Archive for March 27th, 2013

I’ve shared a nightmarish flowchart to show the Byzantine complexity of America’s healthcare system under Obamacare. Sort of makes you wonder whether the healthcare system will now be more complicated than the internal revenue code.

But some people may be skeptical because this flowchart was prepared by Republicans from the Joint Economic Committee.

Well, here’s a flowchart from the pro-Obamacare Washington Post, and it shows how just one small piece of the law will require complicated gymnastics.

It’s hard to feel anything but misery about this situation. The Obamacare taxes largely took effect earlier this year and a big chunk of the Obamacare spending starts next year.

So let’s with a great cartoon from Henry Payne showing the Secretary of Health and Human Service force-feeding Obamacare to states.

Obamacare Cartoon 1

I would have replaced “states” with “patients,” but you get the point. We’re being saddled with a one-size-fits-all monstrosity that will cripple what little is left of a functioning marketplace for health care and health insurance.

Next we have a Lisa Benson cartoon, showing the very unhealthy meal we’re expected to digest. Where’s Mayor Bloomberg when we actually need him?!?

Obamacare Cartoon 2

Both Benson and Payne were part of the political cartoonist contest, so you can see their best work by clicking here.

Last but not least, here’s Steven Breen’s take on the third birthday of Obamacare. As you can see, there’s not a lot to celebrate.

Obamacare Cartoon 3

Indeed, this is a good opportunity to share my video explaining why Obamacare will be a budget buster.

P.S. Lawmakers did repeal one of Obamacare’s tax provisions, a 1099 reporting rule that would have buried everyone under a blizzard of paperwork (here’s the cartoon version of that issue). And the Democratic-controlled Senate recently voted 79-20 to repeal the medical devices tax. So there are small reasons for optimism. And I think the bulk of Obamacare spending could be repealed as part of a Medicaid block grant if and when Washington is controlled by lawmakers who are serious about addressing the entitlement crisis.

P.P.S. If you want to enjoy some more Obamacare humor, click here, here, here, here, here, here, here, and here.

P.P.P.S. If you want to know how to restore a functioning market-based healthcare system, this video from Reason TV is must watching.

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If I live to be 100 years old, I suspect I’ll still be futilely trying to educate politicians that there’s not a simplistic linear relationship between tax rates and tax revenue.

You can’t double tax rates, for instance, and expect to double tax revenue. Simply stated, there’s another variable – called taxable income – that needs to be added to the equation. This simple insight is what gives us the Laffer Curve.

This is common sense in the business community. No restaurant owner would ever be foolish enough to think that revenues will double if all prices increase by 100 percent. People in the real world know that this would mean lower sales.

At best, revenues will rise by much less than 100 percent in that scenario. And if sales drop by enough, revenues may actually fall.

Perhaps because so few of them have business experience, it seems that politicians have a hard time grasping this simple concept.

The latest examples come from Europe, where the never-ending greed for more revenue has resulted in the imposition of financial transaction taxes.

So how’s that working out? Are politicians collecting the revenue they expected?

Hardly. Here are some of the details from a City A.M. column.

…taxes on financial transactions across Europe have devastated market activity and failed to raise as much as politicians hoped, according to new figures out yesterday.

The article cites three powerful examples, starting with Hungary.

Hungary implemented a 0.1 per cent tax at the start of the year. But it raised less than half the revenue the state had hoped for, bringing in 13bn Hungarian Forints (£36m) in January.

Wow, less than 50 percent of the revenue that politicians were expecting. But the politicians probably don’t care about the collateral damage they’re imposing on the economy because they’ll get to buy votes with another 13 billion Forints (about $55 million).

Popeye Laffer CurveNow let’s see how the French are doing.

France forged ahead on its own, introducing a 0.2 per cent tax on sales of shares of major firms. But that only raised €200m (£169.4m) from August to November, well below to €530m expected.

Gee, what a shame, the politicians in Paris are only getting about one-third as much money as they were expecting. That’s even worse than Hungary.

But they’ll surely squander that bit of cash as fast as possible.

Our last example comes from Italy. There are no revenue numbers yet, but the decline in financial activity suggests this tax also will be a flop.

And Italy launched its FTT this month. Figures from TMF Group suggest it has cut trading volumes by 38 per cent already

Though politicians may decide it’s a success since they may get more than 50 percent of what they were originally estimating.

That kind of forecasting error would get somebody fired at any private business, but being a politician means never having to say you’re sorry.

And it certainly never means learning from mistakes. The evidence on the Laffer Curve is ubiquitous, with powerful examples in Ireland, the United Kingdom, Italy, France, Spain, as well as Bulgaria and Romania. Or states such as IllinoisOregonFlorida, Maryland, Washington, DC, and New York.

P.S. Even President Obama has sort of acknowledged the supply-side principles that are the basis of the Laffer Curve.

P.P.S. Remember that the goal of good tax policy is NOT to maximize revenue.

P.P.P.S. I warned the European Union’s Taxation Commissioner about the dangers of a tax on financial transactions last year. Needless to say, my sage counsel appears to have been ignored.

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