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Archive for November 10th, 2012

I have a love-hate attitude toward international bureaucracies.

I’m mostly negative about organizations such as the IMF, World Bank, UN, and OECD. In part this is because they are a very expensive burden on taxpayers, but also because they generally push for bad policy.

It’s reprehensible, for instance, that the OECD has allied itself with the Obama Administration to push for class-warfare tax policy. And it’s disgusting that these pampered bureaucrats at the IMF get tax-free salaries while pushing for bailouts and higher taxes.

But I confess that the international bureaucracies sometimes generate good data and produce interesting studies. The World Bank, for instance, showed how the welfare state and excessive government spending are reducing prosperity in Europe. And the European Central Bank also has produced solid research showing that large public sectors undermine economic growth.

One very good source of data from an international bureaucracy is the Doing Business Index, published each year by the World Bank. As you can see from the image (click to enlarge), the United States does relatively well in this ranking.

Since the United States has dropped in the Economic Freedom of the World Index and the World Economic Forum’s Global Competitiveness Report, it’s nice to see that the news isn’t all bad in the international rankings.

The one area where the U.S. gets a very poor score, though, is in the “paying taxes” category. This is yet another reason why we should junk the corrupt internal revenue code and replace it with a simple and fair flat tax.

Hong Kong and Singapore are at the top of the rankings, unsurprisingly. The Nordic nations also do well, which fits with the analysis showing they are very free market in areas other than fiscal policy. And it’s always good to see Estonia with a relatively high score.

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I’m in Jersey, where I gave a speech last night.

But not New Jersey, the state where you shouldn’t die. That’s the state that many people have been fleeing because they don’t like paying confiscatory taxes to finance bureaucrats who make as much as $320,000 per year.

Instead, I’m in the Bailiwick of Jersey, which is a UK dependent territory off the coast of France. Jersey is a so-called tax haven, which I applaud because it helps encourage better tax policy in less enlightened parts of the globe.

Because I’m such a cultured and sophisticated guy, today I used some of my free time to visit the Jersey Museum. I now know lots of useless trivia about how a tiny island 15 miles from France wound up as an English territory.

But I also found something very interesting in the section on the economic history of Jersey. The museum explicitly recognizes the role of low taxation in promoting a prosperous society.

My blackberry camera isn’t that good and I’m probably a crummy photographer, so this image is very hard to read, but the display openly boasts that Jersey’s tax rates are much less onerous than those found in the United Kingdom.

If you want a simple and fair flat tax, Jersey’s 20 percent rate is not bad. And it’s definitely a lot better than the (now) 45 percent top rate in the United Kingdom

If you don’t want double taxation, the capital gains tax rate in Jersey is zero. That’s a lot better than the United Kingdom (though the rate there is now “only” 28 percent.

If you don’t want the government grabbing a big chunk of your income with a value-added tax, then you’re much better off with Jersey’s 5 percent rate rather than the 20 percent rate in the United Kingdom (the museum’s info is out-of-date).

Anyhow, you get the idea. Here’s a close-up photo of that part of the display.

There’s no death tax in Jersey, which is a very important consideration when successful and productive people decide where to conduct economic activity. The United Kingdom, by contrast, has one of the most onerous death tax regimes in the world.

In other words, the people of Jersey have made a very intelligent decision to avoid class-warfare tax policy.

Are you surprised to learn, therefore, that they are richer, on average, than folks in the USA?

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