Trade Deficit Posts Unexpectedly Large Improvement." It fell by 6.5
percent. But why assume that was an improvement? After all, the current account deficit "improved" during every recession, and even moved into surplus during the worst recessions of 1975 and 1980-81.
... One of the most persistent myths about semi-free trade or globalization is the idea that countries with trade deficits must be losing manufacturing jobs to countries that run trade surpluses.
Japan and Germany have run chronic trade surpluses for many years, particularly in manufactured goods, making it easy to find out if this theory works. From 1992 to 2005, according to the Bureau of
Labor Statistics, the number of manufacturing jobs fell by 16.3 percent in the United States, from 20.1 million to 16.3 million. But the number of manufacturing jobs fell by 24.1 percent in Germany
(from 10.7 million to 8.1 million) and by 27.2 percent in Japan (from 15.7 million to 11.4 million). Chronic trade surpluses were a sign of capital flight, not industrial might. Since 1992, industrial production
has increased 11.5 percent in Japan, 18.9 percent in Germany and 59.7 percent in the United States. People in Japan and Germany sold goods to the United States in order to get the dollars they must have
to invest in the stronger U.S. economy.
Monday, June 26, 2006 ~ 8:13 a.m., Dan Mitchell Wrote: Much of the world's media portrayed the victory of the socialist party SMER in the Slovak elections on Saturday as the voters' rejection of
the free market reforms pursued by the current center-right government. ...The truth is more complicated. First, the election turnout was only 54.67 percent. In contrast, it was 70.07 percent in
2002. It is true that SMER increased its support from 13.46 percent in 2002 to 29.14 percent this year, but the low turnout means that SMER had its program endorsed by about 14 percent of the eligible
voters - not exactly a ringing endorsement of a return to socialism. ... the three parties of the center right can count on 65 seats in the Slovak parliament of 150 seats. They will be 11 seats short of a
majority but powerful enough to be a strong opposition, or form a part of the next government. The socialists will have 50 seats. They will thus be 26 seats short of a majority in parliament. ... The upshot
of the election is that under the Slovak voting system, elections don't conclude the process of political horse-trading. They begin that process. True, Fico will get the first crack at forming a government,
but that does not mean much. In 1998 and 2002, Meciar won the elections, but could not form the government. Instead, it was the second largest party in parliament that formed the government. In
both cases, that party was Mikulas Dzurinda's party. Will history repeat itself? One can only hope.
Sunday, June 25, 2006 ~ 5:13 p.m., Dan Mitchell Wrote: ... many developed countries continue to milk their citizens -- both as taxpayers and consumers -- to prop up uncompetitive but coddled
farmers. The headline figure is the $280 billion, or EUR225 billion, that wealthy nations handed out to farmers in 2005. The, ahem, honor roll goes like this: The European Union spent the most on its
farmers last year, $133.8 billion. Next was Japan at $47.4 billion, and then the U.S. at $42.7 billion. Those three account for four-fifths of the rich world's agricultural subsidies. In relative terms
Switzerland, which is not an EU member, spent the most on its farmers: Subsidies made up a whopping 68% of its farm economy. The Swiss were followed by Iceland at 67% and Norway at 64%. EU
subsidies equaled 32% of the bloc's farm economy last year; in the U.S., the figure was 16%. ... farm liberalization shouldn't hinge on whether or how much other trade partners lower their barriers to
Western goods and services. The people of Europe, America, Japan and elsewhere would benefit from any move to free up agricultural trade, even a unilateral one.
Saturday, June 24, 2006 ~ 8:43 p.m., Dan Mitchell Wrote: Democrats in Congress unveiled their 2006 campaign agenda last week, laying claim to the mantle of "fiscal responsibility." The GOP's
spendthrifts have handed them this political opening, which makes it all the more disappointing that Democrats are falling back on an old
confidence trick. Their ruse goes by the name of "pay-as-you-go" budgeting, which has the political virtue of sounding as if spending
won't be able to exceed revenue. ... Paygo rules, to use the Beltway argot, were in place from 1990 until they expired in 2002, so we know how they work. And in practice all they really do is constrain
tax cuts, not new spending. That's because paygo rules apply only to new or expanded entitlement programs, not to those that already exist and grow automatically with user demand. Thus spending for
Medicare, growing this year at an astounding 15% annual rate, would continue to run on autopilot. Ditto for Medicaid. So-called "discretionary" programs (education, Defense) that Congress
approves each year are also exempt. Democrats somehow forget to disclose that those notorious "earmarks" stuffed into spending bills are also exempt from paygo.
Friday, June 23, 2006 ~ 7:37 a.m., Dan Mitchell Wrote: Last year, nine out of 10 black and Latino fourth-graders scored below proficiency in reading and math. Eighth-graders fared worse.
Just 8% of black eighth-graders are proficient readers, and 7% are proficient at math. For eighth-grade Latinos, the numbers are 9% and 6%, respectively. You might think that a Democratic mayor in a
Democratic city would garner plenty of establishment support for fixing a system so poorly serving members of a traditional Democratic constituency. Think again. In April, Mr. Villaraigosa
announced a school reform plan that calls for "more mayoral oversight for the purpose of ensuring accountability." His proposal has met nothing but denunciation from his fellow liberals. Currently,
public education in L.A. is controlled by an elected seven-member school board, which not only appoints the superintendent but also holds sway over everything from teachers contracts and budgets to
curriculum, collective bargaining and the hiring and firing of principals. Under Mr. Villaraigosa's proposal, these core duties would be turned over to the superintendent, who would answer primarily to
the mayor. This is unacceptable to the United Teachers of Los Angeles, the local union that currently controls the school board by fielding candidates and financing what are low-turnout elections. The
status quo is great for union power; it just doesn't do much for kids. But then again the unions long-ago put their own clout above education quality. ...the National Center for Education Statistics puts
per-pupil spending in the district at more than $10,000, which is above both the state average of $8,700 and the national average of $9,300.
Friday, June 23, 2006 ~ 6:15 a.m., Dan Mitchell Wrote: Tax Freedom Day arrived five days earlier in 2006 compared to last year as tax cuts filtered into the system, although Canadians must
still effectively work for almost half of the year before all of their tax liabilities are paid, according to the Fraser Institute, the free market
think tank. This year, Canadians started working for themselves on June 19th. Last year, it was June 24th and the latest that Tax Freedom Day has ever fallen in Canada was on June 25th, in 2000.
..."Although this year marks a reversal of the recent upward trend in taxation, Tax Freedom Day falls over a month and a half later than
it did 45 years ago," noted Niels Veldhuis, senior research economist at the Institute. ...According to the Institute, tax relief announced in
the 2006 federal budget has contributed to the decline. The reduction in the Goods and Services Tax (GST) from 7 percent to 6 percent accounted for one day of the five day decrease in Tax Freedom Day.
In addition, many provincial governments also reduced taxes in 2006. ...This year's study found that...the top 30 percent of income earners paying 65.9 percent of all taxes and earning 59.1 percent of all
income, while the bottom 30 percent of all income earners pay 4.7 percent of all taxes and earn 9.4 percent of all income.
Thursday, June 22, 2006 ~ 8:50 a.m., Dan Mitchell Wrote: High taxes and record budget increases are hardly foreign to overburdened New Jersey residents. In the past four fiscal years,
state leaders raised taxes by more than $3 billion and went on a spending splurge that left a $4 billion to $5 billion hole in the budget. ...a dreary history for New Jersey taxpayers. Over the last several
years they have endured a plague of tax and fee increases to drive record spending growth. Worse, even when revenues declined 23 percent from fiscal 2000 to 2002, spending zoomed by 21 percent.
...Corzine...campaigned as a fiscal conservative who would bring spiraling property taxes back in line and finally help struggling taxpayers. In 2005 he vowed, "I'm not considering raising taxes. It's
not on my agenda. We have a very high-rate tax structure. I'm not considering it." ...Corzine [has proposed] a $1.8 billion "revenue enhancement" (including higher taxes on sales, real estate, and
tobacco) and bloat general-fund outlays by 9.2 percent, further handicapping the state's poor business environment. ...Corzine's package is the largest among the 11 governors proposing revenue
increases this year, even as twenty state executives are seeking (mostly modest) tax reductions while the remainder have no major changes on their agendas.
Thursday, June 22, 2006 ~ 8:17 a.m., Sven Larson Wrote: Facing mounting problems over its inability to deliver the A380 superjumbo plane on time, Airbus appears set to request state aid for
the development of a midsize jetliner in what some analysts described as a rescue package. A move toward development loans from governments for the midrange A350 jet would almost certainly
worsen a bitter trans-Atlantic dispute over the different forms of government support received by Airbus and its American rival, Boeing. European governments have been signaling that such aid
would be forthcoming, even as the United States trade negotiator warned last week that the move could lead to a full-scale battle at the World Trade Organization. ...In October, European governments
deferred a decision on subsidy payments for the A350 in a good-will gesture to Washington as talks to resolve the subsidy dispute got under way. But less than a month before ministers are to review the
freeze, ahead of the Farnborough air show in England on July 17, the talks still have not yielded an agreement on limiting government support, direct or indirect, to the world's two main aircraft makers.
Thursday, June 22, 2006 ~ 7:44 a.m., Dan Mitchell Wrote: Of the $6.3 billion that FEMA handed out, as much as $1.4 billion -- nearly a quarter of the total -- went to crooks and con artists.
According to the Government Accountability Office, FEMA paid millions of dollars to prison inmates, to people who listed cemeteries or post office boxes as their damaged homes, and for property that
its own inspectors reported was nonexistent. Some people collected thousands of dollars in rent assistance even though they were staying in hotels paid for by FEMA. One man ran up an $8,000 government
tab at the Pagoda Hotel in Honolulu, for example, yet was paid $2,358 to cover his rent for the same period. Debit cards issued by FEMA to cover emergency expenses, the GAO reported, were
frequently used for purchases "that did not appear to meet legitimate disaster needs." Like diamond jewelry. And fireworks. And season
tickets to the New Orleans Saints, a bottle of champagne at Hooters, $300 worth of "Girls Gone Wild" videos, and a Caribbean vacation. And that doesn't include the 381 debit cards, worth $762,000, that
FEMA simply -- lost. This is what comes of turning charity into a government function. It is what comes of believing that a centralized government agency can respond to a local disaster more effectively
than a multitude of private individuals acting on their own initiative and using their own judgment. It is what comes of letting politicians vow, as President Bush did after Katrina, to spend "whatever it
costs" on post-disaster relief and rebuilding. Presidents didn't always talk that way. When Congress in 1887 appropriated funds to buy seed for drought-stricken farmers in Texas, President Grover Cleveland
vetoed the bill. Nowhere did the Constitution authorize public expenditures for personal benevolence, he wrote in his veto message. "The friendliness and charity of our countrymen can always be relied
upon to relieve their fellow-citizens in misfortune. Federal aid in such cases encourages the expectation of paternal care on the part of the government and weakens the sturdiness of our national character."
Wednesday, June 21, 2006 ~ 11:49 a.m., Sven Larson Wrote: In the end, realization of the neoliberal tax ideology is leading inexorably to social disintegration with unforeseeable political
consequences. This is why, when we discuss tax policy in general and international taxes in particular, we are talking not only about money
but also about the possibility of (re)gaining policy space and political options. In a situation in which the scope and reach of national policy instruments is declining under the conditions imposed by
globalization, international taxes must be seen as having a major potential for use in regulating globalization. International taxation is an important approach to developing alternatives to the neoliberal
paradigm and at the same time an indispensable component of a post-neoliberal world order. Link to this Blog Entry
Wednesday, June 21, 2006 ~ 10:38 a.m., Sven Larson Wrote: Alabama was the first of twelve states that have passed legislation to prohibit state and local governments from using eminent domain to
take private property for economic development purposes. However, Alabama's new law created an exception that allows seizure of property that the state or local government considers "blighted."
This is a loophole that many believe can easily be exploited, particularly by local governments motivated to designate property as "blighted" if the property is more valuable for economic
development. An attempt to correct this problem with an amendment to the Alabama Constitution passed the House but died in the Senate during the last legislative session. At the federal level, last November
the U.S. House of Representatives passed The Private Property Rights Protection Act of 2005 by an overwhelming vote of 376 - 38. Despite the fact that polling indicates that anywhere from 90 to 97
percent of the public are opposed to taking private property for development purposes, the bill remains stalled in the Senate. Link to this Blog Entry
Wednesday, June 21, 2006 ~ 8:41 a.m., Dan Mitchell Wrote: Germany's Finance Minister Peer Steinbrueck has finalised plans for important corporate tax reforms which, if approved, will bring about
a substantial cut in one of the most onerous company tax burdens among developed nations. Under the proposals presented by Steinbrueck to Chancellor Angela Merkel, which have been leaked to
the German media, the headline rate of corporate tax paid by Germany's largest companies, currently set at 25%, will fall to a rate of between 12.5% and 16%. While Steinbrueck intends to leave the
local corporate tax system in place, which adds on average an additional 13% to a company's corporate tax bill, the aim is to bring the overall burden below 30%, thereby making Germany a much
more attractive country in which to locate a company. Currently, the combined corporate tax rate paid by big companies in Germany is almost 40% - one of the highest in the world.
Tuesday, June 20, 2006 ~ 1:23 p.m., Sven Larson Wrote: In general, tax reforms that increase the rewards from work can encourage labour force participation. However, for budgetary
reasons, general cuts in taxes on labour income need to be accompanied by increased taxes on goods and services or on other types of income, or by lowering public spending. Targeted tax cuts
for some under-represented groups, which are found to have a powerful effect on whether they work, can also be financed by imposing higher taxes on the income of other groups - in which case
stronger work incentives for some go hand-in-hand with less rewards for work effort for others. ...Macroeconomic policy should aim at price stability and sustainable public finances so as to keep interest
rates low and encourage investment and labour productivity, thus strengthening economic growth with potential beneficial effects on employment; where the state of government finances permits,
improvements in public finances may be used to reduce taxes or increase spending in areas that have the most beneficial impact on growth and employment. ...Unemployment benefit replacement rates
and duration, as well as social assistance benefits provided to individuals who can work, should be set at levels that do not discourage job search excessively and, especially where they are
relatively generous, be made conditional on strictly enforced work-availability criteria as part of well-designed "activation" measures; moderate benefit sanctions should be part of such an
activation strategy.
Tuesday, June 20, 2006 ~ 7:41 a.m., Dan Mitchell Wrote: [National Rifle Association President] LaPierre has been charting the U.N. gun-ban movement since the mid-1990s... The philosophy of
these groups, LaPierre said, is that the right to own a gun should be solely the right of governments, and they despise the fact that the United States remains a country in which private citizens can keep a
handgun at their bedsides. ... a disarmed people can do nothing when its armed government or militias turns on it. The U.N. has no response about what to do about that, LaPierre said, citing the Tutsis
in Rwanda, the people of Darfur, and the Muslims of Bosnia. "All they offer is a global socialist fantasy...If there were no guns, there would be no poverty, there would be no child hungry, there would be
no violence. It's the same global socialist fantasy we saw in the 20th century, " he said. "Under the U.N. gun-ban policy, they have no
solution for when the government goes bad; they have no answer for how to be liberated from a tyrant or a dictator; they have no answer for what oppressed people should do...Their whole philosophy is give
up your arms and your freedoms and we'll protect you." ... Though some Democrats have learned recently that it doesn't pay to be on the wrong side of the Second Amendment come election time, LaPierre
doesn't believe the American left is about to give up on gun control. The U.N. is just another vehicle for the same old policies, he said.
Tuesday, June 20, 2006 ~ 7:32 a.m., Dan Mitchell Wrote: Helsinki will work on raising tax on alcohol across the European bloc when Finland takes over the rotating EU presidency from Austria on
1 July, Finnish prime minister Matti Vanhanen has said. ... Earlier this month, the European Commission came out with an "Alcohol in Europe" report mapping out the health and economic impact of
alcohol in the 25-member union. ...One of the recommendations to curb the rising alcohol trend in Europe is to raise taxes.
Monday, June 19, 2006 ~ 8:55 a.m., Dan Mitchell Wrote: If we look at how well it serves its sick citizens, American medicine excels. Prostate cancer is a case in point. The mortality rate from
prostate cancer among American men is 19%. In contrast, mortality rates are somewhat higher in Canada (25%) and much higher in Europe (up to 57% in the U.K.). And comparisons in cardiac care --
such as the recent Heart and Stroke Foundation of Canada study on post-heart-attack quality of life -- find that American patients fare far better in morbidity. Say what you want about the problems of
American health care: For those stricken with serious disease, there's no better place to be than in the U.S. Socialized health-care systems fall short in these critical cases because governments strictly ration
care in order to reduce the explosive growth of health spending. As a result, patients have less access to specialists, diagnostic equipment and pharmaceuticals. Economist David Henderson, who grew up in
Canada, once remarked that it has the best health-care system in the world -- if you have only a cold and you're willing to wait in your family doctor's office for three hours. But some patients have more
than a simple cold -- and the long waits they must endure before they get access to various diagnostic tests and medical procedures have been documented for years. Montreal businessman George Zeliotis,
for example, faced a year-long wait for a hip replacement. He sued and, as the co-plaintiff in a recent, landmark case, got the Supreme Court of Canada to strike down two major Quebec laws that banned
private health insurance.
Monday, June 19, 2006 ~ 8:43 a.m., Sven Larson Wrote: In 2005 the Census Bureau surveyed employees in metropolitan statistical areas (MSAs) to determine the numbers of workers covered
by collective bargaining agreements. The data was compiled for the total workforce and for public sector employees. The MSA union membership survey data was broken out into Right to Work (RTW)
state and non-Right to Work states. For the total workforce survey, 63 of the 253 MSAs in the U.S. had at least 500 respondents, enough to make reliable statistical inferences. Of the 63 MSAs, 35 are located
in non-Right to Work states while 28 are in Right to Work states. In the Pittsburgh MSA, 16 percent of all surveyed employees were covered by a union contract. The 35 non-RTW metro areas have an
average unionized workforce of 16 percent while the RTW states have an average unionized workforce of 8 percent. The difference in job growth over the last five years is striking. The RTW metro areas
grew 6 percent while the non-RTW metro areas managed to eke out a mere 0.7 percent gain, with Pittsburgh posting a 0.9 percent decline in jobs. Obviously, correlation of RTW with stronger job growth is
not absolute proof of causality but when combined with many other studies showing the same type of disparity, it is a potent argument in favor of Right to Work.
Monday, June 19, 2006 ~ 8:11 a.m., Dan Mitchell Wrote: Ethanol's problem is that it is expensive to make and provides far fewer miles per gallon than gasoline. So its supporters have worked
the political system to subsidize ethanol, and more recently to force Americans to buy it. U.S. taxpayers today pay twice for ethanol: once in crop subsidies to corn farmers and again in a 51-cent subsidy for
every gallon of ethanol. Without such a subsidy, ethanol simply wouldn't be cost competitive with gasoline. Then last year, Congress went further and passed a new ethanol mandate, requiring drivers to
use at least 7.5 billion gallons annually by 2012. The immediate consequence of this new mandate was higher gasoline prices this spring, since the ethanol industry was ill-equipped to meet the new
demand. Ethanol must also be carried by truck or rail, rather than through pipelines, and it requires special blending facilities. All this has both raised prices and created gas shortages around the country.
But rather than blame their new mandate for the higher prices, the Members of Congress blamed, of course, Big Oil. Ah, but what about the other alleged virtues of ethanol? One favorite is that every gallon
of ethanol will supplant a gallon of gasoline imported from tyrannical Mideast oil regimes. ...Sorry. The most widely cited research on this subject comes from Cornell's David Pimental and Berkeley's Ted
Patzek. They've found that it takes more than a gallon of fossil fuel to make one gallon of ethanol--29% more. That's because it takes enormous amounts of fossil-fuel energy to grow corn (using fertilizer
and irrigation), to transport the crops and then to turn that corn into ethanol. The Saudis ought to love the stuff.
Sunday, June 18, 2006 ~ 1:04 p.m., Dan Mitchell Wrote: Whether it's pushing through the biggest tax increase in Germany's postwar history (including a three-percentage-point VAT hike) or
introducing red tape rather than cutting it (viz. a costly anti-discrimination law), the coalition of Christian Democrats and Social Democrats almost manages to make one feel nostalgic for the
previous Red-Green government. At least back then, there were no false hopes. ... [A] bone of contention is how to repair welfare reforms adopted by the previous government and get the long-term
unemployed back to work, even if at a lower pay grades than their previous jobs. A number of loopholes have allowed the jobless to get around the welfare laws, costing the government billions in
unexpected handouts. The governors called for a wholesale reform of the reform, whereas the Merkel government agreed to address just some of the problems. ... The government is obsessed with reducing
the budget deficit, hence the tax hikes, rather than in looking for ways to make it easier for companies to hire workers and grow their business. The next big reform is supposed to address Germany's
exploding health care costs. While the two parties still disagree on how to overhaul the mandatory health insurance system, they already agree on one thing: It will cost taxpayers more money.
Sunday, June 18, 2006 ~ 10:44 a.m., Sven Larson Wrote: Anders Fogh Rasmussen, the Danish liberal prime minister, has unveiled an ambitious proposal for the world's two biggest economies
to form a free trade zone. During a visit to the US, where he addressed the Berkeley, University of California, Mr Fogh Rasmussen suggested the creation of a "transatlantic marketplace without
barriers to trade and investment." "Let us not forget that the EU and the United States are responsible for two fifths of world trade. We
are each other's largest trading and investment partners," Mr Fogh Rasmussen said in the speech focussed on globalisation. As much as 85 per cent of US global investments in professional, scientific and
technical services are placed in the EU, he noted. "Globalization is a fact and we have to embrace it by going on the offensive both nationally and through international cooperation."
Saturday, June 17, 2006 ~ 6:54 p.m., Dan Mitchell Wrote: ...the FDA doesn't have the authority to require restaurants to label the number of calories, set portion sizes on menus or prohibit
allowing customers from taking home a doggie bag. That's for right now, but recall that cigarette warning labels were the anti-tobacco zealots' first steps. There are zealots like the Washington-based
Center for Science in the Public Interest who've for a long time attacked Chinese and Mexican restaurants for serving customers too much food. They also say, "Caffeine is the only drug that is widely
added to the food supply." They've called for caffeine warning labels, and they don't stop there. The Center's director said, "We could envision taxes on butter, potato chips, whole milk, cheeses and
meat." Visions of higher taxes are music to politicians' ears. How many Americans would like to go to a restaurant and have the waiter tell you, based on calories, what you might have for dinner? How
would you like the waiter to tell you, "According to government regulations, we cannot give you a doggie bag"? What about a Burger King cashier refusing to sell french fries to overweight people? You
say, "Williams, that's preposterous! It would never come to that." I'm betting that would have been the same response during the 1970s had
someone said the day would come when cities, such as Calabasas, Calif., and Friendship Heights, Md., would write ordinances banning outdoor smoking. Tyrants always start out with small measures that
appear reasonable.
Saturday, June 17, 2006 ~ 2:19 p.m., Dan Mitchell Wrote: ...chancellor Wolfgang Schussel, believes a pan-European referendum could be the way to revive the stranded EU constitution. In an
interview with Germany's Bild am Sonntag, Mr Schussel said "I can well imagine a referendum that takes place simultaneously in all EU states. The constitution would be accepted if the majority of the
European population and the majority of states approves it." ...The leaders of France and Germany at an informal bilateral meeting near Berlin last week (6 June) agreed that the constitution should be
tackled in the first half of next year, when Germany is running the EU for six months. "We have agreed that the constitutional treaty will be reviewed during the German presidency, after a period of
reflection," said German chancellor Angela Merkel after the meeting.
Friday, June 16, 2006 ~ 8:49 a.m., Dan Mitchell Wrote: A House of Representatives (http://search.breitbart.com/q?s=%22House Houston divorce lawyer Mark Lipkin says he can't recall anyone paying for his services with a FEMA debit card, but congressional
investigators say one of his clients did just that. The $1,000 payment was just one example cited in an audit that concluded that up to $1.4 billion - perhaps as much as 16 percent of the billions of dollars in
assistance expended after Hurricanes Katrina and Rita - was spent for bogus reasons. The Federal Emergency Management Agency also was hoodwinked to pay for season football tickets, a tropical
vacation and a sex change operation, the audit found. Prison inmates, a supposed victim who used a New Orleans cemetery for a home address and a person who spent 70 days at a Hawaiian hotel all
were able to get taxpayer help, according to evidence that gives a new black eye to the nation's disaster relief agency. ...The investigative agency said it found people lodged in hotels often were
paid twice, since FEMA gave them individual rental assistance and paid hotels directly. FEMA paid California hotels $8,000 to house one individual - the same person who received three rental assistance
payments for both disasters. In another instance, FEMA paid an individual $2,358 in rental assistance, while at the same time paying about $8,000 for the same person to stay 70 nights at more than
$100 per night in a Hawaii hotel. ...FEMA paid millions of dollars to more than 1,000 registrants who used names and Social Security numbers belonging to state and federal prisoners for expedited
housing assistance. The inmates were in Louisiana, Texas, Alabama, Mississippi, Georgia and Florida. FEMA made about $5.3 million in payments to registrants who provided a post office box as their
damaged residence, including one who got $2,748 for listing an Alabama post office box as the damaged property. The GAO told of an individual who used 13 different Social Security numbers -
including the person's own - to receive $139,000 in payments on 13 separate registrations for aid. All the payments were sent to a single address.
Friday, June 16, 2006 ~ 8:36 a.m., Dan Mitchell Wrote: Sweden's unemployment rate is 15 per cent, three times the figure being used by the government, according to new research from
McKinsey Global Institute, the think tank. The consultancy's calculations indicate unemployment is set to rise further, with between 100,000 and 200,000 jobs outsourced to cheaper countries
over the next 10 years if no corrective action is taken. The numbers cast a pall over Sweden's international reputation as a thriving welfare state with low unemployment and will help focus attention on
jobs ahead of September's national elections. ... The ageing population would put the public sector under "intolerable pressure"
unless productivity improved, it added. "If nothing else changes, the resulting increase in welfare costs would become too large to finance
through the current tax system in only 10 to 20 years," McKinsey said. It forecast municipal income tax rates would have to rise from about 30 per cent to about 50 per cent, arguing that these rises would
not be accepted by the public as welfare and health services would decline. Free-market capitalism and the welfare state, particularly one where the labor market is as highly regulated as it is in Sweden, are
incompatible - an inconvenient truth, as it were, that we might one day have to relearn the hard way. Funding the welfare state is a massive strain on a free economy. Entitlements and the
administrative bureaucracy to manage it must be paid for. The only way to do that, aside from printing more currency, is to tax and tax again the wealth-, prosperity-creating private sector. That's a recipe
for stagnation, not growth. Sweden's slope became most slippery from 1960 to 1980, when public spending increased from 31% of the economy to 60% in order to keep the Swedes rolling in the
government payments they have become dependent on and to fund the bloated public sector. That was deadly to the private sector and contributed to an economic erosion, the effects of which are still
being felt. Once thought to be the promised land, Sweden today ranks about equal with the fifth-poorest U.S. state in per capita income. Likewise, among the wealthy nations that make up the OECD, it
slipped from fifth in income in 1970 to 15th in 2004. ...The rot is alarming, not only for Sweden, but also for the U.S. If it's not careful, the U.S. will take the same well-trod path to stagnation as Sweden.
That's especially true if it doesn't rein its growth in entitlement spending, bureaucracy and regulations. Sweden is seen as the proverbial "third way", combining the openness and wealth creation of capitalism with the redistribution and safety nets of socialism. It is the best of both worlds. But things in Sweden are not as good as the advocates would like to believe. Long the paragon of social democracy, the Swedish model is rotting from within. ... Sweden's economic success story began in the late 19th century, after a fundamental political shift towards free markets and free trade. Swedish traders could export iron, steel and timber, and entrepreneurs created innovative industrial companies that became world leaders. Between 1860 and 1910, real wages for factory workers rose by about 25 percent per decade, and public spending in Sweden didn't surpass 10 percent of GDP. ... as late as 1950 the total tax burden was no more than 21 percent of GDP, lower than in the United States and Western Europe. ... These policies, and the fact that Sweden stayed out of two world wars, meant that the economy yielded amazing results. Sweden was rich: In 1970 it had the fourth-highest per-capita income in the world, according to OECD statistics. But at this stage the Social Democrats began to radicalize... Social assistance was expanded and the labor market became heavily regulated. Public spending almost doubled between 1960 and 1980, rising from 31 percent to 60 percent of GDP. This was also the time when the model began to run into problems. From 1975 to 2000, while per-capita income grew by 72 percent in the United States and 64 percent in Western Europe, Sweden's grew by no more than 43 percent. By 2000, Sweden had fallen to 14th in the OECD's ranking of per-capita income. If Sweden were a state in the United States, it would now be the fifth poorest. ... Swedes are healthier than almost any other people in the world, but they are also out sick more often than any other people, according to available data. In 2004, sickness benefits absorbed 16 percent of the government budget, while health absenteeism has doubled since 1998. With a sickness benefit of up to 80 percent of a recipient's income (depending on his or her wage level), it is not surprising that there is an epidemic of absenteeism. Moreover, about 10 percent of the working-age population has retired with disability benefits. A researcher at the main trade union, LO, recently left his job when he was not allowed to publish his estimate that close to 20 percent of Swedes are unemployed, either openly or hidden in labor-market projects, long-term sick-leave and early retirement. ... The Swedish model has survived for decades, but the truth is that its success was built on the legacy of an earlier model: the period of economic growth and development preceding the adoption of the socialist system. ... The system of high taxes and generous welfare benefits worked for so long because the tradition of self-reliance was so strong. But mentalities have a tendency of changing when incentives change. The growth of taxes and benefits punished hard work and encouraged abs | |||||||||