The Middle Class in America Is Benefiting from “Almost Capitalism”

The candidates for the 2020 Democratic nomination are competing to offer the most statist agenda, with Crazy Bernie, Elizabeth Sanders, and Kamala Harris being obvious examples.

But let’s not overlook Mayor Pete Buttigieg. He has a moderate demeanor, but he’s been advocating hard-left policies.

And he justifies his class-warfare agenda by arguing against Reaganomics and claiming that incomes have been stagnant since the 1980s.

South Bend Mayor Pete Buttigieg, a 2020 Democratic presidential hopeful, said the governing philosophy of Republicans such as former President Ronald Reagan, who signed across-the-board tax rate cuts to grow the economy, should not be repeated in the future. “What we’ve seen is that the rising tide rose, right? GDP went up. Growth went up. Productivity went up — big numbers went up and most of our boats didn’t budge. For 90 percent of Americans, you start the clock right around the time I’m born. Income didn’t move at all — so lower to middle income, really, almost all of us,” Buttigieg said.

Is this true? Have Americans been on a treadmill?

We can easily answer that question because I was at “FEEcon” this past weekend, an annual conference organized by the Foundation for Economic Education.

There were plenty of great presentations (including, I hope, my remarks on the economics of protectionism).

I was most impressed, however, by Professor Antony Davies, who gave some upbeat remarks about living standards.

Here’s one of his slides, which shows some headlines that echo the pessimistic view of Mayor Pete.

But do those headlines reflect reality?

If we look at cash wages since 1979, it seems that there hasn’t been much growth.

But cash is only part of total compensation.

Professor Davies showed that total compensation is up by a significantly greater amount.

By the way, I don’t think this is unalloyed good news.

A big reason for the difference between cash income and total compensation is that we have an exclusion in the tax code that encourages the over-provision of fringe benefits (which, in turn, contributes to the third-party payer problem).

But I don’t want to digress too much. The key point is that workers have seen healthy increases in compensation, notwithstanding the fact that I wish it was more in the form of wages.

Now let’s look at some more headlines from Davies’ presentation.

According to many news sources, the middle class is in trouble.

Is that true?

Professor Davies goes back to 1970 and (after adjusting for inflation) shows the distribution of households in America by income.

And then he shares the same data for every five-year period since 1970 to show that the middle class has shrunk.

But it shrank because a greater share of the population became rich.

Let’s close with two more slides, both of which look at 100 years of data.

This chart shows take-home pay for three types of workers.

And, more importantly, here’s a chart showing how much those three workers could buy based on hours of work.

As you can see, even a minimum-wage worker is much better off today than an average worker 100 years ago (with the exception of movie tickets).

Since we just looked at long-run data, let’s close today’s column with some short-run numbers.

In a column for the U.K.-based Guardian, Michael Strain of the American Enterprise Institute explains that capitalism currently is delivering some very positive results for ordinary people.

This is a strange time to be debating whether capitalism is broken, at least in the United States. The economy has added jobs every month since October 2010 for a total of over 20m net new payroll jobs. The unemployment rate is below 4%, lower than it has been since 1969. Wage growth is finally accelerating, clocking in at a rate well above 3% a year for typical workers. The workforce participation rate for people ages 25 to 54 has increased by 1.6 percentage points since 2015, wiping out half a decade of decline. There are more job openings than unemployed workers in the US. …So much for a stagnant economy. …Since 2016, weekly earnings for the bottom 10% of full-time workers have grown more than 50% faster than for workers at the median. The unemployment rate for adults without a high school degree is further below its long-term average than the rate for college-educated workers.

By the way, I’m not trying to be a Pollyanna with rose-colored glasses.

We have numerous bad policies that are hindering prosperity. If we reduced the size and scope of Washington, we could enjoy even greater levels of prosperity.

But we shouldn’t make the perfect the enemy of the good. The United States is one of the world’s most market-oriented nations.

This tweet nicely captures the choice we face in the real world. We have “almost capitalism,” which has made the U.S. a rich nation.

Some politicians, such as Mayor Pete and Crazy Bernie, would prefer to move the nation toward “almost socialism.”

They don’t intend (I hope!) to go too far in that direction, but incremental moves in the wrong direction will cause incremental weakening of American prosperity.

And they’re dead wrong on the issue of income growth.

P.S. Many of the Democrats say we should copy the statist policies of various European nations. I wish a journalist would ask them why we should copy the policies of nations that have lower living standards.

A George Orwell Award for Most Absurd Rhetoric about Taxation?

Proponents of bigger government sometimes make jaw-dropping statements.

I even have collections of bizarre assertions by both Hillary Clinton and Barack Obama.

What’s especially shocking is when statists twist language, such as when they claim all income is the “rightful property” of government and that people who are allowed to keep any of their earnings are getting “government handouts.”

A form of “spending in the tax code,” as they sometimes claim.

Maybe we should have an “Orwell Award” for the most perverse misuse of language on tax issues.

And if we do, I have two potential winners.

The governor of Illinois actually asserted that higher income taxes are needed to stop people from leaving the state.

Gov. J.B. Pritzker…blamed the state’s flat income tax for Illinois’ declining population. …“The people who have been leaving the state are actually the people who have had the regressive flat income tax imposed upon them, working-class, middle-class families,” Pritzker said. Pritzker successfully got the Democrat-controlled state legislature to pass a ballot question asking voters on the November 2020 ballot if Illinois’ flat income tax should be changed to a structure with higher rates for higher earners. …Pritzker said he’s set to sign budget and infrastructure bills that include a variety of tax increases, including a doubling of the state’s gas tax, increased vehicle registration fees, higher tobacco taxes, gambling taxes and other tax increases

I’ve written many times about the fight to replace the flat tax with a discriminatory graduated tax in Illinois, so no need to revisit that issue.

Instead, I’ll simply note that Pritzker’s absurd statement about who is escaping the state not only doesn’t pass the laugh test, but it also is explicitly contradicted by IRS data.

In reality, the geese with the golden eggs already are voting with their feet against Illinois. And the exodus will accelerate if Pritzker succeeds in killing the state’s flat tax.

Another potential winner is Martin Kreienbaum from the German Finance Ministry. As reported by Law360.com, he asserted that jurisdictions have the sovereign right to have low taxes, but only if the rules are rigged so they can’t benefit.

A new global minimum tax from the Organization for Economic Cooperation and Development is not meant to infringe on state sovereignty…, an official from the German Federal Ministry of Finance said Monday. The OECD’s work plan…includes a goal of establishing a single global rate for taxation… While not mandating that countries match or exceed it in their national tax rates, the new OECD rules would allow countries to tax the foreign income of their home companies if it is taxed below that rate. …”We respect the sovereignty for states to completely, freely set their tax rates,” said Martin Kreienbaum, director general for international taxation at the German Federal Ministry of Finance. “And we restore sovereignty of other countries to react to low-tax situations.” …”we also believe that the race to the bottom is a situation we would not like to accept in the future.”

Tax harmonization is another issue that I’ve addressed on many occasions.

Suffice to say that I find it outrageous and disgusting that bureaucrats at the OECD (who get tax-free salaries!) are tying to create a global tax cartel for the benefit of uncompetitive nations.

What I want to focus on today, however, is how the principle of sovereignty is being turned upside down.

From the perspective of a German tax collector, a low-tax jurisdiction is allowed to have fiscal sovereignty, but only on paper.

So if a place like the Cayman Islands has a zero-income tax, it then gets hit with tax protectionism and financial protectionism.

Sort of like having the right to own a house, but with neighbors who have the right to set it on fire.

P.S. Trump’s Treasury Secretary actually sides with the French and supports this perverse form of tax harmonization.

If Bernie Sanders Is Right, Why not Make Socialism Voluntary?

As reported by the Washington Examiner, Crazy Bernie thinks the American people will be happy to pay more taxes in exchange for more goodies from Washington.

Presidential candidate Bernie Sanders said more taxes would be necessary in order to pay for things like universal healthcare and tuition-free college. …”a lot of people in the country would be delighted to pay more in taxes if they had comprehensive healthcare as a human right,” Sanders said. …Sanders, an independent senator from Vermont, said there is a “tradeoff” but he believes “most people will believe they will be better off…when they have healthcare as a human right and they have affordable housing, decent retirement security, and most Americans will understand that that is a good deal.”

I’m very skeptical of this claim.

When people are given the opportunity to voluntarily pay additional tax, whether to the federal government or state governments, they almost never cough up additional money.

Supporters of Bernie Sanders might claim that I’m being unfair. After all, he’s claiming that people would be happy to pay additional tax for additional spending, not additional tax for the current level of spending.

That’s a fair point.

So I’m willing to meet Crazy Bernie at the halfway point.

He says people would be happy to pay more tax and I think that’s wrong. How can we figure out which one of us is correct?

Simple. Let people choose. There are two ways to make this happen.

1. Make socialism voluntary. If Crazy Bernie is correct about people wanting to pay more to get more, why not create a system where people can opt in or opt out? That shouldn’t be too difficult. Just create two tax systems, one for people who want to pay more to get more goodies, and another for people who don’t want that option. Heck, we could even create a third system for people (like me) who would like to opt out of existing redistribution and social insurance programs.
2. Comprehensive federalism. Let’s basically repeal the Washington-centric welfare state and let states decide whether to impose such programs. If people like paying high taxes in exchange for big government, I’m sure politicians in New Jersey, California, and Illinois will be happy to oblige. But if Crazy Bernie is wrong, maybe people will vote with their feet and migrate to states that presumably would forego the opportunity to replicate the programs currently imposed from D.C.

Needless to say, I very much doubt whether Crazy Bernie or any of his supporters will go for either choice.

They know that voluntary socialism inevitably breaks down.

And folks on the left favor tax and spending harmonization precisely because they know that federalism and decentralization will lead to a smaller welfare state.

Which is why, notwithstanding Crazy Bernie’s claim, I described this tweet as perfectly capturing “the essential difference between libertarians and statists.”

Amen.

Statists don’t support choice. They don’t like federalism. The bottom line is that they know their intended victims will opt out.

Crazy Bernie is bluffing. He knows people don’t favor higher taxes. This cartoon explains everything.

The Right-Wing Debate Between Classical Liberalism and Bigger Government

I wrote yesterday about the debate among leftists, which is partly a contest between Bernie Sanders-style socialists and Elizabeth Warren-style corporatists.

Now let’s look at the debate on the right.

There’s an ongoing argument over what it means to be conservative, especially when thinking about the role of the federal government.

You can view this debate – if you peruse this “political compass test” – as being a battle over whether it is best for conservatism to be represented by Friedrich Hayek or Angela Merkel? By Donald Trump or Gary Johnson?

As far as I’m concerned, it’s a debate between whether the right believes in the principles of small-state classical liberalism or whether it thinks government should have the power to steer society.

Representing the latter view, here’s some of what Henry Olsen wrote for the Washington Post.

…libertarian-minded opinion leaders have criticized Trump… For these people, Trump was…an apostate whose heresies had to be cast out of the conservative church. Trump’s overwhelming victory in the primaries should have shocked them out of their ideological slumber. …the market fundamentalists seem to see nothing— absolutely nothing — about today’s capitalism to dislike. …National Review’s founder, William F. Buckley, famously wrote that…the federal government’s proper peacetime duties are solely to “protect its citizens’ lives, liberty, and property.” With respect to its efforts to do anything else, “we are, without reservation, on the libertarian side.” But that dog don’t hunt politically. ..libertarian-conservatives remain oblivious or intentionally in denial… The New Deal’s intellectual core, that the federal government should vigorously act to correct market failures, remains at the center of what Americans expect from Washington. Trump’s nomination and election proved beyond a shadow of a doubt that even a majority of Republicans agree. Less doctrinaire conservative thinkers understand this. Ramesh Ponnuru noted in his National Review essay that…capitalism “require[s] invigoration” as a result. The American Enterprise Institute’s Yuval Levin goes further, noting that “sometimes our economic policy has to be determined by more than purely economic considerations.” Other factors, such as social order and family formation, are also worthy goals to which pure economic efficiency or growth must bend at times. …this debate is fundamental to the future of conservatism and perhaps of the United States itself.

And here’s the beginning of a history-filled article by Joshua Tait in the National Interest.

When FOX television host Tucker Carlson recently attacked conservative faith in free market economics, he probably surprised a number of his viewers. For too long, Carlson charged, libertarians and social conservatives have ignored the fundamental part economic structures play in undermining communities. Families are crushed beneath market forces. Disposable goods—fueled by consumer culture—provide little salve for drug addiction and suicide. Markets are a “tool,” Carlson said, not a “religion.” “You’d have to be a fool to worship” them. Carlson put a primetime spin on an argument that has been brewing for some time on the right. Just as the 2008 economic collapse and the national prominence of Bernie Sanders have begun to shift the Democratic Party’s stance toward socialism, so the long effects of the downturn and Trump’s election have caused a rethinking of conservative commitment to free markets.

Last but not least, Jonah Goldberg examines a slice of this divide in a column for National Review.

The idea holding together the conservative movement since the 1960s was called “fusionism.” The concept…was that freedom and virtue were inextricably linked. …Today, conservative forces concerned with freedom and virtue are pulling apart. The catalyst is a sprawling coalition of self-described nationalists, Catholic integralists, protectionists, economic planners, and others who are increasingly rallying around something called “post-liberal” conservativism. By “liberal,” they…mean classical liberalism, the Enlightenment worldview held by the Founding Fathers. What the post-liberals want is hard to summarize beyond generalities. They seek a federal government that cares more about pursuing the “highest good” than protecting the “libertarian” (their word) system of individual rights and free markets. …On the other side are…conservatives who…still rally to the banner of classical liberalism and its philosophy of natural rights and equality under the law. …this intellectual mudfight really is…about what conservatism will mean after Trump is gone from the scene. …the so-called post-liberals now want Washington to dictate how we should all pursue happiness, just so long as it’s from the right. …Where the post-liberals have a point is that humans are happiest in communities, families and institutions of faith. The solution to the culture wars is to allow more freedom for these “little platoons” of civil society… What America needs is less talk of national unity — from the left or the right — and more freedom to let people live the way they want to live, not just as individuals, but as members of local communities. We don’t need to move past liberalism, we need to return to it.

For what it’s worth, I prefer Jonah’s analysis.

But I’ll also make three additional points.

First, if we care about maximizing freedom and prosperity, there’s no substitute for classical liberalism.

In my lifetime, there have been various alternatives to free markets. There was pre-Reagan Rockefeller Republicanism, post-Reagan “kinder and gentler,” George W. Bush’s so-called compassionate conservatism, reform conservatism, and now various strains of Trumpism and populism.

It may very well be true that some of these alternatives are more politically palatable (though I’m skeptical given the GOP’s unparalleled electoral success with an anti-big government message in 1980, 1994, 2010, and 2014).

But even if some alternatives are more popular, the associated policies will hurt people in the long run. That’s a point I made when arguing for supply-side tax cuts over family-friendly tax cuts.

In other words, you demonstrate compassion by giving people opportunity to prosper, not by giving them other people’s money.

Second, there’s nothing about classical liberalism or capitalism that suggests people should be selfish and atomistic.

Indeed, I pointed out, starting at the 3:36 point of this interview, that a libertarian society is what allows family, neighborhood, and community to flourish.

And, as Jonah explained, the “platoons” of “civil society” are more likely to thrive in an environment where the central government is constrained.

My third and final point is that I’m pessimistic.

The debate on the left is basically about how to make government bigger and how fast that process should occur.

Unfortunately, there isn’t a similar debate on the right, featuring different theories of how to shrink the size and scope of government.

Instead, the Reaganite-oriented classical liberals are the only ones who want America to become more like Hong Kong, while all the competing approaches basically envision government getting bigger, albeit at a slower rate than preferred by folks on the left.

In other words, we’re in a political environment where everyone on the left is debating how quickly to become Mexico and many people on the right are debating how quickly to become France.

No wonder I’ve identified an escape option if America goes down the wrong path.

The Left-Wing Debate Between Socialism and Corporatism

When writing about Bernie Sanders back in 2016, I put together a flowchart to identify different strains of statism.

In part, I wanted to show that genuine socialists, with their advocacy of government ownership, central planning, and price controls, aren’t really the same as other leftists (and I’ve made the unconventional claim that “Crazy Bernie” isn’t a true socialist – at least based on his policy positions).

I’m not the only one to notice that not all leftists have the same approach.

Writing for the Washington Post about the battle between Bernie Sanders and Elizabeth Warren for the Democratic nomination, Elizabeth Bruenig opines on the difference between two strains of statism.

What is the difference between Sanders (I-Vt.) and Sen. Elizabeth Warren (D-Mass.)? …much of it comes down to the matter of regulation vs. revolution. For Warren, the solution to our economic ills already exists in well-regulated capitalism. “I believe in markets,”… Warren believes today’s socioeconomic ills are the result of high concentrations of power and wealth that can be resolved with certain regulatory tools and interventions. …for Sanders, those solutions come up short. ,,,Instead, he aims to transfer power over several key segments of life to the people — by creating a set of universal economic rights that not only entitle citizens to particular benefits (such as medical care, education and child care) but also give those citizens a say in how those sectors are governed: in short, democratic socialism.

They both sound like “stationary bandits” to me, but there are some nuances.

Elizabeth Warren basically favors private ownership but she explicitly wants politicians and bureaucrats to have the power to dictate business decisions.

Thomas Sowell points out this economic philosophy is fascism. But I’ll be more polite and refer to it as corporatism.

By contrast, as a self-declared socialist, Bernie Sanders should be in favor of nationalizing companies.

But, as reported by the New York Times, he actually sees himself as another Franklin Roosevelt.

Senator Bernie Sanders of Vermont offered a vigorous defense of the democratic socialism that has defined his five decades in political life on Wednesday… Mr. Sanders cast himself at times in direct competition with President Trump, contrasting his own collectivist views against what he called the “corporate socialism” practiced by the president and the Republican Party. And Mr. Sanders, 77, declared that his version of socialism was a political winner, having lifted Mr. Roosevelt to victory four times… Mr. Sanders…presented his vision of democratic socialism not as a set of extreme principles but as a pathway to “economic rights,”… He argued that his ideology is embodied by longstanding popular programs, including Social Security, Medicare and Medicaid, that Republicans have labeled socialist. …Mr. Sanders called for a “21st-century economic Bill of Rights,” which he said would address health care, wages, education, affordable housing, the environment and retirement.

I’ll make two points.

First, FDR may have won four times, but he was an awful President. His policies deepened and lengthened the Great Depression.

And his proposed “economic bill of rights” would have made a bad situation even worse. He basically said everyone has a right to lots of freebies without ever stopping to think about the impact such policies would have on incentives to lead productive lives.

For all intents and purposes, we wanted to turn this cartoon into reality.

Second, I don’t actually think there’s a significant difference between Sanders and Warren. Yes, their rhetoric is different, but they both want higher taxes, more regulation, additional spending, and more intervention.

Heck, if you examine their vote ratings from the Club for Growth or the National Taxpayers Union, it’s hard to find any real difference.

At the risk of making a radical understatement, neither of them is a friend to taxpayers.

But thinking about this issue has motivated me to modify my statism flowchart. Here’s the new version.

As you can see, I created a much-needed distinction between totalitarian statism and democratic statism.

And while Warren is on the corporatist side and Sanders is on the socialist side, I also put both of them relatively close to the Venezuela-style track of “incoherent statism.” In other words, I think they’re guided by vote buying rather than a cohesive set of principles.

P.S. I wrote last week about the emerging “anti-socialist” wing of the Democratic Party. Presumably they would be the “rational leftists” on the flowchart.

An Important Lesson on Spending Restraint from the United Kingdom

I wrote yesterday about the leadership race for the Conservative Party in the United Kingdom.

The most important goal is to find a leader who will deliver a “clean Brexit,” but I also pointed out that it would be very desirable to select a Prime Minister who will support much-needed supply-side reforms to make the U.K. more attractive for jobs and investment.

Today, let’s turn our attention to the spending side of the fiscal ledger.

The accompanying table of data (from page 65 of HM Treasury’s Statistical Analyses of Public Expenditure) shows annual spending in nominal and inflation-adjusted terms, as well as the burden of spending as a share of economic output.

If you look at trends, you’ll notice a bit of progress in the 1980s under Margaret Thatcher and then some backsliding last decade when Tony Blair and Gordon Brown were in charge.

But the most surprising results can be found this decade.

Starting in 2011, there’s been some impressive spending restraint. Nominal outlays have increased by an average of 1.7 percent annually.

And since the private sector has grown at a faster pace, that means the overall burden of government spending – measured as a share of gross domestic product – has declined.

I’ve never thought of David Cameron (Prime Minister from 2010-2016) or Theresa May (Prime Minister since 2016) as fiscal conservatives, but they deserve credit for keeping spending under control.

(Too bad we can’t say the same thing about Donald Trump!)

In any event, the new leader of the Conservative Party should maintain this approach. Or, better yet, go one step further by institutionalizing some sort of Swiss-style spending cap.

There’s also a lesson for the rest of us.

What’s happened in the United Kingdom is additional confirmation that my Golden Rule is the right approach to fiscal policy.

Nations with multi-year periods of spending restraint always get good fiscal results.

We even had such an experience in the United States (back when Republicans pretended to care about spending).

Let’s close with this chart, based on IMF data, showing what’s happened this decade in the United Kingdom.

P.S. Unsurprisingly, Paul Krugman got everything backwards when he examined U.K. fiscal policy earlier this decade.

P.P.S. While they did a surprisingly good job on spending restraint, that doesn’t change the fact that Cameron was bad on tax policy and May was a failure on Brexit.

Can Tories Find a New Margaret Thatcher to Lead the U.K. to Post-Brexit Prosperity?

The Conservative Party in the United Kingdom is in the process of selecting a new leader to replace the disastrous Theresa May as Prime Minister.

The most important goal for the Tories is to find someone who will deliver a clean Brexit and thereby extricate the country from a decrepit and declining European Union.

But once Brexit does happen, adopting pro-growth policies will be very important – especially if the European Union petulantly tries to make the transition painful by rejecting a free trade agreement.

The good news is that the United Kingdom is ranked #9 for overall economic liberty according to the latest edition of Economic Freedom of the World, so it has a strong foundation for competitiveness.

The bad news is that the U.K. is only ranked #120 for fiscal policy.

Since that’s the weak spot, let’s see what can be done to move in the right direction.

Let’s look at the tax side of the fiscal equation. According to the Tax Foundation’s International Tax Competitiveness Index, the U.K. is in the bottom half (almost in the bottom third). And I’ve circled the country’s dismal ranking for individual taxes.

By the way, I don’t think this Index is a perfect measure. As I pointed out back in 2016, it needs to include a size-of-government variable.

Nonetheless, it’s a great place to start.

Now let’s consider the fiscal plans of various candidates for Tory leader.

The U.K.-based Mirror has a helpful summary.

Frontrunner Boris Johnson has promised a massive income tax cut for Britain’s richest people – by raising the 40p threshold from £50,000 to £80,000. …Meanwhile Home Secretary Sajid Javid has said he would partially reverse swingeing Tory cuts to the police and recruit 20,000 police officers. He also planned a tax cut for the richest 1% of taxpayers in the UK by removing the 45p rate of income tax, if it pays off overall. …Michael Gove has pledged to scrap VAT replacing it with a simpler sales tax. …Meanwhile Esther McVey has vowed to cut taxes – without saying which – and slash £7billion from the foreign aid budget and spend it on school and police. …Former Brexit Secretary Dominic Raab…promised to shrink the state and slash public spending by reducing the basic rate of income tax from 20p to 15p over time – including a 1p drop “straight away”. …Foreign Secretary Jeremy Hunt wants to cut corporation tax further to 12.5%. That would make the UK’s tax rate by far the lowest in the G20 and turn the country into a tax haven. …Rory Stewart has himself already said he would double spending on climate change and the environment as he warned the UK must do more in the face of an “environmental cataclysm”. Former Leader of the House Andrea Leadsom…is committed to “low taxes, incentives for enterprise and strong employment opportunities”.

A mixed bag.

Rory Stewart seems to have the most statist mindset (he’s also very weak on Brexit), but it’s not clear who has the best fiscal plan.

Let’s look at more data. The Wall Street Journal opined this morning on this topic.

The editorial starts with an indictment of the current system.

Britain’s Byzantine tax system still drags on investment, productivity and growth despite important recent improvements. The top corporate rate has fallen to 19% from 30% since 2007 and is due to hit 17% next year. But the top personal rate, paid on incomes above £150,000, has fallen only to 45% from 50%. Coupled with abrupt income cutoffs in eligibility for allowances and credits, British taxpayers in practice can experience a marginal rate as high as 60% for each additional pound of income between £100,000 and £124,000, and 65% for families with three children earning between £50,000 and £60,000, according to the Institute for Fiscal Studies. Add taxes on pension contributions at higher incomes and some workers pay marginal rates above 100% on parts of their income—paying more than a pound in tax for each additional pound they earn. …Social-insurance and property taxes add more burdens.

And this doesn’t even include the fact that the U.K. has above-average death taxes and higher-than average levels of double taxation.

How do Tory candidates propose to deal with these problems?

The best Conservative leadership proposals so far come from Foreign Secretary Jeremy Hunt and Home Secretary Sajid Javid.Mr. Hunt pledges to reduce the corporate rate to 12.5% to match Ireland’s low rate… Mr. Javid would cut the top individual rate to 40%. …Frontrunner Boris Johnson promises to increase the threshold at which the 40% rate kicks in, to £80,000 from £50,000. The 4.2 million people estimated to see their taxes reduced won’t complain. But tweaking brackets does nothing to fix the current tax code’s bad rate incentives for top earners—the entrepreneurs and investors post-Brexit Britain needs to attract. …Brexit hardliner Dominic Raab would cut the lower personal rate for earners between £12,500 and £50,000 to 15% from 20%. Any rate cut is welcome, but this would help many households that already receive more in benefits than they pay in tax. Environment Secretary Michael Gove would replace the 20% value-added tax with a lower-rate U.S.-style sales tax, which would be a boon to low-income households. But neither would fix broken incentives to work and invest as incomes rise.

As you can see, it’s a mix of mediocre-to-good ideas.

Much like when Republicans generated a bunch of plans when competing for the nomination in 2016.

Of course, let’s also keep in mind that Jeremy Corbyn of the Labour Party also has a tax plan, which is a poisonous collection of class-warfare provisions that would make the U.K. less attractive for jobs and investment.

Which means it is especially important, as the WSJ concludes, to have a compelling case for growth instead of redistribution.

…the only way Britain can prosper post-Brexit is by becoming a magnet for investment and human talent. If voters want the party of income redistribution, they’ll choose Labour. Tories have to be the credible party of growth, with a leader willing and able to make the reform case.

In other words, is there another Margaret Thatcher somewhere in the mix?

P.S. If you want to enjoy some Brexit-themed humor, click here and here.