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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 Cato Institute, 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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Monday, July 31, 2006 ~ 9:25 a.m., Sven Larson Wrote: [Achieving] the necessary improvement in the government budget position - around 5% of GDP - will require additional revenue. Given that less than one-half of wage earnings
are taxed and only one-third of corporations pay income tax, broadening tax bases is important to raise additional tax revenue, while enhancing economic efficiency and growth. In addition, measures to increase
tax compliance, such as a taxpayer identification number, would enhance efficiency and fairness, while increasing tax revenue. A hike in the consumption tax rate may also be necessary to achieve fiscal
consolidation.
Monday, July 31, 2006 ~ 8:56 a.m., Dan Mitchell Wrote: NCLB takes a giant step toward nationalizing elementary and secondary education, a disaster for federalism. It pushes classrooms
toward relentless drilling, not something that inspires able people to become teachers or makes children eager to learn. It holds good students hostage to the performance of the least talented, at a time
when the economic future of the country depends more than ever on the performance of the most talented. …NCLB has not had a significant impact on overall test scores and has not narrowed the racial and
socioeconomic achievement gap.
Monday, July 31, 2006 ~ 8:21 a.m., Sven Larson Wrote: New York City's ideal of public schooling as a means of assimilating all children into a common civic culture is under assault - not by teachers
who care too little, but by those who, in a perverse way, care too much. The root of the problem is "social justice" education. It starts in teacher
preparation programs, where rigorous training in math, science and literacy takes a backseat to theories about victimization and inequality.
Teachers-to-be are told that conventional instruction is an outgrowth of capitalist oppression; "true" education helps students see the unfairness
all around them and challenge society to change. But it doesn't stop there. Far too many New York City public schools - including some of the new small schools created by Chancellor Joel Klein and funded with
money from the Bill and Melinda Gates Foundation - distort education by imbuing social justice into everything they do.
Sunday, July 30, 2006 ~ 11:30 a.m., Dan Mitchell Wrote: Officials at the U.S. Department of Agriculture…decided to dip into massive stockpiles of powdered milk that the agency had stored in
warehouses nationwide as part of its milk price-support program. Livestock owners could get the protein-rich commodity free and feed it to their cattle and calves. The milk would help ranchers weather the
drought while the government reduced its growing stockpile. But within months, the program spawned a lucrative secondary market in which ranchers, feed dealers and brokers began trading the powdered milk in
a daisy chain of transactions, generating millions of dollars in profits. Tens of millions of pounds of powdered milk intended solely for livestock owners in drought-stricken states went to states with no
drought or were sold to middlemen in Mexico and other countries, a Washington Post investigation found. Taxpayers paid at least $400 million for the emergency milk program, one of an array of costly relief
plans crafted by Congress and the USDA to insulate farmers and ranchers from risk. In some cases, ownership of the powdered milk changed hands half a dozen times or more in a matter of days, with the
price increasing each time. A commodity that started out being sold for almost nothing was soon trading for hundreds of dollars a ton. One government inspector stumbled upon huge cargo containers being
loaded with the milk at the Port of Houston. The destination: Europe. A New Zealand official complained to USDA officials that American brokers were flooding her country with the powdered milk, undercutting
local dairy suppliers. Still other records show the milk going to the Netherlands and the Philippines. …Federal officials still don't know how
much of the government's milk was diverted to foreign countries and to states that didn't have a drought. Warehouse examinations identified
some abuses. But "when we turned over title [for the milk] to the states, we were finished," Farrish said. State officials said the assistance
program was fraught with loopholes that fostered the speculative trading. And when they did report cases of suspected abuse, they said, the USDA was slow to respond. …For years, the government has
periodically purchased powdered milk -- as well as butter and cheese, the other byproducts of raw milk -- as part of a congressionally mandated price-support program for milk producers. By 2003, the
Agriculture Department had accumulated a record 1.4 billion pounds of powdered milk in warehouses and in a huge limestone cave in the Kansas City area.
Saturday, July 29, 2006 ~ 7:17 p.m., Dan Mitchell Wrote: EU industry commissioner Gunter Verheugen has raised the alarm on poor efforts to slash EU over-regulation, slamming the European
Commission's own high officials while calling for a red tape reduction quota to be fixed to member states. …Mr Verheugen said that although the commission has withdrawn 67 unnecessary proposed laws from the
EU's legislative machine, the reduction of existing regulation has met heavy resistance from the commission's own staff as well as the European Parliament and member states. Brussels had for this year
planned to simplify 54 laws – but only five have so far been tackled. …In an attempt to give more weight to his fight against bureaucracy, the commissioner suggested that member states during the German EU
presidency starting in January commit themselves to a "quantifiable" reduction target of EU red tape. "An administrative reduction of
around 25 percent would release €75 billion into the European economy," he said. But he added that member states are not always happy to support the commission when it proposes to chop regulation.
His own plan to scrap 80 EU laws regulating the size of the packaging of food products was resisted by the UK and Germany – normally de-regulation champions - as well as by MEPs who reacted to the plan
by issuing a list of products where packaging sizes still need regulation. Finland, Poland, Sweden and other traditional vodka producers around the Baltic want the European Union to insist that only spirits made with
traditional ingredients - barley-grain and potato - should be allowed to carry the vodka label. Pitched against them is a group led by Britain,
the Netherlands, France and Austria - and backed by the London-based multinational drinks producer Diageo - which take a more relaxed view of what can go into vodka, for example grapes, beets or citrus fruit.
Friday, July 28, 2006 ~ 8:50 a.m., Dan Mitchell Wrote: My, how times have changed. Today the Democratic Party is so vehemently opposed to income tax cuts that when President Bush's
reached their final vote in May 2003, only 4% of Democratic legislators (2 of 48 senators and 7 of 205 representatives) voted "yes." …Tax cuts
work, and work well, for individuals, employers and even the government, which sees its revenues increase dramatically when tax cuts are enacted and left in place over time. State governments are
coming to the same conclusions. Rhode Island Democrats came to realize their 9.9% top income tax rate--the third highest in the nation--was costing the state business and jobs, so they teamed up with
their Republican governor to enact a flat-tax option: pay 7.5% (which phases down to 5.5% over time,) without deductions, instead of 9.9% with them. Arizona's Democratic governor, Janet Napolitano, signed a
10% across-the-board income tax rate reduction. Oklahoma has reduced its income tax rates by 20%, and New Mexico's Democratic governor, Bill Richardson, cut his state's top rate from 8.2% to 4.9%
and its capital gains tax rate in half. Experience has shown that such reductions will be very good for these states' economies. In the late 1970s, when Delaware had the nation's highest personal income tax
rate at 19.8% (and also its lowest credit rating and second highest unemployment rate), it began reducing top tax rates down to 5.95%. Over 20 years income-tax revenues increased in every year but one, and
became 300% greater than they had been.
Friday, July 28, 2006 ~ 8:27 a.m., Dan Mitchell Wrote: Macedonia 's future prime minister has pledged to lead his impoverished country out of the wastelands of economic muddle to the sunny uplands
of a boom through a 100-point reform plan. ...Economic experts say the appointment of a leader familiar with market logic comes not a moment before time. About 40 per cent of the adult population is officially
unemployed and foreign direct investment is minimal, not least on account of rampant corruption. The future prime minister has based his renewal plans on a few main pillars. One is a new, flat, ten per cent
income tax, along the lines of the flat taxes established in several former communist countries in Eastern Europe and the former Soviet Union. …The government promises that these changes will lead to
annual economic growth rates of six to eight per cent within four years. The current one is around four per cent. Experts say the promises are
attainable, as they are mostly based on the experience of other countries in similar economic situations. …The pillar of the new economic programme, the planned flat tax, aims to make Macedonia a country
with one of the lowest tax rates in Europe. The basic principle is that the application of a single, low rate of tax on profits, as well as
exemptions from taxes for profits that are reinvested, will yield a higher income for the government in the long term than high tax rates and complicated and variable tax bands. This model has already been tried
and proved successful in Estonia , Latvia and Lithuania , which experienced booms after low taxes began to draw in massive foreign investment. …a flat tax would also help solve another key problem - the
untaxed "grey" economy, which is estimated to absorb about 40 per cent of the country's economic activity. "With the reduction of
employment costs, businessmen will feel encouraged to register their employees," he said. "The flat tax will be an incentive for many people who run businesses to legalize them."
Friday, July 28, 2006 ~ 7:44 a.m., Dan Mitchell Wrote: O'Neill died in 1994, but the political culture he epitomized is alive and well and enshrined in the Big Dig, a slough of corruption, callousness,
and cover-ups that had become a synonym for government mismanagement long before it killed Milena Del Valle on July 10. It would be going too far to link O'Neill to the incompetent workmanship
and negligent oversight that led to the collapse of a 3-ton ceiling panel in the Interstate 90 connector just as the Del Valles drove beneath it last
week. But the culture that he embodied is still solidly in place. Only one month earlier the lords and ladies of Bay State politics had gathered to
christen the longest section of the Big Dig as the Thomas P. "Tip" O'Neill Jr. Tunnel and proclaim the immense -- and immensely
expensive -- highway project his triumphant legacy. "That project could never be complete until it bears the name of the person who made it all
possible," gushed US Senator Ted Kennedy. "So let us celebrate his great legacy today . . . and remember that our job in public life is to
improve the lives of others." Valle's life was not improved by this troubled project. It was ended by it. … For years news stories, outside
audits, and internal memos had been documenting a shocking history of failures and errors. Just a few weeks earlier, in fact, six employees of
Aggregate Industries, the Big Dig's largest vendor of concrete, had been arrested for allegedly falsifying records to disguise the poor quality of
the concrete supplied. Long before the dedication ceremony in June, the Big Dig had come to stink of cronyism, corner-cutting, and deceit. The odor grew stronger with each passing year, during Republican
administrations no less than during Democratic ones. But that didn't stop Kerry, et al., from singing hosannas to O'Neill and pooh-poohing the critics' warnings. … The Big Dig is indeed a monument to O'Neill. It
captures perfectly the costly big-government sloppiness for which he was the poster child. Only in the public sector, where market discipline is nonexistent and financial losses are the taxpayer's problem, would
such mismanagement be tolerated for so long. Only in the public sector, where political considerations far outweigh the bottom line, and where
consumer satisfaction carries little weight, is such shoddiness and lack of oversight routine. In the private sector, incompetent performance generally means lost business, reduced earnings, or even bankruptcy.
Only in the public sector -- under Democrats and Republicans both -- are negligence and failure commonly rewarded with ever-increasing
budgets. "Giving money and power to government," P.J. O'Rourke once observed, "is like giving whiskey and car keys to teenage boys." In both cases, the results can be lethal.
Friday, July 28, 2006 ~ 7:15 a.m., Dan Mitchell Wrote: The European Commission will send 350 of its senior officials for one week internships in small companies - such as bakeries or carpentry
firms - so that they can learn about small businesses (SMEs) for which they draft European laws. EU industry commissioner Gunter Verheugen presented the intitiative on Monday (17 July), announcing that the first
50 civil servants would leave the Brussels' headquarters of the EU executive and set out for traineeships across the member states already this year. "We don't need an ivory tower policy," commented Mr
Verheugen, suggesting that by acquiring such a "hands-on experience" in SMEs, the commission's administrators will understand their problems better and become their "ambassadors."
Thursday, July 27, 2006 ~ 8:54 a.m., Dan Mitchell Wrote: This year, Democratic governors including Janet Napolitano of Arizona, Brad Henry of Oklahoma, and Bill Richardson signed legislation to cut
income tax rates, even for the rich. The most amazing man-bites-dog story comes from Rhode Island, the bluest of blue states. Voters there went 2-to-1 for John Kerry over George Bush in 2004. But Rhode Island
just passed a flat tax, which will lower the top tax rate in this New England state from 9.9 percent to 5.5 percent — the biggest income-tax cut in any state in years. Why? Because Rhode Island has been bleeding
jobs, businesses and people. It's one of only three states losing population. Rhode Island politicians were mugged by the reality of economic competitiveness: states with low or no income tax, like
Florida and Texas and Tennessee, are growing much faster than the high-tax-and-spend states of the Northeast. Every day 1,000 Americans vote with their feet and move from the highest-tax to the lowest-tax states.
Thursday, July 27, 2006 ~ 7:30 a.m., Dan Mitchell Wrote: How will repealing the "death tax" affect the death rate? Why would it, you ask? Well, economists believe that incentives govern almost
everything, and the evidence from down under is that they may be right. … The economics literature indicates that the death rate may respond to changes in estate taxes. Kopczuk and Slemrod (2003) find some
evidence of a response but suggest that the "death elasticity" is small. However, they are unable to analyze the effect of a complete abolition
of the estate tax, as is due to occur in 2010. We know from other areas of economic life—most notably marriages and births—that this type of change can have a large effect. … With this in mind, we report what
happened in Australia when estate taxes were abolished in 1979. We find an effect on the timing of deaths for a large fraction of individuals
who might have been taxed except for their response. … During the last tax year in which the estate tax applied, we estimate that 9 percent of decedents paid the estate tax. The abolitionist movement was finally
successful in June 1978, with the Australian parliament passing legislation to entirely abolish estate taxes a year later. …any person dying on or before 30 June 1979 was subject to federal estate taxes,
while any person dying on or after 1 July 1979 was entirely exempt from estate taxes. Using data on the number of deaths by day, we were able
to test for impacts on deaths in the last week of June 1979 and the first week of July. …In the last week of June, when federal estate taxes still
applied, the number of deaths dropped sharply; before rising in July, immediately after the tax was abolished. …Under current United States law, the estate of an individual worth more than $3.5 million will be
taxed at a marginal rate of 45 percent if they die in the final week of December 2009, but untaxed if they die in the first week of January
2010. Our results from the abolition of estate taxes in Australia suggest that a significant number of United States taxpayers who would face
the estate tax if they died in the last week of 2009 may well shift their reported death date to the first week of 2010. Even the super rich cannot cheat death forever, but some may be able to stay alive long
enough to avoid the estate tax.
Thursday, July 27, 2006 ~ 7:25 a.m., Dan Mitchell Wrote: The government of New Zealand has proposed a cut in the rate of company tax as one of a number of options designed to make the
country's business tax regime more internationally competitive. "The government's goal, in line with its confidence and supply agreements with United Future and New Zealand First, is to help transform the
New Zealand economy through internationally competitive business tax rules," announced Finance Minister Michael Cullen and Revenue Minister Peter Dunne in a statement."If we are to build a high wage,
high skill, knowledge-based economy we need business tax rules that encourage innovation, support business investment, encourage exporters to break in to new markets and help to build a more skilled
workforce," they added. Potential initiatives that have been published in a discussion document include: Dropping the company tax rate from 33% to 30%.
Wednesday, July 26, 2006 ~ 1:00 p.m., Andrew Quinlan Wrote: In a scene strikingly reminiscent of a bygone era, Communist activists rallied this June in Berlin to pledge allegiance to the establishment of a
strong, national Communist party in Germany. Proclaiming their contempt for "neo liberal Capitalism" and the major German political
parties, who have "no broader social perspective beyond the present," these 21st century Communists declared their commitment to a
"socialist society." The rally would hardly be newsworthy were it not for the fact that, nearly two decades after the fall of the Berlin Wall,
Communists are once again a force in German politics. ... In the first decade after the fall of the Wall, many people thought it inconceivable
that totalitarian ideologies would ever again have any appeal, especially in Europe. After all, the free world had now defeated both versions of
the same totalitarianism: fascism and communism. However, oppressive ideologies do not die young, as the Islamo-fascist war on the West reminds us. Now the West is seeing the resurrection of its own,
homegrown totalitarianism. This is most evident in Germany where the old East German communist party is leading the only growing political movement in the country. Their voter share is growing rapidly, while the
old, established parties are stagnant and deadlocked. Worst of all, their ideology is outspokenly Leninist and anti-capitalist.
Wednesday, July 26, 2006 ~ 8:37 a.m., Dan Mitchell Wrote: France is now charging travelers a new tax on their airline tickets, amounting to a surcharge of between $1.25 and $50. The French
government claims the new tax is earmarked to help the world's poor. The airline surcharge, which is based on the traveler's ticket price, came
into effect this weekend. The hope is that eventually all wealthy nations will participate in this international tax plan. The new tax, pushed
through the French parliament by President Jacques Chirac and backed by United Nations Secretary General Kofi Annan, is being hailed and criticized by many throughout the globe. It's being hyped by the
Globalists as the "Solidarity Tax." The airlines will collect the money and turn it over to the French government which will then transfer the
proceeds to the United Nations. There's talk of eventually having the airlines submit funds collected directly to the United Nations. … The United States, Canada and Germany strongly oppose the levy, and
many airlines have complained that it will add to the already high cost of air travel at a time of rising fuel prices. The United Kingdom said
although it supported the aid package, it would divert money from other sources. While the United Nations and France attempt to paint the tax
as merely a small part of a charitable program, critics see…it's purpose is the globalized redistribution of wealth or the creation of an international welfare state. …Perhaps the President sees this Solidarity
Tax as a first step in the UN levying taxes on nations throughout the world, thereby avoiding problems should the U.S. decide to withhold funds. This is because the UN would be gathering its own revenue
directly through global taxes imposed on individuals or companies, rather than depending on budget approvals and dues payments by the wealthier member governments. The U.S. and Japan provide about
40% of the UN's annual budget. It would also help the UN avoid being the target of investigations by member countries when they discover
suspicious or corrupt behavior such as the Iraq oil-for-food scandal.
Wednesday, July 26, 2006 ~ 8:30 a.m., Dan Mitchell Wrote: The surge in tax revenue is masking the effects of reckless federal spending. At $2.696 trillion, projected outlays for 2006 are at record
levels. And with outlays growing about three times the rate of inflation, there is no sign that the profligacy of Bush's first term is dissipating.
…Overall federal spending has increased by almost 9.1 percent in 2006. That's not just the steepest increase since George W. Bush moved into the White House. It's the steepest since 1990. And thanks to the GOP
majority's prescription drug benefit and inability to reform Social Security, federal spending will grow even faster in the future. Unfortunately, the recent deficit reduction relieves Bush from any
pressure he might have had to start cutting his budget. All things considered, this is why it is a serious mistake to focus our attention on
the budget deficit. The size of the deficit is the wrong measure of fiscal responsibility. Congress and the White House should focus on reducing
the size of government, not just the share that is financed by borrowing.
Wednesday, July 26, 2006 ~ 8:11 a.m., Dan Mitchell Wrote: The European Commission has started legal action against five member states for charging a sales tax of less than 15 percent on babies' diapers.
Under current rules, member states must apply a minimum of 15 percent value-added tax (VAT) on wares sold, except in sectors that have applied for exemption such as medical goods and pharmaceuticals.
… But Brussels is also currently considering steps to ensure a legal basis for reduced VAT on diapers across the bloc in the future. "The
commission fully supports social and family-friendly policies," said a commission spokeswoman. She indicated that the commission will consider proposing EU-wide diaper tax relief as part of next year's
review on the VAT system and will therefore take the five member states' replies "into account positively".
Tuesday, July 25, 2006 ~ 9:14 p.m., Dan Mitchell Wrote: …. for the optimists hoping that war in the Middle East will soon end so the rebuilding can commence, there is a serious problem. The political
boundaries of these countries, especially Iraq, make the long-term prospects bleak. The existence of ethnic division in the countries will probably mar them permanently in a way that bombs never could.
Boundaries between many countries of the Middle East, like those in Africa, were haphazardly put together in negotiations by European colonizers who had little regard for ethnic realities. … In a new study,
three economists — Alberto F. Alesina and Janina Matuszeski of Harvard University and William Easterly of New York University — document how important internal cohesion is for the health of a society.
… their study compares the performance of countries with natural borders to those with artificial ones and finds, overwhelmingly, that artificial nations suffer terribly — lower income, horribly ineffective and
corrupt governments, less respect for the law, low literacy, limited access to clean water, poor health care, you name it. … Viewed from this perspective, the long-term economic prospects for Afghanistan and
Iraq do not look good. It is not the destruction of war. That will end and the countries can be rebuilt. It is the fragmentation and ethnic hatred. That, typically, never goes away.
Tuesday, July 25, 2006 ~ 5:45 p.m., Dan Mitchell Wrote: Washington is too distant from ordinary Americans, and has saddled itself with far too many obligations (many of which conflict with each
other), to spend taxpayer money wisely. So while Congress debates how it will "reform" the Army Corps, hoping to make it a more responsible
and capable agency, I have a more radical proposal for my friends and loved ones in Louisiana: Forget about the Army Corps. Rebuild your levees yourselves. The estimated cost of rebuilding these levees is $3.5
billion. Admittedly, for Uncle Sam that's no money at all; it's a mere 0.16 percent of his annual budget. For the government of the state of Louisiana, however, $3.5 billion is a significant chunk of its annual
budget. So it's natural that politicians in the Pelican State are eager to have Uncle Sam foot the bill. Unfortunately, having Uncle Sam pay means entrusting reconstruction to the very same agency whose
big-time screw-up led to the Katrina catastrophe. Of course, Congress promises reform and the Army Corps insists that it will absolutely, positively, cross-its-heart-and-hope-to-die do better next time. … The
cost of having Uncle Sam pay to rebuild the levees seems to me to be enormous, for doing so requires reliance on an agency proven to be dangerously susceptible to political influence. If the levees are rebuilt,
and continue to be maintained, by the Army Corps, there's a good chance that they will again break, killing hundreds more people and inflicting billions of dollars of property damage. Is $3.5 billion, plus
subsequent maintenance expenses, too high a price to pay to avoid this fate? …The most credible objection to my suggestion is that the state of
Louisiana has a "Long" and infamous history of corruption and incompetence -- and, I concede, Katrina provided ample evidence that
these curses continue to plague my home state. It is indeed possible that Louisiana's own government will botch levee reconstruction. But in this
choice among two highly imperfect options, I say let the officials and citizens with the greatest personal stakes in the matter now take more
responsibility for their own fates. …I sincerely wish that a politically acceptable means of clearing government completely out of the business of levee construction were possible so that creative, private
entrepreneurs would turn their energies to the task. I have no doubt that private initiative and enterprise would rise to the challenge and provide
levees and other means of flood control far superior to what even the best government effort would produce. But levee reconstruction now inevitably will be done by government. So, again, given this regrettable
reality, let's try some decentralization. Maybe the still-vivid memories of Katrina will inspire Louisiana citizens and officials to build levees more
reliable than those produced by a hidebound Beltway bureaucracy answerable to a pork-drunk Congress.
Tuesday, July 25, 2006 ~ 2:45 p.m., Andrew Quinlan Wrote: Unlike any other major industrial country, the United States operates under a world-wide tax regime, taxing all income regardless of where it
is earned. Accordingly, Americans transferred overseas by their employers are subject not only to local taxes in the countries where they work, but also to U.S. taxes. … This treatment often makes it cheaper
for U.S.-based firms to hire foreign workers rather than Americans when expanding operations overseas. In low-tax jurisdictions, for example, American firms might have to pay 30% more to employ a U.S.
citizen than a national from another country with a less onerous taxation system. … The Working American Competitiveness Act would end this practice by eliminating the cap on income that Americans
working abroad can earn without being taxed twice. This change would make U.S.-based companies more competitive globally, bring U.S. tax
practices in line with those of other industrialized nations, and increase job opportunities for American workers. … In fact, PriceWaterhouseCoopers estimates that removing the cap would
increase the number of Americans working abroad by nearly 10,000 and increase U.S. manufactured exports by $14.4 billion, supporting 137,319 domestic jobs.
Tuesday, July 25, 2006 ~ 10:58 a.m., Sven Larson Wrote: The G8 declaration on trade called for agreement "within a month" on an interim deal laying down detailed guidelines for cuts in farm
subsidies and industrial and agricultural tariffs, after negotiators missed yet another deadline in June. At an emergency meeting at the World Trade Organisation in Geneva on Monday, following the G8 summit,
officials from the US, European Union, Japan, Brazil, India and Australia agreed to meet again on July 23-24 and July 28-29 in Geneva. Agreement among this so-called Group of Six is seen as an essential
precursor to a pact acceptable to all 149 WTO members. However, Pascal Lamy, WTO director-general, told the G8 leaders on Monday that his consultations with the six had revealed scope for only
"marginal" movement. The nub of a deal would involve the US doing more to cut farm subsidies, the EU offering more access for agricultural
imports, and emerging economies such as Brazil and India reducing tariffs on industrial goods. But all insist others must move first, and the US has been criticised for setting the level of ambition too high.
Monday, July 24, 2006 ~ 3:17 p.m., Sven Larson Wrote: Californians will pay too great a price to realize the small monetary benefits of SB-840 - about 4 percent of current health spending. In June
2005, the Canadian Supreme Court recognized that government monopoly health care is a violation of basic human rights, based on the fact that it is harmful to patients' health. If California had already
implemented a government monopoly, Californians would be suffering the following consequences: The number of physicians would be about 23,000 less than it is today, dropping from approximately 94,000 to
71,000. Californians would suffer lengthy waiting times for medical treatment - time worth about $1 billion annually. About $9 billion
dollars of "free" health care would have been wasted by people who did not need it. If SB-840 is imposed by the government, the long-run
consequences will be dire: There will be a decline in the availability of medical technology. Hospital stays for senior citizens will lengthen from
an average of four or five days (depending on the procedure) to about 14 days - about three times what they are now. The number of middle-aged women receiving mammograms at least once every two or
three years will drop by about 330,000 in 2010, and more in subsequent years. Life spans will shorten by about two months if the government imposes restrictions on the prescription medicines available, as the
Department of Veterans Affairs has. The number of heart attack victims prescribed Beta-blockers, a standard treatment to avoid a second heart
attack, will drop by just under 20,000 in 2010, and more in subsequent years. The number of cardiovascular patients receiving angioplasty or coronary artery bypass grafts will drop by about 60,000 in 2010, and
more in subsequent years. But Californians at risk of coronary artery bypass operations will need them four years earlier than they do now: 64 versus 68.
Monday, July 24, 2006 ~ 7:34 a.m., Dan Mitchell Wrote: Nutty EU officials want to rename Bombay mix Mumbai mix - to make the snack politically correct. They say the Indian city of Bombay has
been called Mumbai since 1995 so the old name could offend because it dates back to colonial rule. ...Newsagent Khalid Ahmed, from Canterbury, Kent, said: "This is crazy. Everybody knows it as Bombay
mix. It would be such a waste of time and money when everyone knows what Bombay mix is - and nobody is offended by the name." ...Shadow
Europe Minister Graham Brady also condemned the move. He said: "It is exactly the kind of ludicrous regulation that gives Brussels such a bad name and gets in the way of successful business."
Sunday, July 23, 2006 ~ 12:55 p.m., Dan Mitchell Wrote: The Hong Kong government has stated that it may be prepared to slash the territory's rate of profit tax as part of plans to introduce a goods
and services tax. In a paper issued to the Legislative Council on Saturday, the government suggested that a 5% Goods and Services tax would raise sufficient revenue to allow a cut in profits tax from the
current level of 17.5% down to 12.5%. Although the SAR already has one of the lowest corporate tax rates in the world, such a cut in profits tax would make Hong Kong very attractive to companies compared
with its regional rivals such as Singapore, where corporate tax is 20%, and South Korea, where corporate tax is 27.5%. ...The government also indicated that the GST could allow it to reduce salaries tax to 11%.
Currently, Hong Kong employs a graduated scale of salaries tax, but the system is designed so that nobody pays more than 15% of their assessable income. Hong Kong's prosperity since World War II is sometimes referred to as a "miracle." But much of the city's success is built on its low and simple
tax regime. That's one of the main reasons Hong Kong has ranked at the top of the Heritage Foundation-Wall Street Journal annual Index of Economic Freedom ever since it began in 1995. Hong Kong's maximum
tax rates of 16% for individuals and 17.5% for business provide great incentives to invest and take risks. And with no complex deductions or exemptions, the tax system is transparent and user-friendly; even the
mathematically challenged can fill out their tax forms in just a few minutes. ...In a paper released yesterday, the Hong Kong government says a 5% sales tax is only a proposal and that it hasn't made up its
mind. Even if the new levy is introduced, it says, it will be offset by cuts in other taxes. But forgive us for feeling skeptical when a government
says it's not in it for the money. The consultation paper concedes that the revenue-neutral pledge is good for only five years and could be
waived altogether if the legislature prefers to spend the money on public services instead. If experience elsewhere in the world is any guide, it
won't be long before the government finds an excuse to increase the levy from its initial 5%.
Saturday, July 22, 2006 ~ 2:41 p.m., Sven Larson Wrote: When compared to other emerging economies, and considering its own past history, Brazil's tax load is excessively heavy. Because of its
cumulative aspects and extreme complexity, it is also of poor quality as it generates serious obstacles to productive investments as well as exports. It is for no other reason that in any survey among Brazilian
entrepreneurs, no matter how large and from what region of the country, taxation tops the list of evils that harm the economy, always ahead of Brazil's notoriously high real interest rates (actual rate minus
inflation). The acceleration in the rate of increase of Brazil's tax load which took place in recent years is a crucial ingredient of the perverse method through which fiscal adjustment has been pursued in this
country. Instead of promoting spending cuts, the government has sought to collect more and more revenue. The load has been expanded in order to subsidize spending that not only isn't cut, but continues to grow,
particularly through income transfers - from debt servicing to social benefits. At the same time, there have been cuts in the type of government spending that could make a difference, such as in
infrastructure projects. This is precisely the opposite of current trends in industrialized countries.
Friday, July 21, 2006 ~ 8:35 a.m., Dan Mitchell Wrote: The French need to work harder and display less arrogance, if they are to recapture former glories, Nicolas Sarkozy, the Interior Minister, tells
his countrymen in a highly personal 281-page book published yesterday. ...Hailing modern Britain as an example, M Sarkozy urges voters to remove their heads from the sand, accept that France is in decline and
embrace the market economy as the path to revival. ...And in a comment that will infuriate traditionalists, he says that the French should no longer insist on speaking their own language in international
negotiations and instead should use English. "We should ask ourselves why the English buy our houses in the Dordogne, in the Périgord ... and
in many other regions. The answer is simply because the British GDP is 10 per cent greater than the French and that the standard of life of the British is higher than that of the French...We have committed the
immense error of undermining work. When someone who works does not have a better life than someone who does not work, why should he get up in the morning?"
Friday, July 21, 2006 ~ 8:30 a.m., Sven Larson Wrote: The waste, fraud and abuse of Tennesseans' tax dollars is reaching new heights, thanks largely to a $300 million state budget surplus created
when taxpayers overpaid for the cost of state government. Rather than giving taxpayers their money back-something that happens everyday in the private sector when cashiers give customers their change-state
legislators went on an outrageous bipartisan spending spree. The result is a state budget that includes a 6.4 percent increase in General Fund
spending over the previous year, nearly double the rate of inflation. To put state spending into perspective, the Tennessee state government
spends $330 in time it takes to blink. In the time it takes to read this sentence, the state will spend $2,084. The state consumes more money in 45 seconds than the average family makes in an entire year. If the
26.3 billion one-dollar bills the state will spend this fiscal year were laid end-to-end, they would stretch to the moon and back five times. Among
the pork projects that led to Tennessee's staggering budget is a $1 million program to encourage state employees in Nashville to take the bus to work, a $123,000 grant to the Stax music museum in Memphis
and $50,000 for a Tennessee-focused online encyclopedia. Tennessee legislators also approved spending $10 million to subsidize filmmakers, $4 million to subsidize the purchase of soybean crushers and about $1.3
to subsidize golf courses.
Thursday, July 20, 2006 ~ 2:00 p.m., Andrew Quinlan Wrote: Should the U.N. be able to tax you? Over the last several years, officials at the U.N. and other international organizations have been hatching
schemes to directly tax the world's people. Traditionally, only sovereign governments have the right to tax. The U.N. and other international
organizations have largely depended on their ability to extract dues or other payments from their sovereign members. ... Naturally, officials at
the United Nations, the Organization for Economic Cooperation and Development and other organizations hate the present system because it limits their ability to spend other people's money on themselves and
their various schemes. The U.N. crowd has proposed an international tax on aviation fuel, a tax on airline tickets, taxes on international currency transactions, carbon use taxes, including a 4.8-cent tax on
each gallon of gasoline, and other taxes on an extensive range of transactions, goods and services. ...Sens. James Inhofe, Oklahoma Republican, and Ben Nelson, Nebraska Democrat, also seeing the threat
to national sovereignty and global economic prosperity, have introduced a bipartisan bill known as the "Protection Against United Nations Taxation Act of 2006" (S.3633). ... If the U.N., OECD,
International Monetary Fund, World Bank and the rest would put their own houses in order and seriously fight corruption in the developing world, not one additional penny of development aid would be needed. ...
The Inhofe-Nelson proposal is quite modest. It does not defund the U.N. or OECD or any other international organization. It merely reduces the U.S. government's payment to these organizations if they continue to
push ahead with their destructive tax proposals. Thus, one can only assume those who oppose or vote against the Inhofe-Nelson bill favor allowing the unelected U.N. bureaucrats to impose taxes on all of us. ...
If the U.N. and the other international organizations obtain the right to directly tax, you can be assured most of the world's productive people will grow relatively poorer and less free, while the international
bureaucratic class will become relatively richer. Link to Coalition for Tax Competition's comments on Sens. Inhofe's and Nelson's legislation: Link to a letter sent to President George W. Bush from the entire GOP Senate Leadership that takes a strong stand against UN global tax schemes: Link to CF&P Foundation August 2001 study on the UN seeking global tax authority:
Thursday, July 20, 2006 ~ 12:18 p.m., Sven Larson Wrote: The Financial Action Task Force (FATF) and the Asia Pacific Group (APG) have jointly assessed the United States' anti-money laundering
and counter-terrorist financing (AML/CFT) standards. Among the major findings of the report were: The United States has a comprehensive legal and institutional framework for investigating and
prosecuting money laundering and terrorist financing offenses. The United States vigorously pursues, seizes and confiscates the assets of criminals involved in money-laundering and terrorist financing. The
United States has an effective regulatory and supervisory framework for monitoring compliance with AML/CFT measures and has imposed severe financial penalties on financial institutions that do not comply
with the measures. Customer identification requirements apply to most types of financial institutions; however, these could be strengthened, particularly in relation to the identification of beneficial owners.
AML/CFT measures presently apply to a broad range of financial institutions; however, the FATF recommends that comprehensive AML/CFT measures should also apply to a wider range of non-financial
businesses and professions. Company formation procedures and reporting requirements are such that the information on beneficial ownership of legal persons may not, in most instances, be adequate,
accurate or available on a timely basis. ... Introduce a primary obligation to identify the beneficial owners of accounts (which may, of course, be implemented on a risk-based approach with respect to
low-risk customers or transactions). ... Introduce a requirement that the relying bank or other financial institution should obtain immediately
from the introducing institution details relating to the identity of the account holder, the beneficial owner, and the reason for which the account is being opened. Extend such measures to investment advisers
and commodity trading advisors, and the insurance sector (including insurance agents and brokers). In spite of stereotypes formed by reading John Grisham novels, tax havens do not attract a significant portion of the world's dirty money.
The State Department, the Central Intelligence Agency (CIA), the Financial Action Task Force (FATF - of which the U.S. is a member) and the Internal Revenue Service (IRS) each independently assess the
extent to which a jurisdictions attracts - or has the potential to attract - dirty money. Some low-tax jurisdictions are on these lists, but the accompanying table shows that they are clearly outnumbered by
high-tax nations.
Thursday, July 20, 2006 ~ 9:00 a.m., Dan Mitchell Wrote: A new tax law that ratchets up costs for many Americans working overseas could change company hiring practices in certain countries --
and is causing some employees to consider coming back home. The increased taxes are hitting hardest at American expatriates working in places where housing costs are high and local taxes are relatively low,
such as Russia, Hong Kong and Singapore. The higher costs can fall on employers, some of which guarantee that their workers don't pay more in taxes than they would if they were living in the U.S. But many
Americans living abroad aren't offered such guarantees, known as tax equalization, and must shoulder the increases on their own. ...In other places, such as some European countries where taxes are higher than in
the U.S., American expats are little affected by the new law. That's because those workers already pay large sums in their host countries,
which can be used to offset any U.S. tax liability. ...Peak International Ltd., a supplier of packaging for high-tech products, recently dismissed
one American employee because of the new tax law and expects soon to decide the fate of two others, says President Dean Personne. Peak also must decide what to do with three additional Americans that work at its
Hong Kong headquarters, including Mr. Personne himself. ...Heavy equipment maker Caterpillar Inc., which currently employs about 1,000 Americans abroad, says the tax change could cost the company $15
million to $20 million a year and "means we must take a serious look at alternatives to continuing to place U.S. employees in international
assignments." It called the change a "barrier to competitiveness," adding that the countries where it would be "most impacted" are
"Japan, Switzerland, Singapore and China." ...An American earning $1,000,000 in Russia pays $271,741 in U.S. taxes under the old rules and $315,259 according to the new ones, the Moscow chamber
estimates. That is 143% more than what a European would pay, it says.
Thursday, July 20, 2006 ~ 8:22 a.m., Dan Mitchell Wrote: Scores of wealthy Californians "go Nevadan" each year, relocating to a neighboring state famous for its low taxes. Among the transplants are
Pierre Omidyar, founder of eBay Inc., and Andreas Bechtolsheim, a co-founder of Sun Microsystems Corp. ...Nevada transplants account for more than 20% of all tax disputes made public earlier this year by
California tax authorities. Complex cases can take a decade or longer to sort out. Brady Anderson, a native Californian who played center field for the Baltimore Orioles in the early 1990s, was dunned with a
$322,410 California tax bill after claiming Nevada residency in 1993 and '94. The tax authorities "looked at where Brady was, every single
day, and they subpoenaed credit-card receipts," recalled his accountant, Joseph Geier. ..."If you come here from California, you can expect to be
audited," said Peggy Taylor, a former PeopleSoft executive who prevailed in her own tax dispute after leaving the San Francisco area
and moving to Incline Village in the late '90s. "Audits are winnable, but it's grueling."
Thursday, July 20, 2006 ~ 8:15 a.m., Dan Mitchell Wrote: According to French government data, at least one millionaire on the average leaves France every day. It's not that they're finding other
places more charming than their native terroir. No, it's that France punishes its wealthiest with burdensome tax rates that sometimes reach
as high as 72%. ...In addition to high income, capital gains, inheritance and social security taxes, the wealthy French are hit with a "solidarity
tax." Like the U.S.' alternative minimum tax, the solidarity tax is meant to make sure the wealthy pay their fair share for France's out-of-control
welfare state. In some cases that levy can actually exceed a person's income, making it one of the great incentive killers of all time. ...Both
the rich and the not-so-rich who are young, skilled and ambitious are leaving for countries where the labor markets are less regulated by the state and taxes not as burdensome. That exodus might help explain why
real GDP in France has grown just 1.5% a year on average since 2000 - lagging the rest of Europe.
Wednesday, July 19, 2006 ~ 10:55 p.m., Dan Mitchell Wrote: In 2005, according to new data from the National Highway Safety Administration, the rate of injuries per mile traveled was lower than at
any time since the Interstate Highway System was built 50 years ago. The fatality rate was the second lowest ever, just a tick higher than in
2004. As a public policy matter, this steady decline is a vindication of the repeal of the 55 miles per hour federal speed limit law in 1995. That
1974 federal speed limit was arguably the most disobeyed and despised law since Prohibition. "Double nickel," as it was often called, was first
adopted to save gasoline during the Arab oil embargo, though later the justification became saving lives. But to Westerners with open spaces and low traffic density, the law became a symbol of the heavy hand of
the federal nanny state. To top it off, Congress would deny states their own federal highway construction dollars if they failed to comply. In repealing the law, the newly minted Republican majority in Congress
declared that states were free to impose their own limits. Many states immediately took up this nod to federalism by raising their limits to 70
or 75 mph. Texas just raised its speed limit again on rural highways to 80. This may seem non-controversial now, but at the time the debate
was shrill and filled with predictions of doom. Ralph Nader claimed that "history will never forgive Congress for this assault on the sanctity of
human life." Judith Stone, president of the Advocates for Highway and Auto Safety, predicted to Katie Couric on NBC's "Today Show" that
there would be "6,400 added highway fatalities a year and millions of more injuries." Federico Pena, the Clinton Administration's Secretary
of Transportation, declared: "Allowing speed limits to rise above 55 simply means that more Americans will die and be injured on our highways." We now have 10 years of evidence proving that the only
"assault" was on the sanctity of the truth. The nearby table shows that the death, injury and crash rates have fallen sharply since 1995. Per
mile traveled, there were about 5,000 fewer deaths and almost one million fewer injuries in 2005 than in the mid-1990s.
Wednesday, July 19, 2006 ~ 5:12 p.m., Dan Mitchell Wrote: Most people think about their weight a lot of the time, and most understand the connection between eating less, eating differently and
weighing less. But apparently these common sense ideas about eating and dieting have somehow escaped the notice of the Food and Drug Administration. It has just released a 136-page report from something
called the Keystone Forum about "improving consumers ability to manage caloric intake" when eating away from home. That amounts to government speak for how it can change the way Americans eat in
restaurants. …Apparently, all those dieting Americans missed the bit that excessive food consumption can make you fat. They haven't heard that restaurant meals contain calories -- in some cases lots of them. And
this blind ignorance is why they're overweight or obese. …why would anyone think that telling Americans the caloric content of their restaurant meals or trying to engineer the portion sizes or types of food
that restaurants serve would reduce obesity when all of the consumers' own fat consciousness and desperate dieting attempts have failed to do so? …In plain English, these 40 folks convened by the government have
concluded -- without any definitive science -- that the food that most of us eat in restaurants is somehow bad for us. And not content with this
paternalism -- they are prepared to consider a variety of measures, including using the coercive power of government to make Americans eat not what they want but what the food cops want them to eat.
Perhaps the Keystone food cops were out to lunch when another survey in the Journal of the American Dietetic Association that found 70% of the 1,750 adults surveyed believed that the government had no business
telling people what to eat. They should consider it.
Wednesday, July 19, 2006 ~ 8:57 a.m., Dan Mitchell Wrote: Gun control laws do not actually control guns. Anyone who lives in a high-crime area knows that criminals have access to all the guns they
want. Gun control laws simply prevent their intended victims from being able to defend themselves. Incidentally, most uses of guns in self-defense do not even involve pulling the trigger. Once you pull a gun
on someone who is threatening to assault you, he is likely to have a very sudden change of plans and head elsewhere. In communities where most
people are known to have guns in their homes, burglaries are rare and violent crime rates are low. Guns deter as well as defend. A study by John Lott of Yale showed that it is crimes against blacks and women
which fall sharpest where law-abiding citizens are allowed to carry concealed weapons. Yet blacks and women usually vote for Democrats, who want to keep them unarmed. …the United Nation's Review Conference on Small Arms ended, barely noticed by the media. That's too bad, because this meeting, and the
initiative of which it is a part, deserves much more public attention -- and censure -- than it gets. ...the conference chair, Prasad Kariyawasam
of Sri Lanka, stoutly insisted that the conference "does not in any way address legal possession," while Secretary General Kofi Annan
promised that "we do not wish to deny law-abiding citizens their right to bear arms in accordance with national laws." Both statements are
disingenuous. ...Last year Unesco and Unicef funded the supporters of a Brazilian referendum to outlaw citizen firearms possession. It was rejected by a resounding 64% of the voters. A few months ago, in a
warm-up meeting for this year's small arms conference, Rubem Fernandes, head of Viva Rio (the U.N.-funded prohibition group) explained what he had learned from the experience: "First lesson is,
don't trust direct democracy." ...The U.N. bureaucracy and the gun prohibition lobbies knew that they would not be able to get everything they wanted from the 2006 conference. Accordingly, they aim to keep
the "small arms" process going, with more conferences in upcoming years -- when a new U.S. administration might welcome rather than resist international efforts to end-run the Second Amendment. ...The
U.N. gun control program, of which this week's small arms conference is a part, has already caused massive suffering and the loss of civil liberties in many nations around the world. Americans would be foolish
to imagine that they will always be immune.
Wednesday, July 19, 2006 ~ 8:16 a.m., Sven Larson Wrote: The Iowa Events Center project was conceived by the Polk County Board of Supervisors to help revitalize the downtown Des Moines area.
...The Polk County Board of Supervisors and the Central Iowa Building and Construction Trade Council entered into a Project Labor Agreement for the construction of the Iowa Events Center. The
justification for the Project Labor Agreement (PLA) was that it was necessary to keep the project on time, keep it on budget, and complete it in a safe manner. How successful was the Project Labor Agreement in
achieving these goals? This study will demonstrate that the PLA for the Iowa Events Center construction project failed on all three counts. Despite the implementation of a Project Labor Agreement, the Iowa
Events Center project went over its projected budget, was not completed on time, and raised concerns about safety issues.
Tuesday, July 18, 2006 ~ 8:58 a.m., Dan Mitchell Wrote: Payre, who moved his family to neighboring Belgium eight years ago, is today part of a sizable community of rich expatriate French driven out
by the world's highest tax bills on wealthy citizens. The exodus continues: On average, at least one millionaire leaves France every day to take up residence in more wealth-friendly nations, according to a
government study. At a time when France is struggling to stay competitive in an increasingly integrated world, business leaders say the country can't afford to make refugees of some of its most established
business families. They include members of the Taittinger champagne empire, the Peugeot auto magnates and leading shareholders of dominant retailers Carrefour and Darty. Also going are members of a
new generation of high-tech entrepreneurs. … "France is penalizing success in a big way," argued Payre, who is now 43 and has started a
new company in Brussels that he said did nearly $32 million in business this year. "The loss in income for the government is the smallest part.
The big issue is the loss of all that creative energy this country is dying for." … The wealth tax -- officially called the solidarity tax -- is
collected on top of income, capital gains, inheritance and social security taxes. It's part of the reason France consistently ranks at the top of
Forbes magazine's annual Tax Misery Index -- a global listing of the most heavily taxed nations. … Taittinger, who helped create the champagne label that is synonymous with luxury worldwide, said the
French tax system not only helped force the sale of his family company but scattered the 38 family members involved in the corporation. "Half
of my family left France because of taxes," said Taittinger… "This tendency to take from the rich and give to the poor which is supposed to
solve all the problems in France is ruining the country," said Alain Marchand, who left France six years ago and now has a London-based consulting business that helps relocate French business leaders and
entrepreneurs in England and other countries. "That's an incredibly stupid and narrow-minded vision of economic life." Eric Pinchet, author
of a French tax guide, estimates the wealth tax earns the government about $2.6 billion a year but has cost the country more than $125 billion
in capital flight since 1998. … In France, employers are required to pay social security taxes equal to 48 percent of each employee's salary. Labor laws make it difficult and costly to fire incompetent workers.
"The way the French state is organized makes it impossible for big family corporations to stay on French soil," said 44-year-old Virginie
Taittinger, who moved to Brussels two years ago. "If you add up all the taxes an employer has to pay -- social taxes, employee taxes, the wealth
tax, taxes on profit -- even a successful business has a hard time surviving." … Suzanne Belgeonne, who heads a Brussels real estate agency, Le Lion, said that in the past decade she has sold dozens of
houses to French expatriates in the city's toniest neighborhoods. The sales have risen "significantly" in the past four years.
Tuesday, July 18, 2006 ~ 8:44 a.m., Sven Larson Wrote: It might be thought that the best solution would be a simple division of responsibilities: let free and liberal markets take care of economic
growth while requiring governments to address market failure and take responsibility for the implications of rising inequality - for social concerns and for human development priorities. However, this division
ignores the fact that trade, economic growth and human development have a symbiotic relationship. Each needs the other. One direct link is through tariff revenue. Removing or reducing tariffs can have a
damaging impact on human development since many countries rely on customs and other duties for a high proportion of government income - in some Pacific Island countries, up to 70 per cent. Trade liberalization
may thus demand dramatic cuts in public services as revenues fall. A second link concerns sequencing. Countries may need to achieve certain levels of human development to prepare the ground for liberalization.
Boosting international trade requires not only capital and technology but also a capable labour force. For this the state needs to take responsibility - ensuring that the basic capacities are in place to enable
the private sector to take full advantage of liberalization.
Tuesday, July 18, 2006 ~ 7:39 a.m., Dan Mitchell Wrote: EU finance ministers on Friday (14 July) approved radical cuts in the European Commission staff budget, following proposals by the Finnish
EU presidency. ...Helsinki wants to see a cut of 1700 eurocrat jobs over the next seven years which amounts to 8.5 percent of the commission staff - the equivalent of three departments (DGs). ...the EU executive
had favoured a budget rise by over 5 percent... Next year's EU budget including the staff issue will be subject to further discussions between
the Finnish presidency, the commission and the European Parliament in the autumn, with the parliament also disliking member states' proposed cuts. The European Commission is sticking to the controversial idea of a Eurovision-style singing event in all member states to celebrate the EU's
50th birthday next year - but national capitals fear tabloid press ridicule and soaring costs. ...Brussels' communication department led by commissioner Margot Wallstrom is lobbying for big-style birthday
celebrations to "highlight the benefits that European integration has brought to its citizens," according to the document seen by EUobserver.
...Diplomats said the idea has sparked feelings of disgust among new member states, which are reminded of "Stalinist times" when people
were forced to sing. ...Brussels also intends to spend around €300,000 on the appointment of 50 citizen "ambassadors," dubbed the "Faces of
Europe," who are supposed to "tell their story" throughout the year on what the EU means to them in their daily life. ...The total cost of the
plans are not known yet, but Ms Wallstrom's department alone foresees spending of over €7 million.
Tuesday, July 18, 2006 ~ 6:18 a.m., Dan Mitchell Wrote: France hopes to soften hostile attitudes towards capitalism by promoting financial know-how and greater enterprise through the
media. A new body will try to boost financial literacy and communicate the benefits of wealth creation more effectively. …Attempts at economic reform have largely stalled and some senior ministers, including
presidential candidate Nicolas Sarkozy, have called for a radical break with France's corporatist economic model. They are worried about what
they see as an over-reliance on the state and a lack of entrepreneurial dynamism. …Finance minister Thierry Breton lamented the "significant
lack of an economic culture" in France in a speech earlier this year. Attitudes to the private sector have hardened since the government was
forced to drop an employment contract in the face of mass protests.
Monday, July 17, 2006 ~ 5:22 p.m., Dan Mitchell Wrote: The real news, and where the policy credit belongs, is with the 2003 tax cuts. They've succeeded even beyond Art Laffer's dreams, if that's
possible. In the nine quarters preceding that cut on dividend and capital gains rates and in marginal income-tax rates, economic growth averaged an annual 1.1%. In the 12 quarters--three full years--since the
tax cut passed, growth has averaged a remarkable 4%. Monetary policy has also fueled this expansion, but the tax cuts were perfectly targeted
to improve the incentives to take risks among businesses shell-shocked by the dot-com collapse, 9/11 and Sarbanes-Oxley. This growth in turn
has produced a record flood of tax revenues, just as the most ebullient supply-siders predicted. In the first nine months of fiscal 2006, tax revenues have climbed by $206 billion, or nearly 13%. As the
Congressional Budget Office recently noted, "That increase represents the second-highest rate of growth for that nine-month period in the past
25 years"--exceeded only by the year before. For all of fiscal 2005, revenues rose by $274 billion, or 15%. Official bean counters often make huge errors estimating tax revenues and budget deficits even six months ahead, much less six years ahead.
But that should not excuse political failure to deal with an unsustainable 8.6 percent increase in federal spending here and now. ...Revenues from
the individual income tax are now estimated to be 8 percent of GDP -- exactly the same as during the first term of the Clinton presidency, 1993-1995. Tax receipts from stock options and capital gains were
higher during the 1997-2000 stock market boom, of course. But that had nothing to do with tax policy, except that the capital gains tax was reduced. ...The CBO estimates show the top 1 percent receiving 11.5
percent of after- tax income in 2002 and 12.2 percent in 2003, compared with 13.2 percent in 1986 and 12 percent in 1988. The CBO also estimates the top 1 percent devoted 22.3 percent of their income to
the federal individual income tax in 1980, when the top tax rate was 70 percent on dividends, 50 percent on salaries and 28 percent on capital gains. The top 1 percent paid 20.8 percent in 2003, when the top tax
rate was 35 percent on salaries and 15 percent on dividends and capital gains. And those top taxpayers reported much more of their income in taxable form in 2003 (as opposed to tax-exempt bonds and tax-free
perks in 1980). As explained in my recent column about renaming the Laffer Curve, punitive tax rates yield nothing but rampant tax avoidance and a sick economy.
Monday, July 17, 2006 ~ 5:01 p.m., Dan Mitchell Wrote: House Republicans are being told by their leaders to run campaigns this fall on a platform of fiscal discipline that includes cutting spending. This
from a party that has given us new entitlement programs resembling Lyndon Johnson's Great Society; this from a party that has set new
records in "earmarks" for pork barrel projects in their home districts and states; this from a party that under Ronald Reagan at least tried to
eliminate the Department of Education, but under President Bush has thrown new money at it with no appreciable improvement in academic achievement. To what should we compare this laugher? How about to a
member of Alcoholics Anonymous who gets drunk between meetings and then gets up to testify that he has not had a drink in the last 10 minutes? Or, Madonna endorsing modesty. ...The roaring economy is
responsible for the deficit decline. New tax revenue has been produced and Republicans can claim credit because of their tax cuts. But unless
Republicans reduce spending, the deficit will increase when the economy cools and Democrats, should they ever again become a majority, can be counted on to raise taxes as well as spend. Where spending is
concerned, the two parties are identical twins.
Sunday, July 16, 2006 ~ 2:15 p.m., Dan Mitchell Wrote: Parliamentarians voted 196 to 153 on Monday to raise the middle tier of VAT from 15% to 20% and introduce a 4% 'solidarity tax' on
business profits and personal incomes above HUF6 million (US$27,500). A 20% tax will also be introduced on interest rate and foreign exchange gains. According to Finance Minister Janos Veres,
these measures will be sufficient to ensure that no further tax hikes will need to be proposed in 2007. However, he hinted that government was mulling the introduction of a new property tax in 2008.
Saturday, July 15, 2006 ~ 4:00 p.m., Dan Mitchell Wrote: …according to the EU's own comparative income data (2001 "Laeken indicators"), the median income in Portugal for a single adult is roughly
€8,000 per year and for a family of four, just under €17,000. This implies that roughly half of the Portuguese population lives below the
monetary threshold of poverty as defined by the US Department of Health and Human Services. Nonetheless, if it has not quite succeeded in "abolishing" poverty yet, the EU has indeed managed to make a
remarkably large share of poverty in Europe disappear -- that is, as far as the official statistics are concerned. Thus, the EU statistical office,
Eurostat, defines the poverty line -- or rather what it more gingerly describes as "the risk-of-poverty threshold" -- not in absolute terms, as
in the US statistics, but rather as 60 percent of the median national income in each country.
Friday, July 14, 2006 ~ 3:39 p.m., Andrew Quinlan Wrote: More than 300,000 Americans living abroad are facing a $2.1 billion tax increase over the next 10 years. While the new law increases the
amount of foreign-earned income that can be exempted from U.S. taxes to $82,400 from $80,000, it also for the first time imposes taxes on housing, educational and other subsidies that are commonly provided by
employers to expatriate workers. ...The change, which is retroactive to the beginning of 2006, surprised many expatriates, who launched a successful grassroots effort three years ago to stop a full repeal of all
U.S. tax benefits for working overseas. It also has angered some lawmakers such as Senator Jim DeMint, a South Carolina Republican, who has introduced legislation that would end U.S. taxation on
Americans living and working abroad. ...The increase was added by Senate Finance Committee Chairman Charles Grassley and House Ways and Means Committee Chairman Bill Thomas in final negotiations
on the $69 billion tax-cutting measure passed in May and signed into law by President George W. Bush. Among other things, the legislation extends until 2010 the 15 percent rate on most dividends and capital
gains and prevents 15 million households from being subject to the alternative minimum tax. ...DeMint, 54, says the new law penalizes expatriates. ``America is the only industrialized nation in the world that
forces its citizens to pay double taxes while they compete in the global marketplace,'' he says. ...The law may also dissuade employers from hiring U.S. citizens, he says. ``Already, Americans are more expensive
than other country nationals,'' de Boursac says. ``I think we're going to see Americans being replaced. American expatriates are going to cost
more, so there is going to be less demand for them.'' ...A study last year by PricewaterhouseCoopers LLP found that Americans working overseas on average would need 7.19 percent more pay to preserve
their after-tax incomes if the exclusion were fully repealed. The New York-based accounting firm hasn't updated its study since the new law was passed. Link to Coalition for Tax Competition's comments on DeMint's legislation: Link to CF&P Foundation study on Section 911: Friday, July 14, 2006 ~ 9:00 a.m., Dan Mitchell Wrote: Did you know that just over the past 11 quarters, dating back to the June 2003 Bush tax cuts, America has increased the size of its entire
economy by 20 percent? In less than three years, the U.S. economic pie has expanded by $2.2 trillion, an output add-on that is roughly the same size as the total Chinese economy, and much larger than the total
economic size of nations like India, Mexico, Ireland, and Belgium. …the economic power of lower-tax-rate incentives is once again working its magic. While most reporters obsess about a mild slowdown in housing,
the big-bang story is a high-sizzle pick-up in private business investment, which is directly traceable to Bush's tax reform. …record low tax rates on capital are leading to continued job and income gains
as businesses continue to expand. …It is this American economic dynamism that separates our ongoing prosperity from the overtaxed and overregulated stutter-start stagnation of industrial economies in
Western Europe and Japan.
Friday, July 14, 2006 ~ 8:38 a.m., Dan Mitchell Wrote: The Irish have leapt into the top tier of the world's wealthiest citizens after a decade of rampant economic growth and soaraway property
prices that has transformed household balance sheets in the Republic and created 30,000 millionaires. The average Irishman and woman is richer than an American, a Briton or a German, according to Bank of
Ireland research into the nation's wealth. …Once the paupers of Europe, the Irish have rapidly moved to a place at the top table. Within just a decade, the personal net worth of the average Irish citizen has
more than trebled from €46,000 to €148,000 (£102,000). The Irish are already comfortably ahead of their British neighbours… the main
growth motor has been fiscal reforms introduced in the 1990s and the foreign investment this brought in. Corporate tax rates of 12.5 per cent
attracted a host of US multinationals, such as Dell, Microsoft and IBM.
Friday, July 14, 2006 ~ 7:54 a.m., Dan Mitchell Wrote: "Fortress Europe" is losing out as skilled immigrants head to a more open US, EU officials have warned ahead of a key migration summit on
Monday. …Skilled workers from Africa and Asia are heading west to Canada and the US, societies more open to immigrants, as the EU raises the drawbridge with crackdown followed by crackdown. "Europe
is losing out to Canada and the US on the global labour force that is emerging," said a commission official. …EU officials have approached the US to find agreement on measures to soften the impact of selective
migration of skilled workers from Africa. But officials reveal the US is not interested in talking while America, in comparison to a closed EU,
has the pick of the best migrants. "What is good for the US is good for the world, is the view. If the US takes all the brains it is good for America," said one official.
Friday, July 14, 2006 ~ 7:16 a.m., Sven Larson Wrote: Prime Minister Ferenc Gyurcsány's government is sticking to its plan to cut the country's budget deficit and may adopt a property tax. "I don't
see a chance for softening," Veres said at a press conference in Budapest today. "It is very important for this series of measures to
work." Gyurcsány last month unveiled plans to raise taxes, increase regulated prices and cut the size of government bureaucracy to reduce
the European Union's largest budget deficit. The proposals, which face a parliamentary vote today, are designed to help slash the country's
shortfall to a third by 2008 to qualify for euro adoption two years later.
Thursday, July 13, 2006 ~ 11:19 a.m., Sven Larson Wrote: Large increases in federal spending are responsible for 67 percent of the increase in the total cost of government since 2000. And total federal
spending is accelerating contrary to what we often hear from elected officials. Consider these key facts from this year's Cost of Government Day report: Federal spending has increased faster than national income
in five of the past six years, leading to a 10.2 percent increase in the federal spending burden on American workers since 2000. This year the
average American worker will need to labor 86.5 days out of the year to earn enough income to pay for the cost of federal spending. This is an increase of 1.4 days compared to 2005 and eight days more than was
required in 2000. 51 percent of all of the gains achieved in the 1990s have been wiped out in the past six years. The federal spending burden declined eight straight years from 1992 through 2000 as strong
economic growth coupled with federal spending restraint led to the average American worker needing to work 15 days less in 2000 than was required in 1992. Half of all those gains have now been wiped out
and the index currently stands at 1995 levels. If spending increased only as a percentage of national income since 2001, the federal government
would have a $20 billion budget surplus (not a $296 billion deficit) in fiscal year 2006. Moreover, the country would never have reached surplus in the late 1990s if spending equaled national income. The
surplus resulted because spending was actually lower than national income during that time period. If spending is such a problem, why is the deficit being reduced? The deficit is only declining because tax
revenues have entered the Treasury at the highest rate in twenty-five years for two consecutive years. This double-digit growth masks the fact that spending will increase 9 percent this year and has averaged 7.1
percent annual growth since 2000. But growing tax revenues at 11 to 15 percent per year is unsustainable; this growth rate will decline over time. If the growth of spending is not reduced correspondingly we will
not only have a higher cost of government imposed on American families but we will also have an increasing deficit. Then the tax-increasing politicians will come home to take an even larger share
of worker's incomes.
Thursday, July 13, 2006 ~ 10:31 a.m., Sven Larson Wrote: As people become increasingly conscious of price, the consumer-patient is looking to manage their health care with the same information they
are accustomed to having as they make other purchases in their daily lives: namely information on price and some measure of quality. ...Recent surveys highlight the growing popularity of the price
transparency issue and explain its increasing attention from policymakers. ...polls in 2005 showed that God and the Pledge of Allegiance polled at 91 percent, and the right to know cost and quality
information on health care polled at 93 percent. ...More recently, a May 2006 Zogby International poll found that 88 percent of likely voters
across the U.S. said that publishing price data on the Internet is a good idea. ... Lawmakers seem to be getting the message. In response to the
interest and growing need for transparency, Congress and state legislatures across the country are looking for legislation to compel health care providers to shine light on the prices they charge.
Wednesday, July 12, 2006 ~ 11:13 a.m., Sven Larson Wrote: According to OECD Health Data 2006, health spending has grown faster than GDP in every OECD country except Finland between 1990
and 2004. It accounted for 7% of GDP on average across OECD countries in 1990 but reached 8.9% in 2004, up from 8.8% in 2003. OECD Health Data 2006 provides a comprehensive database of
comparable health statistics in major developed countries, with more than 1200 indicators including some time series going back to 1960. In most OECD countries, the bulk of healthcare costs is financed through
taxes, with 73% of health spending on average publicly funded in 2004. Ensuring sustainable financing of health systems is critical for governments, as health spending as a share of GDP is projected to
increase further due to costly new medical technologies and population ageing.
Wednesday, July 12, 2006 ~ 10:30 a.m., Sven Larson Wrote: PLAs are a form of a "pre-hire" collective bargaining agreement between contractors and labor unions pertaining to a specific project,
contract or work location. They are unique to the construction industry. The terms of PLAs generally recognize the participating unions as the sole bargaining representatives for the workers covered by the
agreements, regardless of their current union membership status. They require all workers to be hired through the union hall referral system. Non-union workers must join the signatory union of their respective
craft and pay dues for the length of the project. ...It is widely believed that construction projects are more expensive when a PLA is in effect because the competitive pressure that holds down prices in other
industries is eroded. "Open shop" construction firms -- facing the huge obstacles required by PLAs -- are often discouraged from bidding on
publicly financed projects. Two studies from he Beacon Hill Institute (BHI), found that the presence of PLAs increased construction bids over
non-PLA projects in the greater Boston metropolitan area and the state of Connecticut. ...Our findings show that the potential savings from not
entering into a PLA on a school construction project range from $2.7 million for a 100,000-square-foot structure to $8.1 million for a 300,000-square-foot structure.
Tuesday, July 11, 2006 ~ 3:16 p.m., Sven Larson Wrote: EU trade commissioner Peter Mandelson is set to place tariffs of 15.2 per cent on plastic bags from China and of 14.3 per cent on bags from
Thailand, according to media reports. The move follows an inquiry, which found that plastic bags were being dumped illegally into the EU. Due to lower raw material and labour costs plastic bags imported from
the Far East are estimated to be between 10 per cent and 20 per cent cheaper than those produced in Europe, with annual Chinese exports of plastic bags coming up to $300 million (EUR235 million). The inquiry
followed a complaint by 30 European producers of certain plastic sacks and bags representing more than 25 per cent of the EU's production in the sector. Although the 30 withdrew the complaint in February, French
industry has kept up pressure and received backing from French transport commissioner Jacques Barrot, according to the Times.
Monday, July 10, 2006 ~ 8:14 a.m., Dan Mitchell Wrote: Slovak leftist leader Robert Fico was appointed prime minister on Tuesday amid a wave of harsh criticism from economic analysts...
Investors and analysts are concerned that the coalition, which has 85 seats in the 150-seat parliament, would loosen the fiscal reins, reverse several of Dzurinda's widely praised economic reforms and delay the
adoption of the euro, planned for 2009. ...After remaining silent since the government line-up was announced last week, incoming Finance Minister Jan Pociatek appeared to tone down Smer's campaign rhetoric.
...Pociatek said Smer's campaign pledges, such as a dividend tax and scrapping the flat tax system that was a cornerstone of the previous government's reforms, would not be implemented.
Monday, July 10, 2006 ~ 7:51 a.m., Dan Mitchell Wrote: Rodney Littlebear was a homeless drunk who for 15 years ran up the public tab with trips to jail, homeless shelters and emergency rooms.
Howard Hunt, 41, homeless since 1999, moved into 1811 Eastlake in Seattle on the day it opened, in 2005. The government-financed building's residents, who have been labeled "chronic public inebriates,"
are allowed to drink in their rooms. He now has a brand-new, government-financed apartment where he can drink as much as he wants. ...These are the "unsympathetic homeless" who beg, drink,
urinate and vomit in public - and they are probably the most difficult to get off the streets, said Bill Hobson, executive director of the Downtown
Emergency Service Center... The building's critics are particularly incensed that residents do not have to stay sober. The Seattle Times, in
2004, editorialized that government should insist that the residents quit drinking in order to live there. "Bunks for drunks - it's a living
monument to failed social policy," said John Carlson, a conservative radio talk show host here. This approach, he said, is "aiding and
abetting someone's self-destruction." ...He shrugged when asked about the policy allowing him to drink in his new home. "We're going to drink
somewhere," Mr. Hunt said. Influential Bush administration officials have come to support this project, including the on-site drinking. ...Robb
Anderson, 43, an owner of the trophy shop next door to the apartments, complained bitterly about paramedics' 120 visits in just six months. ...26
residents live on the first floor in office-sized cubicles with a bed, desk, dresser and small refrigerator. These communal living areas have a strong scent of body odor.
Sunday, July 9, 2006 ~ 11:45 a.m., Sven Larson Wrote: Promise: "Implement a 10-year regional transit system plan..." Reality: Sound Transit is far short of providing the system plan promised in
1996. The agency cut back on several projects and unilaterally extended its program to at least 13 years. Promise: "After 10 years, any addition
to the system will have to be voter approved, assuring accountability and satisfaction." Reality: Sound Transit has significantly reduced its
original plans while collecting full taxes. The agency says it has no plans to seek voter approval. Promise: "Cost of the plan is $3.9 billion."
Reality: The cost of Sound Transit today tops $4.7 billion and rising. Sound Transit supporters now say the costs they gave voters in 1996
were only "placeholder" figures. Promise: "Public transportation will have the capacity to move 40% of the region's commuters to their jobs"
Reality: Public transit is well below this capacity. Also, creating capacity is not the same as moving people. Today, 95% of daily trips are
in private automobiles. Promise: "53,000 cars out of rush hour traffic everyday." Reality: There are more cars in rush hour traffic today than
in 1996. Annual traffic data does not show a reduction of 53,000 cars a day. Promise: Upgrading Burlington Northern Santa Fe track for use by Sound Transit would be $470 million. Reality: Today the cost estimate
for track upgrades is $942 million. Promise: A 21-mile light rail line for $2.3 billion in ten years. Reality: Sound Transit is building a 14-mile line
for $2.7 billion; the last mile will cost $225 million. Promise: "40% of operating costs will be covered by fare revenues" and "Fares will cover
a growing share of the operating costs." Reality: The opposite is happening. 2004 fare revenues covered 12% of operating costs. Sound Transit expects this figure to fall to 10.3% in 2006.
Saturday, July 8, 2006 ~ 1:55 p.m., Sven Larson Wrote: With another failed world trade meeting pushing the WTO into a crisis, the head of the organisation, Pascal Lamy, is set to step up negotiating
efforts. More than 60 ministers of the 149 WTO members took part in the so-called Doha development round meeting in Geneva over the weekend (30 June-2 July), where they tried to reach an agreement on
tariff reductions on the imports of agricultural and industrial goods. "I will not beat about the bush," Mr Lamy said after the meeting in a
statement. "We are now in a crisis." He stated that the 149 WTO members now seemed to be faced with the real propsect of a Doha development round not taking place. ...The Doha round aims to boost
the global economy and help pull millions of people across the world out of poverty by liberalising trade in agriculture, industry and services. To
save the deal, according to Mr Lamy, the US must reduce the subsidies Washington pays to its farmers, while the EU must lower the duties on agriculture imports and the G-20 group of developing countries, led by
Brazil and India, must open up access to its industrial markets.
Friday, July 7, 2006 ~ 9:01 a.m., Dan Mitchell Wrote: Europe's 14-year struggle to tax its citizens' offshore savings has flopped, after investors in countries such as Switzerland and
Luxembourg exploited loopholes in a controversial savings law. In the first six months of the law's operation, Switzerland - the world's leading
offshore financial centre - raised only EUR100m in withholding taxes on the vast savings held there by European Union citizens. Others quickly
spotted the gaps in the EU savings directive: Luxembourg collected just EUR48m in the second half of 2005; Jersey EUR13m, Belgium EUR9.7m, Guernsey EUR4.5m and Liechtenstein EUR2.5m. The news
will be disappointing to countries such as Germany, which had hoped the directive would catch tax avoiders and yield hundreds of millions of euros for EU finance ministries. German citizens alone are thought to
have more than EUR300bn stashed away in tax-friendly countries. ...the directive is riddled with loopholes, some inserted by EU members to maintain their appeal to offshore investors. Others were created by
loose legal definitions, while ambiguity was added with the translation of the original draft law from English to French and back to English.
Friday, July 7, 2006 ~ 8:15 a.m., Sven Larson Wrote: Government regulation can advance desired programs without using tax dollars. Since disclosure of and accountability for the regulatory costs are
rare, policy makers are often careless of regulatory costs relative to ordinary government spending. If unpopular, Congress escapes accountability and
blames agencies for costs. Moreover, since regulatory costs are not budgeted and lack the formal presentation to the public and media that accompanies
federal spending, regulatory initiatives can allow manipulation of privatesector resources without much public fuss, rendering regulation a form of off-budget taxation. ...A way to maximize congressional
Friday, July 7, 2006 ~ 8:11 a.m., Dan Mitchell Wrote: Nearly every state in the nation is celebrating the new fiscal year that begins on Monday with record tax revenues. The big exception is New
Jersey, which is headed instead for what could be a government shutdown. ...Mr. Corzine wants to raise the state sales tax to 7% from an already high 6%. Many Democrats in the legislature believe this is
political suicide, especially with the Governor low in the polls. But somehow they've convinced themselves that voters will happily swallow new levies on payroll, tobacco, computer services and car rentals
instead. Meanwhile, the one promise that Democrats made to voters in last year's election campaign -- lowering what are some of the highest
property taxes in the country -- remains conspicuously unfulfilled. A new Quinnipiac poll finds that 47% of voters identify taxes as the biggest
problem in the state -- the highest number for any issue the polling firm has ever found in New Jersey. The Garden State has raised taxes nearly
every year since 2000 and nearly twice as much per resident as the next highest tax state. ...The real New Jersey story is that a rising cost of
living and taxes have spurred an exodus of businesses, high net worth individuals and working families. U.S. Census Bureau data indicate that, in 2004 alone, 60,000 more people left New Jersey than moved in.
This outmigration led to a loss of $1 billion per year in the state's personal income, according to IRS statistics analyzed by the Manhattan
Institute. Thus New Jersey finds itself in a spiral down: Taxes are raised, more taxpayers flee so the tax base shrinks, the politicians raise taxes again, and the cycle repeats itself.
Thursday, July 6, 2006 ~ 8:54 a.m., Dan Mitchell Wrote: Mart Laar was barely 32 years old in 1992, when he became prime minister of Estonia, a small nation on the Baltic Sea that had just
emerged from decades of Communist oppression as a satellite state of the Soviet Union. He inherited leadership of a country with 1,000 percent inflation, 30 percent unemployment, and government-owned
businesses that were a shambles. Laar's government removed price controls, cut regulations and welfare programs, sold state-owned businesses, introduced a new currency, and instituted a simple, flat-rate
income tax that is being emulated in countries across Central and Eastern Europe. The rate has been lowered several times over the years and is now at 20 percent. The result? Inflation in Estonia has dropped
below 3 percent, unemployment has plunged below 6 percent, and foreign investment has poured in. Estonia has enjoyed the greatest growth in real per-capita income of any of the former Soviet states.
...Laar: "Last year in Estonia, 83 percent of people did their taxes electronically, and it took from five to 20 minutes for each of them. So
you don't need tax lawyers or a big tax bureaucracy. ...It brings more money to the budget. It supports growth. Its relevance has been proved. It works."
Thursday, July 6, 2006 ~ 8:23 a.m., Dan Mitchell Wrote: America's governors must feel as if they've won their own state lotteries. Thanks to the snappy growth of the U.S. economy over the last three
years, state treasuries are now overflowing with tax collections. At least 40 states are in the black, and only a handful, such as the Gulf states
wrecked by Hurricane Katrina and perpetually hapless New Jersey, are still spilling red ink. In 2005 state and local revenues grew by 10.5%, according to Census Bureau data, and so far this year tax receipts in
most states are climbing at close to that level. ...the biggest beneficiaries of President Bush's 2003 tax cuts have been state and local governments, even though tax cut opponents predicted states would be
losers. By our calculations, based on revenue estimates from around the country, states and cities will collect $50 to $100 billion in unexpected
revenues this year (see chart). That's the good news. The bad news is that most Governors and state lawmakers are spending this money so recklessly that they're making Republicans in Congress look like penny
pinchers. ...A report by the American Legislative Exchange Council found that, in the 1980s and 1990s, states that directed their budget riches into new spending wound up with the deepest deficits when
recession hit. States that cut tax rates were better able to ride out the storm, and their economies performed better. But that lesson has been
lost on most state lawmakers who are now spending about two of every three surplus tax dollars. We hope voters remember this spending spree when politicians plead poverty the next time the economy hits a pothole.
Thursday, July 6, 2006 ~ 7:51 a.m., Dan Mitchell Wrote: British state education is in collapse. Its schools are turning out an army of innumerate, semi-literate proles. ...grade inflation and a debasement
of the papers have made examination results largely worthless. Certificates are fast becoming the academic equivalents of forged banknotes. The problem is not one of funding. The state sector is awash
with money. In 2002, £49 billion of our tax money went on schooling and further education. Given a total of 10 million children and young people in the maintained sector, that gives spending per head of around
£4,900. Many independent schools charge less than that, and get better results. ...In part, the problem is one of management. Our state education is under centralized, authoritarian control. ...In main,
however, the problem of the state sector is not its management, but its existence. ...The real answer is to get the state entirely out of education.
The education budget should not be expanded, or its administration reformed. It should simply be abolished. That £49 billion - now, I believe, £63 billion - should be handed back to the people in tax cuts.
The schools should be sold off or given away, the bureaucrats made redundant. The people should then be left to arrange by themselves for the education of their children. ...Left to themselves, it is hard to see
how parents could do worse than those presently in charge of state education. How they might do better is for them to decide. Some would pay for a conventional independent education. Some would send their
children to schools run by their ministers of religion, or by charitable bodies. Some would educate their children at home. Many do this last already, by the way; and Paula Rothermel of Durham University caused
a stir in 2002, when she looked at a sample of children educated at home and found they performed consistently better in standard tests than schoolchildren. Indeed, she found that the children of people like
bus drivers and shop assistants were receiving a better education than those committed to the care of state-certified teachers. Home education may not always be that good. State education generally is that bad.
Wednesday, July 5, 2006 ~ 5:00 p.m., Dan Mitchell Wrote: Since 2002, far too many airline, steel, auto and other companies have dumped their pension plans on the PBGC, the quasi-government agency
that "insures" private pension plans. That body has gone from a $10 billion surplus in 2000 to more than a $23 billion deficit last year, and it
is the financier of last resort for a private defined-benefit pension system that is underfunded to the tune of $450 billion. On present trends, this could become a fiasco on the order of the savings and loan
collapse. This is what happens when Congress socializes what ought to be private labor contracts. The theory behind the PBGC was that it would collect enough premiums from companies to cover future
liabilities. But as always in Washington, unions and powerful industries have worked the political system to prevent premiums from reflecting
real market and business risks. The result is today's underfunding and a looming taxpayer bailout.
Wednesday, July 5, 2006 ~ 11:42 a.m., Sven Larson Wrote: Stratification by wealth, ethnicity, maternal education status, sex, region and uban/rural residence yielded statistically significant
diffrences across a wide range of health indicators in six countries. In many cases, the ethnic, educational and regional variations were more pronounced than were the disparities attributable to differences in
wealth. Furthermore, analysis of dual forms of marginalization reveals the complexity of health gaps within countries. ...The full array of underlying social determinants of health must be addressed in both
health research and development policy. And rather than a patchwork of "pro-poor" inventions and ad-hoc targeted programmes, universal
health systems dedicated to the inclusion of all population groups are needed to build more efficient, equitable and healthier societies.
Tuesday, July 4, 2006 ~ 5:10 p.m., Dan Mitchell Wrote: Mr. Warner had promised not to raise taxes during his 2001 gubernatorial campaign, but still managed to woo enough Republican
legislators to win approval of his tax hike. Soon after it passed, state officials disclosed a budget surplus that nearly matched the amount the
increase was projected to raise. Nonetheless, the tax issue made Mr. Warner a national figure as a Democrat who could persuade a Republican Legislature to increase taxes. ...Mr. Kaine, too, vowed in his
campaign he wouldn't raise taxes. Four days before his election last November, he told an interviewer: "I'm not going to be in for tax increases because we did it in 2004 and we're going to have to live
within our means." Six days after he was inaugurated in January, he abruptly changed his tune, announcing a plan to raise "modest, reliable
revenues" of $1 billion to fund urgently needed transportation improvements. ...the Senate Republicans, more liberal than their House counterparts, were already on board with Mr. Kaine's tax hike. ...Not a
single Republican delegate sided with Mr. Kaine. The problem for Mr. Kaine on the House side was simple, Mr. Howell said. "Fool me once
and it's your fault," he said. "Fool me twice and it's my fault." In 2004, 17 Republican delegates had broken ranks and voted for Mr. Warner's
tax increase. This prompted a backlash among conservative voters, particularly after the bulging surplus was disclosed. Every one of the 14
Republican tax-hikers who returned to the house after last fall's election learned the lesson and stuck closely with Mr. Howell this time around.
They unswervingly opposed the governor. ...Never trust a candidate who promises not to raise taxes. Mr. Sabato moderated a campaign debate in which, he said, "we asked [Mr. Kaine] three different ways if
he would raise taxes. The answers were no, no, no." Mr. Kaine might have meant it at the time. But we now know, his promises weren't binding. Such promises rarely are.
Monday, July 3, 2006 ~ 6:09 a.m., Sven Larson Wrote: Proposed German corporate tax reforms aimed at cutting rates by almost a quarter could instead raise the tax burden on companies and
discourage investment, experts warned on Wednesday. Tax experts said that plans to prevent companies from deducting interest payments from
taxable profits, part of the fine print of the reform plans being drawn up by the government of Chancellor Angela Merkel, could have dramatic
implications for Germany's largely debt-financed corporate sector. ... "This is being sold as a corporate tax cut," said one Frankfurt banker.
"But what I see is a tax rise." Under the reform, said Berthold Welling, tax expert at the BDI industry federation, "the cost of credit would no
longer be considered a cost. In theory, you could be losing money and still have to pay taxes. We are at a complete loss to understand what the
ministry is up to here." ...[Germany's finance minister] Mr Steinbrück argues that the provisions are necessary to stop large companies borrowing money from subsidiaries in low-tax countries as a way to
artificially reduce their profits.
Sunday, July 2, 2006 ~ 1:11 p.m., Sven Larson Wrote: Bolivians also ask why foreigners reap all the benefits of today's high prices for oil and gas. It costs no more to extract oil or gas today than it
did when prices were one-third of their current level. Yet, the foreign oil companies get 82% of the increase - in the case of oil this amounts to a
windfall for them of $32 a barrel or more. No wonder Bolivians thought they were being cheated and demanded a new deal. On May 2, Morales simply reversed the percentages, pending renegotiation of the contracts:
the companies operating in the two largest fields would get 18% of the production for themselves. As part of this new deal, Bolivia should also
get a larger share when prices increased. (Bolivia may, of course, not want to bear the risk of a fall in the price, so it may strike a deal to
transfer some of the downside risk to foreign companies, giving them in exchange more of the upside potential.)
Saturday, July 1, 2006 ~ 12:07 p.m., Sven Larson Wrote: The Rev. Jesse Jackson's call for a rally in Louisville to support the race-based student assignment policy of the Jefferson County Public
Schools (JCPS) urges people to value racial quotas above every other consideration, including the quality of education provided to Kentucky's black students. Unfortunately, the Rev. Jackson's support is warmly
received within the Jefferson County School system, which has fought a long and costly legal battle to maintain strict racial quotas in Kentucky's largest school district. This battle - a result of the district
denying a parent the right to choose a better school for her child because of racial quotas - has now reached the U.S. Supreme Court. ...Nearly all school-choice programs guarantee that minority children
form an overwhelming majority of their participants. For example, only low-income students can currently receive a scholarship in Washington, D.C. or a voucher in Milwaukee. These provisions ensure that children
with the fewest choices - many of whom are minorities - are provided an escape route from failing public schools in poor neighborhoods.
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