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Archive for the ‘Migration’ Category

When companies want to boost sales, they sometimes tinker with products and then advertise them as “new and improved.”

In the case of governments, though, I suspect “new” is not “improved.”

The British territory of Jersey, for instance, has a very good tax system. It has a low-rate flat tax and it overtly brags about how its system is much better than the one imposed by London.

In the United States, by contrast, the state of New Jersey has a well-deserved reputation for bad fiscal policy. To be blunt, it’s not a good place to live and it’s even a bad place to die.

And it’s about to get worse. A column in the Wall Street Journal warns that New Jersey is poised to take a big step in the wrong direction. The authors start by observing that the state is already in bad shape.

…painless solutions to New Jersey’s fiscal challenges don’t exist. …a massive structural deficit lurks… New Jersey’s property taxes, already the highest in the nation, are being driven up further by the state’s pension burden and escalating health-care costs for government workers.

In other words, interest groups (especially overpaid bureaucrats) control the political process and they are pressuring politicians to divert even more money from the state’s beleaguered private sector.

…politicians seem to think New Jersey can tax its way to budgetary stability. At a debate this week in Newark, the Democratic gubernatorial nominee, Phil Murphy, pledged to spend more on education and to “fully fund our pension obligations.” …But just taxing more would risk making New Jersey’s fiscal woes even worse. …New Jersey is grasping at the same straws. During the current fiscal year, the state’s pension contribution is $2.5 billion, only about half the amount actuarially recommended. The so-called millionaire’s tax, a proposal Gov. Chris Christie has vetoed several times since taking office in 2010, will no doubt make a comeback if Mr. Murphy is elected. Yet it would bring in only an estimated $600 million a year.

The column warns that New Jersey may wind up repeating Connecticut’s mistakes.

Going down that path, however, is a recipe for a loss of high-value taxpayers and businesses.

Let’s look at a remarkable story from the New York Times. Published last year, it offers a very tangible example of how the state’s budgetary status will further deteriorate if big tax hikes drive away more successful taxpayers.

One man can move out of New Jersey and put the entire state budget at risk. Other states are facing similar situations…during a routine review of New Jersey’s finances, one could sense the alarm. The state’s wealthiest resident had reportedly “shifted his personal and business domicile to another state,” Frank W. Haines III, New Jersey’s legislative budget and finance officer, told a State Senate committee. If the news were true, New Jersey would lose so much in tax revenue that “we may be facing an unusual degree of income tax forecast risk,” Mr. Haines said.

Here are some of the details.

…hedge-fund billionaire David Tepper…declared himself a resident of Florida after living for over 20 years in New Jersey. He later moved the official headquarters of his hedge fund, Appaloosa Management, to Miami. New Jersey won’t say exactly how much Mr. Tepper paid in taxes. …Tax experts say his move to Florida could cost New Jersey — which has a top tax rate of 8.97 percent — hundreds of millions of dollars in lost payments. …several New Jersey lawmakers cited his relocation as proof that the state’s tax rates, up from 6.37 percent in 1996, are chasing away the rich. Florida has no personal income tax.

By the way, Tepper isn’t alone. Billions of dollars of wealth have already left New Jersey because of bad tax policy. Yet politicians in Trenton blindly want to make the state even less attractive.

At the risk of asking an obvious question, how can they not realize that this will accelerate the migration of high-value taxpayers to states with better policy?

New Jersey isn’t alone in committing slow-motion suicide. I already mentioned Connecticut and you can add states such as California and Illinois to the list.

What’s remarkable is that these states are punishing the very taxpayers that are critical to state finances.

…states with the highest tax rates on the rich are growing increasingly dependent on a smaller group of superearners for tax revenue. In New York, California, Connecticut, Maryland and New Jersey, the top 1 percent pay a third or more of total income taxes. Now a handful of billionaires or even a single individual like Mr. Tepper can have a noticeable impact on state revenues and budgets. …Some academic research shows that high taxes are chasing the rich to lower-tax states, and anecdotes of tax-fleeing billionaires abound. …In California, 5,745 taxpayers earning $5 million or more generated more than $10 billion of income taxes in 2013, or about 19 percent of the state’s total, according to state officials. “Any state that depends on income taxes is going to get sick whenever one of these guys gets a cold,” Mr. Sullivan said.

The federal government does the same thing, of course, but it has more leeway to impose bad policy because it’s more challenging to move out of the country than to move across state borders.

New Jersey, however, can’t set up guard towers and barbed wire fences at the border, so it will feel the effect of bad policy at a faster rate.

P.S. I used to think that Governor Christie might be the Ronald Reagan of New Jersey. I was naive. Yes, he did have some success in vetoing legislation that would have exacerbated fiscal problems in the Garden State, but he was unable to change the state’s bad fiscal trajectory.

P.P.S. Remarkably, New Jersey was like New Hampshire back in the 1960s, with no income tax and no sales tax. What a tragic story of fiscal decline!

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I shared some academic research last year showing that top-level inventors are very sensitive to tax policy and that they migrate from high-tax nations to low-tax jurisdictions.

Now we have some new scholarly research showing that they also migrate from high-tax states to low-tax states.

Let’s look at some of the findings from this new study, which was published by the Federal Reserve Bank of San Francisco. We’ll start with the issue the economists chose to investigate.

…personal taxes vary enormously from state to state. These geographical differences are particularly large for high income taxpayers. …the average tax rate (ATR) component due solely to state individual income taxes for a taxpayer with income at the 99th percentile nationally in 2010…in California, Oregon, and Maine were 8.1%, 9.1%, and 7.7%, respectively. By contrast, Washington, Texas, Florida, and six other states had 0 income tax. Large differences are also observed in business taxes. …Iowa, Pennsylvania, and Minnesota had corporate income taxes rates of 12%, 9.99%, and 9.8%, respectively, while Washington, Nevada, and three other states had no corporate tax at all. And not only do tax rates vary substantially across states, they also vary within states over time. …If workers and firms are mobile across state borders, these large differences over time and place have the potential to significantly affect the geographical allocation of highly skilled workers and employers across the country.

Here’s a map showing the tax rates on these very successful taxpayers, as of 2010. Many of these states (California, Illinois, New Jersey, and Connecticut) have moved in the wrong direction since that time, while others (such as North Carolina and Kansas) have moved in the right direction.

Anyhow, here’s more information about the theoretical issue being explored.

Many states aggressively and openly compete for firms and high-skilled workers by offering low taxes. Indeed, low-tax states routinely advertise their favorable tax environments with the explicit goal of attracting workers and business activity to their jurisdiction. Between 2012 and 2014, Texas ran TV ads in California, Illinois and New York urging businesses and high-income taxpayers to relocate….In this paper, we seek to quantify how sensitive is internal migration by high-skilled workers to personal and business tax differentials across U.S. states. Personal taxes might shift the supply of workers to a state: states with high personal taxes presumably experience a lower supply of workers for given before-tax average wage, cost of living and local amenities. Business taxes might shift the local demand for skilled workers by businesses: states with high business taxes presumably experience a lower demand for workers, all else equal.

And here’s their methodology.

We focus on the locational outcomes of star scientists, defined as scientists…with patent counts in the top 5% of the distribution. Using data on the universe of U.S. patents filed between 1976 and 2010, we identify their state of residence in each year. We compute bilateral migration flows for every pair of states (51×51) for every year. We then relate bilateral outmigration to the differential between the destination and origin state in personal and business taxes in each year. …Our models estimate the elasticity of migration to taxes by relating changes in number of scientists who move from one state to another to changes in the tax differential between the two states.

So what did the economists find? Given all the previous research on this topic, you won’t be surprised to learn that high tax rates are a way of redistributing people.

We uncover large, stable, and precisely estimated effects of personal and business taxes on star scientists’ migration patterns. …For the average tax rate faced by an individual at the 99th percentile of the national income distribution, we find a long-run elasticity of about 1.8: a 1% increase in after-tax income in state d relative to state o is associated with a 1.8 percent long-run increase in the net flow of star scientists moving from o to d. …To be clear: The flow elasticity implies that if after tax income in a state increases by one percent due to a personal income tax cut, the stock of scientists in the state experiences a percentage increase of 0.4 percent per year… We find a similar elasticity for state corporate income tax… In all, our estimates suggest that both the supply of, and the demand for, star scientists are highly sensitive to state taxes.

Wonky readers may appreciate these graphs from the study.

For everyone else, the important lesson from this research is that high tax rates discourage productive behavior and drive away the people who create a lot of value.

Two years ago, I shared some research showing that entrepreneurs flee high-tax nations to low-tax jurisdictions. Now we know the some thing happens with top-level inventors.

And let’s not forget that it’s even easier for investment to cross borders, which is why high corporate tax rates and high levels of double taxation are so damaging to U.S. workers and American competitiveness.

P.S. I don’t expect many leftists to change their minds because of this research. Some of them openly admit they want high tax rates solely for reasons of spite. Sensible people, by contrast, should be even more committed to pro-growth tax reform.

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Illinois is a mess. Taxes and spending already are too high, and huge unfunded liabilities point to an even darker future.

Simply stated, politicians and government employee unions have created an unholy alliance to extract as much money as possible from the state’s beleaguered private sector.

That’s not a surprise. Indeed, it’s easily explained by the “stationary bandit” theory of government.

But while the bandit of government may be stationary, the victims are not. At least not in a nation with 50 different states. Indeed, Illinois Policy reports that a growing number of geese with golden eggs decided to fly away after a big tax hike in 2011.

Politicians enacted Illinois’ 2011 income-tax hike during a late-night legislative session in January 2011 and raised the state’s personal income-tax rate to 5 percent from 3 percent. This 67 percent income-tax hike lasted for four years, during which time Illinois experienced record wealth flight. …The short-term increase in tax revenue gained from higher tax rates is offset by the long-term loss of substantial portions of Illinois’ tax base. The average income of taxpayers leaving Illinois rose to $77,000 per year in 2014, according to new income migration data released by the IRS. Meanwhile, the average income of people entering Illinois was only $57,000. …During the four years of the full income-tax hike, prior to its partial sunset in 2015, Illinois lost $14 billion in annual adjusted gross income, or AGI, to other states, on net.

Illinois has always had an unfavorable ratio when comparing the incomes of immigrants and emigrants. But you can see from this chart that there was a radically unfavorable shift after the tax hike.

Here’s a table from the article showing the 10-worst states.

Illinois leads this list of losers by a comfortable margin. Connecticut, meanwhile, has a strong hold on second place (which shouldn’t be a surprise).

The IP report observes that the states benefiting from internal migration have much better fiscal policy. In particular, most of them are on the admirable list of states that don’t impose income taxes.

…the top five states with favorable income differentials were Florida, Wyoming, Nevada, South Carolina and Texas. Notably, 4 of 5 of these states have no income tax, and none of them have a death tax.

It’s worth noting that the high-tax approach is not producing good results.

Instead, as reported by Bloomberg, the Land of Lincoln is the land of red ink.

Illinois had its bond rating downgraded to one step above junk by Moody’s Investors Service and S&P Global Ratings, the lowest ranking on record for a U.S. state… Illinois’s underfunded pensions and the record backlog of bills…are equivalent to about 40 percent of its operating budget. …investors have demanded higher premiums for the risk of owning its debt. Moody’s called Illinois “an outlier among states” after suffering eight downgrades in as many years. …like other states, has no ability to resort to bankruptcy to escape from its debts. A downgrade to junk, though, would add further financial pressure by increasing its borrowing costs.

Amazing, in spite of this ongoing meltdown, the Democrats who control the state legislature are pushing hard to once again increase the income tax.

Heck, they want to increase all sorts of taxes. Including higher burdens on the financial industry.

Kristina Rasumussen, the President of Illinois Policy, warned in the Wall Street Journal that this was not a good recipe.

Proponents here call it the “privilege tax.” …The Illinois bill would put a 20% levy on fees earned by investment advisers. It passed the state Senate in a 32-24 vote Tuesday, and backers are hoping to get it through the House before the legislative session ends May 31. The new tax is pitched as a way to squeeze more revenue—as much as $1.7 billion a year—from hedge funds and private-equity firms… An earlier version of the Illinois proposal included a provision so that the 20% tax would take effect only if and when New York, New Jersey and Connecticut enacted similar measures. But the bill as written now would impose the tax regardless, and lawmakers will simply have to hope other states follow suit. Yet who says financiers can’t do their jobs just as well in Palm Beach, Fla.—or London, Zurich or Hong Kong? The progressives peddling this idea don’t understand that Chicago competes for these businesses not only with New York and Greenwich, Conn., but with anywhere that can offer cellphone service and an internet connection. …Railing against supposed “fat cats” might satisfy progressive groups, but lawmakers shouldn’t be in the business of hounding the people who help connect capital with new opportunities for growth. …Rather than focus on how to make everyone miserable together, policy makers should work to increase their states’ competitiveness. A start would be to rally against this proposed privilege tax and instead fix the spiraling pension costs and outdated labor rules that are dragging Illinois and other blue states down.

Let’s hope the governor continues to reject any and all tax increases.

If he does hold firm, he’ll have allies.

Including the Chicago Tribune, which recently editorialized about the state’s dire position

Illinois legislators fumble repeated attempts to send a balanced budget to Gov. Bruce Rauner; while the stack of Illinois’ unpaid bills climbs by the minute; while our leaders prioritize politics over policy… Employers and other taxpayers are hopping over Illinois’ borders with alarming regularity. …What an embarrassment. What a dereliction of duty. …Illinois, boasting the lowest credit rating and the highest population loss of any state in the country, has doubled down. State government is in a full-blown crisis. Again. Since January, Democrats have discussed plans to raise income taxes and borrow money to pay down bills. They approved bills that would make Illinois a less attractive place to do business; under one proposal, Illinois would have the highest minimum wage of all its neighboring states.

This is some very sensible analysis from a newspaper that endorsed Obama in both 2008 and 2012.

Even more important, the state’s taxpayers are mostly on the correct side.

Illinoisans feel the strain of the state’s two-year budget impasse, but they are emphatic that tax hikes should not be part of any budget deal. These are the findings of a new poll of likely Illinois voters… Only 31 percent of survey respondents support raising the state income tax to end the budget impasse. An increase in the state sales tax is even more unpopular, with 76 percent of survey respondents opposed. Another key takeaway from the poll: A plurality (49 percent) of respondents who are directly affected by the state budget impasse prefer a cuts-only, no-tax-hike budget. …Survey respondents were also asked what they think of political candidates who support raising taxes to end the budget impasse. The poll found that likely Illinois voters will be unforgiving of candidates for governor or the General Assembly who raise the state income tax or sales tax.

I suspect taxpayers realize that higher taxes will simply lead to more spending.

Indeed, a leftist in the state inadvertently admitted that the purpose of tax hikes is to enable more spending.

If there is to be any hope for the future in Illinois, Governor Rauner needs to hold firm. So long as Republicans in the state legislature hold firm, he can use his veto power to stop any tax hikes.

Or he can be Charlie Brown.

P.S. Illinois is invariably near the bottom in comparisons of state fiscal policy. The one saving grace is that the state has a flat tax. If the statists ever succeed in replacing that system with a so-called progressive tax, it will just be a matter of time before the state passes New York and California in the real race to the bottom.

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Although I gave him a good grade for his first 100 days, it’s no secret that I’m not overly optimistic about the long-term policy implications of the Trump presidency. Simply stated, I fear he’ll wind up being a big-government Republican like Bush (either one) or Nixon rather than a small-government Republican like Reagan or Coolidge.

I’ve specifically complained about Trump’s approach to entitlements, his support for protectionism, his proposed childcare subsidies, and that’s just a partial list of his statist policies.

I mention all these things because I’m about to defend the President’s extended family for the practice of “selling” American citizenship and I don’t want anyone to accuse me of being a shill for Trump.

You will get a good grasp of the controversy if you read this editorial in the New York Times. Here are the key passages.

The Kushner family…has been highlighting its White House connections to entice wealthy Chinese investors and promising them green cards in return under a special government visa program. …it’s also a scandal that Congress allows real estate developers to use the American immigration system to pad their profits. …Jared Kushner, President Trump’s son-in-law and special adviser…. His sister Nicole Meyer was in Beijing and Shanghai this past weekend seeking investors for a luxury apartment project her family is developing… Her sales pitch cited her brother and laid out how a $500,000 investment could provide a coveted path to American citizenship. …Ms. Meyer’s disturbing investor pitch was made possible by the EB-5 investor visa, which opens an express lane into the United States for those who can afford to invest nearly 10 times what the median American household earns in a year. …Under the program, investors have to put at least $1 million, and it has to lead to creation or preservation of at least 10 permanent, full-time jobs. But the minimum investment drops to $500,000 if applicants invest in rural areas or places with elevated unemployment.

I don’t agree with the tone, but this is an accurate description of the program. The EB-5 program is a part of America’s immigration system and it is explicitly designed to lure job-creating investment to the U.S. economy.

Yes, it’s poorly designed and presumably should be improved.

But the underlying concept is good. If we want more prosperity, America should join in the competition to attract economically successful migrants.

After all, many immigrant groups are unambiguously good for the American economy, increasing our per-capita GDP.

The EB-5 program creates a pathway for those people, and the Kushner family is simply showing them that investing in commercial real estate is one of their options.

I don’t understand why some people think this is a bad thing. All things being equal, I’d rather have rich immigrants than poor immigrants.

That’s why I defended Governor Scott Walker when he was attacked for wanting some of these people investing in Wisconsin. And that’s why today I’m defending the Kushners. I want America to become more prosperous.

Yet this rational policy rubs a lot of people the wrong way. Including some lawmakers.

Senators Grassley (R-IA) and Feinstein (D-CA), the Chair and Ranking Committee members of the Senate Judiciary Committee introduced bill S. 232 to terminate the EB-5 Visa Program.

Critics tend to make three arguments.

  • They don’t like rich people benefiting – My response is that don’t care that wealthy foreigners benefit or that wealthy American developers benefit. My goal is more growth for ordinary people, and that’s what we get with rich and/or high-skilled immigrants.
  • They are upset about favoritism – I agree that the current EB-5 system is too complicated and vulnerable to cronyism, but the solution is to copy the nations cited below by creating very simple rules allowing rich foreigners to move to America and make investments.
  • They worry about bad people getting visas – There already are fairly onerous rules designed to prevent crooks, terrorists, and other bad guys from sneaking into the U.S. by obtaining an EB-5 visa. There’s no evidence that the current system is inadequate.

To elaborate, let’s focus on the first argument dealing with economic benefits. There is considerable research showing that ordinary people benefit when high-skilled and/or high-net-worth individuals can migrate to their nations.

Here are some excerpts from a recent study by the World Bank.

The number of migrants with a tertiary degree rose nearly 130 percent from 1990 to 2010… A pattern is emerging in which these high‐skilled migrants are departing from a broader range of countries and heading to a narrower range of countries—in particular, the United States, the United Kingdom, Canada, and Australia. …For recipient countries, high‐skilled immigration is often linked to clusters of technology and knowledge production that are certainly important for local economies and are plausibly important at the national level. More than half of the high‐ skilled technology workers and entrepreneurs in Silicon Valley are foreign‐born. For native workers, high‐skilled immigration means…a chance to benefit from the complementarities and agglomeration effects created by talent clusters.

And here are some additional finding from the same authors in research published by the Bank of Finland.

…many countries are launching new policies to attract high-skilled migrants. Examples include the United Kingdom’s introduction of a points-based immigration system under Tony Blair’s government and its recent programs to attract the “brightest and best” innovators and entrepreneurs. The Netherlands introduced a new “Expatcenter Procedure,” which is an entry procedure designed for “knowledge migrants.” Competing programs pop up with regular frequency—in short, the doors seem to be opening ever wider for high-skilled migrants…the four Anglo-Saxon countries that attract the highest proportions of high-skilled migrants—Canada, the United Kingdom, Australia and New Zealand—implement points-based systems to varying degrees… high-skilled migrants boost innovation and productivity outcomes. …longer time horizons tend to show greater gains.

Here’s a map from the study.

Last but not least, let’s look at two small nations that have reaped big benefits from their economic citizenship programs.

Starting with Cyprus, as reported by Bloomberg.

…foreigners can become citizens in less than six months in exchange for investing at least 2 million euros ($2.2 million) in Cyprus property or 2.5 million euros in government bonds or companies. Since then, the nation has issued about 2,000 passports, Finance Minister Harris Georgiades said in an interview in Nicosia last month. About half have gone to Russians, according to PricewaterhouseCoopers and other consultants who guide clients through the process. The impact has been profound, sparking about 4 billion euros of foreign investment last year — equivalent to almost a quarter of the island’s annual economic output.

And also in Malta, according to Politico.

Malta has earned €310 million through the sale of EU passports… Justice Minister Owen Bonnici confirmed the figure during a parliamentary debate on the small island’s budget for next year, local media reported. …more than 700 individuals have obtained passports since 2014 in exchange for property investments and cash donations to the government

One final point, as seen in data on top inventors and entrepreneurs, is that super-skilled people want to migrate to places with good tax policy.

P.S. Here’s another pro-immigration policy that would have universal support in a sensible world.

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When trying to educate people about the superiority of free enterprise over statism, I generally show them long-run data comparing market-oriented jurisdictions with those that have state-driven economies. Here are some of my favorite examples.

It’s my hope that when readers look at these comparisons, they will recognize the value of economic freedom because it is very obvious that ordinary people become far more prosperous when government is small.

But there’s also another way of determining which approach is superior. Just look and see what happens when people are allowed to vote with their feet. Or, just as important, look at places where people are not allowed to vote with their feet.

The Berlin Wall and the Iron Curtain, for instance, existed to prevent people from escaping the horror of Soviet communism. Likewise, people in North Korea and Cuba don’t have the freedom to emigrate.

Totalitarian governments realize that their citizens would escape en masse if they had the chance.

In free countries, by contrast, there’s no need to imprison people.

And that’s why this Imgur image is not only funny, but also a good summary of population shifts around the world.

I’ll definitely have to add this to my collection of libertarian humor.

To be sure, not everybody who moves from a statist hellhole to a prosperous capitalist society is motivated by an appreciation for liberty. They may simply want a better life and have no idea that national prosperity is a function of economic liberty.

And they may not even want to earn a better life. They may simply want to get on the gravy train of government handouts (which is why I’m not a fan of America’s dependency-inducing refugee program).

But I’m digressing. The simple moral of today’s story is that decent societies don’t have to imprison their citizens. That only happens in place where government is not only big, but also evil.

P.S. Unlike some libertarians, I like borders.

P.P.S. People also vote with their feet inside nations, and the lesson to be learned is that smaller governments attract more people.

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Whenever mass shootings occur, some people quickly jump to conclusions before there’s any evidence.

Folks on the right are occasionally guilty of immediately assuming Islamic terrorism, which is somewhat understandable. Folks on the left, meanwhile, are sometimes guilty of instinctively assuming Tea Party-inspired violence (I’m not joking).

I confess that I’m prone to do something similar. Whenever there is a terrorist attack, I automatically wonder if we’ll find out welfare payments and other goodies from the government helped subsidize the evil actions.

In my defense, there’s a reason I think this way. Whether we’re talking about Jihadi John or the Tsarnaev brothers, there are lots of examples of dirtbag terrorists getting handouts from taxpayers.

It happens a lot in other nations. And it’s now happening with disturbing frequency in the United States.

It’s even gotten to the point where I’ve created a special terror wing in the Moocher Hall of Fame. And, as more evidence accumulates, the medieval savage who drove a truck through a Christmas market in Germany may be eligible for membership.

Here’s some of what we know, as reported by the Daily Caller.

Berlin truck attack terrorist Anis Amri used several different identities to claim multiple welfare checks simultaneously in different cities around Germany. Amri, the Tunisian refugee who killed 12 and injured 48 at a Christmas market in Berlin Dec. 19… The investigation was closed in November because Amri’s whereabouts were unknown. …Welfare is a common way for terrorists to fund their activities in Europe.

The U.K.-based Express reveals that the terrorist was very proficient at ripping off taxpayers before deciding to kill them.

Despite being shot dead in Italy just days after the attack, the Tunisian refugee is now under investigation for fraud after conning German authorities into handing over cash to fund his terror exploits. After travelling from Tunisia to Europe in 2011, he used up to eight different aliases and several different nationalities – at times even claiming to be from Egypt or Lebanon. Reports claim Amri carried several different false identity documents and used aliases to collect welfare in cities across Germany.

The story also has details on how welfare payments subsidized previous terrorist actions.

Welfare fraud was key to funding terror attacks in Brussels in March and in Paris last year. Terrorists collected around £45,000 in benefits which they used to pay for the brutal attacks in the major European cities. …Meanwhile, Danish authorities came under fire recently after it emerged 36 Islamic State fighters continued to receive benefits for months after leaving the country to join other members of the brutal regime in Syria and Iraq.

And while I’m not sure RT is a legitimate news source, it says Amri used 14 identities for mooching.

Anis Amri, the Tunisian man accused of driving a truck into a crowd of Christmas market shoppers in Berlin, used at least 14 different identities, a German police chief said. …Among other things, this allowed the man to receive social benefits under different names in different municipalities, the police chief said.

A close associate (and suspected co-conspirator) of Amri also was mooching off the system according to news reports.

A spokeswoman for the office of Germany’s chief prosecutor on Wednesday said authorities have taken a second Tunisian suspect into custody following raids in Berlin on Tuesday. …However, she added that there was insufficient evidence to charge the suspect. In a separate statement, the federal prosecutor’s office announced the man had been charged with committing social welfare fraud and would remain in custody. …the suspect had previously been detained on suspicion of supplying explosives intended for a prospective attack in Dusseldorf. …The 26-year-old suspect allegedly had dinner with Amri at a restaurant the night before the attack, according to Köhler. The suspect allegedly met Amri in late 2015. “Süddeutsche Zeitung” reported that the two men traveled together from Italy to Germany that year.

Gee, sounds like a model citizen. Merkel must be proud of her caring and sharing welfare state.

Last but not least, a story in the U.K.-based Telegraph has some added details on the sordid history of welfare-funded terrorism in Europe.

The jihadists suspected of carrying out the bomb and gun attacks in Paris and Brussels used British benefits payments to fund international terrorism, a court has heard. …Zakaria Bouffassil, 26, from Birmingham is accused of handing over the cash which had been withdrawn from the bank account of Anouar Haddouchi, a Belgian national, who had been claiming benefits while living in the West Midlands with his wife. Kingston Crown Court heard how thousands of pounds of taxpayers’ money continued to be paid into Haddouchi’s bank account, even after he had left Britain for Syria and had begun fighting for Islamic State in Iraq and Levant (Isil). …On the opening day of their trial, jurors heard how some of the most notorious and wanted terrorists in Europe had used British taxpayers’ money to fund their activities in Syria and elsewhere.

Though I suppose I shouldn’t say “sordid history.” This is more like societal suicide.

After all, we’re not talking about welfare payments for a tiny fraction of terrorists. It really is a theme.

I linked to some examples above, and if you want more evidence, click here, here, here, here, and here.

By the way, I’m not claiming that welfare causes terrorism. Though I do wonder if Mickey Kaus has a point when he does make that link.

…extreme anti-social terrorist ideologies (radical Islam, in particular) seem to breed in “oppositional” cultures supported by various government welfare benefits. …The social logic is simple: Ethnic differences make it easy for those outside of, for example, French Arab neighborhoods to discriminate against those inside, and easy for those inside to resent the mainstream culture around them. Meanwhile, relatively generous welfare benefits enable those in the ethnic ghetto to stay there, stay unemployed, and seethe. Without government subsidies, they would have to overcome the prejudice against them and integrate into the mainstream working culture. Work, in this sense, is anti-terrorist medicine.

I don’t particularly like government-provided welfare of any kind, but I definitely think there should be strict rules against handouts for immigrants. And if that makes them less susceptible to terrorist ideologies, that’s a big fringe benefit.

P.S. It goes without saying that politicians aren’t trying to subsidize terrorism. It’s just a byproduct of bad policy. They do, however, explicitly and deliberately subsidize terrorism insurance for big companies. A rather unique example of corporate welfare.

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There’s a somewhat famous quote from Adam Smith (“there is a great deal of ruin in a nation“) about the ability of a country to survive and withstand lots of bad public policy. I’ve tried to get across the same point by explaining that you don’t need perfect policy, or even good policy. A nation can enjoy a bit of growth so long as policy is merely adequate. Just give the private sector some “breathing room,” I’ve argued.

Growth will be weaker with bad policy, of course, but if a nation already is relatively rich, then perhaps voters don’t really care.

But there’s a catch. If you add demographic change to the equation, then bad policy can be a recipe for crisis rather than slow growth. This is one of the reasons why I’m worried about the long-run outlook for Europe, with particular concern about Eastern Europe (by the way, we also have to worry in America).

Welfare State Wagon CartoonsSimply stated, you have to pay attention to the ratio of producers to consumers. And that’s why demographics is important. Falling birthrates and increasing lifespans will wreak havoc with Europe’s tax-and-transfer welfare states.

But there’s another form of demographic change that also can have a big impact. Migration patterns can alter the economic vitality of a jurisdiction. I’ve written about the exodus of French entrepreneurs who move to other countries with better tax systems, and the same thing happens with migration between American states.

And you probably won’t be surprised to learn that Illinois is usually on the losing end.

The Wall Street Journal opines on the state’s grim outlook.

…taxpayers are fleeing the Land of Lincoln in record numbers. According to the Census Bureau, Illinois now leads the nation for the steepest population decline. Between July 2015 and July 2016, Illinois lost some 114,000 people in net migration to other states, with total population decline of 37,508 (including births and deaths). For the third year in a row it was the only state to have lost population among the nine in its Great Lakes and Mid-America region.

But what’s really important, the WSJ explains, is that Illinois is losing people who are net producers and contributors.

…the average person moving out of the state earns some $20,000 more than the average person moving in. According to IRS data for tax year 2014 (filed in 2015), the average income of the taxpayer leaving Illinois was $76,824 while the average income of the new arrival was $56,689. That gap is widening and the differential can be traced to policy decisions as the state staggers under pension debt and an entrenched Democratic-public union machine in Springfield. In an effort to cover growing debt, in January 2011 state lawmakers raised the personal income tax rate to 5% from 3% and the corporate income tax to 9.5% from 7.3%. …The exodus accelerated to 73,500 from July 2011 to July 2012, 67,300 in 2012-2013, 95,000 in 2013-2014, 105,000 in 2014-2015 and 114,000 this year.

The class-warfare tax hike in 2011 was a terrible signal to investors and entrepreneurs.

Illinois already was losing both taxpayers and taxable income during the first decade of the century and the tax increase accelerated the process.

And keep in mind that the state also has a gigantic unfunded liability because of absurd promises of lavish pensions and fringe benefits for state and local government employees.

It’s almost as if the politicians in Springfield want to make the state unattractive.

Though the situation isn’t totally hopeless. Voters elected an anti-tax governor in 2014 and there’s a possibility that the destructive tax increase of 2011 won’t be renewed.

The Wall Street Journal makes a very wise recommendation to the Governor.

Democrats are trying to shake Mr. Rauner down for a repeat. He needs to hold firm to stop the state’s population exodus.

Needless to say, it would be a good idea to let the tax hike expire. That being said, that simply gets the state back to where it was in 2010, which wasn’t exactly a strong position.

The bottom line is that Illinois may have passed the tipping point and entered a death spiral. Sort of akin to being the Greece of America.

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