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Archive for the ‘Higher Taxes’ Category

The American Enterprise Institute has published a comprehensive budgetary plan entitled, “Tax and spending reform for fiscal stability and economic growth.”

Authored by Joseph Antos, Andrew G. Biggs, Alex Brill, and Alan D. Viard, all of whom I know and admire, this new document outlines a series of reforms designed to restrain the growth of government and mitigate many of the tax code’s more punitive features.

Compared to current law, the plan is a huge improvement.

But huge improvement isn’t the same as perfect, so here’s my two cents on what’s really good, what’s partially good, and what has me worried.

I’ll start with something that’s both good and bad.

According to the latest CBO estimates, federal tax revenues for 2015 will absorb 17.7 percent of GDP and spending will consume 20.4 percent of economic output. Now look at this table showing the impact of the AEI proposal. As you can see, the burden of taxes and spending will both be higher in the future than today.

That’s obviously bad. One would think a conservative organization would present a plan that shrinks the size of government!

But here’s the catch. Under current law, the burden of government is projected to climb far more rapidly, largely because of demographic changes and poorly designed entitlement programs. So if we do nothing and leave government on auto-pilot, America will be saddled with a European-sized welfare state.

From that perspective, the AEI plan actually is good since it is based on reforms that stop most – but not all – of the already-legislated expansions in the size of the public sector.

So here’s the bottom line. Compared to what I would like to see, the AEI plan is too timid. But compared to what I fear will happen, the AEI plan is reasonably bold.

Now let’s look at the specific reforms, staring with tax policy. Here’s some of what’s in the report.

The goal of our tax reform is to eliminate the income tax’s inherent bias against saving and investment and to reduce other tax distortions. To achieve this goal, the income tax system and the estate and gift taxes would be replaced by a progressive consumption tax, in the form of a Bradford X tax consisting of a…37 percent flat-rate firm-level tax on business cash flow and a graduated-rate household-level tax, with a top rate of 35 percent, on wages and fringe benefits.

At the risk of oversimplifying, the AEI folks decided that it was very important to solve the problem of double taxation and not so important to deal with the problem of a discriminatory and punitive rate structure. Which is sort of like embracing one big part of the flat tax while ignoring the other big part.

We’d have a less destructive tax code than we have now, but it wouldn’t be as good as it could be. Indeed, the plan is conceptually similar to the Rubio-Lee proposal, but with a lot more details.

Not that I’m happy with all those additional details.

To address environmental externalities in a more cost-effective and market-based manner, energy subsidies, tax credits, and regulations would be replaced by a modest carbon tax. The gasoline tax would be increased to cover highway-related costs.

I’m very nervous about giving Washington a new source of revenue. And while I’m open (in theory) to the argument that a carbon tax would be a better (less worse) approach than what we have now, I’m not sure it’s wise to trust that politicians won’t pull a bait and switch and burden us with both a costly energy tax and new forms of regulatory intervention.

And I definitely don’t like the idea of a higher gas tax. The federal government should be out of the transportation business.

There are also other features that irk me, including the continuation of some loopholes and the expansion of redistribution through the tax code.

Child and dependent care expenses could be deducted… A 15 percent refundable credit for charitable contributions… A 15 percent refundable credit for mortgage interest… A refundable credit for health insurance…the EITC for childless workers would be doubled relative to current law.

Though I should also point out that the new tax system proposed by AEI would be territorial, which would be a big step in the right direction. And it’s also important to note that the X tax has full expensing, which solves the bias against investment in a depreciation-based system.

But now let’s look at the most worrisome feature of the plan. It explicitly says that Washington should get more money.

… we also cannot address the imbalance simply by cutting spending… The tax proposals presented in this plan raise necessary revenues… Over time, tax revenue would gradually rise as a share of GDP… The upward path of tax revenue is necessary to finance the upward path of federal spending.

This is very counterproductive. But I don’t want to regurgitate my ideological anti-tax arguments (click here if that’s what you want). Let’s look at this issue from a strictly practical perspective.

I’ve reluctantly admitted that there are potential tax-hike deals that I would accept, at least in theory.

But those deals will never happen. In the real world, once the potential for additional revenue exists, the appetite for genuine spending restraint quickly evaporates. Just look at the evidence from Europe about the long-run relationship between taxes and debt and you’ll see that more revenue simply enables more spending.

Speaking of which, now let’s shift to the outlay side of the fiscal ledger.

We’ll start with Social Security, where the AEI folks are proposing to turn Social Security from a substandard social insurance program, which is bad, to a flat benefit, which might even be worse since it involves a shift to a system that is even more focused on redistribution.

The minimum benefit would be implemented immediately, increasing benefits for about one third of retirees, while benefits for middle- and high-earning individuals would be scaled down to the wage-indexed poverty level between now and 2050.

Yes, the system they propose is more fiscally sustainable for government, but what about the fact that most workers are paying record amounts of payroll tax in exchange for a miserly monthly payment?

This is why the right answer is personal retirement accounts.

The failure to embrace personal accounts may be the most disappointing feature of the AEI plan. And I wouldn’t be surprised if the authors veered in this unfortunate direction because they put the cart of debt reduction ahead of the horse of good policy.

To elaborate, a big challenge for real Social Security reform is the “transition cost” of financing promised benefits to current retirees and older workers when younger workers are allowed to shift their payroll taxes to personal accounts. Dealing with this challenge presumably means more borrowing over the next few decades, but it would give us a much better system in the long run. But this approach generally isn’t an attractive option for folks who fixate on near-term government debt.

That being said, there are spending reforms in the proposal that are very appealing.

The AEI plan basically endorses the good Medicare and Medicaid reforms that have been part of recent GOP budgets. And since those two programs are the biggest drivers of our long-run spending crisis, this is very important.

With regards to discretionary spending, the program maintains sequester/Budget Control Act spending levels for domestic programs, which is far too much since we should be abolishing departments such as HUD, Agriculture, Transportation, Education, etc.

But since Congress presumably would spend even more, the AEI plan could be considered a step in the right direction.

Finally, the AEI plan calls for military spending to consume 3.8 percent of economic output in perpetuity. National defense is one of the few legitimate functions of the federal government, but that doesn’t mean the Pentagon should get a blank check, particularly since big chunks of that check get used for dubious purposes. But I’ll let the foreign policy and defense crowd fight that issue since it’s not my area of expertise.

P.S. The Heritage Foundation also has thrown in the towel on personal retirement accounts and embraced a basic universal flat benefit.

P.P.S. On a completely different topic, here’s a fascinating chart that’s being shared on Twitter.

As you can see, the United States is an exception that proves the rule. I don’t know that there are any policy implications, but I can’t help but wonder whether America’s greater belief in self-reliance is linked to the tendency of religious people to believe in individual ethics and moral behavior.

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I’ve openly stated that there are tax-hiking budget deals that theoretically would be attractive.

But notice that “theoretically” is part of that sentence.

That’s because in the real world, tax hikes have a poisonous effect on fiscal policy. Instead of being the lubricant that produces concessions from the big-government crowd, the prospect of additional revenue is like putting blood in the water when hungry sharks are circling.

The bottom line is that trying to cure deficits with taxes is like trying to cure alcoholics by giving them keys to a liquor store.

Indeed, the New York Times accidentally proved my point by putting together a chart showing that the only successful budget deal was the one that cut taxes instead of raising them.

So this is why I’m a huge fan of Americans for Tax Reform’s no-tax-hike pledge.

Simply stated, I want to restrain – and hopefully reduce – the burden of government spending. And that definitely won’t happen if politicians think more revenue is an option.

So I get excited any time voters express the same sentiment. As such, you can imagine my feeling of happiness that Michigan voters overwhelmingly rejected a big tax increase that was supported almost the entire political establishment.

Here are some of the joyous details from a Detroit Free Press report.

With all counties reporting, 1.4 million Michiganders voted no on Proposal 1 while less than 351,000 voted yes, according to the Michigan Secretary of State’s office. The 80-20 rejection may be the most one-sided loss for a proposed constitutional amendment in state history. …Proposal 1 would have hiked the state sales tax to 7% from 6%, taken the sales tax off fuel sales, and hiked fuel taxes — raising close to $1.3 billion extra for roads. When fully implemented, the plan would have also generated about $200 million a year more for schools; $116 million for transit and rail; sent $111 million more to local governments; and given a $260-million tax break to low- and moderate-income families through restoration of the Earned Income Tax Credit.

If the Michigan earned-income credit works the same way as the one in Washington, it’s not a tax break. It’s simply a wage subsidy, a form of redistribution that gets laundered through the tax code.

But that’s not terribly relevant for purposes of today’s discussion. What really matters is that politicians were pushing a big increase in the overall burden of spending financed by a big increase in the overall burden of taxation.

And they had special interests on their side, which enabled them to out-spend the pr0-taxpayer side by a margin of about 20-1.

the Safe Roads Yes committee, which pushed for a yes vote on Proposal 1, reported raising $9.6 million to spend on its campaign. Of that, $5.8 million came from the Michigan Infrastructure & Transportation Association, a lobbying group for road builders and their suppliers. …The main no committee, the Coalition Against Higher Taxes and Special Interest Deals, reported raising just under $500,000 as of Monday.

But special-interest money doesn’t necessarily translate into votes. At least it didn’t in Michigan on Tuesday.

By the way, I’m not claiming voters always make the right choices. As we saw from referenda in Oregon and California, they can sometimes be lured into voting yes on tax hikes if they’re told “the rich” are the only ones who will pay.

John Miller of Hillsdale College (site of my flat tax v. fair tax debate) explains that the politicians in Lansing were simply too greedy. Writing for the Wall Street Journal before the vote, Miller suggests voters were unhappy that they were being asked for a big tax hike, when 40 percent of the money was going to be diverted to non-transportation purposes.

…the measure would generate more than $2 billion in revenue a year. Yet the amount that would go to transportation—mostly roads and bridges, but also bike paths, light rail and “streetscape” projects that aim to improve the look of downtown areas—is only about $1.2 billion. …In other words, taxpayers will get less than $1.2 billion in roadwork for the price of more than $2 billion.

How typical. Politician proposed a tax hike for one reason, but then hijacked their own plan and made it a Christmas tree of special-interest spending.

P.S. Here are my five policy and five political reasons against higher taxes in Washington.

P.P.S. The international evidence also shows that higher taxes are a recipe for bigger government and more debt.

P.P.P.S. I don’t fixate too much on the bias of the establishment media. It’s annoying, to be sure, but it doesn’t help to get all agitated about things outside of my control. That being said, I thought it was very revealing that the home pages of both the New York Times and Washington Post didn’t have any stories on the Michigan referendum. If the vote had gone the other way, I feel 99 percent confident in stating that the story would have been prominently displayed with lots of “analysis” about why the vote was hugely important.

P.P.P.P.S. Needless to say, Republicans who refuse to take the no-tax-hike pledge should be viewed with considerable suspicion.

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For the people of China, there’s good news and bad news.

The good news, as illustrated by the chart, is that economic freedom has increased dramatically since 1980. This liberalization has lifted hundreds of millions from abject poverty.

The bad news is that China still has a long way to go if it wants to become a rich, market-oriented nation. Notwithstanding big gains since 1980, it still ranks in the lower-third of nations for economic freedom.

Yes, there’s been impressive growth, but it started from a very low level. As a result, per-capita economic output is still just a fraction of American levels.

So let’s examine what’s needed to boost Chinese prosperity.

If you look at the Fraser Institute’s Economic Freedom of the World, there are five major policy categories. As you can see from this table, China’s weakest category is “size of government.” I’ve circled the most relevant data point.

The bottom line is that China could – and should – boost its overall ranking by improving its size-of-government score. And that means reducing the burden of government spending and lowering tax rates.

With this in mind, I was very interested to see that the International Monetary Fund just published a study entitled, “China: How Can Revenue Reforms Contribute to Inclusive and Sustainable Growth.”

Did this mean the IMF was recommending pro-growth tax reform? After reading the following sentence, I was hopeful.

We highlight tax policies that can facilitate economic transition to high income status, promote fiscal sustainability and make growth more inclusive.

After all, surely you make the “transition to high income status” with low tax rates rather than high tax rates, right?

Moreover, the study also acknowledged that China’s tax burden already is fairly substantial.

Tax revenue has accounted for about 22 percent of GDP in 2013…the overall tax burden is similar to the tax-to-GDP ratio for other Asian economies such as Australia, Japan, and Korea.

So what did the IMF recommend? A flat tax? Elimination of certain taxes? Reductions in double taxation? Lowering the overall tax burden?

Hardly.

The bureaucrats actually want China to become more like France and Greece.

I’m not joking. The IMF study actually wants people to believe that making the income tax more punitive will somehow boost prosperity.

Increasing the de facto progressivity of the individual income tax would promote more inclusive growth.

Amazingly, the IMF wants more “progressivity” even though the folks in the top 20 percent are the only ones who pay any income tax under the current system.

…around 80 percent of urban wage earners are not subject to the individual income tax because of the high basic personal allowance.

But a more punitive income tax is just the beginning. The IMF wants further tax hikes.

Broadening the base and unifying rates would increase VAT revenue considerably. …tax based on fossil fuel carbon emission rates can be introduced. …the current levies on local air pollutants such as SO2 and NOX emissions and small particulates could be significantly increased.

What’s especially discouraging is that the IMF explicitly wants a higher tax burden to finance an increase in the burden of government spending.

According to the proposed reform scenario, China could potentially aim to increase public expenditures by around 1 percent of GDP for education, 2‒3 percent of GDP for health care, and another 3–4 percent of GDP to fully finance the basic old-age pension and to gradually meet the legacy costs of current obligations. These would add up to additional social expenditures of around 7‒8 percent of GDP by 2030… The size of additional social spending is large but affordable as part of a package of fiscal reforms.

Indeed, the study explicitly says China should become more like the failed European welfare states that dominate the OECD.

Compared to OECD economies, China has considerable scope to increase the redistributive role of fiscal policy. …These revenue reforms serve as a key part of a package of reforms to boost social spending.

You won’t be surprised to learn, by the way, that the study contains zero evidence (because there isn’t any) to back up the assertion that a more punitive tax system will lead to more growth. Likewise, there’s zero evidence (because there isn’t any) to support the claim that a higher burden of government spending will boost prosperity.

No wonder the IMF is sometimes referred to as the Dr. Kevorkian of the global economy.

P.S. If you want to learn lessons from East Asia, look at the strong performance of Hong Kong, Taiwan, Singapore, and South Korea, all of which provide very impressive examples of sustained growth enabled by small government and free markets.

P.P.S. I was greatly amused when the head of China’s sovereign wealth fund mocked the Europeans for destructive welfare state policies.

P.P.P.S. Click here if you want some morbid humor about China’s pseudo-communist regime.

P.P.P.P.S. Though I give China credit for trimming at least one of the special privileges provided to government bureaucrats.

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It must be fun to be a leftist.

You get to spend other people’s money. But that’s just for starters. Using the power of majoritarianism, you also get to tell the rest of the country what to do, how to behave, and even what to eat.

Best of all, you can be a complete hypocrite. Even if you’re in the public eye, like Hillary Clinton, that’s apparently no obstacle to behaving in one way and then insisting that the rest of us do the opposite.

I’m particularly impressed that statists feel no guilt about dodging taxes while insisting that the rest of us pay more. That’s true even if you’re Barack Obama’s first Treasury Secretary or his current Treasury Secretary.

And it’s definitely true if you’re part of the statist chattering class.

Jillian Kay Melchoir of National Review reveals that the pro-tax crowd at MSNBC must think they’re working at the OECD.

How else to explain that so many of them have unpaid tax bills?

Touré Neblett, co-host of MSNBC’s The Cycle, owes more than $59,000 in taxes, according to public records reviewed by National Review. In September 2013, New York issued a state tax warrant to Neblett and his wife, Rita Nakouzi, for $46,862.68. Six months later, the state issued an additional warrant to the couple for $12,849.87. …MSNBC’s hosts and guests regularly call for higher taxes on the rich, condemning wealthy individuals and corporations who don’t pay their taxes or make use of loopholes. But recent reports, as well as records reviewed by National Review, show that at least four high-profile MSNBC on-air personalities have tax liens or warrants filed against them.

And why is this hypocritical?

Because, as illustrated by this video from Washington Free Beacon, so many of them urge higher taxes on the rest of us and argue that paying taxes is a wonderful experience.

I guess the MSNBC hosts forget to mention that higher taxes are only good for other people, not for themselves.

Now let’s look at another example.

Though I confess I’m merely assuming hypocrisy in this case. It deals with actors, the vast majority of which almost surely would want to impose a higher minimum wage on, say, the fast-food industry.

But, writing for Investor’s Business Daily, Larry Elder points out that these actors in Los Angeles don’t want to be covered by the minimum wage because they understand it means less work for themselves.

In Los Angeles County, the minimum wage is $9 per hour. Theater actors, however, can be paid as little as $7 a performance, and an actor can even work long rehearsal hours with no pay. Three decades ago, L.A. County actors sued their union for an exception to union wages for theaters with 99 seats or fewer seats. Why do these stage actors work for so little? They want to work. By working, they improve their skills, stay sharp and or perhaps have a chance to get spotted by an agent. Some say simply having something to do is better than just sitting around and waiting for a casting agent to call. Actors Equity, the national union, wants to change this. …But then a very Republican thing happened — 66% of the union members voted against a higher minimum wage. Their rationale was simple: A higher minimum wage means fewer plays get performed. Fewer plays mean fewer opportunities for actors and therefore fewer opportunities to gain experience, stay in practice or get discovered. …When it comes to their own lives, these actors understand the law of economics: Artificially raise the cost of a good — in this case the price of an actor in a stage play — and you reduce the demand for actors.

Unfortunately, this episode of economic enlightenment doesn’t have a happy ending.

But the union’s national council ignored this advisory vote and ordered, with some exceptions, a $9 per hour minimum wage.

Mr. Elder also includes a very perceptive quote from a Hollywood celebrity.

Pat Sajak, host of “Wheel of Fortune,” recently offered a different perspective on the minimum wage. “When I had minimum wage jobs,” he tweeted, “my goal was to better myself, not to better the minimum wage.”

Kudos to Mr. Sajak. Too bad there are so many politicians (including many Republicans) who don’t understand that higher minimum wages mean fewer jobs for the less vulnerable.

Though, to be fair, maybe supporters do understand the harsh impact and simply don’t care.

P.S. I wrote yesterday about the impact of tax reform on the 2016 election, and I included a postscript about a healthcare issue that has resonance with voters.

Well, Philip Klein of the Washington Examiner makes the case for another healthcare issue that he hopes will motivate Republican primary voters to reject Ohio Governor John Kasich.

…not only did Kasich decide to participate in Obamacare’s fiscally destructive expansion of Medicaid, in doing so he also displayed a toxic mix of cronyism, dishonesty and executive overreach. …despite campaigning on opposition to Obamacare, Kasich crumbled under pressure from hospital lobbyists who supported the measure, and endorsed the expansion. When his legislature opposed him, Kasich bypassed lawmakers and imposed the expansion through a separate panel — an example of executive overreach worthy of Obama. Kasich cloaked his cynical move in the language of Christianity, and, just like a liberal demagogue, he portrayed those with principled objections to spending more taxpayer money on a failing program as being heartless. …Republican voters made a terrible miscalculation when they chose so-called compassionate conservative George W. Bush as their nominee, as he went on as president to push the largest expansion of entitlements since the Great Society in the form of the Medicare prescription drug plan. …During this presidential primary season, Republican voters will have much better options than they did last time. They don’t have to settle for another champion of big government. By punishing Kasich for expanding Medicaid, conservative primary voters would be sending the message to state-level Republicans everywhere that if they choose to advance big government healthcare solutions, there will be consequences — and they will have no chance of rising to higher office.

It’s not my role to comment on which candidates deserve support, but I definitely agree that Kasich’s Obamacare expansion was very bad policy.

And it’s particularly galling that he made a religious argument for bigger government. I don’t think Libertarian Jesus would be amused.

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What’s the Laffer Curve?

It’s the simple, common-sense observation that there’s not a linear relationship between tax rates and tax revenue.

Folks in the private sector understand this principle. No restaurant owner, for instance, would double meal prices and assume that revenues would climb by 100 percent.

Yet that’s basically the methodology used by the Joint Committee on Taxation when estimating the revenue impact of changes in tax rates.

Which helps to explain why Washington is so often wrong about revenue implications of personal tax rates and corporate tax rates.

The Laffer Curve also applies to tobacco taxation.

Patrick Gleason of Americans for Tax Reform points out in the Wall Street Journal that greedy politicians in New York have pushed cigarette taxes so high that the main beneficiaries are smugglers.

Rampant cigarette smuggling isn’t the problem in New York. It’s a symptom of the problem: sky high tobacco taxes. …New York state levies the highest cigarette tax in the nation, $4.35 per pack, and New York City tacks on an additional $1.50 local tax. All told, the cost of one pack there can run to $12 or more. …The result? Most of the cigarettes smoked in New York, 58%, are smuggled in from out of state… The higher that revenue-hungry politicians raise tobacco taxes, the more profit smugglers can make.

Which means, of course, that the higher tax rates don’t lead to more tax revenue.

…revenue from increases in cigarette taxes often falls short of expectations. Washington, D.C., experienced this firsthand after cigarette taxes were raised by 25%, to $2.50 per pack from $2, in October 2009. City leaders claimed the hike would generate a windfall of additional revenue. By February of 2010, D.C.’s chief financial officer reported that projections were off by $15 million. Revenue from the cigarette tax actually fell by $7 million after the hike. New Jersey should have learned the same lesson. In 2007 the Garden State raised cigarette taxes to $2.575, from $2.40. The new tax generated $52 million less than expected, and revenue from cigarette taxes fell by $22 million. But in 2009 New Jersey raised the tax by another 17.5 cents.

By the way, don’t believe the fall-back excuse that politicians don’t care about revenue because they’re motivated by public health concerns.

Lawmakers can claim they’re raising taxes on cigarettes to reduce smoking and improve public health. That talking point is belied by the recent imposition of taxes on electronic cigarettes, which are saving lives by delivering nicotine in puffs of water vapor instead of chemical-filled smoke. There are more than 15 tax bills pending across the country for currently untaxed e-cigarettes. Hawaii is proposing a tax of 80%, New York of 75%, Oregon of 65% and Ohio of 60%. For politicians, cigarette taxes are—and have always been—about one thing: money.

One last thing. Gleason reports that New York is suing UPS because the company ships cigarettes to New York customers.

New York state and New York City in February announced a $180 million lawsuit against the shipping company UPS over what officials allege was unlawful delivery of nearly 700,000 cartons of cigarettes from 2010-14. …New York state officials claim that the cigarette smuggling via UPS cost the treasury $29.7 million in lost tax revenue. That’s less than 0.03% of the state budget. The $4.7 million allegedly lost by New York City represents less than 0.006% of its budget. For a mere rounding error, state and city officials want to grab $180 million from UPS. That’s $180 million UPS could use to hire new workers, give employees raises, or invest back into its business. The leaders of New York and New York City should drop this silly lawsuit and find a more productive use of their time.

They shouldn’t merely drop the lawsuit. They should be condemned for engaging in a thuggish shakedown.

Returning to the main topic, here’s a video from the Center for Freedom and Prosperity that reviews real-world examples of the Laffer Curve.

P.S. If local officials are greedy, state officials are ever greedier, and federal officials are greediest, then you can imagine how awful it would be to let international officials impose tobacco taxes.

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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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With tax day looming, let’s wallow in misery by contemplating the burden on America’s taxpayers.

But we’ll ignore the angst caused be dealing with an indecipherable tax code and an oppressive IRS and simply focus on the amount of money that gets extracted from our income each year.

The bad news is that the federal government is collecting a record amount of money, even after adjusting for inflation. Here’s a chart, based on the latest numbers from the Office of Management and Budget.

But there is some good news. This isn’t a record tax burden when measured as a share of economic output.

Federal taxes are projected to consume 17.7 percent of GDP this year. That’s higher than the post-WWII average of 17.2 percent of GDP, but there have been several years in which the federal tax burden has been higher than 17.7 percent, most recently in 2007, when it reached 17.9 percent of economic output.

So while it’s bad news that the IRS is collecting a record amount of revenue in inflation-adjusted dollars, I guess we should consider ourselves lucky that it’s not a record share of GDP.

I discuss the growing federal tax burden in this CNBC debate with Jared Bernstein.

A few points are worth emphasizing from the interview, two of which deal with corporate taxation.

First, it’s silly to talk to compare “taxes by individuals” to “taxes paid by corporations.” That’s because all taxes on business ultimately are paid by individuals, whether as workers, consumers, or shareholders. To be blunt, corporations may collect taxes, but the burden inevitably falls on people.

Second, the fact that corporate tax receipts are lagging is a sign that tax rates are too high rather than too low. In other words, there’s a Laffer Curve effect, and there’s lots of evidence that a lower corporate rate will generate more revenue. Which is precisely what happened when personal tax rates were reduced on the “rich” in the 1980s.

Third, if we want a balanced budget, the only responsible approach is spending restraint. As I’ve noted before, our long-run fiscal challenge is because of a rising burden of spending. Indeed, spending is more than 100 percent of the long-run problem.

By the way, let’s not forget about the role of state and local governments. WalletHub just released a report on state and local tax burdens.

Here are the 10 best states.

I’m mystified to see California in the top 10.

Though maybe this is a Laffer Curve-based result. In other words, perhaps taxes are so high that people are paying less?

Moreover, the Golden State drops to 30 if you adjust for the cost of living (see column on far right).

Now here are the 10 worst states.

I’m not surprised to see Illinois in last place, but who knew that Nebraska was a hotbed of taxaholism?

And if you look at the right-most column, you’ll see that New York and Connecticut could be considered the worst states. Both jurisdictions are richly deserving of that designation.

P.S. Don’t forget that Puerto Rico is a secret tax haven for American citizens, particularly when considering federal taxes, so it deserves honorary first place recognition.

P.P.S. The best (i.e., least worst or least destructive) approach to taxation is the flat tax.

P.P.P.S. Though the ideal scenario is to have a very small federal government so that there’s no need for any broad-based tax whatsoever. Our nation enjoyed strong growth before that dark day in 1913 when the income tax was imposed.

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