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Archive for the ‘United States’ Category

Back in 2013, I shared a snarky post comparing murder rates in Chicago and Houston. What made the data amusing is that any sensible person would look at Chicago’s high murder rate and strict gun control and conclude that perhaps, just maybe, such policies don’t work.

But the post speculated that a left-wing social scientist would instead conclude that “cold weather causes murder.”

Today, let’s take a more serious look at the issue.

Here’s a great video, narrated by Bill Whittle, that looks at gun ownership rates and murder rates. As you can see, America is the number one nation for gun ownership, but we’re nowhere near the top in murder rates.

Having had many arguments with leftists, I can tell you that their response to this video will be to point out that America has one of the highest murder rates if you look solely at developed nations.

That’s true, but this is why the most persuasive data in the video comes near the end when Bill looks at murder rates by major metropolitan areas.

He shows that pro-gun control cities have very high murder rates, whereas heavily armed, pro-gun places such as Plano, TX, have murder rates lower than some of the most tranquil places on the planet.

And although Bill doesn’t make the connection, it’s very much worth noting that Switzerland is one of the world’s most heavily armed nations, yet the murder rate is extremely low.

Moreover, there were no murders in the most recent years for which data are available in Monaco and Liechtenstein, yet I’ve been told during visits to both principalities that there is widespread private gun ownership.

Gee, maybe John Lott is right about more guns leading to less crime.

P.S. Since we’re sharing good news on guns, here’s a heartwarming story about civil disobedience. But this isn’t about civil disobedience solely by gun owners, as we’ve seen in Connecticut.

This is a story about civil disobedience sanctioned by a law enforcement officer!

J.D. Tuccille of Reason reports on the principled behavior of a sheriff in New York.

Fulton County Sheriff Thomas J. Lorey is already known as a supporter of the Second Amendment… Despite the Empire State’s fame as a jurisdiction unfriendly to private gun ownership—or, really, any activity beyond the reach of government officials—Lorey isn’t alone in his views. The New York State Sheriffs Association and individual sheriffs are already on record opposing tightened gun laws and suing the governor to block their enforcement. But Lorey goes a step further, and urges his constituents to defy the state’s handgun permit law. …”I’m asking everyone that gets those invitations to throw them in the garbage because that is where they belong,” says Lorey in the video below. “They go in the garbage because, for 100 years or more, ever since the inception of pistol permits, nobody has ever been required to renew them.”

Makes me proud to be an American when I read things like this.

Though I guess we shouldn’t be surprised to see law enforcement officers express skepticism about gun control. A poll of cops found that they overwhelmingly reject the left’s anti-gun ideology.

And let’s not forget about the poll showing an overwhelming majority of regular citizens would engage in civil disobedience if the government tried to confiscate guns.

P.P.S. Since it’s Super Bowl weekend, here’s a depressing reminder of the NFL’s anti-gun bias.

P.P.P.S. If you like pro-Second Amendment videos, here’s a great collection.

And if you want gun control videos that are both funny and on the right side, here’s my collection.

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I’m tempted to feel a certain degree of sympathy for Paul Krugman.

As a leading proponent of the notion that bigger government stimulates growth (a.k.a., Keynesian economics), he’s in the rather difficult position of rationalizing why the economy was stagnant when Obama first took office and the burden of government spending was rising.

And he also has to somehow explain why the economy is now doing better at a time when the fiscal burden of government is declining.

But you have to give him credit for creativity. Writing in the New York Times, he attempts to square the circle.

Let’s start with his explanation for results in the United States.

…in America we haven’t had an official, declared policy of fiscal austerity — but we’ve nonetheless had plenty of austerity in practice, thanks to the federal sequester and sharp cuts by state and local governments.

If you define “austerity” as spending restraint, Krugman is right. Overall government spending has barely increased in recent years.

But then Krugman wants us to believe that there’s been a meaningful change in fiscal policy in the past year or so. Supposedly there’s been less so-called austerity and this explains why the economy is doing better.

The good news is that we…seem to have stopped tightening the screws: Public spending isn’t surging, but at least it has stopped falling. And the economy is doing much better as a result. We are finally starting to see the kind of growth, in employment and G.D.P., that we should have been seeing all along… What held us back was unprecedented public-sector austerity…now that this de facto austerity is easing, the economy is perking up.

But where’s his evidence? Whether you look at OMB data, IMF data, or OECD data, all those sources show that overall government spending has been steadily shrinking as a share of GDP ever since 2009.

And deficits also are shrinking as a share of economic output according to all these measures, so there’s still “austerity” regardless of whether we’re looking at the underlying disease of government spending or the symptom of red ink.

I sliced and diced the data to see if there was some way of justifying Krugman’s hypothesis and the only numbers that are (vaguely) supportive are the ones from the IMF that show total government spending (federal, state, and local) has increased by an average of 2.3 percent annually over the past two years, after increasing by 1.3 percent per year over the prior three years.

On that basis, one could sort of argue that Krugman is right and “austerity is easing.”

But if that’s his definition of victory, then I’m more than willing to let him be the winner. If we can constrain the public sector so that it grows at 2.3 percent annually, we’ll be complying with my Golden Rule and the burden of government spending will continue to slowly but surely shrink as a share of GDP.

And we’ll definitely have much better fiscal policy than we had between 2002-2009, when overall government spending rose by an average of 7.1 percent annually.

So does this mean Krugman and I are on the same page? During the Los Angeles riots in 1992, Rodney King famously asked, “Can we all get along?” Assuming Krugman is being serious, the answer in late 2014 is yes. It’s time to join hands and sing Kumbaya!

But you may sense a slight tone of sarcasm in my remarks, and that’s because Krugman surely doesn’t want government to “only” grow by 2.3 percent annually. He simply wants to justify his hypothesis that the economy’s improving performance is somehow due to less austerity. Even if that means he’s implicitly endorsing genuine spending restraint.

In other words, Krugman actually is being slippery and misleading in his analysis of American austerity.

But that’s nothing compared to his analysis of so-called austerity on the other side of the Atlantic Ocean. Here’s some of what he wrote about fiscal policy in the United Kingdom.

…in 2010 Britain’s newly installed Conservative government declared that a sharp reduction in budget deficits was needed to keep Britain from turning into Greece. Over the next two years growth in the British economy, which had been recovering fairly well from the financial crisis, more or less stalled. In 2013, however, growth picked up again — and the British government claimed vindication for its policies. Was this claim justified? No, not at all.

Krugman then claims that there was better economic performance because U.K. politicians decided against “further cuts.”

What actually happened was that the Tories stopped tightening the screws — they didn’t reverse the austerity that had already occurred, but they effectively put a hold on further cuts. …And sure enough, the nation started feeling better.

So is he right?

Well, the IMF numbers show that overall government spending has been growing, on average, by 2 percent annually since 2009. By today’s standards, that’s a decent record of spending restraint.

But what if we dissect the numbers? Did spending grow very slowly between 2010-2012, followed by a relaxation of restraint beginning in 2013? In other words, is Krugman’s argument legitimate, even if it requires him to implicitly endorse (as in the American example) decent fiscal discipline over the past two years?

Nope. Instead, the numbers show just the opposite. Between 2010-2012, the burden of government spending expanded by an average of 2.3 percent per year.

But over the past two years, the “austerity” has become tighter and the budget has grown by 1.5 percent annually.

In other words, it seems that Krugman is either sloppy or mendacious.

Though I’m going to give him an escape hatch, a way of justifying his assertions. When the Tories took over in the United Kingdom, they quickly imposed a series of tax hikes (in addition to the tax hikes imposed by the outgoing Labor government). But since that time, the government has implemented some tax cuts, most notably reductions in corporate tax rates and lower tax rates on personal income.

So if Krugman wants to argue that tax increases retarded the British economy for a few years and that tax cuts are now helping to boost growth, I’m willing to give him a probationary membership in the supply-side club.

But I don’t expect him at the next meeting.

P.S. This isn’t the first time Krugman has mangled numbers when analyzing U.K. fiscal policy.

P.P.S. He’s also butchered data when writing about fiscal policy in nations such as France, Estonia, and Germany,

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The United States is burdened with some very bad policies that hinder growth and undermine competitiveness. But sometimes you can win a race if your rivals have policies that are even more self-destructive.

And that’s a good description of why the U.S. economy is out-performing Europe and why people in the United States enjoy higher living standards than their European counterparts.

In 2010, I shared data showing that Americans had far higher levels of consumption than Europeans.

In 2012, I updated the numbers and showed once again that people in America far ahead of folks in Europe.

And here are the most recent numbers from the Organization for Economic Cooperation and Development, showing “average individual consumption” for various member nations of that international bureaucracy.

The average for all OECD nations is 100, and the average for eurozone nations is 96, so the U.S. score of 147 illustrates how much better off Americans are than citizens of other countries.

The only nations that are even close to the United States have oil (like Norway) or are low-tax international financial centers (such as Luxembourg and Switzerland).

So why is the United States doing better than Europe?

There are two responses.

First, notwithstanding what I’ve just written, it’s a bit misleading to compare the U.S. to Europe. Simply stated, there are vast differences among European nations in terms of policies and living standards, much more than you find between and among American states.

There are nations such as Switzerland and Finland, for instance, that rank above the United States in Economic Freedom of the World. But there are also highly statist and moribund countries such as France, Italy, and Greece, as well as transition economies in Eastern Europe that are still trying to catch up after decades of communist oppression.

So overall America-vs-Europe comparisons should be accompanied by a grain of salt.

Second, now that we’ve ingested some salt, let’s draw some general conclusions about the role of public policy. Most important, nations with bigger governments and more intervention (as is the case for many European countries) generally don’t grow as fast or have the same living standards as nations with smaller governments and more reliance on competitive markets.

The comparisons can get complicated because there are a wide range of policies that impact economic performance (many people focus on fiscal policy, but trade, regulation, monetary policy, and the rule of law are equally important). Comparisons also can get confusing because there are some relatively rich nations with bad policy and some relatively poor nations with good policy, which is why it is important to look at how rich or poor nations are (or were) when there were significant changes in policy.

For instance, many nations in Western Europe became relatively rich in the 1800s and early 1900s when the overall burden of government was very small. Now they’ve adopted welfare states and growth is much slower (or, in some cases, nonexistent), but they’re oftentimes still in better shape than nations (such as Estonia and Chile) that only recently have liberalized their economies.

Now that we’ve gone through all this background, let’s look at a couple of stories that make me pessimistic about Europe’s future because they capture the mentality that seems dominant among continental policy makers.

First, one of the bright spots for the continent is that there’s been vigorous corporate tax competition. In other words, politicians have been under pressure to lower tax burdens on the business community because of concerns that jobs and investment will migrate to nations with better policy.

As you can imagine, this irks the political class (even though lower rates haven’t resulted in less revenue!).

So you won’t be surprised to learn that there’s a new push for tax harmonization in Europe. Here are some of the details from a news report.

France, Germany and Italy have joined forces to outlaw tax competition between EU countries in a letter to the European Commission. …the language and tone in the joint letter to the new Economic and Taxation Commissioner, Pierre Moscovici, is much more aggressive than in the past. …the letter from the finance ministers of the eurozone’s three largest economies says that “the lack of tax harmonisation in the European Union is one of the main causes allowing aggressive tax planning, base erosion and profit-shifting to develop”. …Vanessa Mock, commission spokeswoman said Mr Moscovici “welcomes these significant contributions to the work being carried out by the commission”.

Hmmm…., the Frenchmen who is the Economic and Taxation Commissioner “welcomes” a call from the governments of France, Germany, and Italy to outlaw tax competition. I’m shocked, shocked, by this development.

But as one British politician explained, this approach of higher business taxes will further undermine European economic vitality.

Now let’s shift to our second story, which illustrates the self-serving greed of the political elite at the European Commission.

Here are some passages from a story on the spectacular golden parachutes offered to outgoing senior Eurocrats. And we’ll focus on the former President of the European Council since he’s such a deserving target of ridicule.

Herman Van Rompuy will be entitled to more than £500,000 for doing nothing at the taxpayer’s expense over the next three years, after finishing his term as president of Europe. After standing down on Monday, the former president of the European Council will be paid £133,723 a year, 55 per cent of his basic salary, until December 2017 – to ease him back into life outside the world of Brussels officialdom.

Gee, how kind of European taxpayers to “ease him back” into the real world.

Except, of course, Van Rompuy’s never been in the real world. He’s had his snout in the public trough his entire life.

And he also gets to pay far less tax on this money compared to the poor slobs in the private sector who are footing the bill for this official largesse.

…The “transitional allowance” does not require Mr Van Rompuy to do any work at all and the cash will be paid under reduced rates of EU “community” tax, which are far lower than taxation in his native country of Belgium. …Mr Van Rompuy has not been a stranger to controversy over the perks of EU officialdom since he took the post in December 2009. He was widely criticised four years ago for using his official motorcade of five limousines as a taxi service to take his family on 325-mile round trip to Paris airport en route to a private holiday in the Caribbean. …The cost of Mr Van Rompuy’s retirement is part of a much larger bill for the handover of the administration in EU as former European Commissioners serving in the last Brussels executive pocket “transitional allowances” worth around £30million.

This scam has been in operation for several years, and keep in mind that excessive pay and lavish perks for commissioners are matched by excessive pay and lavish perks for member of the European Parliament (including taxpayer-financed penile implants).

And lavish pay and perks for European Union bureaucrats.

And don’t forget these are the folks who are pushing for bigger government and higher taxes on a pan-European basis. Like many of our politicians in Washington, they think the private sector is some sort of piñata that is capable of producing endless amounts of revenue to finance ever-expanding government.

Even though the evidence from Greece, Italy, Spain, etc, confirms that Margaret Thatcher was right when she warned that the problem with big government is that sooner or later you run out of other people’s money.

P.S. European bureaucrats have decided taxpayer-financed tourism is a human right. And they also use taxpayer money to produce self-aggrandizing comic books.

P.P.S. The European political elite are so bad that even President Obama has felt compelled to oppose some of their tax initiatives.

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It’s time for an updated version of the U.S. vs U.K. government stupidity contest.

This ongoing series has featured amazing feats of inane government, including the world’s most pointless road markings, photo-ID requirements for drain cleaner purchases, and a government so incompetent that it couldn’t give money away.

Today’s contest, though, is going to focus on examples of wimpiness from both sides of the Atlantic.

Here’s an excerpt from a story out of the United Kingdom. Apparently, one neurotic mother thinks her son is some sort of incompetent misfit.

OMG, he’s going to become a serial killer!!

A mother was left horrified after her 10-year-old son returned form Tesco’s supermarket with a pumpkin carving kit which included a sharp serrated blade. Natalie Greaves from Sheffield in South Yorkshire described her reaction to Shay returning home with the one pound kit: ‘I went berserk when he came home with it. ‘I couldn’t believe that he could pick that sort of thing up as a child – there should have been an age restriction on it.’

“Horrified”? “Beserk”? You must be kidding. If there’s someone in that family who shouldn’t be allowed around sharp objects, it’s the mother.

It’s almost enough to make me think the kid would be better off in foster care, notwithstanding my libertarian instincts that even bad homes are oftentimes better than state control.

But I also wonder what this says about the entire nation. Back in 2012, I shared some laughably pathetic examples of anti-gun political correctness from the United Kingdom and wondered how such inane behavior could exist in a country that “once ruled half the world.”

Needless to say, this story doesn’t reflect well on our cousins across the ocean.

But Americans are in no position to make fun of others since there are plenty of examples of brain-dead political correctness in the United States.

After all, you don’t want to throw stones if you live in a glass house. And when it comes to absurd anti-gun hysteria, government schools make Americans look like infantile idiots.

Here are parts of a story from a local news outlet in Alabama.

A Mobile mother is not happy about a controversial Mobile County School contract her daughter signed without her consent. The contract promises that her daughter will not kill or injure herself and others. …She said E R Dickson school officials crossed the line when they had her daughter sign a Mobile County Public Safety Contract without her being present.

This sounds serious. Are we talking about a 16-yr old gang member? A 17-yr old with psychiatric issues? A 15-yr old with a history of violence.

Ummm…not exactly.

The student, a 5-yr old girl named Elizabeth, was playing like a normal kid. Here are some of the details.

School officials told Rebecca they had to send Elizabeth home after an incident in class.  “They told me she drew something that resembled a gun,” said Rebecca. “According to them she pointed a crayon at another student and said, ‘pew pew,” said Rebecca. She said her child was given a questionnaire to evaluate her for suicidal thoughts. “[They] Asked her if she was depressed now,” said Rebecca. Without her permission, Rebecca said her child was given the Mobile County Public School Safety Contract to sign stating she wouldn’t kill herself or others. “While I was in the lobby waiting they had my 5-year-old sign a contract about suicide and homicide,” said Rebecca. …Rebecca is pushing to have the incident removed from her child’s record. She said school officials have requested Elizabeth see a psychiatrist.

As I’ve argued before, in cases like this it’s the school bureaucrats who need counseling.

So which nation wins the prize for the worst example of P.C. wimpiness?

I’m ashamed to say that the United States probably deserves that dubious honor. After all, the story from the U.K. involves one weird parent while the U.S. story involves a deliberate decision by an arm of government.

Though I will point out that it’s not just one screwy parent in the United Kingdom. Wimpiness appears to be pervasive.

The mum-of-three checked online and found similar carving kits with restrictions allowing only people over-18 to buy it. A Tesco spokesperson responded to this mother’s anger… ‘We were concerned by this incident and acted immediately to ensure all pumpkin carving knives will trigger an age restriction till prompt.’

So maybe the U.K. story belongs in the U.K. vs. U.S. private sector political correctness contest.

P.S. Let’s shift to a different topic. I recently wrote that the jihad against tobacco at the U.N.’s World Health Organization was a classic (and tragic) case of resources being diverted from something that genuinely matters, such as fighting deadly infectious disease.

A column in the Wall Street Journal makes the same point, only it identifies the silly crusade against sugar as the main example of mission creep.

The WHO’s record of handling epidemics over 30 years reveals a health system that is getting worse, not better. On at least four occasions the U.N. organization has failed to deal with major outbreaks of communicable disease. …The list of internal problems that cause the WHO to fumble when faced with an epidemic is no secret. …an array of disparate programs within the WHO—such as the current crusade against processed sugar and sugar beverages—have diverted time, attention and money from higher priorities, such as tracking and responding to epidemic diseases.

And the Washington Examiner has opined on the same issue.

Years of dramatically overstaffed city agencies, over-generous retirement promises to public employee unions, and white-elephant development projects had left the city unable to police its streets, keep street lamps on, maintain parks, or provide other basic government services, no matter how much the city government raised taxes. The lesson of Detroit is one that governments everywhere can learn: In a world with finite resources, governments that try to do too much end up neglecting even the essential. Detroit’s case is a microcosm of what Americans are now experiencing nationwide in several different areas — the evident inability of public health officials to manage the Ebola scare competently is just one of them. The Centers for Disease Control and Prevention, the agency that instructed a mildly symptomatic patient with known exposure to Ebola to board a commercial flight this week, spends millions annually on bonuses for top employees, bicycle paths, farmers markets, and other luxuries. …Even if they enjoy using the money the nation has for disease control and vaccine research to fund instead research on origami condoms and to appease politically active bicyclists, public health bureaucrats might do better in the future putting their massive budgets toward basic preparedness for precisely the kind of emergency the CDC was created to address.

The link between small government and effective government is something Calvin Coolidge understood. Needless to say, that’s not the attitude of the current occupant of the White House, which is why this bit of humor is worth sharing.

I think the unintentional video on Obama’s new Ebola Czar is even funnier, but whoever put this together gets high marks for cleverness.

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Divided government is good for America’s economy.

Or, to be more specific, divided government is a net plus if the alternative is to have statists fully in charge of economic policy.

I made this point back in 2012 when I pointed out that the unemployment rate started falling after Republicans captured the House of Representatives, and we got further good results when gridlock led to an end to extended unemployment benefits, first in North Carolina and then the entire country.

We also see positive evidence in the new rankings from the Fraser Institute’s Economic Freedom of the World, which was published this week.

As you can see from this chart, the United States fell in 2010 to #18 in this global ranking of economic liberty, but now America has improved to #12.

That’s still far below our #3 ranking when Bill Clinton left office, so we’re still paying a high price for the statist policies of both Bush and Obama, but at least we’re finally moving back in the right direction.

If you look at the underlying data, you can see why America’s score has increased since 2010.

There was a slight improvement in the scores for trade and regulation, but that was offset by declines in the scores for monetary policy and property rights.

Fiscal policy is the area where there was a significant improvement for the United States, which matches with my data showing that sequestration and the Tea Party made a big difference by significantly slowing the growth of government spending.

But the improvement over the past two years, as noted above, is small compared to the decline in the previous 10 years.

Here’s how Economic Freedom of the World describes America’s fall.

The 7.81 chain-linked rating of the United States in 2012 is more than 8/10 of a point lower than the 2000 rating. What accounts for the US decline? While US ratings and rankings have fallen in all five areas of the EFW index, the reductions have been largest in the Legal System and Protection of Property Rights (Area 2)… The plunge in Area 2 has been huge. In 2000, the 9.23 rating of the United States was the 9th highest in the world. But by 2012, the area rating had plummeted to 6.99, placing it 36th worldwide. …the increased use of eminent domain to transfer property to powerful political interests, the ramifications of the wars on terrorism and drugs, and the violation of the property rights of bondholders in the auto-bailout case have weakened the tradition of strong adherence to the rule of law in United States. …To a large degree, the United States has experienced a significant move away from rule of law and toward a highly regulated, politicized, and heavily policed state.

Geesh, we’re becoming another Argentina.

Looking at the big picture, a falling score is not a trivial issue.

The decline in the summary rating between 2000 and 2012 on the 10-point scale of the index may not sound like much, but scholarly work on this topic indicates that a one-point decline in the EFW rating is associated with a reduction in the long-term growth of GDP of between 1.0 and 1.5 percentage points annually (Gwartney, Holcombe, and Lawson, 2006). This implies that, unless policies undermining economic freedom are reversed, the future annual growth of the US economy will be only about half its historic average of 3%.

Amen. This is why I worry so much about the corrosive impact of big government.

Now let’s look at the overall ratings for all nations. The chart is too large to show all nations, so here are the nations with the most economic freedom.

You shouldn’t be surprised to see that Hong Kong and Singapore own the top two spots.

Other nations with very high scores include New Zealand, Switzerland, Mauritius, UAE, Canada, Australia, Jordon and Chile.

Getting a good score today, however, is no guarantee of getting a good score in the future.

I’ve already expressed concern about Australia moving in the wrong direction, but I’m even more worried about Chile. That nation’s socialist President is making very bad moves on fiscal policy, and also is trying to undermine her country’s very successful system of school choice.

But it would take a lot of bad policy for Chile to drop down to the level of Venezuela, which has the dubious honor of being in last place.

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Since I spend considerable time defending tax competition, fiscal sovereignty, and financial privacy, people sometimes think I can give competent advice on how best to protect one’s income from the IRS.

Hardly. Like most people in Washington, I’m all theory and no practice.

Besides, when people ask me about the ideal tax haven for an American citizen, I generally don’t have good news.

I explain that they are already living in a very successful tax haven, but then given them the bad news that only nonresident foreigners can take advantage of America’s tax haven policies. Though we should still be happy about being a haven since the favorable tax rules for foreigners have attracted lots of investment.

With the erosion of financial privacy, the IRS has considerable ability to track your money around the world, so moving your money to an overseas tax haven may not work. Even Switzerland, for example, has been bullied into weakening its human rights laws so that they no longer protect the privacy of nonresident investors.

Physically moving (your body and your money) to a foreign fiscal paradise such as Bermuda, Monaco, or the Cayman Islands doesn’t provide much value since the United States has the world’s most aggressive and punitive worldwide tax system. You’re basically treated by the IRS like you’re living stateside.

You can join thousands of other people and give up your American passport. But even that step has big downsides since the IRS imposes very nasty exit taxes, notwithstanding the fact that the United States is a signatory to international agreements that supposedly protect the right to emigrate without undue hassle.

But there is still one legal and effective way of dramatically reducing your federal tax burden.

Here are some details from a Bloomberg report on the relatively unknown tax haven of Puerto Rico.

Struggling to emerge from an almost decade-long economic slump, the Puerto Rican government signed a law in early 2012 that creates a tax haven for U.S. citizens. If they live on the island for at least 183 days a year, they pay minimal or no taxes, and unlike Singapore or Bermuda, Americans don’t have to turn in their passports. ……Under Puerto Rico’s new rules, an individual who moves to the island pays no local or federal capital-gains tax — capital gains are charged based on your tax home rather than where you earn them — and no local taxes on dividend or interest income for 20 years. …Moving to the island won’t kill all taxes: U.S. citizens still have to pay federal taxes on dividend or interest income from stateside companies.

And there are even some tax benefits for companies.

The government gives a tax break for businesses that move to Puerto Rico and provide services outside the country, perfect for a hedge fund with clients in New York and London. These firms pay only a 4 percent corporate tax, compared with 35 percent on the mainland. About 270 companies have applied for this incentive, according to officials.

Here are some real-world examples of rich people engaging in fiscal self defense.

About 200 traders, private-equity moguls and entrepreneurs have already moved or committed to moving, according to Puerto Rico’s Department of Economic Development and Commerce, and billionaire John Paulson is spearheading a drive to entice others to join them. …Schiff, who runs Westport, Connecticut-based brokerage Euro Pacific Capital Inc., relocated his $900 million asset management arm from Newport Beach, California, to San Juan in 2013. He plans to move to the island within the next several years. But the savings can be extraordinary, especially given the effects of compounding, says Alex Daley, chief technology investment strategist at Casey Research, a firm that publishes reports for investors. Late last year, Daley moved from Stowe, Vermont, to Palmas del Mar, about 45 minutes from San Juan. …Robb Rill, 43, managing director of private-equity firm Strategic Group PR, relocated with his wife to Puerto Rico from Florida in February 2013. He started the 20/22 Act Society, named for the tax laws designed to encourage people and businesses to set up shop here, to help educate fellow expatriates and serve as a networking group.

So what’s the catch? Well, it depends on your lifestyle preferences. Some people are willing to pay extra so they can live in a big metropolis like New York City. Others are willing to cough up a lot of their money to enjoy California’s climate.

But the folks in Puerto Rico say they have a lot to offer besides big reductions in federal taxation.

The real challenge, she says, is convincing people they can replicate their life. Will they have well-traveled, well-educated friends? Are there decent schools for their kids? Are there charities that wives can join? Is crime an issue? She takes her clients to dinner at outdoor cafes to show them it’s safe at night, and she organizes luncheons to introduce newcomers to native Puerto Ricans. …Puerto Rico isn’t just about low taxes. It has white-sand beaches and temperatures in the 80s year-round. There’s an art museum with a world-renowned pre-Raphaelite collection. It has luxury apartment buildings, over-the-top resorts such as Dorado Beach, and a handful of private international schools that send their graduates to Ivy League colleges. It has restaurants with award-winning chefs. It’s a four-hour flight to New York. And the island operates under U.S. law.

I don’t have money, so it’s not an issue for me. But if I did, my first questions would be about the prevalence of fast food and softball leagues.

But I admit that I’m a bit of a rube.

Anyhow, the New York Times also has figured out that rich people can escape class-warfare taxes by moving to Puerto Rico.

After a slow start, Puerto Rico’s status as a tax haven is beginning to catch on, and some are betting big bucks that the trickle of buyers moving there will soon become a stream. …“I take at least five calls a day from new people considering moving here,” said Gabriel Hernandez, a tax partner with the San Juan office of BDO Puerto Rico. When the law was first passed, Mr. Hernandez advised two people who relocated to Puerto Rico from the mainland United States; last year that number rose to about 15, and so far this year, he has helped more than 80 people make the move and is advising another 60 who are considering it. …As of July, 115 people — nearly all of them United States citizens — have applied and been granted the tax exemption, with another 135 forecast to make the move before the end of the year, according to Puerto Rico’s Department of Economic Development and Commerce. Last year, 151 people were granted the tax-exempt status.

The real reason to share the NYT story, though, is a particularly laughable excerpt.

The reporter wants us to believe that escaping high taxes is “distasteful.”

While there is much to recommend Puerto Rico as a tax haven — it has better beaches than Switzerland, no immigration hassles like Ireland and is a lot closer than Singapore — there are the undeniably distasteful politics of fleeing New York to save on taxes.

If escaping high taxes in New York is “distasteful,” then lots of people with lots of money already have decided to be distasteful.

P.S. If you’re a rich person, but you don’t want to move to Puerto Rico, there are some relatively simple and fully legal steps you can take to deprive the politicians of tax revenue.

P.P.S. In other words, politicians can impose high tax rates, but that doesn’t necessarily mean high tax revenue. Which is why I’m still hoping President Obama reads what I wrote for him on the Laffer Curve.

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To put it mildly, I’m not a fan of the so-called Tax Justice Network. In a moment of typical understatement, I referred to the U.K.-based group as “…a bunch of crazy Euro-socialists.”

And to give you an idea of why I don’t like them, here’s some of what I wrote about them two years ago.

…the Tax Justice Network [is] closely allied with governments in left-wing nations such as France, and they share the same goals as statist international bureaucracies such as the Paris-based Organization for Economic Cooperation and Development. If they succeed in crippling tax competition and setting up some sort of global network of tax police, more politicians will raise tax rates, causing more misery, and bringing more nations one step closer to Greek-style fiscal collapse.

With this bit of background, it goes without saying that I very rarely agree with TJN.

But just as a stopped clock is right twice daily, the Tax Justice Network on rare occasions will produce some worthwhile research. For example, here are some passages from my article in the latest issue of the Cayman Financial Review (where I’m a member of the Editorial Board).

…would anybody, if asked to list the world’s 10 biggest tax havens, put together a list that includes Germany, Japan and the United States? Sounds absurd, but that’s precisely what the ideologues at the Tax Justice Network (TJN) asserted in the Financial Secrecy Index (FSI) released last November. …To be fair, though, the methodological approach used in the FSI report is not wholly objectionable. The TJN is seeking to come up with a measure that combines both the degree to which a jurisdiction has “secrecy” laws and the extent to which that jurisdiction attracts global capital. In other words, the TJN’s philosophical leanings are extreme and the organization obviously is motivated by a desire to hinder tax competition and fiscal sovereignty, but the FSI report provides an interesting way of seeing which so-called tax havens play the biggest role in the world economy.

And one of the biggest tax havens – number 6 according to TJN – is the United States.

TJN FSI 2013I have no objection to their choice.

It makes sense to include the United States because there are several attractive policies for global investors, including the non-taxation and non-reporting of certain types of capital income. Moreover, several states have very friendly incorporation laws.

When I’m talking about “friendly incorporation laws,” I’m referring to the fact that states such as Delaware, Nevada, Wyoming, and others make it easy for everyone – particularly foreigners – to set up companies. This is a good thing for business and investment, but it irks statists because many American states don’t require the collection and sharing of information that foreign governments want for purposes of enforcing bad tax law.

So the United States is a de facto tax haven.

But that’s just part of the story. When I discuss the “non-taxation and non-reporting of certain types of capital income,” I’m referring to the fact that the internal revenue code generally does not impose tax on interest and capital gains paid to  foreigners (specifically nonresident aliens). And because we don’t tax those payments, there’s no requirement to report that information to any government. As you can imagine, this irks the left because it means there’s no information to share with foreign governments that want to track – and tax – flight capital.

To reiterate, this makes the United States is a de facto tax haven.

These laws are extremely beneficial to the American economy. To get an idea of why the United States is a big winner from being a “tax haven,” look at this chart showing historical data on the amount of money foreigners have invested in stocks, bonds, and other forms of indirect (sometimes called passive) investment in America.

By any standard, $13 trillion is a lot of money. Those funds boost our financial markets, enable job creation, and increase economic performance. We don’t know how much of that money is invested in the United States because we have a friendly and confidential tax system for nonresident aliens, but it surely helps to explain why there’s so much foreign investment in America.

Let’s be thankful that the United States is a so-called tax haven. Those pro-growth policies help to offset Obama’s bad policies. Indeed, two Canadian economists found that tax havens actually are economically beneficial for high-tax nations.

But that’s not the moral of the story. Yes, I like that America is a tax haven for foreigners, but the real moral of the story is that we should apply the same good policies to Americans.

Let’s get rid of the corrupt internal revenue code and adopt a simple and fair flat tax. That means a low tax rate, of course, but it also means no double taxation of income that is saved and invested.

Which means Americans would get the same pro-growth treatment now reserved for foreigners.

For more information, here’s my video on the economic argument for tax havens.

P.S. You won’t be surprised to learn that hypocritical leftists love using tax havens to protect their money even though they want to deny that freedom to the rest of us.

P.P.S. I’m such an avid defender of tax havens that I almost wound up in a Mexican jail. That’s dedication!

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