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Archive for April, 2013

I’ve made the point before that the United States foolishly imposes the highest corporate tax rate of all developed nations.

But that obviously means it is theoretically possible for there to be a nation in the developing world that has a higher corporate tax rates.

Well, according to this map produced by the Financial Times, there is one nation with a worse corporate tax regime.

Corporate Tax FT Map

It’s not China, which is nominally still a communist nation (though apparently with more of a pro-business mentality than the United States).

It’s not Venezuela or Argentina, corrupt and thuggish Latin American nations. And it’s not Zimbabwe, a statist kleptocracy in Africa.

The one nation in the world which is worse than the United States is the United Arab Emirates, with a corporate rate of 55 percent.

There’s no data on revenues collected by this onerous levy, but I’m going to make a sight-unseen prediction – based on Laffer Curve insights – that the UAE’s corporate income tax raises almost no money from the non-petroleum sector of the economy.

P.S. If the OECD succeeds in undermining corporate tax competition with its “BEPS” initiative, I expect we’ll see many nations raising corporate tax rates.

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I’ve shared two personal fantasies on this site, but I must be a policy wonk because they involved a vision of a  politician telling a voter to grow up and an imagined interaction between the Governor of Texas and the United Nations.

Not exactly steamy stuff, I realize.

And even when I posted a video about libertarian porn, it involved zero nudity.

So I think I’m being very bold in sharing this libertarian fantasy.

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This morning my friend lucked out and was able to buy several cases of ammo.

"Libertarians are hot"

“Libertarians are hot”

On the way home he stopped at the gas station where a drop-dead gorgeous blonde was filling up her car at the next pump.

She looked at the ammo in the back of my pickup truck and said in a very sexy voice, “I’m a big believer in barter. Would you be interested in trading sex for ammo?”

He thought a few seconds and asked, “What kinda ammo ya got?”

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Too bad this has never happened to me.

Unfortunately, libertarians usually are the target of jokes, though I admit some of them are very amusing.

For instance, a video portraying Somalia as a libertarian paradise.

Then we have two cartoons, one on libertarian ice fishing and the other showing libertarian lifeguards.

And this image showing 24 types of libertarians.

Last but not least, this montage of how the world views libertarians.

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You don’t enjoy many victories when you fight for liberty, so I’m not averse to spiking the football on those rare occasions when we win.

That’s why I shared this very funny cartoon last week to celebrate Obama’s belly flop on gun control.

Now we have another cartoon, this one by Henry Payne, mocking the Administration’s shameful effort to force a tax increase by deliberately making air travel less convenient.

Sequester Tax FAA

No wonder the President is behaving in such a petulant fashion. The sequester is an embarrassing defeat for Obama and other proponents of bigger government.

He thought he could bully Republicans into a class-warfare tax hike. Now he’s resorting to pathetic gimmicks.

And he lost on that issue now that Congress has made explicit that the FAA has authority to reallocate funds.

Let’s not just spike the football. Let’s do a dance in the end zone.

 

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Here’s a new edition of my “you be the judge” series.

These are posts designed to explore some of the more challenging aspects of a pro-libertarian philosophy.

Today’s example comes from Colorado, which had displayed a libertarian streak on issues ranging from school choice to drug legalization.

But the latter issue is the source of today’s quandary. Should marijuana be legal if it means more tax revenue that will be used by the political elite to expand the burden of government spending?

Here are the details from the Denver CBS station.

A draft bill floating around the Capitol late this week suggests that a new ballot question on pot taxes should repeal recreational pot in the state constitution if voters don’t approve 15 percent excise taxes on retail pot and a new 15 percent marijuana sales tax. Those would be in addition to regular state and local sales taxes. …Marijuana activists immediately blasted the proposal as a backhanded effort to repeal the pot vote, in which 55 percent of Coloradans chose to flout federal drug law and declare pot legal in small amounts for adults over 21.

If my math is correct, the politicians want a 30 percent special tax on marijuana, which is on top of the regular taxes that would be imposed.

That would be fine with me – if the proposal specified that the additional tax revenue was offset by a tax cut of equal size.

But as I explained in my “starve-the-beast” post, higher taxes usually finance bigger government.

Indeed, some politicians openly admit that they want the new revenue to expand the budget.

Sen. Larry Crowder, R-Alamosa, said the whole purpose of legalizing recreational marijuana was to raise money for education and other programs. “So if there’s no money, we shouldn’t have marijuana,” Crowder said. …In Washington state, the only other place where voters last year approved recreational pot, the ballot measure set taxes at 75 percent, settling the question. Both states are still waiting to find out whether the federal government plans to sue to block retail sales of the drug, set to begin next year.

Though I didn’t realize that the state of Washington imposes a 75 percent tax on marijuana. How…um…French!

More Money for Government? The Ultimate Buzz Kill

So what’s the bottom line? If I lived in Colorado, would I vote to keep pot legal even if it meant more money from the buffoons in the state capital?

Since drug legalization is about 990 out of 1000 in my list of priorities, I’m tempted to say no.

On the other hand, it would be nice to reduce the onerous burden of the War on Drugs, which has been used an excuse to expand the size and scope of government.

What do you think?

P.S. If you want more examples of “you be the judge,” previous editions are listed below.

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The bad news is that there are despicable and evil people seeking to kill innocents.

The worse news is that some of these pathetic excuses for protoplasm are subsidized by taxpayers.

It’s happened in France, Australia, and the United Kingdom.

And we now know that the Tsarnaev family was on he dole as well.

Which makes this cartoon funny, but at the same time not funny at all.

Welfare Terrorism

I used to think it was outrageous that the welfare state funded bad behavior (as illustrated by this humorous poster), as well as general laziness and moral depravity.

But there should be a special wing of the Moocher Hall of Fame for taxpayer-subsidized terrorists.

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A recurring feature on this blog is the US vs UK government stupidity contest, which features examples of idiotic behavior by politicians and bureaucrats on both sides of the Atlantic.

Recent winners of this dubious honor include a rather amazing example of British road painting and a horrid incident of anti-gun political correctness by American school bureaucrats.

Our neighbors to the north must be envious that they’re not part of this contest. Based on what just happened in Quebec, Canada probably deserves to be in the conversation.

Mon Dieu!

First some background, courtesy of a story from the Guardian. It seems that the provincial government actually has language police.

They are known as the language police, a unit within the regional Quebec government that seeks to protect French from the rising tide of English. It deploys inspectors to rein in recidivist anglophones, take on big corporate transgressors such as Guess, the Gap and Costco and conduct spot checks to follow up thousands of public complaints.

But sometimes, these tax-funded Keystone Cops go too far.

Le Crime

Now, however, zealots in the Office québécois de la langue française (Quebec Board of the French Language) may have gone a step too far in picking a fight with an Italian restaurant… After a five-month investigation into an anonymous complaint, Massimo Lecas received a letter from the board telling him that his establishment, Buonanotte, had broken the law by including the words “pasta” on the menu and “bottiglia“, the Italian word for bottle, instead of the French word bouteille. Outraged, Lecas posted the letter for 2,500 of his Facebook friends to see. In doing so, he unleashed a political tempest over one of the most sensitive topics up for debate in the province. The outcry has forced the Quebec government to rein in its language inspectors, ensure exceptions to the rules are made for ethnic food and restaurant menus and order a review of how it handles public complaints.

Job security

By the way, this is not an isolated incident.

Lecas’s decision to go public with the letter from the language inspector has prompted other restaurateurs to come forward. One told how he was ordered to cover his microwave’s on/off switch and the redial button on a telephone with tape because they were in English. The chef’s grocery list, which was written on a kitchen chalkboard, was also found to have broken the law: steak frites may be a staple of Parisian bistros but, according to Quebec law, biftek is the only acceptable term. …Quebec’s recent budget included one notable increase: the yearly allotment for the language police.

So Canada definitely can make a claim that it belongs in the government stupidity contest. Though, to be fair, I should acknowledge that other governments also merit consideration.

  1. In Germany, the government misplaced the sensitive blueprints of its new $2.3 billion spy headquarters.
  2. In Italy, the government of supposed technocratic experts managed to appoint the wrong person to a job that shouldn’t exist.
  3. In the European Union, watching free soccer broadcasts is now a human right.
  4. In Greece, bureaucrats actually demand stool samples from entrepreneurs applying to set up online companies.

The moral of the story is that government – in all nations – is a festering black hole of waste. And if you ever feel that these incompetent and foolish people deserve more of our money, then I suggest you move to France, where the nation’s President generously has promised that nobody will have to surrender more than 80 percent of their income to the government.

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I’ve received several requests to comment on the controversy surrounding the famous Rogoff-Reinhart study on government debt and economic performance.

For those who haven’t followed this issue, Kenneth Rogoff and Carmen Reinhart wrote an influential paper in 2010 arguing that government debt above 90 percent of GDP was associated with weaker economic performance.

It turns out that the Rogoff and Reinhart made a mistake in their excel spreadsheet and this error was publicized in a recently unveiled article by three other economists.

This has led to a renewed debate about “austerity,” with R&R cast in the role of fiscal hawks and various critics saying that the mistake in their paper discredits that approach and that it’s time for Keynesian policies.

If you’re interested in the broader debate, here’s what Rogoff and Reinhart wrote in the New York Times to defend themselves, and here’s Paul Krugman’s criticism.

But if you want to know my opinion, I’m not a fan of either side. Unlike the Keynesians, I don’t think debt is good for growth. But I also think it doesn’t make sense to myopically focus on red ink.

Which explains why I’m very frustrated by the debate in Europe. On one side, you have the Keynesians advocating higher spending and on the other side you have “austerians” advocating higher taxes.*

No wonder I want both sides to lose!

As I’ve repeated over and over again, the real fiscal problem in most nations is the size of government. Excessive government spending is bad for prosperity, regardless of whether it is financed by taxes or borrowing.

To be sure, governments can accumulate so much debt that investors will get suspicious and demand very high interest rates before lending more money (sometimes referred to as an attack by “bond vigilantes”).

But it’s important to realize that debt is the symptom. The underlying disease is a bloated public sector. That’s true in Greece, Spain, Italy, and other nations that have had trouble borrowing money.

By the way, it’s also true in nations such as France and Belgium. Those countries also have governments that are far too big. They haven’t been hit (at least not yet) by the bond vigilantes, but they’re suffering from economic stagnation as well.

In other words, deficits are bad, but the real problem is spending. I elaborate in this Center for Freedom and Prosperity video.

The wise fiscal policy, needless to say, is to follow Mitchell’s Golden Rule. If the burden of government spending grows slower than the private economy, any nation can climb out of a fiscal ditch. Especially if they lower tax rates and avoid class-warfare tax policy.

*In theory, the “austerians” ” also advocate less spending, but you won’t be surprised to learn which option politicians select when given a choice between higher taxes and less spending.

P.S. You also won’t be surprised that Paul Krugman doesn’t do his homework when he writes about “austerity” in Estonia and the United Kingdom.

P.P.S. Please do not confuse “austerian” economics with “Austrian economics.” The former is a political rationale for tax hikes. The latter is a sensible school of economic thought.

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