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Archive for the ‘Class warfare’ Category

Economists generally like competition because it promotes economic efficiency, more prosperity, lower prices, and higher wages.

But some types of competition can be misguided.

For instance, Americans used to dominate membership in the Bureaucrat Hall of Fame.

Now, however, government employees in other nations have risen to the challenge and shown they can be just as spectacularly unproductive and wasteful as their American counterparts.

Maybe even more so.

Consider the doctor for Italy’s government-run healthcare system who only worked 15 days over a nine-year period.

Even more impressive, how about the bureaucrat in India who managed to go 24 years without showing up for work.

Now we have another foreign honoree.

Here are some blurbs from a BBC report about one French bureaucrat who went above and beyond the call of duty.

A top French civil servant has been forced to resign after spending more than €40,000 (£29,000; $44,000) on taxis in 10 months. Agnes Saal stepped down as head of France’s TV and radio archives at the demand of the culture minister. She had previously argued she needed to travel by taxi, despite having a chauffeur as well as a private car. But she admitted her son was responsible for €6,700 of the bill… She said giving him her reservation number was a “silly mistake”.

Yes, there was a “silly mistake,” but that mistake took place when France decided to create a Ministry of Culture.

Then another “silly mistake” was creating a sub-bureaucracy to be in charge of archives.

And then an additional “silly mistake” was to give the head bureaucrat of that useless division a credit card.

And perhaps the biggest “silly mistake” was to assign a chauffeur to a person holding a job that shouldn’t even exist.

All that being said, Ms. Saal deserves to be in the Bureaucrat Hall of Fame because it takes a special sense of entitlement to have a chauffeur yet still run up a $44,000 taxi bill in just 10 months.

That’s nearly $145 per day she foisted on overburdened French taxpayers, which doesn’t even count the cost of the car and chauffeur!

And I suppose we should give an “honorable mention” award to Ms. Saal’s predecessor. In his new position, he has also demonstrated an unwavering commitment to waste, fraud, and abuse.

She replaced Mathieu Gallet, who is now head of French public radio and is himself at the centre of a scandal after reportedly spending €100,000 on renovating his office and hiring a €90,000 PR consultant, just as he was preparing a cost-cutting plan.

Oh, and will anybody be surprised to learn that the over-paid bureaucrats at France’s taxpayer-subsidized radio network just finished a record-long strike?

Employees at Radio France ended their longest ever strike earlier this month, after walking out for 28 days.

Sigh. I can’t wait for the day when France will be forced to reconsider whether state-run and state-financed media networks are a proper function of government (like has already happened in Greece).

P.S. On another topic, I wrote a few days ago about the types of policies that lead to more “SuperEntrepreneurs” in a nation.

Well, the World Economic Forum has published related research about the impact of taxes on “superstar inventors.”

They start by looking at some of the research about taxation and labor mobility.

There is currently heated public debate about whether higher top tax rates will cause an exodus of valuable, high income and highly skilled economic agents. …Kleven et al. (2014) study a Danish tax reform that temporarily reduced top tax rates on high income foreigners and they find very strong effects on the inflow of migrants. In another recent paper Kleven, Landais, and Saez (2013) show that highly paid football players react to top tax rates when choosing in which country to work. …A group of highly valuable economic agents that policymakers perhaps might worry about is inventors, the creators of innovations and potential drivers of technological progress. Inventors may well be important factors for a country’s development and competitiveness – highly skilled migration has been shown to be both beneficial for a receiving country’s economy and to disproportionately contribute to innovation (Kerr 2013).

Then they focus specifically on highly productive inventors and how they migrate to places where the tax burden is less onerous.

…the average top 1% inventor has hundreds of times more citations. Among top inventors, some are highly successful migrants. In general, higher quality inventors are more mobile than lower quality inventors. …In recent research (Akcigit, Baslandze, and Stantcheva 2015) we study the international migration responses of superstar inventors to top income tax rates for the period 1977-2003 using data from the European and US Patent offices, as well as from the Patent Cooperation Treaty (Miguelez and Fink 2013). …From outside survey evidence, we know that superstar inventors are highly likely to be in the top tax bracket and, hence, directly subject to top tax rates. …There has is a strong and significant correlation between top tax rates and those inventors who remain in their home countries. The relation is strongest for superstar inventors. Figures 2 and 3 show that superstar inventors are highly sensitive to top tax rates. The elasticities imply that for a ten percentage point reduction of top tax rates from 50% to 40%, a country would be able to retain on average 3.3% more of its top 1% superstar inventors. …our results suggest that, given a ten percentage point decrease in top tax rates, the average country would be able to…attract 38% more foreign superstar inventors.

Here’s the bottom line.

The loss of highly skilled agents such as inventors might entail significant economic costs, not just in terms of tax revenues lost but also in terms of reduced positive spillovers from inventors and, ultimately, less innovation in a country.

In other words, class-warfare tax policy ultimately is very destructive for the jurisdictions that practice the politics of hate and envy.

P.P.S. I wrote a few years ago about legal tank ownership in America.

But there’s a catch. You theoretically have to disarm the gun, which would take away part of the fun.

Well, maybe you can make up for that loss of firepower by owning a flamethrower, which apparently is legal in 48 states.

Not sure I would want one of these, but I bet the answers to my IQ test for criminals and liberals would be even more interesting if homeowners added some their arsenals.

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I’m a huge fan of a simple and fair flat tax.

Simply stated, if we’re going to have some sort of broad-based tax, it makes sense to collect revenue in the least-damaging fashion possible.

And a flat tax achieves that goal by adhering to the principles of good tax policy.

  1. A low tax rate – This is the best-known feature of the flat tax. A low tax rate is designed to minimize the penalty on work, entrepreneurship, and other forms of productive behavior.
  2. No double taxation of saving and investment – The flat tax gets rid of the tax bias against income that is saved and invested. The capital gains tax, double tax on dividends, and death tax are all abolished. Shifting to a system that taxes economic activity only one time will boost capital formation, thus facilitating an increase in productivity and wages.
  3. No distorting loopholes – With the exception of a family-based allowance designed to protect lower-income people, the flat tax eliminates all deductions, exemptions, shelters, preference, exclusions, and credits. By creating a neutral tax system, this ensures that decisions are made on the basis of economic fundamentals, not tax distortions.

All three features are equally important, sort of akin to the legs of a stool. And if we succeeded with fundamental reform, it would mean an end to the disgraceful internal revenue code.

But just because an idea is good policy doesn’t necessarily mean that it’s also good politics.

So let’s delve into the debate over whether the flat tax is a winning political issue as well as a pro-growth reform.

Writing for the Weekly Standard, Steve Moore of the Heritage Foundation thinks the flat tax has political legs.

…the flat tax is again the rage in a presidential primary. A number of GOP candidates, including Rand Paul, Rick Perry, Ted Cruz, and Scott Walker, are looking to go flat with a radically simplified postcard tax return. …Ripping up the 70,000-page tax code has visceral appeal to voters.The way to sell the flat tax is as the ultimate Washington versus America issue. The only people who benefit from a complicated, barnacle-encrusted 70,000-page tax code are tax attorneys, accountants, lobbyists, IRS agents, and politicians who use the tax code as a way to buy and sell favors. The belly of the beast of corruption in American politics is the IRS tax code. The left keeps saying it wants to end the corrupting influence of big money in politics. Fine. By far the best way to do that is enact a flat tax and D.C. becomes the Sahara Desert.

I like what Steve is saying.

And I specifically agree that the best way of selling tax reform is to point out that it’s a Washington-versus-America issue.

When I first started giving speeches about the flat tax in the 1990s, I focused on the pro-growth and pro-competitive impact of lower marginal tax rates and reductions in double taxation.

People largely agreed with those points, but they didn’t get excited.

I soon learned that they instinctively liked the flat tax because they saw it as a way of cleaning out the stables of a corrupt system. In other words, they wanted tax reform mostly for reasons of fairness.

But with fairness properly defined, meaning all taxpayers playing by the same rules. Not the left’s definition, which is based on punishing success with high marginal tax rates.

Steve concurs.

So can the flat tax catch the populist tide of voter rage and angst over an economy that has squeezed the middle class for nearly a decade? Who knows? What seems certain is Democrats will run a class warfare campaign of raising tax rates on the rich. But envy isn’t an economic revival policy. Republicans can win this debate by going on the offensive and reminding voters that the best way to grow the economy, create jobs, and increase tax payments by the rich is to flatten the code. Flat is the new fair.

So does this mean the flat tax is a slam-dunk issue?

Ramesh Ponnuru of National Review is unconvinced. Here’s some of what he wrote about the candidates pushing fundamental reform.

They may have some creative ideas to get around problems with previous flat-tax proposals. But I have my doubts about whether a flat tax could be…as politically attractive as Moore suggests.

Ramesh is particularly skeptical whether the flat tax can be more appealing than the Lee-Rubio tax plan.

I have my doubts about whether a flat tax could be free from the objections Moore raises against Lee-Rubio… A 15 percent flat tax could also expose many more millions of people to tax increases than Lee-Rubio does; and it seems highly unlikely to reduce tax bills for as many people as Lee-Rubio does.

At the risk of sounding like a politician, I agree with both Steve and Ramesh.

Taking them in reverse order, Ramesh is correct that a flat tax faces an uphill battle. He specifically warns that a flat tax might result in higher fiscal burdens for millions of middle-class taxpayers.

Ultimately, that would depend on the tax rate, the size of the family-based allowance, and whether tax reform also was a tax cut. And those choices could be easier to make if Republicans actually demonstrated some political acumen and modernized the revenue-estimating system at the Joint Committee on Taxation.

And Ramesh also points out, quite appropriately, that the flat tax will create strong opposition from interest groups that benefit from provisions in the current system.

But Steve is correct that people want bold reform, which is a proxy for ending tax-code corruption. I’ve already praised the Lee-Rubio plan, which Ramesh likes, but I have a hard time imagining that such a plan will seize the public imagination like a flat tax.

Moreover, the Lee-Rubio plan is a huge tax cut. Since I think good reform is more likely if a plan lowers the overall tax burden, I consider that to be a feature rather than a bug.

But it does mean you have to fight a two-front war, battling both those who benefit from the current system as well as those who don’t want to reduce the flow of revenue to Washington.

These are big obstacles, whether we’re talking about an incremental plan like Lee-Rubio or big-picture reform like a flat tax.

Which is why, regardless of what happens with elections, I’m not overly optimistic about making progress. Unless, of course, we figure out some way of dealing the growing burden of federal spending. Which necessarily requires genuine entitlement reform.

P.S. Don’t forget that Barack Obama reportedly will be introducing a very simple tax reform plan.

P.P.S. Since we’re talking about the impact of policies on the election, my colleague Michael Cannon points to some very low-hanging fruit.

For more than five years, the executive branch has been issuing illegal subsidies that personally benefit the most powerful interest group in the nation’s capital: members of Congress and their staffs. …executive-branch agencies have broken the law, over and over, to protect ObamaCare. …The longest-running and perhaps most significant way the administration has broken the law to protect ObamaCare is by issuing illegal subsidies to members of Congress.

What’s Michael talking about?

When congressional Democrats passed the Patient Protection and Affordable Care Act (ACA), they were so desperate to pass a health care law that the ACA did not receive the scrutiny most bills do. Many members of Congress and their staffs were therefore surprised to learn that, as of the moment the president signed the ACA, that very law threw them out of their health plans. The ACA prohibits members of Congress and their staffs from receiving health coverage through the Federal Employees’ Health Benefits Program. They remained free to purchase health insurance on their own, but they would have to do so without the $10,000 or so the federal government “contributed” to their FEHBP premiums.

But who cares what the law says.

Rather than risk Congress reopening the ACA to restore their lost health coverage — because who knows what other changes Congress might make in the process — the administration simply pretended that that part of the law didn’t exist. The Office of Personnel Management announced that members of Congress and their staffs could remain in the FEHBP until the ACA’s Exchanges launched in 2014.  …That still didn’t solve the president’s problems, however. The ACA says that as of 2014, the only coverage the federal government can offer members of Congress in connection with their employment is coverage created under the Act. In effect, that means Exchange coverage. But the law still cut off that $10,000 “employer contribution” to their health benefits. According to Politico, “OPM initially ruled that lawmakers and staffers couldn’t receive the subsidies once they went into the exchanges.” After the president intervened, OPM just ignored that part of the law and started issuing (illegal) subsidies on the order of $10,000 to hundreds of individual members of Congress and thousands of individual congressional staffers.

So what does all this have to do with the 2016 elections?

Well, as Michael points out, the GOP could make a lot of hay by going after the Obama Administration’s illegal favor for Capitol Hill.

Ending Congress’ special ObamaCare exemption — i.e., the bribes individual members of Congress and their staffs are receiving not to reopen ObamaCare — polls off the charts. More than 90 percent of voters believe this exemption is unfair.

The goal, of course, isn’t to deny the folks on Capitol Hill from getting pre-Obamacare subsidies for their health plans.

Instead, Michael is saying that these subsidies have to be restored in the proper fashion, which means amending the law, which will also open the door to other changes.

Which might mean actually addressing the real problems in our healthcare system.

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I don’t understand the left’s myopic fixation on income inequality. If they genuinely care about the less fortunate, they should be focused on policies that produce higher incomes.

But instead, they agitate for class warfare and redistribution, which leads me to believe that many of them hate the rich more than they love the poor.

And while it’s surely true that governments can harm (or worse!) the financial status of folks like Bill Gates, that doesn’t help the poor.

Indeed, the poor could be worse off since statist policies are linked to weaker economic performance.

So relative inequality may decline, but only because the rich suffer even more than the poor (as Margaret Thatcher brilliantly explained).

That’s a bad outcome by any reasonable interpretation.

But let’s set aside the economic issues and contemplate the political potency of so-called income inequality.

Writing for the Wall Street Journal, William Galston of the Brookings Institution (and a former adviser to Bill Clinton) opines that income inequality isn’t a powerful issue in America.

Hillary Clinton was reportedly struck that no one had asked her about inequality. She shouldn’t have been surprised… Recent opinion surveys show inequality well down the list of public concerns. In a February CBS News poll, for example, only 4% of Americans named income disparities as the most important problem facing the country. In March only 2% told Gallup that the income gap was at the top of their list.

Galston cites a couple of studies of public opinion trends.

In…Public Opinion Quarterly in 2013, Matthew Luttig also found that rising inequality has failed to boost support for redistribution and may actually have the opposite effect. What is going on? The authors of the Brookings paper found that the principal beneficiaries of government programs—especially the elderly—have become increasingly resistant in recent decades to additional redistributive policies. During that period, just about every new cohort entering the ranks of the elderly has been less supportive of redistribution than its predecessor.

He doesn’t think voters necessarily are becoming libertarian or conservative.

But he does think leftists are deluding themselves if they think more propaganda will sway voters in favor of redistribution.

Many Democratic activists believe that the weakness of public support for redistribution rests on ignorance: Give them more information about what is really happening, and their policy preferences will be transformed. But a recent paper for the Washington Center for Equitable Growth reported that while survey respondents “who view information about inequality are more likely to believe that inequality is a serious problem, they show no more appetite for many interventions to reduce inequality.” The best explanation for this apparent anomaly: rising mistrust of government, especially the federal government. Many people who think inequality is an important problem don’t believe that Washington’s political institutions can be trusted to fix it.

Gee, I wonder why people think the federal government is incompetent in helping the poor?

Could it be that voters are slowly but surely realizing that P.J. O’Rourke was right?

In any event, Galston concludes with some very sound recommendations.

What matters most is growth that includes everyone. To get that kind of growth, we will have to act on a broad front to expand opportunity for those who now lack it—and ensure that workers earn enough to provide opportunity for their children. These measures will reduce inequality, all the more so if they are financed by linking real wages to productivity gains and terminating tax preferences that don’t promote growth while benefiting mainly the wealthiest Americans.

To be sure, Galston’s embrace of growth instead of redistribution doesn’t mean he has good ideas on what causes growth.

But at least he understands that the goal should be to make the pie bigger.

And that’s the point I made in this CNN interview, which took place via Skype since I was at a conference in Brussels.

Though you may notice that I mangle my metaphor at the end of the interview, switching from pie to cake.

But setting aside that one glitch, I hopefully got across my main point that the focus should be growth rather than inequality.

P.S. It’s worth noting that states with the most support for class warfare and redistribution also are the states with the most inequality. Maybe they should experiment with bad policy inside their own borders before trying to foist such policies on the entire nation.

P.P.S. I wrote last year about six remarkable examples of leftist hypocrisy. Make that seven.

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Who benefits most from the death tax?

There are two obvious answers.

First, politicians presumably benefit since they get more money to spend. Yes, it’s true that the tax discourages capital formation and may actually lose revenue in the long run, but politicians aren’t exactly famous for thinking past the next election cycle.

Second, there are some statists who are motivated by envy and resentment. These are the folks who make class-warfare arguments about the death tax being necessary to prevent the “rich” from accumulating more wealth, even though evidence shows large family fortunes dissipate over time.

Both of those answers are correct, but they don’t fully explain why this pernicious levy still exists.

Tim Carney of the Washington Examiner has a must-read piece for the American Enterprise Institute. He reveals the groups that actually are spending time and money to defend this odious version of double taxation.

…about two-thirds of Americans tell pollsters that they oppose the death tax. …But some segments of the population feel differently — most notably, the estate-planning industry. A survey by an industry magazine in 2011 found that 63 percent of estate-planning attorneys opposed repeal of the estate tax. That’s fitting. The death tax forces people to engage in complex and expensive estate planning. Lobbying disclosure forms show that the insurance industry is lobbying on the issue these days. The Association for Advanced Life Underwriting, which represents companies that sell estate-planning products, lobbied on the issue last year, as it has for years. Last decade, AALU funded a group called the Coalition for America’s Priorities, which attacked estate tax repeal as a tax break for Paris Hilton. …When the estate tax was last before Congress, the life insurance industry revved up the troops, spending $10 million a month on lobbying in the first half of 2010. In that stretch, only three industries spent more, according to data from the Center for Responsive Politics.

I concur with Tim.

Indeed, I remember giving a speech back in the 1990s to a group of estate-planning professionals. In my youthful naiveté, I expected that these folks would very much appreciate my arguments against the death tax.

Instead, the reception was somewhat frosty.

Though not nearly as hostile, I must confess, as the treatment I got when speaking about the flat tax to a group of tax lobbyists for big corporations.

In both cases, I was surprised because I mistakenly assumed that my audiences actually cared about the best interests of their clients or employers.

In reality, they cared about what made them rich instead (economists and other social scientists call this the principal-agent problem).

But I’m digressing. Let’s look at more of Tim’s article. He cites the Clintons to make a key point about rich people being able to avoid the tax so long as they cough up enough money to the estate-planning industry.

Those same techniques, however, often are not available to farmers, small business owners, and others who are victimized by the levy.

The Clintons may be stupid-rich, but they aren’t stupid — they’re using estate-planning techniques to avoid the estate tax. Bloomberg News reported in 2014 that the Clinton family home has been divided, for tax purposes, into two shares, and those shares have been placed in a special trust that will shield Chelsea from having to pay the estate tax on the full value of the home when she inherits it. Also, the Clintons have created a life insurance trust — a common tool wealthy people use to provide liquidity for heirs to pay the estate tax. The Clintons’ games, and the estate-planning industry’s interest in the tax, highlights how the tax fails at its stated aims of preventing the inheritance of wealth and privilege. Instead, the estate tax forces the wealthy to play games in order to pass on their wealth. These games don’t add anything to the economy, they just enrich the estate-planning industry. Those whose wealth is tied up in a small or medium-sized business, on the other hand, aren’t always capable of playing the estate planning games. They’re the victims.

The bottom line is that the tax should be abolished for reasons of growth.

But it also should be repealed because it’s unfair to newly successful entrepreneurs, investors, and business owners, all of whom generally lack access to the clever tax-planning tools of those with established wealth.

And it should be repealed simply because it would be morally satisfying to reduce the income of those who benefit from – and lobby for – bad government policy.

P.S. The U.S. death tax is more punitive than the ones imposed by even France and Venezuela.

P.P.S. It’s particularly hypocritical for the Clintons to support the death tax on others while taking steps to make sure it doesn’t apply to them.

P.P.P.S. In a truly repugnant development, there are efforts in the U.K. to apply the death tax while people are still alive.

P.P.P.P.S. On a more positive note, a gay “adoption” in Pennsylvania helped one couple reduce exposure to that state’s death tax.

P.P.P.P.P.S. If you live in New Jersey, by contrast, the best choice is to move before you die.

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I’ve sometimes asserted, only half-jokingly, that statists believe all of our income belongs to the government and that we should be grateful if we’re allowed to keep any slice of what we earn.

This is, at least in part, the mentality behind the “tax expenditure” concept, which creates a false equivalence between spending programs and provisions of the tax code that allow people to keep greater amounts of their own income.

Here’s how I characterized this moral blindness when criticizing a Washington Post columnist back in 2013.

Hiatt presumably thinks that the government’s decision not to impose double taxation is somehow akin to a giveaway. But that only makes sense if you assume that government has a preemptive claim to all private income. …Hiatt wants us the think that there’s no moral, ethical, or economic difference between giving person A $5,000 of other people’s money and person B being allowed to keep $5,000 of his or her own money.

Today, I have a particularly absurd real-world illustration of this statist mindset.

Two writers for the Wonkblog section of the Washington Post recently wrote an article entitled, “The rich get government handouts just like the poor. Here are 10 of them.”

Did their list of 10 “handouts” include the Export-Import Bank, which lines the pockets of big corporations? Nope.

Did it include agriculture subsidies, which provide unearned goodies for big agribusiness firms? Nope.

Did it the TARP bailout, which shielded Wall Street fatcats from capitalism? Nope.

And how about subsidized terrorism insurance, ethanol goodies, and green energy subsidies? Nope, nope, and nope.

Or the handouts in Obamacare for major pharmaceutical companies and big insurance companies? Nope and nope.

Instead, every single “handout” that the rich “get” from government is nothing more than a provision of the tax code that lets people keep more of their own money.

I’m not joking. Here’s the list, followed by my two cents.

1. The mortgage interest deduction for big houses and second homes.

As I’ve previously explained, I don’t think the tax code should be tilted in favor of residential real estate. But a handout is when the government takes money from Person A and gives it to Person B.

2. The yacht tax deduction.

There actually isn’t a yacht tax deduction, but if you can live in something, it can be eligible for a mortgage interest deduction. I don’t think that’s wise tax policy, but it’s not an example of government taking from Person A and giving to Person B.

3. Rental property.

The authors appear to be upset that people running a business get to subtract costs from gross income when calculating net income. But that’s exactly how businesses are supposed to be taxed. And even if one thought, for some odd reason, that gross income was the right tax base, this still isn’t an example of government taking from Person A to give to Person B.

4. Fancy business meals.

As just noted, businesses should be taxed on profits rather than gross receipts. Well, profits are the difference between total income and total costs, including the cost of business-related meals. And even if one thinks that folks in business are lying and mischaracterizing personal meals, they’re not spending other people’s money. No funds are being taken from Person A and being given to Person B.

5. The capital gains tax rate.

In a good tax system, there’s no double taxation of income that is saved and invested, so the capital gains tax should be abolished. As such, the “preferential” rate in the current system is more accurately characterized as a mitigation of a penalty. But even if one believes that saving and investment should be double taxed, a lower capital gains tax rate doesn’t take money from Person A to give to Person B.

6. The estate tax.

The death tax is triple taxation, so it also should be abolished. Regardless, letting a family hold onto its own money is not the same as taking from Person A to give to Person B.

7. Gambling loss deductions.

The government taxes gamblers on their net winnings (if any), which is the proper approach. And even if the government gave a deduction for net losses (which isn’t the case), this wouldn’t be an example of taking from Person A and giving to Person B.

8. The Social Security earnings limit.

The Social Security system is supposed to be social insurance, and one of the implications of this approach is that there’s a limit on the benefits one can receive and the payments one has to make. As such, it’s silly to assert that the “wage base cap” is somehow improper. But even if one believed in turning Social Security into a pure redistribution scheme, the existing earnings limit simply means a cap on what the government takes. There’s no coerced handout from Person A to Person B.

9. Retirement plans.

The bad news is that we have pervasive double taxation in the internal revenue code. The good news is that some forms of retirement savings, such as IRAs and 401(k)s, are protected from double taxation. That protection does not require any money being taken from Person A and given to Person B.

10. Tax prep.

I’m not a fan of companies like H&R Block that benefit from an unfair and convoluted tax code. Under a simple and fair system like the flat tax, they would go out of business. But a deduction for tax preparation costs simply allows a taxpayer to keep more of his or her income. There’s no handout from Person A to Person B.

In case you didn’t notice, there’s a strong moral component to my argument. The leftists think you’re getting a handout if you get to keep more of your own money.

I think that’s absurd.

And it’s also economically illiterate when applied to provisions of the tax code that make sense, such as companies getting to subtract expenses when calculating taxable income.

Or individuals not being subjected to double taxation.

P.S. Here’s some pro-Second Amendment humor, which cleverly uses the left’s “undocumented” terminology for illegal aliens and applies it in a much better fashion.

And if you like pro-gun humor, you can find lots of good links by clicking here.

P.P.S. Since I mentioned immigration, here’s a fascinating graphic that shows immigration trends over the past two centuries.

There’s no policy lesson of philosophical point. I just think this graphic is very informative and well designed.

But if you want my two cents, I like immigration but want to make sure we attract people who want to work and assimilate rather than scroungers (and worse) who want welfare and handouts.

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When writing about the Organization for Economic Cooperation and Development, an international bureaucracy based in Paris, my life would be simpler if I created some sort of automatic fill-in-the-blanks system.

Something like this.

The OECD, subsidized by $____ million from American taxpayers, has just produced a new _________ that advocates more power for governments over the _________ sector of the economy.

But this may not be sufficiently descriptive.

So maybe I should create a multiple choice exercise. Sort of like when students take tests and get asked to circle the most appropriate answer.

The bureaucrats at the Paris-based OECD, working in cooperation with union bosses/class-warfare advocates/other tax-free international bureaucrats/politicians, have released a new report/study/paper urging more power/control/authority for governments in order to increase regulation/taxes/spending/redistribution/intervention.

You may think I’m trying to be funny, but this is totally serious.

How else would you describe a bureaucracy that consorts and cooperates with leftist groups like Occupy Wall Street and the AFL-CIO and routinely published propaganda in favor of Obama’s agenda on issues such as global warming, government-run healthcare, so-called stimulus, and class-warfare taxation.

And never forget that American taxpayers finance the biggest chunk of this bureaucracy’s budget.

Adding insult to injury, the bureaucrats at the OECD get tax-free salaries, which makes their relentless support for higher taxes on the rest of us even more obnoxious.

Now we have some new examples of the OECD’s statist mischief.

Here’s some of what the Center for Freedom and Prosperity recently uncovered.

At its sixth annual conference, the George Soros-founded Institute for New Economic Thinking will feature prominent left-wing economists Thomas Piketty, Joseph Stiglitz, and self-described Marxist and Greek Finance Minister, Yanis Varoufakis. By itself that wouldn’t be remarkable, but the meeting will come with the implicit endorsement of the U.S. taxpayer thanks to the sponsorship of the Organization for Economic Cooperation and Development (OECD), which gets over 20 percent of its funding from the United States.

So why is the OECD subsidizing a left-wing gabfest and giving publicity to way-out-of-the-mainstream characters like Piketty?

Part of the answer, one suspects, is that the bureaucracy has a bloated budget.

But the bigger reason is presumably that the bureaucrats want to push a statist ideological agenda.

…tax collectors have hijacked the OECD… Over the last decade and a half, they have threatened and cajoled low-tax jurisdictions into counter-productive reforms that make their economies less attractive to those suffering under the excessive taxes required to fund European welfare states. …They have essentially turned the OECD into a global tax cartel, or an OPEC for politicians.

None of this is a surprise because it’s part of a bigger pattern.

The OECD gets its money from governments. Most of those governments are European welfare states. The bureaucrats at the OECD get very generous tax-free salaries.

So of course they’re going to pump out whatever propaganda is needed to please their political (and pay) masters.

Here are some other recent examples, both of which were disseminated by the OECD’s Washington Center, which mostly exists to make sure that Congress and the White House maintain the gravy train of handouts to Paris.

Our first example of economic malpractice is this nonsense about a so-called gender wage gap. Note that the OECD is forced to admit the numbers are “unadjusted.”

That’s because lots of research shows that the wage gap disappears once you adjust for factors such as hours worked, types of professions, and work history.

By the way, just in case you think I’m only citing pro-market sources, it’s very much worth noting that even one of President Obama’s economic advisers confessed that the left’s gender-gap numbers are bogus.

Now let’s look at another chart.

I’ve previously explained that what matters most for the poor is economic growth.

Yet statists prefer to focus on the rich-v-poor gap because they want to mislead folks into thinking the economy is a fixed pie (as depicted here) and the income of the rich is at the expense of the poor.

And that’s the purpose of this OECD chart.

This very much reminds me of the OECD’s laughably dishonest research on poverty, which purports to show that there is more poverty in the United States than there is in economically distressed nations such as Greece, Turkey, Hungary, and Portugal.

As you can see from this video, statism is now the OECD’s chief product.

Which is why Republicans in Congress, if they actually on the side of taxpayers, should defund this destructive bureaucracy.

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In 1729, Jonathan Swift authored a satirical essay with the unwieldy title of A Modest Proposal for Preventing the Children of Poor People From Being a Burthen to Their Parents or Country, and for Making Them Beneficial to the Publick. He suggested that the destitute Irish could improve their lot in life by selling their children as food for the rich.

I’m personally glad this was merely a tongue-in-cheek proposal since some of my ancestors immigrated to America from Ireland in the 1800s.

But maybe it’s time for a new “modest proposal” to make our leftist friends happy.

They’re constantly griping about the rich, asserting that the “top 1 percent” or “top 10 percent” are making too much money. Indeed, folks on the left want us to believe that “income inequality” is a big issue and a threat to the country.

So why not update Jonathan Swift’s idea and simply consume all the rich people? Indeed, P.J. O’Rourke actually wrote a book entitled Eat the Rich.

But we don’t really need to feed them to anyone. Just dump their bodies in a mass grave or bury them at sea.

In one fell swoop, income inequality could be dramatically reduced. Sure, those of us left would wind up being equally poor, like in Cuba or North Korea, but you can’t make an omelet without breaking a few eggs!

But some of you probably think arbitrary executions of rich people is a step too far. After all, it would be unseemly to mimic France’s Reign of Terror or Stalin’s extermination of the Kulaks.

That’s why we should instead look at a watered-down “modest proposal” put forward by David Azerrad of the Heritage Foundation. Here’s some of what he wrote for Real Clear Politics.

…consider the following bold proposal to solve our inequality problem once and for all: exile the top 0.1% of income earners. Round up all 136,080 taxpayers who make more than $2.16 million a year and ship ’em off to whatever country will accept them. Presto. Problem solved. …The 0.1 percenters, whose growing incomes have been fueling the rise in inequality over the past several decades, will have vanished overnight.

Though Azerrad does point out that exile has many of the same economic downsides as execution.

..it will put a serious dent in the government’s finances. Almost one in every five tax dollars that the government collects comes from the 0.1 percent. To make up for the shortfall, we should probably also confiscate all their assets before exiling them. What about the jobs the 0.1 percenters create and the value they add to the economy? …we’d be losing all but twelve of the CEOs from the 300 largest companies in the country. The show business industry would collapse overnight with all the star talent in exile. Gone too would be the best investment bankers, financial consultants, surgeons and lawyers. One third of the NFL’s roster and well over half of the NBA’s roster would also be culled.

Heck, we’re already confiscating some of the assets of rich people who emigrate, so part of Azerrad’s satire is disturbingly close to reality.

But let’s stick with the more farcical parts of his column. To deal with potential loss of tax revenue, Azerrad proposes to have the government sell America’s rich people to other countries.

…we will need to generate more revenue. That could be done rather easily by auctioning off the top-earning Americans to the highest foreign bidder.

That makes sense. There are still a few places in the world – such as Switzerland, Cayman, Hong Kong, Bermuda, etc – where the political class actually understands it is good to have wealth creators.

By the way, Azerrad points out that there will be a tiny little downside to this proposal. Contrary to the fevered assertions of Elizabeth Warren and Paul Krugman, penalizing the rich won’t do anything to help the less fortunate.

Mind you, life prospects will not have improved for a single poor child born into a broken community with failing schools. Or for a single recent college grad crushed by debt and facing dim job prospects. Or for a single family struggling to make ends meet. …It won’t be any easier to start a business or to find a job. Four in 10 children will still be born out of wedlock. Our entitlements will still face unfunded liabilities of almost $50 trillion. …We will however be able to boldly proclaim that we have addressed “the defining challenge of our time.” Our country will in no way be better off. But we will have satiated our lust for equality.

Actually, our country will be far worse off. Jobs, investment, and growth will all collapse.

So while the poor may wind up with a larger share of the pie, the overall size of the pie will be much smaller.

And this is perhaps the moment to stop with the satire and take a more serious look at the issue of income inequality.

I’ve repeatedly argued that the focus should be growth, not redistribution. To cite just one example, it’s better to be a poor person in Singapore than in Jamaica.

But let’s look at what others are saying. Professor Don Boudreaux of George Mason University addresses the issue (or non issue, as he argues) in a column for the Pittsburgh Tribune-Review.

I’ve never worried about income inequality. …Income inequality — like the color of my neighbor’s car or the question of the number of pigeons in Central Park — just never dawns on me as an issue worthy of a moment’s attention.

Don then speculates about why some people are fixated on inequality.

I wonder: What makes someone worry about income inequality? One personal characteristic that plausibly sparks obsession with inequality is envy. …Another characteristic…that likely gives rise to concerns over income inequality is a mistaken conviction that the amount of wealth in the world is fixed. …A third personal characteristic that prompts anxiety over income inequality is fear that the “have-nots” will rape and pillage society until and unless they get more from the “haves.” …This third characteristic is widespread today. The risk that the “have-nots” in modern First World economies will organize themselves using social media and then grab their electric carving knives to storm the wine bars and day spas of the “haves”.

I think all three hypotheses are correct, though people in the public policy world rarely admit that they’re motivated by envy.

But, for what it’s worth, I think many leftists genuinely think the economy is a fixed pie. And if you have that inaccurate mindset, then extra income or wealth for a rich person – by definition – means less income and wealth for the rest of us. This is why they support class-warfare tax policy.

The challenge, for those of us who believe in economic liberty, is to educate these people about how even small differences in growth can yield remarkable benefits to everyone in society within relatively short periods.

A lot of establishment Republicans, meanwhile, seem to implicitly believe that redistribution is desirable as a tactic to “buy off” the masses. They’ll privately admit the policies are destructive (both to the economy and to poor people), but they think there’s no choice.

When dealing with these people, our challenge is to educate them that big government undermines social capital and makes it far more likely to produce the kind of chaos and social disarray we’ve seen in Europe’s deteriorating welfare states.

P.S. For a humorous explanation of why the redistribution/class-warfare agenda is so destructive, here’s the politically correct version of the fable of the Little Red Hen.

And the socialism-in-the-classroom example, which may or may not be an urban legend, makes a similar point. As does the famous parable about taxes and beer.

P.P.S. I still think Margaret Thatcher has the best explanation of why the left is wrong on inequality. And if you want to see a truly disturbing video of a politician with a different perspective, click here.

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