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Archive for May 26th, 2012

Last year, I made fun of the Washington Post for biased reporting when they used the world “slash” to describe a budget proposal that would have trimmed $6 billion out of a giant $3,800 billion budget.

I wrote that this was the budgetary equivalent of “going on a diet by leaving a couple of french fries in the bottom of the bag after bingeing on three Big Mac meals at McDonald’s.” A couple of other bloggers then had some fun by doing the exact calculations of what this would mean.

Now we have a cartoon version of Washington budgeting, authored by Gary Varvel.

Keep in mind, though, that this cartoon actually is inaccurate because it implicitly accepts the dishonest Washington definition of a budget cut (having spending grow, but not as fast as previously planned).

Every budget plan, even the very admirable proposals put forth by Sen. Rand Paul and the House Republican Study Committee, merely restrains the growth of federal spending.

So the cartoon should show Uncle Same with some clippers, simply seeking to keep the weed from growing even faster.

And if we replaced Uncle Sam with Barack Obama, instead of scissors or clippers, he’d be holding fertilizer.

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I’ve mocked France on several occasions, and I thought Sarkozy was so bad that I figured (in the long run) the election of Hollande was a step in the right direction.

But in certain ways, France isn’t as bad as the United States.

The New York Times has a big story about French entrepreneurs and investors looking to escape looming class-warfare tax hikes. Here are a few excerpts

Benoît Pous-Bertran de Balanda, the descendant of a French general who fought for the Americans, is trying to help his wealthy countrymen escape what he calls the tyranny of a new Socialist government primed to severely tax the rich. …Well-heeled French citizens are scouring real estate opportunities in neighboring countries like Britain and Switzerland. The United States — particularly New York and Miami— is also drawing French investors looking to pick up rental properties or pieds-à-terre, brokers say. The French buyers most active in recent months are generally looking at properties between $500,000 and $5 million, brokers say. What the French are so concerned about is Mr. Hollande’s campaign vow to tax income over 1 million euros at a 75 percent rate. …it will also raise the tax rate on capital gains to the same level as the tax on ordinary income.

Normally, this type of story would be an excuse for me to write about the Laffer Curve and the foolishness of penalizing success.

But I want to focus instead on the right to emigrate. Specifically, there are two ways in which France has better policy than the United States.

1. France, like almost every other civilized nation, does not have worldwide taxation. So when French citizens move to Switzerland, Hong Kong, or the United States, they pay tax to those nations. But they’re no longer subject to French taxes on this foreign-source income. Sadly, that is not true for overseas Americans, who are subject to tax in the nations where they live AND the IRS. Their only choice, if they want to escape this punitive and unfair form of double taxation, is to give up U.S. citizenship.

2. But when Americans like Eduardo Saverin decide to surrender their passports, they are hit by punitive exit taxes. This is the type of policy normally associated with some of the world’s most odious regimes, such as Nazi Germany and the Soviet Union. France, I am told, is not perfect in this regard, but the tax treatment of people re-domiciling in another country is not nearly so onerous (especially if they go to another EU nation).

I want good tax policy, like the flat tax, regardless of what’s happening in other nations. But it says a lot (and none of it good) when one of the world’s most statist nations has better policy than America.

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