Blue Moon Rising: Dan Mitchell Endorses a Tax Hike

I wrote earlier this year that I could accept a tax hike if there was a deal that actually resulted in a permanent reduction in the burden of government spending.

In reality, however, we will never get an acceptable deal. Instead, the politicians want us to accept deeply flawed packages like the Simpson-Bowles tax-hike.

But maybe I have to moderate my views. When a group of people loudly say we need higher taxes, then perhaps we should agree. But since they’re the ones saying taxes should go up, we should stick them with the tax hike.

Glenn Reynolds, the Instapundit, has been suggesting that it’s time to repeal the Hollywood tax cuts. After all, that crowd is always pontificating for statism. So let them put their money where their mouths are.

I’m thinking of a different group. Based on their penchant for supporting tax hikes, maybe it’s time to raise taxes on corporate executives. Here are some relevant blurbs from a Wall Street Journal story.

A coalition of anti-deficit groups has tapped businesses and foundations and raised more than $29 million… They are planning to run “fix the debt” ads after the election. …And they are building a roster of big-company chief executives, thus far numbering about 70. These executives are alarmed by the degree of dysfunction in Washington and have pledged to speak out about the urgency of addressing deficits… The “fix the debt” campaign, as it is called, is coordinated by deficit worrywarts in Washington… The effect that CEOs have on Congress depends on who they are and what they actually do. Former Sen. Sam Nunn (D., Ga.), who is leading a group of retired congressmen to build support for a deficit deal, says Democrats need CEOs to organize grass-roots support for a deficit compromise among their workers. And Republicans need business cover for agreeing to raise taxes in exchange for restraints on the growth of health-care spending. CEOs enlisting in the fix-the-debt campaign see no alternative to both cutting benefit spending and raising taxes, despite campaign rhetoric to the contrary. “It’s going to entail sacrifice by every American, every company, every entity,” says Mr. Oberhelman. “I, for one, believe that revenue has to increase. I think every American would pay more if they thought spending was going to be cut and the budget brought to balance.”

At the risk of disagreeing with Mr. Oberhelman, it goes without saying that higher taxes will lead to more spending rather than less.

Corporate executives probably understand tax hikes don’t work, but they want to “play ball” with the politicians – probably because many of them are crony capitalists.

But regardless of their motives, the obvious response is to ask them to cough up some of their cash.

A hike in the corporate income tax wouldn’t be the right approach, though, since that would penalize shareholders, workers, and consumers.

Increasing personal income tax rates also would be the wrong approach since that would punish every successful person, not just wayward corporate executives.

I’m guessing that the best approach is to impose a special excise tax on the fringe benefits and salaries of CEOs at publicly traded companies.

True, that will also punish corporate executives who aren’t guilty of sucking up to the political class, but that will have a positive impact in that the good CEOs will pressure the statist CEOs to stop being suck-up a$$holes.

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Chile’s Amazing School Choice Revolution

I wrote back in July about the remarkable transformation of Chile into a prosperous market economy.

In that post, I noted that Chile was a pioneer in the shift from unsustainable tax-and-transfer entitlement schemes to savings-based personal retirement accounts. And with good reason. That system, which has been in place for more than three decades, is hugely successful.

We should do the same thing in America, and we should do it yesterday, if not sooner.

But Chile’s success is driven by more than just pension reform. And I want to mention something remarkable about what’s happening with school choice in that country.

Jose Pinera – Freedom Fighter

First, some background. I’m currently at a Cato Institute donor retreat, where I had the chance to talk to Jose Pinera, who is now the Co-chairman of Cato’s Project on Social Security Choice, but who also was the person who implemented the pension reforms in his home country of Chile.

I knew Chile had a school choice program, and I wrote a brief post about those reforms back in 2010.

But I was stunned when Jose told me yesterday that about 60 percent of Chilean kids – of all ages – now attend private schools.

That’s far better than Sweden, which also has nationwide school choice, but has only about 20 percent of high school-age kids in private schools.

Jose thinks that it is just a matter of time before more than 80 percent of Chilean kids are in private schools. Why? Because people like freedom and choice.

He often brags – and rightly so – that more than 95 percent of workers chose personal retirement accounts when given the option of staying with the old government-run pension system. So it shouldn’t be a surprise that parents also choose wisely when deciding how to get the best possible education option for their kids.

Now, if we can just figure out how to expand school choice in America…

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