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Posts Tagged ‘Big Government’

If nothing else, Alexandria Ocasio-Cortez gives me a lot to write about…and to laugh about.

I recently pontificated about her crazy idea to impose a top tax rate of 70 percent, which would reverse the very successful experiment we had in the 1980s (and presumably have a reverse effect on revenue as well).

Today, let’s look at the spending side of the fiscal equation.

AOC, as she is known, wants a dramatic increase in the burden of federal spending for her so-called “green new deal.”

Let’s examine the implications.

We’ll start with a supporter. Thomas Friedman of the New York Times has a giant carbon footprint compared to the average person, but that naturally doesn’t stop him from endorsing policies that would put AOC’s onerous burdens on the less fortunate.

Barack Obama picked up the theme and made a Green New Deal part of his 2008 platform, but the idea just never took off. So I’m excited that the new Democratic Congresswoman Alexandria Ocasio-Cortez and others have put forward their own takes on a Green New Deal… The goal is a ‘detailed national, industrial, economic mobilization plan’ to rapidly transition the country away from fossil fuels and toward clean energy, such as a solar, wind, and electric cars.” The Green New Deal that Ocasio-Cortez has laid out aspires to power the U.S. economy with 100 percent renewable energy within 12 years and calls for “a job guarantee program to assure a living wage job to every person who wants one,” “basic income programs” and “universal health care,” financed, at least in part, by higher taxes on the wealthy. …it is time for the green movement to think big and make big demands…a portion of every dollar raised by a carbon tax in a Green New Deal would be invested in two new community colleges and high-speed broadband in rural areas of every state.

Now let’s look at the implications of such policies.

But before looking at fiscal and economic considerations, let’s briefly detour to ideology.

Jonah Goldberg of National Review has some fun examining the philosophical forerunners of Ocasio-Cortez’s plan.

…the Green New Deal…is a triumph of recycling. Not of plastic bags or soda cans, but of ideas. Specifically, Franklin D. Roosevelt’s New Deal and the impulses behind it. To her credit, Ocasio-Cortez (D., N.Y.) is fairly honest about her ideological recycling. …the New Deal itself was largely about war mobilization — without war. Roosevelt campaigned for president promising to adapt Woodrow Wilson’s wartime industrial policies to fight the Great Depression. …Nearly the entire structure of the New Deal was copied from Wilson’s “war socialism.” The National Recovery Administration was modeled on the War Industries Board. The Reconstruction Finance Corporation was an update of Wilson’s War Finance Corporation. …breaking discipline was a punishable offense, which is why a tailor, Jacob Maged, was sentenced to 30 days in jail for charging too little to press a suit. …American liberalism has been recycling the same basic idea: The country needs to be unified and organized as if we are at war… The attraction stems from what John Dewey called “the social possibilities of war” — the ability to reorganize and unify society according to the schemes of planners and experts.

Gee, another New Deal. What could possibly go wrong?

Now let’s contemplate the practical implications.

We’ll start with Warren Henry’s article in the Federalist.

…the darling of democratic socialism proposed eliminating carbon emissions within 12 years. …The “Frequently Asked Questions” section accompanying her draft resolution claims it could be funded in the “same ways that we paid for the 2008 bank bailout and extended quantitative easing programs, the same ways we paid for World War II and many other wars. The Federal Reserve can extend credit to power these projects and investments, new public banks can be created (as in WWII) to extend credit and a combination of various taxation tools (including taxes on carbon and other emissions and progressive wealth taxes) can be employed.” …Ocasio-Cortez now falls back on the comforting myth that everything is affordable by soaking the rich with higher income taxes. …Ocasio-Cortez half-concedes her plan is a fantasy… For an idea of how detached Ocasio-Cortez is from reality, consider that we get only 17 percent of our energy from renewables. …even if the golden geese of capitalism were to continue laying eggs in Ocasio-Cortez’s command-and-control economy, there will not be enough to make her statist omelet. Even if Ocasio-Cortez’s fever dream were technologically feasible, the burden of funding it would land on the middle class as well as the uber-wealthy. …This is not the first time Ocasio-Cortez has tried to pass off a fairy tale as a white paper. She recently claimed the $32 trillion cost of a Medicare-for-all plan could be funded by curbing fraud at the Pentagon. Not even PolitiFact could make that math work, given that our nation has not spent $32 trillion on defense since its founding.

In an article for FEE, Jarrett Stepman looks at the economics of AOC’s plan.

It shouldn’t be a surprise that the avowed “democratic socialist” went with the predictable “tax the rich” formula in order to pay for a massive government program to combat climate change. …such a scheme would mean that her constituents in New York City would pay a max income tax rate of 82.6 percent… Perhaps New Yorkers deserve what they voted for, but does the country? …the tax hikes on the rich would be one of the least radical parts of the agenda. …moving the economy away from fossil fuels to 100 percent renewable energy will come “at a cost of about $5.2 trillion over 20 years.” …this deal would instead rely on the ruthless bludgeoning of private industry and citizens through the levers of the state. …the plan calls for direct government intervention to be its “prime driver.” …The Green New Deal doesn’t just include environmentalist proposals… Among the liberal wish list items included, the Green New Deal contains a proposal for universal health care and a basic minimum income program to make up for all the jobs lost…this will all come with an immense cost. …How do Green New Deal proponents propose to pay for this extreme growth in government? …by massively hiking taxes and then borrowing and ultimately printing money. Then it would use public banks run by unaccountable bureaucrats to carry the whole thing out. …an American version of a Soviet-style five-year plan focused on command-and-control economic solutions that have proven to fail the world over. …The agony of a collapsing Venezuela…is a stark example of how badly this can end.

Milton Ezrati’s column in the City Journal further debunks AOC’s numbers.

…specific goals…include, among other things, expanding renewable-energy sources until they provide 100 percent of the nation’s power…upgrading every residence and industrial building in the U.S. for energy efficiency…eliminating greenhouse-gas emissions for industry and agriculture; funding “massive” investments… Ocasio-Cortez adds a long list of social objectives: providing training and education for the energy transition, including “job guarantees at a living wage for everyone who wants one”; …mitigating racial, regional, and gender-based inequalities; developing universal health-care and income-support programs… there were some 136 million housing units in the United States. Upgrading each unit to high standards of energy efficiency would cost, conservatively, at least $10,000 per home, adding up to a total cost of $1.3 trillion. Doing the same for industrial structures would easily exceed that amount. The single-payer health-care part would cost another $3 trillion or more, annually. Stabilizing carbon dioxide in the atmosphere would add another $1 trillion to $2 trillion to the price tag—and all these still only account for three items on AOC’s list. …she would rely on debt, “printing money,” and government willingness to take an equity stake in some of the enterprises involved.

The bottom line is Ocasio-Cortez wants to dramatically expand the size and scope of government.

Some of her ideas would involve big increases in red tape, especially for the green parts of the Green New Deal (thus underscoring why it is rather naive for anyone to think the left would accept less regulation in exchange for a carbon tax).

But since I’m a fiscal policy person, I’m naturally concerned about what her grandiose plan would mean for the tax and spending burden.

Brian Riedl of the Manhattan Institute has used public sources to estimate the price tag. Here’s the new spending that AOC and her fellow travelers want to impose on the economy.

And below we have a menu of potential tax increases.

There are two things to realize.

  • First, even if every single one of the tax increases is adopted, it doesn’t come close to paying for AOC’s wish list for new spending.
  • Second, the big revenue sources (payroll taxes, VAT, income tax) are largely taxes on lower-income and middle-class taxpayers.

In other words, politicians talk big about screwing the rich, but the rest of us will be picking up the tab.

By the way, I can’t resist commenting on this second table. I realize Brian is merely following the tradition of budget scorekeepers at the JCT and CBO, but new revenues should not be categorized as “savings.” I would go with “grabbings” or “takings” instead.

Brian’s rhetorical sin doesn’t qualify him for the Bob Dole Award or the Charlie Brown Award, but surely there should be some consequences. Maybe we’ll create a Libertarian Re-education Camp and miscreants will be forced to listen to lectures from Dork 1, Dork 2, and Dork 3?

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I cared a lot about the 1995-96 shutdown and the 2013 shutdown because those were battles involving the size and scope of government.

But I don’t have a dog in the current fight over immigration and border security. That being said, I told Neil Cavuto that there are several fiscal policy lessons we can learn from the current shutdown fight.

A short TV interview just scratches the surface of an issue, so here are some additional details.

The first lesson is that much of what the government does is irrelevant to America.

I pointed out that ordinary Americans don’t notice or care that departments such as Housing and Urban Development are closed because there’s no net value generated by such bureaucracies.

And polling data supports my assertion.

The second lesson is that some parts of government should be shut down permanently.

If people don’t care or notice that a department is temporarily closed, they probably won’t care or notice if it is permanently closed.

I think that message applies to bureaucracies that are affected by the current shutdown (such as HUD and Transportation) as well as to some of the bureaucracies that are unaffected (Education, Energy, Agriculture, etc).

The third lesson is that temporary shutdowns are not a money-saving exercise.

A shutdown does not alter the amount of entitlement spending and it does not change annually appropriated spending. And since bureaucrats always get back pay for their involuntary vacations, there aren’t any savings there, either.

Some argue (see here and here) that a shutdown gives the executive branch unilateral authority to save money. I actually hope that’s true, but I have very little reason to think the Trump Administration is interested in fiscal rectitude.

The fourth lesson is that a busy and productive Congress is a dangerous Congress.

I included the brief blurb by Senator Tillis prior to my interview because I don’t want a “productive” Congress.

I’m not being nihilistic. Instead, I’m making the simple point that America’s Founders had the right idea in creating a factionalism-based system that enables gridlock.

Last but not least, the fifth lesson is that bureaucrats should have less power over economic activity.

I mentioned that there wouldn’t be any threat of disrupted air travel if all airports got to use a privatized version of TSA.

But that’s just one small example. Tim Carney’s column in the Washington Examiner is a must-read on the issue of pointless bureaucratic impediments to commerce.

…the government shutdown is another lesson… Before now, if an out of state brewery issued a new seasonal, you could simply purchase it across state lines thanks to…Form 5100.31 approvals… Of course, if you’re a particularly skeptical type, you may have a question… Why in the world should a brewer need federal approval on new beer labels? Once we ask that question, a thousand analogous questions come to mind. And in the asking, we expose the trick in so many stories about the crucial work of our expansive federal government. The trick is that the government’s work is often made necessary only by needless federal meddling in the first place. …when some reporter tries to tell you to be grateful that the federal government is opening a gate for you, ask them why the wall is there in the first place.

Amen.

This is what I was trying to get across in the interview about business decisions being stymied until some bureaucrats signs off.

Let’s wrap up today’s column with a superb Reason video by John Stossel.

P.S. No column on this topic would be complete without adding to our collection of shutdown humor (h/t: Libertarian Reddit).

You can see other examples of shutdown satire by clicking here, herehere, and here.

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Bernie Sanders is yesterday’s news.

Yes, he’s still lovable ol’ Crazy Bernie, but he’s now being overshadowed by Congresswoman Alexandria Ocasio-Cortez, another out-of-the-closet socialist who somehow thinks America should be more like Greece or Venezuela.

Brian Riedl of the Manhattan Institute opines in National Review about AOC’s proposed tax hike on the rich. He starts with a very appropriate economic observation.

A 70 percent tax bracket would raise very little (if any) revenue, while damaging the economy and sending income and jobs overseas.

He then points out that we should look at both sides of the fiscal ledger.

And the spending side of the left’s ledger is very crowded and very heavy.

…when assessing the needed tax revenues, a green-energy initiative costing $7–$10 trillion over the decade should be examined in the context of $42 trillion in additional Democratic-socialist proposals that include single-payer health care ($32 trillion), a federal jobs guarantee ($6.8 trillion), student-loan forgiveness ($1.4 trillion), free public college ($800 billion), infrastructure ($1 trillion), family leave ($270 billion), and Social Security expansion ($188 billion). …These spending promises are so stratospheric as to be incomprehensible — except to the far Left, which clings to the myth that simply taxing millionaires can finance a level of socialism that would make the Swedes start a tea-party movement.

Here’s the key part of Brian’s column.

He points out that there’s no way to finance the agenda of Democratic Socialists with class-warfare taxes. Even if the AOC tax plan is dramatically expanded.

…a 100 percent tax rate on all income over $1 million…would raise 3.8 percent of GDP — not even enough to balance the current budget, much less finance a Green New Deal. And even that figure implausibly assumes that people continue working and investing. Slightly more realistically, doubling the top 35 percent and 37 percent tax brackets, to 70 percent and 74 percent for singles earning more than $200,000 and couples earning at least $400,000, would raise roughly 1.6 percent of GDP. That figure also ignores all revenues lost to the economic effects of 85 percent marginal tax rates (when including state and payroll taxes) as well as tax avoidance and evasion. …limiting the 70 percent tax bracket to incomes over $10 million…would raise only 0.25 percent of GDP — about $50 billion annually. …$50 billion is surely too high of an estimate, because the kind of people with incomes over $10 million also have teams of accountants and tax lawyers finding every conceivable tax loophole and overseas income shift.

Everything we know about the real-world impact of tax policy tells us that these soak-the-rich taxes won’t raise much – if any – revenue for the simple reason that upper-income taxpayers will alter the timing, level, and composition of their income.

But, as Brian noted, these taxes wouldn’t come close to financing the leftist wish list even if one makes absurd assumptions that behavior doesn’t change and the economy is unaffected.

So how do European nations finance their large welfare states?

Europe finances its generous welfare states through steep value-added taxes that hit the entire population. …Increasing federal spending by 21 percent of GDP to fund Democratic socialism — even after slashing defense — would require either a 55 percent payroll tax increase, or 115 percent value-added tax, according to CBO data. Acknowledging this brutal middle-class burden would immediately end any public flirtation with “free-lunch socialism.”

This is the most important takeaway from the column.

And it’s something that I’ve noted as well. On more than one occasion.

If you want European-type handouts, you better be prepared to cough up a lot of money.

  • Onerous value-added taxes.
  • Punitive payroll taxes.
  • And income taxes that impose high rates on modest incomes.

Simply stated, there is no way to finance a European-sized welfare state without pillaging middle-class and lower-income taxpayers.

Which helps to explain why European living standards are significantly below American levels.

By the way, there one final point from Brian’s column that is worth sharing.

He explains that high tax rates in the 1950s, 1960s, and 1970s didn’t generate much revenue. Even from the rich.

A common liberal retort is that the economy survived 91 percent income-tax rates under President Eisenhower and 70 percent tax rates through the 1970s. That does not mean those policies raised much revenue. Tax exclusions and high income thresholds shielded nearly everyone from these tax rates — to the degree that the richest 1 percent of earners paid lower effective income-tax rates in the 1950s than today. In 1960, only eight taxpayers paid the 91 percent rate. Overall, today’s 8.2 percent of GDP in federal income-tax revenues exceeds that of the 1950s (7.2 percent), 1960s (7.6 percent), and 1970s (7.9 percent). Those earlier decades were not a tax-the-rich utopia.

Amen.

I made similar points back in 2017.

The bottom line is that Alexandria Ocasio-Cortez’s economic agenda cannot be justified when looking at economic data, fiscal data, and historical data.

But we can say with great confidence that ordinary people ultimately will pay the heaviest price if her proposals get enacted since her class-warfare tax hikes will be a precursor for huge tax increases on the rest of us.

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The government is (partially) shut down, yet I’m not happy or excited.

That’s because Washington isn’t fighting about something I care about, such as the near-shutdown over spending levels in 2011 or the shutdown over Obamacare in 2013.

Instead, the latest drama in Washington is because Trump wants money for a border wall, which is an issue that doesn’t motivate me (though I keep asking my GOP friends why they don’t propose to finance the wall by cutting back on wasteful domestic programs).

But at least this battle gives me an opportunity to augment my collection of shutdown humor.

My favorite for today comes from libertarian Reddit.

Amen. As Jay Leno joked back in 2013, the real problem is that politicians eventually figure out how to get the government going again.

Sticking with that theme, let’s enjoy excerpts from some satire by Babylon Bee earlier this year.

As the federal government faces a shutdown…, millions of Americans reported…a sense of relief washing over them like a wave of peace and serenity at the possibility of a powering-down of our volatile governing bodies. “Maybe it wouldn’t be so bad if the federal government would just close up shop and go away for a little while,” one smiling man told reporters. “They’re such a source of strife and frustration in our daily lives—we need a little peace of mind. I really hope they’ll go ahead and take a little break.” “Don’t worry about us, politicians—we’ll be fine. Just go ahead, shut her down and take as much time as you need,” he added.

So even if it’s only a partial shutdown, and even though it’s not for the reasons I would prefer, I still share the sentiment in the Babylon Bee article.

Which is a good segue to an amusing image from Imgur.

The seal in the above image should thank Hank Stanson, at least according to another article from Babylon Bee.

…local libertarian man Hank Stanson reportedly wrote a letter to Santa asking for the entire government to cease operations forever for Christmas this year. “Dear Santa, all I want for Christmas is for you to shut down the federal government permanently,” his modest request read. “All non-essential services should be shut down immediately.” …”I’ve been a very good boy this year,” he wrote, arguing his case. “I haven’t smoked any marijuana, and I haven’t shouted at any police officers that taxation is theft yet. When a prominent politician died earlier this year, I even waited a full day before blasting him on my Facebook page. So please, Santa Claus, please make this staunch liberty lover a very happy man this year.”

I’ve also been a good boy. I waited a full week after George H.W. Bush died before pointing out that he was not a good president.

On a semi-serious note, it’s worth noting that shutdowns don’t actually save any money.

Notwithstanding this bit of satire, we still have to pay taxes.

And the vast army of minions in the federal bureaucracy get paid for sitting at home.

That’s the message in another contribution from Imgur.

To be fair, I don’t actually object to bureaucrats getting paid during shutdown.

I’m much more concerned that they oftentimes work for agencies and departments that shouldn’t exist.

Which brings us to the final bit of humor for today.

This hits the nail on the head.

Every employee at the Department of Housing and Urban Development is nonessential.

The same is true for the Department of Education, Department of Agriculture, Department of Transportation, Department of Energy, and many other boxes on the federal flowchart.

P.S. I linked above to a couple of prior examples of shutdown humor. You can enjoy other editions by clicking here, here, and here.

P.P.S. People say fiscal policy is dry, but we’re actually fun-loving people. There’s also debt-limit humor and sequestration humor.

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I wrote a column earlier this month about the “world’s most depressing tweet,” which came from the Census Bureau and noted that the suburbs of Washington, DC, are the richest parts of America.

To be sure, I was engaging in a bit of hyperbole since a tweet about famine, war, or genocide surely would be more depressing. Nonetheless, I think it is a very bad sign that so many undeserving people are making so much money thanks to a bloated and cronyist central government.

Today I want to share another tweet that deserves some sort of special accolade.

I thought about calling it the “world’s best-ever tweet,” but I’m going to be more restrained and simply assert that it is the best tweet about socialism and capitalism.

This is spot on.

I’ve dealt with countless leftists who claim that the failure of places such as Venezuela, Cuba, North Korea, Greece, Zimbabwe, and the Soviet Union don’t count because they weren’t “real socialism” or “real communism.”

Indeed, that’s even become a humorous theme (see here, here, and here from my collection of socialism/communism humor).

But shouldn’t we learn something from the fact that “almost socialism” invariably produces awful results?

Similarly, there has never been a society that is 100 percent capitalist. The world’s freest nations today, such as Hong Kong and Singapore, have state sectors that consume about 20 percent of economic output. Likewise, government consumed 10 percent of GDP during the height of the western world’s supposedly laissez-faire period in the 1800s.

That being said, shouldn’t we learn something from the fact that “almost capitalism” created the amazing hockey stick of human progress? Shouldn’t we learn something from the fact that “some capitalism” is capable of dramatically reducing global poverty?

P.S. If there was a prize for the most short-sighted, naive, and anti-empirical tweet, this example would win the prize.

P.P.S. And this tweet wins the prize for the best comeback. Consider it a case of tweet-on-tweet violence.

P.P.P.S. Last but not least, here’s a tweet that sums up the essential difference between libertarians and statists.

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What’s the most inefficient and wasteful part of the federal government?

It’s impossible to answer that question without greater detail.

Are we supposed to identify the worst cabinet-level department? If that’s the case, then bureaucracies such as the Department of Housing and Urban Development or the Department of Education would be high on the list.

Or are we supposed to identify the most counter-productive activity of Washington? If that’s the case, then agriculture subsidies, job-training programs. or subsidies for the Organization for Economic Cooperation and Development come to mind.

But what if we’re simply asked to identify the dumbest single thing our overlords in D.C. have financed? That would generate a very long (and ever-growing) list of options. Today, we’re going to look at an example.

Here’s a story that perfectly symbolizes the waste, ineffectiveness, and corruption of Washington.

Customs and Border Protection hired Accenture to hire and recruit 7,500 agents within the next five years. But just 10 months into the contract, only two accepted job offers have been processed, according to the Department of Homeland Security’s Office of the Inspector General. Accenture, a global management consulting company headquartered in Ireland, was awarded a $297 million contract to achieve the hiring goal. But the report says that $13.6 million has been spent in the last 10 months, and that CBP “risks wasting millions of taxpayer dollars on a hastily approved contract that is not meeting its proposed performance expectations.” …CBP ultimately agreed to the four recommendations in the report, including that the CBP commissioner should assess Accenture’s performance.

This is outrageous on several levels.

  • First, federal employees make much more than folks in the private sector, so I’m mystified why it’s necessary to spend any money to attract applicants.
  • Second, why did Uncle Sam sign a contract to pay Accenture nearly $40,000 for each CBP agent hired, assuming the company fully delivered?
  • Third, it goes without saying (but I’ll say it anyhow) that it is absurd that taxpayers to date have paid $6.8 million each for two new CBP bureaucrats.

Sadly, there won’t be any consequences for this boondoggle, at least if history is any guide.

Nobody at the CBP will get fired.

Nobody at the CBP will be demoted.

Nobody at the CBP will lose a bonus.

Simply stated, people in the government don’t care whether our money is being wasted.

Before concluding, we need to add an additional reason to be outraged.

  • Fourth, this is an all-too-typical example of government contracting, with a “beltway bandit” scamming the system for unearned riches.

Maybe I should create a Waste Hall of Fame to augment the Moocher Hall of Fame and Bureaucrat Hall of Fame.

In addition to this squalid Accenture contract, other examples could be the $15 million scam to improve the IRS’s image, the State Department paying 35 times the market price for some Kindles, bonuses for VA bureaucrats who left veterans to die on waiting lists, gold-plated renovations for the CFPB headquarters, and $6,000-a-piece interviews about erectile dysfunction.

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Maybe there’s hope for France. When Greeks, Belgians, and the Brits riot, it’s because they want more handouts.

The French, by contrast, have taken to the streets to protest higher taxes. And they have plenty of reasons to be upset, as the Wall Street Journal reports.

France became the most heavily taxed of the world’s rich countries in 2017… The Organization for Economic Cooperation and Development’s annual review of taxes in its 36 members published on Wednesday showed the French government’s tax revenues were the equivalent of 46.2% of economic output, up from 45.5% in 2016 and 43.4% in 2000. The Danish government’s tax take, which was the highest among OECD members between 2002 and 2016, fell to 46% of gross domestic product from 46.2% in the previous year and 46.9% in 2000. …The rise in French tax revenues was in line with a longstanding trend… The average tax take across the organization’s members edged up to 34.2% of GDP in 2017 from 34% in 2016 and 33.8% in 2000.

I suppose we should applaud Denmark for no longer being at the top of this list.

The tax burden on Danes is still absurdly high, but at least there is a small bit of progress (presumably because of a modest amount of long-overdue spending restraint).

Shifting back to France, the WSJ story mentions that the French president had to retreat on his plan for higher fuel taxes.

President Emmanuel Macron backed off a fuel-tax increase that enraged much of the nation and sparked a grass-roots protest movement against his government. …Before Tuesday’s climb down, Mr. Macron’s government had planned to raise fuel taxes in an effort to cut automobile pollution. …But the planned move sparked the worst riots to hit Paris in decades on Saturday, leaving the city’s shopping and tourist center dotted with burning cars and damaged storefronts. Protesters vandalized the Arc de Triomphe, rattling Mr. Macron’s administration and the country.

For what it’s worth, I’m glad Macron backed down. He actually has some good proposals to liberalize the French economy. That’s where he should be focused, not on concocting new ways to fleece citizens.

To be sure, over-taxation is not limited to France. Here are the most heavily taxed nations according to the OECD report.

Income taxes and payroll taxes generate most of the revenue, as you can see. But keep in mind that all of these countries also have onerous (and ever-increasing) value-added taxes, as well as other levies.

If I was in France (or any of these nations), the first thing I would point out is that people are getting ripped off.

A huge chunk of their income is seized by tax collectors, yet they’re not getting better services in exchange.

Are schools, roads, and healthcare in France better than they are in Switzerland or New Zealand, where the burden of government is much lower?

Or are they better in France than they are in Hong Kong and Singapore, where the fiscal burden is much, much lower?

The European Central Bank confirms that the answer is no.

Here is the data on taxes and spending for OECD member nations. For some reason, not all countries in the OECD’s tax database are included in the OECD’s spending database. Regardless, the obvious takeaway is that big welfare states require confiscatory tax regimes (with the middle class getting pillaged).

A few closing observations on this data.

  • Governments also have non-tax revenues, so red ink is only a partial explanation for the gap between spending and taxes in various nations.
  • Because of somewhat distorted GDP data, the actual tax burden in Ireland and Luxembourg is worse than shown in these numbers.
  • From 1965-present, the tax burden has increased the most in Greece. Needless to say, that has not been a recipe for economic or fiscal success.
  • The U.S. has a modest fiscal burden compared to other industrialized nations, which helps to explain why living standards are higher in America.
  • Mexico is not a low-tax nation. Like many developing economies, its government is simply too incompetent and corrupt to enforce onerous tax laws.

Circling back to our main topic, I joked years ago that the French national sport is taxation. It’s so bad that thousand of taxpayers have faced effective tax rates of more than 100 percent. Indeed, taxes are so onerous that even EU bureaucrats have warned taxes are excessive.

P.S. I guess we shouldn’t be surprised that more than half the population would flee to America if they had the opportunity.

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