California Scheming

This has not been a good period of time for California’s moocher class. A public uproar recently forced the state to prevent welfare recipients from using government-provided ATM cards in casinos. Now there’s a similar storm brewing about handouts being obtained using ATMs in strip clubs. Here’s a report from the LA Times. 

California welfare recipients have been able to get taxpayer cash — meant to feed and clothe their children — from ATMs at strip clubs across the state, including some well-known gentlemen’s cabarets in Los Angeles. More than $12,000 from the Temporary Assistance for Needy Families program was dispensed between the start of 2007 and the end of 2009 at clubs, including Sam’s Hofbrau, Star Strip and Seventh Veil, according to officials at the state Department of Social Services. …The move came a day after The Times asked the administration how much welfare cash had been withdrawn at 17 adult clubs in recent years, and less than a week after The Times reported that more than half the casinos and state-licensed poker rooms in California appear on the state website showing welfare recipients where they can access cash benefits. After that report, Schwarzenegger ordered the casinos struck from the state’s ATM network and directed the Department of Social Services to produce a plan to reduce “waste, fraud and abuse” in the welfare program.

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Those Crazy French

To preserve domestic tranquility, men should always shout “NO” when their wives ask “Does this make me look fat?” Well, Frenchmen now also have a legal reason to give that answer. In a nation where everything seemingly requires a role for government, there is a new law with penalties of “…up to three years in prison and a €75,000 fine” for men who insult their spouses. The law does apply both ways, so men who are called “lazy fat slobs” for watching TV instead of taking out the garbage also can run to the government for psychological protection. Allow me to stipulate that there is such a thing as “psychological violence” and there doubtlessly are cases of genuine non-physical abuse, but those presumably are ground for divorce, not a matter for law enforcement. In any event, here’s a blurb from the UK-based Telegraph:

Couples who insult each other over their physical appearance or make false accusations about infidelity face jail, under a new French law making “psychological violence” a criminal offence. …French magistrates have slammed the new legislation as “inapplicable”, as they argue the definition of what constitutes an insult is too vague and verbal abuse too hard to prove. …men now also have the right to report their wives verbal abuse in a domestic row. It will apply to both married couples and cohabiting partners. …Miss Morano said witnesses could be called on to testify in such cases and doctors’ certificates charting a patient’s descent into nervous depression as a result of such insults could be used as evidence. …The courts also stood to be “clogged” by couples using the law to get the upper hand in acrimonious divorces, she added. Women who complain that their husband insulted them can now have a judge ban him from approaching his wife or their children on a simple declaration, she warned.

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Thanks to Tax Competition, Corporate Tax Rates Continue to Fall in Europe

Many people assume that Europe is the land of high-tax welfare states and America is an outpost of laissez-faire capitalism. We should be so lucky. The burden of government in America is still lower than it is in the average European nation, but the United States is a lot closer to France than it is to Hong Kong – and the trend is not comforting.

We recently endured the embarrassing spectacle of President Obama arguing with Europeans that they should increase the burden of government spending. Now we have a new report from the European Commission indicating that the average corporate tax rate in member nations of the European Union has plummeted to just 23.5 percent while the corporate tax rate in the U.S. has stagnated at 35 percent. In the past dozen years alone, as the chart illustrates, the average corporate tax rate in the European Union has dropped by nearly 12 percentage points. To make matters worse, the corporate tax rate in America actually is closer to 40 percent if state tax burdens are added to the mix.

This is not to say that European politicians are reading Hayek and Friedman (or watching Dan Mitchell videos on corporate taxation). Almost all of the positive reforms are because of tax competition. Thanks to globalization, it is increasingly easy for labor and (especially) capital to cross national borders to escape bad policy. As such, nations now have to compete for jobs and investment, and this liberalizing process is particularly powerful among nations that are neighbors.

Not surprisingly, European politicians despise tax competition and instead would prefer to impose a one-size-fits-all policy of tax harmonization. These efforts to create a tax cartel have a long history, beginning even before Reagan and Thatcher lowered tax rates and triggered the modern era of tax competition. The European Commission originally wanted to require a minimum corporate tax rate of 45 percent. And as recently as 1992, there was an effort to require a minimum corporate tax rate of 30 percent.

Fortunately, the politicians did not succeed in any of these efforts. As such, tax competition remains alive and corporate tax rates continue to fall. What remains to be seen, however, is whether America will join the race to lower corporate tax rates – and more jobs and investment.

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