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Posts Tagged ‘Class warfare’

I don’t always fully agree with Will Wilkinson of the Niskanen Institute, but I’m an avid reader of his work because he writes intelligently on issues that I care about.

I especially like it when we’re on the same side. A good example is his recent column about billionaires in the New York Times. He starts by observing that politicians such as Bernie Sanders and Alexandria Ocasio-Cortez are demonizing the super-rich.

Socialists have long held that large stores of private wealth are tantamount to violence against those in need. …Thanks at least in part to Bernie Sanders and the sizzling rise of Alexandria Ocasio-Cortez,… Enthusiasm for radical leveling is whistling out of the hard-left fringe… Ms. Ocasio-Cortez’s policy adviser, Dan Riffle, contends that “every billionaire is a policy failure”… He’d like to see the 2020 Democratic primary contenders answer a question: Can it be morally appropriate for anyone to be a billionaire?

Will answers Mr. Riffle’s question by noting that the world’s most successful nations operate on the principles of classical liberalism.

…the existence of virtuous three-comma fortunes is a sign not of failure but of supreme policy success. …The empirical record is quite clear about the general form of national political economy that produces the happiest, healthiest, wealthiest, freest and longest lives. There’s no pithy name for it, so we’ll have to settle for “liberal-democratic welfare-state capitalism.” There’s a “social democratic” version, which is what you get in countries like Sweden, Norway and the Netherlands. And there’s a “neoliberal” (usually English-speaking) version, which is what you get in countries like Canada, New Zealand and the United States. …in comparative terms, they’re all insanely great. The typical citizen of these countries is as well-off as human beings have ever been. …guess what? There are billionaires in all of them. Egalitarian Sweden, an object of ardent progressive adoration, has more billionaires per capita than the United States.

Spot on.

Nations with a lot of economic freedom produce both billionaires and a high quality of life for ordinary people.

And, yes, that does include some Northern European welfare states (though, if I wrote the column, I would have noted that those nations became rich before welfare states were adopted).

But let’s not digress. Here’s the accompanying chart for Will’s column, which compares how nations score on the U.N.’s Human Development Index (based on lifespans, education, and income) and how many billionaires they have as a share of their populations.

I can’t resist pointing out that Hong Kong and Singapore both score highly, so the “welfare-state” part of “liberal-democratic welfare-state capitalism” certainly isn’t necessary to get on this list.

Indeed, the same is true of the other countries on the list if you look at the history of their economic development.

But I’m digressing again. Let’s get back to the column.

Will issues a very relevant challenge to the class-warfare crowd.

So what’s the problem? Preventing billion-dollar hoards guards against the bad consequences of … having the best sort of polity that has ever existed? …Inspect any credible international ranking of countries by democratic quality, equal treatment under the law or level of personal freedom. You’ll find the same passel of billionaire-tolerant states again and again. If there are billionaires in all the places where people flourish best, why think getting rid of them will make things go better?

And he makes a final point about how honestly earned wealth (i.e., not using government coercion) produces big benefits for the rest of us.

…there’s a big moral difference between positive-sum wealth production and zero-sum wealth extraction — a difference that corresponds to a rough-and-ready distinction between the deserving and undeserving rich. The distinction is sound because there’s a proven a way to make a moral killing: improve a huge number of other people’s lives while capturing a tiny slice of the surplus value. …According to William Nordhaus, the Nobel Prize-winning economist, innovators capture about 2 percent of the economic value they create. The rest of it accrues to consumers. Whatever that is, it’s not a raw deal. The accumulation of these innovations over time is the mechanism that drives compounding economic growth, which accounts for a vast improvement over the past 100 years in the typical American standard of living. Some people may have made an ungodly sum in the course of helping make this humanitarian miracle happen, but that’s O.K.

It’s not just O.K., it’s great news.

This is what has produced the unparalleled prosperity of western nations.

Though I fear some of our friends on the left won’t be convinced. At least not the ones who are fixated on inequality.

Some of them very openly admit they are willing to hurt lower-income and middle-class people so long as rich people suffer even more. The International Monetary Fund has even produced studies (yes, more than one!) justifying this harsh ideological view.

Margaret Thatcher is spinning in her grave.

P.S. There is a “Modest Proposal” to “solve” inequality by eliminating the rich.

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I did not like Bill Clinton’s 1993 class-warfare tax hike, and I also opposed Barack Obama’s 2012 fiscal-cliff tax increase on the so-called rich.

But those were incremental measures.

Today’s leftist politicians have much more grandiose schemes, such as 70 percent tax rates, wealth taxes, and extortionary death taxes.

And even those proposals may not be enough.

In a column for the New York Times, Farhad Manjoo actually suggests that billionaires should be taxed out of existence. Literally, not just figuratively.

…if we aimed, through public and social policy, simply to discourage people from attaining and possessing more than a billion in lucre, just about everyone would be better off. …Bernie Sanders and Elizabeth Warren are floating new taxes aimed at the superrich, including special rates for billionaires. Representative Alexandria Ocasio-Cortez, who also favors higher taxes on the wealthy, has been making a moral case against the existence of billionaires. …the question is getting so much attention because the answer is obvious: Nope. Billionaires should not exist… Abolishing billionaires might not sound like a practical idea, but if you think about it as a long-term goal in light of today’s deepest economic ills, it feels anything but radical. …Billionaire abolishment could take many forms. It could mean preventing people from keeping more than a billion in booty, but more likely it would mean higher marginal taxes on income, wealth and estates for billionaires and people on the way to becoming billionaires. …But abolishment does not involve only economic policy. It might also take the form of social and political opprobrium. …Why should anyone have a billion dollars, why should anyone be proud to brandish their billions, when there is so much suffering in the world? …When American capitalism sends us its billionaires, it’s not sending its best. It’s sending us people who have lots of problems, and they’re bringing those problems with them. They’re bringing inequality. They’re bringing injustice.

Wow, I’m not even sure how to respond to this demonization of success. Should I focus on the vicious populism? The economic ignorance?

Maybe I should joke about how Mr. Manjoo wants to turn David Azerrad’s satire into reality?

Fortunately, I don’t have to come up with a response. I can simply rely on Allister Heath of the U.K.-based Daily Telegraph.

He explains, in his latest column, that these crazy ideas are a real threat.

Hard-Left ideas are uber-trendy: they are making a catastrophic comeback in the world’s most powerful universities, capturing many young minds, and are now being proposed by a new generation of supposedly modern politicians around the world. …pro-capitalist arguments…are met with derision by this new generation of intellectuals. Higher taxes bad for the economy? Hilarious! Nationalisation doesn’t work? Laughable! Venezuela? Nothing to do with actual socialism, all America’s fault. It’s a dialogue of the deaf… The old Left used to argue (falsely) that entrepreneurs, investors and executives aren’t really put off by high tax, which means that rates can be jacked up safely, raising lots to “redistribute”, without discouraging work and investment. The new Left has turned the argument on its head. It now admits the “rich” would work less if they were highly taxed – but claim this would be a good thing, as it would make society less unequal… As Harvard’s Greg Mankiw puts it, the Left now believes that “we can no longer afford the rich”.

If such policies were ever enacted, the results would be catastrophic.

The impact would be Venezuelan-style: it would lead to a collapse in GDP… Only the richest are being targeted at first: but everybody will suffer when the economy tanks, and such taxes are always eventually extended to the prosperous middle classes. …We could thus be on the cusp of a new socialist era, where even zero GDP growth will be seen as a good year. …we are on the brink of a new war on wealth.

Here’s what worries me.

Allister’s warning about terrible economic consequences is accurate, but I’m not sure that matters.

When I talk to hard-core leftists, I usually make the following three points.

In the past, leftists would disagree. Maybe they would claim government could make investments. Or perhaps they would assert that government could somehow compel employers to pay higher wages.

But it’s now quite common for my leftist friends to simply assert that lower living standards are an acceptable result. For all intents and purposes, hurting the rich is more important than helping the poor.

You may think I’m joking, or that only a small handful of crazies actually want this outcome.

But the establishment left also advocates for lower living standards. The International Monetary Fund has financed and publicized research that explicitly embraces the twisted notion that it would be ideal to reduce everyone’s living standards so long as rich people suffered the bigger declines.

Margaret Thatcher is spinning in her grave.

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Mark Perry of the American Enterprise Institute is most famous for his Venn diagrams that expose hypocrisy and inconsistency.

But he also is famous for his charts.

And since I’m a big fan of sensible tax policy and the Laffer Curve, we’re going to share Mark’s new chart looking at the inverse relationship between the top tax rate and the share of taxes paid by the richest Americans.

Examining the chart, it quickly becomes evident that upper-income taxpayers started paying a much greater share of the tax burden after the Reagan tax cuts.

My left-leaning friends sometimes look at this data and complain that the rich are paying more of the tax burden only because they have grabbed a larger share of national income. And this means we should impose punitive tax rates.

But this argument is flawed for three reasons.

First, there is not a fixed amount of income. The success of a rich entrepreneur does not mean less income for the rest of us. Instead, it’s quite likely that all of us are better off because the entrepreneur created some product of service that we value. Indeed, data from the Census Bureau confirms that all income classes tend to rise and fall simultaneously.

Second, it’s not even accurate to say that the rich are getting richer faster than the poor are getting richer.

Third, one of the big fiscal lessons of the 1980s is that punitive tax rates on upper-income taxpayers backfire because investors, entrepreneurs, and business owners will choose to earn and report less taxable income.

For my contribution to this discussion, I want to elaborate on this final point.

When I give speeches, I sometimes discover that audiences don’t understand why rich taxpayers can easily control the amount of their taxable income.

And I greatly sympathize since I didn’t appreciate this point earlier in my career.

That’s because the vast majority of us get the lion’s share of our income from our employers. And when we get this so-called W-2 income, we don’t have much control over how much tax we pay. And we assume that this must be true for others.

But rich people are different. If you go the IRS’s Statistics of Income website and click on the latest data in Table 1.4, you’ll find that wages and salaries are only a small fraction of the income earned by wealthy taxpayers.

These high-income taxpayers may be tempting targets for Alexandria Ocasio-Cortez, Elizabeth Warren, Bernie Sanders and the other peddlers of resentment, but they’re also very elusive targets.

That’s because it’s relatively easy – and completely legal – for them to control the timing, level, and composition of business and investment income.

When tax rates are low, this type of tax planning doesn’t make much sense. But as tax rates increase, rich people have an ever-growing incentive to reduce their taxable income and that creates a bonanza for lawyers, accountants, and financial planners.

Needless to say, there are many loopholes to exploit in a 75,000-page tax code.

P.S. There’s some very good evidence from Sweden confirming my point.

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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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She’s not quite as bad as Matt Yglesias, who wants a top tax rate of 90 percent (a rate that Crazy Bernie also likes), but Congresswoman Alexandria Ocasio-Cortez is not bashful about wanting to use the coercive power of government to take much larger shares of what others have earned.

And she doesn’t want to take “just” half, which would be bad enough. She wants to go ever further, endorsing a top tax rate on household income of 70 percent.

Those of you with a lot of gray hair may recall that’s the type of punitive tax regime we had in the 1970s (does anybody want a return to the economic misery we suffered during the Nixon and Carter years?).

So it’s very disturbing to think we may get an encore performance.

Here are some excerpts from a Politico report.

Rep. Alexandria Ocasio-Cortez (D-N.Y.) is floating an income tax rate as high as 60 to 70 percent on the highest-earning Americans… Ocasio-Cortez said a dramatic increase in taxes could support her “Green New Deal” goal of eliminating the use of fossil fuels within 12 years… “There’s an element where yeah, people are going to have to start paying their fair share in taxes.” …When Cooper pointed out such a tax plan would be a “radical” move, Ocasio-Cortez embraced the label… “I think that it only has ever been radicals that have changed this country,” Ocasio-Cortez said. “Yeah, if that’s what radical means, call me a radical.”

There are many arguments to make against this type of class-warfare policy, but I’ll focus on two main points.

First, this approach isn’t practical, even from a left-wing perspective. Simply stated, upper-income taxpayers have considerable control over the timing, level, and composition of their income, and they can take very simple (and completely legal) steps to protect their money as tax rates increase.

This is one of the reasons why higher tax rates don’t translate into higher tax revenue.

If you don’t believe me, check out the IRS data on what happened in the 1980s when Reagan dropped the top tax rate from 70 percent to 28 percent. Revenues from those making more than $200,000 quintupled.

Ms. Ocasio-Cortez wants to run that experiment in reverse. That won’t end well (assuming, of course, that her goal is collecting more revenue, which may not be the case).

Second, higher tax rates on the rich will have negative consequences for the rest of us. This is because there is a lot of very rigorous research that tell us:

And this is just a partial list.

And I didn’t even include the potential costs of out-migration, which doubtlessly would be significant since Ms. Ocasio-Cortez would impose the developed world’s most punitive tax regime on the United States.

I’ll close by recycling this video on the harmful impact of punitive tax rates.

P.S. Today’s column focused on the adverse economic impact of a confiscatory tax rate, but let’s not forget the other side of the fiscal equation. Ms. Ocasio-Cortez wants to finance a “green new deal,” which presumably means a return to Solyndra-style scandals.

P.P.S. There is some encouraging polling data on class-warfare taxation.

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The central argument against punitive taxation is that it leads to less economic activity.

Here’s a visual from an excellent video tutorial by Professor Alex Tabarrok. It shows that government grabs a share of private output when a tax is imposed, thus reducing the benefits to buyers (“consumer surplus”) and sellers (“producer surplus).

But it also shows that some economic activity never takes place (“deadweight loss”).

When discussing the economics of taxation, I always try to remind people that deadweight loss also represents foregone taxable activity, which is why the Laffer Curve is a very real thing (as even Paul Krugman admits).

To see these principles at work in the real world, let’s look at a report from the Washington Post. The story deals with cigarette taxation, but I’m not sharing this out of any sympathy for smokers. Instead, the goal is to understand and appreciate the broader point of how changes in tax policy can cause changes in behavior.

The sign on the window of a BP gas station in Southeast Washington advertises a pack of Newports for $10.75. Few customers were willing to pay that much. But several men in the gas station’s parking lot had better luck illegally hawking single cigarettes for 75 cents. The drop in legal sales and spike in black market “loosies” are the result of $2-a-pack increase in cigarette taxes that took effect last month… Anti-tobacco advocates hailed the higher legal age and the tax increase as ways to discourage smoking. But retailers say the city has instead encouraged the black market and sent customers outside the city.

Since I don’t want politicians to have more money, I’m glad smokers are engaging in tax avoidance.

And I feel sympathy for merchants who are hurt by the tax.

Shoukat Choudhry, the owner of the BP and four other gas stations in the city, says he does not see whom the higher taxes are helping. His customers can drive less than a mile to buy cheaper cigarettes in Maryland. He says the men in his parking lot are selling to teenagers. And the city is not getting as much tax revenue from his shops. Cigarette revenue at the BP store alone fell from $63,000 in September to $45,000 in October, when the tax increase took effect on the first of the month. …The amateur sellers say the higher cigarette tax has not been a bonanza for them. They upped their price a quarter for a single cigarette.

It’s also quite likely that the Laffer Curve will wreak havoc with the plans of the D.C. government.

Citywide figures for cigarette sales in October — as measured by tax revenue — will not be available until next month, city officials said. The District projected higher cigarette taxes would bring in $12 million over the next four years. Proceeds from the tax revenue are funding maternal and early childhood care programs. The Campaign for Tobacco-Free Kids says the fear of declining tax revenue because of black market sales has not materialized elsewhere.

Actually, there is plenty of evidence – both in America and elsewhere – that higher cigarette taxes backfire.

I would be shocked if D.C. doesn’t create new evidence since avoidance is so easy.

…critics of the tax increase say the District is unique because of how easy it is to travel to neighboring Virginia, which has a 30-cent tax, and Maryland, with a $2 tax. “What person in their right mind is going to pay $9 or $10 for a pack of cigarettes when they can go to Virginia?” said Kirk McCauley of the WMDA Service Station and Automotive Repair Association, a regional association for gas stations. …Ronald Jackson, who declined to buy a loose cigarette from the BP parking lot, says he saves money with a quick drive to Maryland to buy five cartons of Newport 100s, the legal limit. “After they increased the price, I just go over the border,” said Jackson, a 56-year-old Southeast D.C. resident. “They are much cheaper.”

An under-appreciated aspect of this tax is how it encourages the underground economy.

Though I’m happy to see (especially remembering what happened to Eric Garner) that D.C. police have no interest in hindering black market sales.

The D.C. Council originally set aside money from the cigarette tax increase for two police officers to crack down on illegal sales outside of stores. But that funding was removed amid concerns about excessive enforcement and that it would strain police relations with the community. On a Tuesday morning, Choudhry, the owner of the Southeast BP, stopped a police officer who was filling up his motorcycle at the BP station to point out a group of men selling cigarettes in his parking lot. The officer drove off without action. …On a good day, he can pull about $70 in profit. “Would you rather that we rob or steal,” said Mike, who said he has spent 15 years in jail. “Or do you want us out here selling things?”

Kudos to Mike. I’m glad he’s engaging in voluntary exchange rather than robbing and stealing. Though maybe he got in trouble with the law in the first place because of voluntary exchange (a all-too-common problem for people in Washington).

But now let’s zoom out and return to our discussion about economics and taxation.

An under-appreciated point to consider is that deadweight loss grows geometrically larger as tax rates go up. In other words, you don’t just double damage when you double tax rates. The consequences are far more severe.

Here are two charts that were created for a chapter I co-authored in a book about demographics and capital taxation. This first chart shows how a $1 tax leads to 25-cents of deadweight loss.

But if the tax doubles to $2, the deadweight loss doesn’t just double.

In this hypothetical example, it rises to $1 from 25-cents.

For any given tax on any particular economic activity, the amount of deadweight loss will depend on both supply and demand sensitivities. Some taxes impose high costs. Others impose low costs.

But in all cases, the deadweight loss increases disproportionately fast as the tax rate is increased. And that has big implications for whether there should high tax rates on personal income and corporate income, as well as whether there should be heavy death taxes and harsh tax rates on capital gains, interest, and dividends.

Some of my left-wing friends shrug their shoulders because they assume that rich people bear the burden. But remember that the reduction of “consumer surplus” is a measure of the loss to taxpayers. The deadweight loss is the foregone output to society.

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Imagine being a poor person and getting to choose your country. Which one would you select?

The answer probably depends on your goals in life. If you want to emulate “Lazy Robert” and be a moocher, you could pick Denmark. You’ll surely get more than enough money to survive.

Denmark’s also not a bad choice if you have a bit of ambition. It ranks #16 in the latest edition of Economic Freedom of the World, largely because it has a very laissez-faire approach on trade, regulation, and other non-fiscal policies. So there’s a decent chance you could climb the economic ladder.

But if you have lots of ambition and definitely want a better life for your children and grandchildren, you’d presumably pick a nation such as Singapore, which routinely gets very high grades from Economic Freedom of the World.

There’s a lot of economic liberty, which has resulted in huge improvements in living standards. Indeed, people in Singapore are now much richer than Americans.

The last thing you would do, however, is pick a stagnant country such as Greece. Or a miserably impoverished nation such as Zimbabwe.

Unless you’re one of the buffoons at Oxfam. That “charity” just produced an inequality study that says Singapore is one of the world’s worst nations, ranking far below places where people are very poor with very bleak lives.

Here’s how Oxfam describes its report.

In 2015, the leaders of 193 governments promised to reduce inequality under Goal 10 of the Sustainable Development Goals (SDGs). Without reducing inequality, meeting SDG 1 to eliminate poverty will be impossible. In 2017, …Oxfam produced the first index to measure the commitment of governments to reduce the gap between the rich and the poor. The index is based on a new database of indicators, now covering 157 countries, which measures government action… The report recommends that all countries should develop national inequality action plans to achieve SDG 10 on reducing inequality. These plans should include delivery of universal, public and free health and education and universal social protection floors. They should be funded by increasing progressive taxation and clamping down on exemptions and tax dodging.

In other words, the study is a measure of whether nations have punitive welfare states, not whether poor people have better lives.

The assertion in the second sentence that poverty can’t be reduced without reducing inequality is especially absurd. Unless, of course, you choose a dishonest definition of poverty (which is what we get from leftist groups like the UN and OECD, not to mention the Equal Welfare Association, Germany’s Institute of Labor Economics, and the Obama Administration).

But let’s focus on Singapore. Here are some excerpts from a Reuters story on the controversy over that nation’s poor score.

Oxfam on Wednesday rejected Singapore’s defense of its low taxes after the NGO ranked the wealthy city state among the 10 worst-offending countries in fuelling inequality with its low-tax regime. Oxfam’s Commitment to Reducing Inequality (CRI) index ranked Singapore 149th of 157, below Afghanistan, Algeria, and Cambodia, and marginally higher than Haiti, Nigeria and Sierra Leone. …Oxfam’s head of inequality policy, Max Lawson, said the impact of Singapore’s tax policy went beyond its borders, serving as a tax haven for the rich and big corporations. …Singapore Social and Family Development Minister Desmond Lee said on Tuesday…“Yes, the income tax burden on Singaporeans is low. And almost half the population do not pay any income tax,”…“Yet, they benefit more than proportionately from the high quality of infrastructure and social support that the state provides,” he said. “In Oxfam’s view, Singapore’s biggest failing is our tax rates, which are not punitive enough.” Lee also said 90 percent of Singaporeans owned their homes and home ownership was 84 percent even among the poorest 10 percent of households. “No other country comes close,” he said.

Minister Lee is correct, of course.

Singapore is a great place to be poor, in part because the bottom 10 percent in Singapore would be middle class or above in many of the nation’s that get better scores from Oxfam’s ideologues. But mostly because it’s a place where it’s possible to become rich rather than remain poor.

There are some other aspects of the Oxfam study that merit attention, including the curious omission of some of the world’s most left-wing nations, such as Venezuela, Cuba, and North Korea.

In the case of North Korea, I’m willing to believe that there simply wasn’t enough reliable data. But why aren’t there scores for Cuba and Venezuela? I strongly suspect that authors deliberately omitted those two hellholes because they didn’t want to deal with the embarrassment of incredibly poor nations getting very high scores (which is what made Jeffrey Sachs’ SDG Index an easy target for mockery)

Also, I’d be curious to learn why Hong Kong isn’t ranked? Taxes are even lower and there’s even less redistribution in Hong Kong, so maybe it would have been last rather than merely in the bottom 10.

Was Oxfam worried about looking foolish, so they left prosperous Hong Kong out of the study?

That’s my guess. The last thing the left wants is for people to understand that poor nations only become rich nations with free markets and small government.

The bottom line is that Oxfam is an organization that has been hijacked by hard-left activists. Given it’s track record of shoddy reports, it’s now a joke rather than a charity.

P.S. The OECD also produced a shoddy study that grossly mischaracterized Singapore and totally ignored Hong Kong.

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