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Archive for the ‘Dan Hannan’ Category

What’s the most noxious example of hypocrisy from the political class?

Is it left wingers from Obama’s cabinet utilizing tax havens while supporting higher taxes for the rest of us peasants?

HypocrisyOr how about politicians who voted for Obamacare and are now trying to exempt themselves and their staff from the law?

The limousine liberals who had a press conference for higher taxes and then rejected requests for them to pay more?

Or the Canadian politician who supports government-run healthcare for others, yet went to America for heart surgery?

Those are all good choices, but our old friend Dan Hannan from the European Parliament has another contestant. His tax-hungry colleagues (like their American counterparts) are bashing Apple, Google, and other multinationals for legally minimizing their tax burdens.

Yet as Dan explains, parliamentarians from 24 out of 27 nations get a sweetheart deal and pay a very low flat tax.

I don’t think I’ve posted any of Hannan’s material since a speech on the European racket in 2009 and two great speeches on taxation in 2010, so I’m glad I had a chance to rectify that oversight.

But I must say none of these examples of hypocrisy can compete with the bureaucrats from the OECD and IMF, both of whom get completely tax-free salaries while pushing for higher taxes on the rest of us.

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Daniel Hannan is a member of the European Parliament from England. He is one of the few economically sensible people in that body, as demonstrated in these short clips of him speaking about tax competition and deriding the European Commission’s corrupt racket.

And as you can see from his latest article in the UK-based Telegraph, he’s also very wise on issues of class warfare tax policy and Laffer Curve responses to punitive taxation.

France’s richest man, Bernard Arnault, is shifting his fortune to Belgium. Gérard Depardieu, the country’s greatest actor (figuratively and literally)is moving to Russia. And, if rumours are to be believed, Nicolas Sarkozy is planning a new career in London. That’s the problem with very high taxes – they don’t redistribute wealth; they redistribute people. …the rich don’t sit around waiting to be taxed. …many financiers can open their businesses abroad simply by opening their laptops. The result of a hike in tax rates is thus often a fall in tax revenue – which means, of course, that the rest of us end up paying more to cover the share of the departed plutocrats.

Hannan understands that rich people have considerable control over the timing, level, and composition of their income, which is precisely why there are powerful Laffer Curve effects when politicians go after the so-called rich (as I tried to explain in a lesson for President Obama).

But Hannan also makes a good point about complexity.

The complexity of a tax system is every bit as damaging to competitiveness as the overall tax rate. The more convoluted the tax code becomes, the more time we have to take off work to comply with it.Tolley’s Tax Handbook is now 11,500 pages long, twice what it was when Gordon Brown became chancellor, and the number of tax lawyers has increased commensurately. …The very wealthy, who can afford ingenious tax advisers and high upfront fees, turn this complexity to their advantage, sheltering their assets in various pockets unintentionally created by government schemes. Again, the rest of us then have to pay more to make up their portion.

Since we have 72,000 pages of complexity and corruption in our tax code, I can’t help but comment that the Brits are lucky that they “only” have 11,500 pages (assuming, of course, that the methodology in both page counts is similar).

In both cases, though, Hannan is right in stating that complexity benefits those who can hire lots of tax lawyers, financial planners, accountants, and other tax advisers.

The answer, of course, is a flat tax. Hannan doesn’t explicitly embrace that option, but he does write about the benefits of lower rates and fewer distortions.

There is one other point he makes that is worth noting. He cites a former Labour Party politician who explicitly was willing to have less prosperity if it meant more equality.

You might, of course, agree with Roy Hattersley, who once said that he’d rather have 5% more equality than 10% more prosperity. That is a respectable position, but at least be honest about it. Wealth taxes create more equal, but poorer societies.

Margaret Thatcher eviscerated that destructive mentality many years ago in this famous speech, but this is an area where proponents of limited government need to do more work.

There are plenty of well-meaning people who mistakenly think the economy is a fixed pie. If we want to help them understand the benefits of small government and free markets, we need to come up with more effective ways of educating them about the important implications of even small differences in economic growth.

I try to make that point in this PBS interview, but I suspect these charts comparing North Korea and South Korea and comparing Chile, Argentina, and Venezuela are much more compelling.

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Regular readers know that I’m a big fan of tax competition because politicians are less likely to misbehave if the potential victims of plunder have the ability to escape across borders.

Here is an excerpt from a superb article by Allister Heath, one of the U.K.’s best writers on economic and business issues.

In a modern, global and open world, states have to compete for people. Weirdly, that is something that a large number of commentators have failed to recognise… They assume implicitly that governments remain quasi-monopolies, as was the case throughout most of human history, with citizens mere subjects forced to put up with poor public services, high taxes, crime, misgovernment and a poor quality of life. Yet the reality is that there is now more competition than ever between governments for human capital, with people – especially the highly skilled and the successful – more footloose and mobile than ever before. This is true both within the EU, where freedom of movement reins, and globally. …competition between governments is as good for individuals as competition between firms is for consumers. It keeps down tax rates, especially on labour and capital, which is good for growth and job creation; states need to produce better services at the cheapest possible cost. And if governments become too irritating or incompetent, it allows an exit strategy. It is strange how pundits who claim to want greater competition in the domestic economy – for example, in banking – are so afraid of competition for people between states, decrying it as a race to the bottom. Yet monopolies are always bad, in every sphere of human endeavour, breeding complacency, curtailing innovation and throttling progress. …Globalisation is not just about buying cheap Chinese goods: it also limits the state’s powers to over-tax or over-control its citizens.

For those who haven’t seen them before, here are a couple of my videos that elaborate on these critical issues.

First, here’s a video on tax competition, which includes some well-deserved criticism of international bureaucracies and high-tax nations that are seeking to create global tax cartels.

Here’s a video that makes a powerful economic case for tax havens.

But this is not just an economic issue. Here’s a video that addresses the moral issues and explains why tax havens play a critical role in protecting people subject to persecution by venal governments – as well as people living in nations plagued by crime and instability.

And last but not least, this video punctures some of the myths promoted by the anti-tax haven advocates of global tax cartels.

By the way, since the main purpose of this post is to draw your attention to the superb analysis of a British writer, I may as well close by drawing your attention to a couple of speeches by Dan Hannan, a British member of the European Parliament. In a remarkably limited time, he explains what this battle is all about.

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We need effective, articulate, and principled lawmakers in Washington. I don’t think many Republicans in DC understand the tax competition issue. And if they do, I doubt they could give either of these speeches.

I especially appreciate his defense of tax havens.

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My earlier post noted that I would be speaking on a panel with Dan Hannan, one of the English members of the European Parliament who is famous in the blogosphere for his verbal dismantling of Gordon Brown. But since I’m in Brussels to discuss European reform in a city that is devoted to statism, this speech by Dan Hannan is much more relevant.

I wish Republicans were capable of doing this.

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I’m in Belgium to speak at the 6th annual International Leaders Summit, which will be held in the European Parliament (a.k.a., belly of the beast) on Tuesday and Wednesday. I’m giving two speeches, including one that will focus on European reforms – including transparency and accountability. A key theme of my remarks will be that centralization is the enemy of good government. Unfortunately, the European Union has been morphing from a free-trade pact into a centralized and bureaucratized super-state. I will explain why this is a bad thing, both from an economic perspective and a civic-virtue perspective, but I’m not overly optimistic of altering Europe’s drift to statism.

On a more positive note, I’m looking forward to hearing some of the other speakers. Dan Hannan, an MEP from the UK is famous on youtube for his damning indictment of Gordon Brown, and he will be with me on the first panel. In the afternoon, I’ll be joined by the former Finance Minister of Slovakia, who is responsible for an amazing set of free-market reforms, including the flat tax and personal Social Security retirement accounts.

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