Category: Taxes

Productivity is not a gift from the government.

Via Cato @ Liberty comes information that Canada’s Liberal Party is proposing a lower corporate tax rate (emphasis mine):

Liberal Leader Stephane Dion has pledged to further reduce the Canadian federal corporate tax rate to better compete with other countries and strengthen Canada’s economic sovereignty. …Dion told the Economic Club of Toronto…“A lower corporate tax rate is a powerful weapon in the federal government’s arsenal to generate more investment, higher living standards and better jobs.” …The previous Liberal government reduced the federal corporate tax rate to 19% from 28%. Dion said he would go deeper than the Conservatives have done with their reduction to 18.5% in 2011. …“If you lower the corporate tax rate, you lower the cost of capital for Canadian companies. Therefore, these companies are induced to spend more on capital equipment. As for foreign investment, we need a big hook to snare investment, including Canadian investment, that might otherwise go south of the border. Finally, it would strengthen Canadian companies against foreign takeover,” Dion concluded.

I think this is a great idea, but I don’t think Dion understands why. This is where Liberal/Left thinking is flawed. A lower tax rate is best because it removes more of the government’s destructive power from the process. It should not be viewed as a tool to create anything other than more liberty, freeing entrepreneurs to create what customers want.

Maybe a business should invest in new capital equipment when it keeps more of its revenue. Maybe it should expand into new territories. Maybe it should launch a new product line. Maybe it should return the extra revenue to shareholders, who may then redirect the money to more productive uses. There are countless possibilities.

Tax rates should be as low as possible because government can’t know which use for capital is best. Central planners can guess, but any accuracy is luck. This proposed tax cut should be explained as a realization of that core truth, not as further evidence of the benevolence and wonderful nature of government control over business.

I move closer to hoarding my savings in cash.

Hillary Clinton is unfit to be president:

“I like the idea of giving every baby born in America a $5,000 account that will grow over time, so that when that young person turns 18 if they have finished high school they will be able to access it to go to college or maybe they will be able to make that downpayment on their first home,” she said.

I recently purchased a new car. I like the idea of getting that car for free. I suspect the dealership will even hand over the keys to me and call it free, as long as I set up a separate transaction where I relinquish a specific number of dollars – strangely matching the value of the car – to the dealership’s possession.

Interestingly, that sounds much like the tax charade that would occur for every child “given” $5,000 from their own future earnings.

It’s possible that funding could come from the earnings of another person currently working (parents?) or who will work in the future. Regardless, I’m sure the “trust fund” aspect will remain an IOU rather than asset-based, with the present tax dollars used for some other socialist adventure. And I discount the possibility that funding would come from the child’s parents, since that would imply a measure of fiscal responsibility wrapped inside this socialism. Since that would also discourage poor people from having children if they have to fund an extra $5,000 up front, there’s no way Sen. Clinton would suggest such a thing. She’ll cave once that possibility arises and claim it’s society’s job to support all children, especially those of the poor, with the poor to be defined loosely later.

More thoughts at A Stitch in Haste, no third solution, and Catallarchy.

Sen. Obama’s class warfare isn’t refreshing.

For all the talk about a change in the politics of the Left signaled by the campaign of Sen. Barack Obama, I’d expect to see change rather than the same class-based stupidity.

“In our new economy, there is no shortage of new wealth,” he told the Tax Policy Center. “But wages are not keeping pace…This isn’t the invisible hand of a market at work. It’s the successful work of special interests. For decades, we’ve seen successful strategies to ride anti-tax sentiment in this country towards tax cuts that favor wealth, not work. And for decades, we’ve seen the gaps in wealth in this country grow wider, while the costs to working people are greater.”

I wish that Sen. Obama meant the perverse nature of tax incentives and the inefficient complexity of the tax code because that would be a conversation worth pursuing. Instead, he’s doing little more than imitating John Edwards.

Sen. Obama seems to believe that U.S. income taxes are regressive, so he’s advocating $80 billion in tax cuts for “work”. This is in a system in which the bulk of the burden is already carried by the group allegedly “favored” so much in Washington. That $80 billion has to come from somewhere, so that’ll be from “wealth”.

I guess I should be grateful such a rebel is running for high office.

For specific analysis of Sen. Obama’s plan, I recommend this entry by Chris Edwards at Cato @ Liberty. For example:

Third, Obama proposed special tax breaks for seniors, which would take 7 million more elderly completely off the tax rolls. But that would inject a very unfair element of age discrimination into the tax code. Old folks are already taking young folks to the cleaners in terms of federal fiscal policy. Obama would make the injustice worse, yet he had the chutzpah to claim in his tax speech: “It’s time to stand up to the special interest carve outs.”

Vote for Sen. Obama and you too can have other people pay your share.

Economics hurts women. Let’s hurt it back.

The United States is in great company:

Why is there deep bias against mothers? It turns out our country lacks basic supports for families. Out of 173 countries, only four have no paid leave for new mothers — Papua New Guinea, Swaziland, Liberia and the U.S.A.

The essay contains many other out-of-context abuses of economics, but this one is sufficient. But first, this:

We know how to fix this problem.

Of course we do. The nanny statists always do.

The U.S. does not have mandatory paid leave, legislated by Congress. And yet, how many new mothers go completely without pay immediately following childbirth? Every time I’ve encountered a co-worker who will be taking maternity leave, she and her family have planned during the pregnancy for the coming lack of income by saving vacation days. They have nine months, after all. This needs to be considered without nonsense like this:

It turns out that having a child is the top cause of a “poverty spell” for families, a time when income dips below what’s needed for basic living expenses like food and rent.

The burden is on the parents, not the state, to properly plan a family’s finances in the event of a child. If a child will cause a “poverty spell”, do not have a child. Couples may procreate but they may not expect society to pay for that choice.

Most frustrating is that the author almost understands the truth.

The good news is businesses that are adapting to the human need for flexibility are thriving.

Still, we must lament that the United States sits with Papua New Guinea, Swaziland, and Liberia in not mandating paid maternity leave.

So let’s assume the U.S. mandates paid maternity leave. Who will fund the new state expense? Since it’s a burden deriving from businesses, the tax burden will be placed on them. They will simply pass this expense to employees in the form of lower wages. Where there is an existing wage gap, it’s logical to assume that the cost for an extra benefit to women, all else equal, will be passed to women. We’re essentially down to shifting financial planning for children from parents to the state.

This might bypass women past child-bearing age, though how that will be determined opens a can of worms. But it will inevitably ignore the women who choose not to have children. Even though they do not need to financially plan for children, they will be financially planning for other people’s children, through the state. But I’m sure this is one extra law from Congress away from being rectified.

And what about paid paternity leave?

Via FARK

I’m worth mass redistribution. Or maybe it’s just my vote.

I’m a few days late on this, thanks to being wrapped up in fantasy football, but John Edwards cares about me.

Democratic presidential hopeful John Edwards said on Sunday that his universal health care proposal would require that Americans go to the doctor for preventive care.

“It requires that everybody be covered. It requires that everybody get preventive care,” he told a crowd sitting in lawn chairs in front of the Cedar County Courthouse. “If you are going to be in the system, you can’t choose not to go to the doctor for 20 years. You have to go in and be checked and make sure that you are OK.”
…

“The whole idea is a continuum of care, basically from birth to death,” he said.

If I’m going to be in the system… How quaint. Do I have a choice? If and when I choose not to be part of the system, do I get to keep that part of my taxes devoted to covering me, as well as the portion that is my charitable “gift” to everyone else in this scheme?

Obviously he wouldn’t emphasize the womb-to-tomb feature bug if the answer to any of my questions was yes. Also obvious is the basic fact that, being unable to understand that government is the problem in health care, his proposal relies on reducing everyone to a lower level rather than working on (effective) ways to enable the unintentionally uninsured minority to mitigate their financial risk. Note, of course, that Edwards – and every other health care nanny currently running for president – misses this true issue in his quest for womb-to-tomb government services. That won’t earn my vote.

More thoughts at A Stitch in Haste and Cato @ Liberty

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I wouldn’t expect anyone else to have mentioned it, but a side issue from Edwards’ proposal involves routine infant male circumcision. As I’ve written, a liberal, progressive argument for universal health care and/or coverage is that the government will cease paying for unnecessary male circumcision. This will not stop.

Governments already fund unnecessary circumcisions today, when resources are limited. There is no significant push among politicians to redirect those funds into medically necessary expenditures (or taxpayer pockets). They do not care about the necessity of any particular intervention, or even health care in general. Universal health care is simply a means to create a new, dependent constituent group. If that constituency wants infant male circumcision, politicians will cover it. (I’d make an argument that bureaucrats will make the decisions, but doctors make the same mistake in an effort to please their constituents constituents’ parents.)

Politicians believe there is always another group to demonize and tax to fund whatever gift needs to be made to voters for their votes. I am unwilling to hope that any government run by these fools will miraculously reverse its stupidity. Such short-sighted adherence to self-interest is inherent in government whenever it’s controlled by those interested in the exercise of power. Neither rights nor logic plays any part.

Now add the context of a politician like Edwards who wants to mandate that you and I will undergo preventive care. Is it really a long leap to assume that such a stupid person could read the splashy headlines about male circumcision and HIV and ignore the context of voluntary and adult, as well as the truth that condoms remain far more effective at reducing the risk of HIV? Almost everyone in our culture has ignored these last three points in the two years since the first preliminary results were announced, so the answer is a clear “no”.

Politicians will continue to make the erroneous, incomplete argument that the cost-benefit analysis of infant male circumcision is a one-sided consideration, with benefits the only deciding factor. They rarely even recognize potential before the word benefit. If there’s a potential benefit to chase, they will assume that means one less disease to pay for out of the collective in the future. That is incomplete and morally defective, since it ignores the risks, the complications, and the rights interest of the child in making this subjective, medically unnecessary decision. That politicians, parents, and doctors make this error every day proves the fallacy of trusting in the economics of universal health care to rectify an ethical failing.

Should government miraculously reverse itself and stop funding infant circumcision, I still argue that this is largely irrelevant. Many parents will just pay for it themselves. I’ve read too many blog entries of parents fretting over the hundreds of dollars it will cost, yet, considering genital cutting either an “investment” in their son or a “necessary” expenditure so that the boy will be normal common, they proceed anyway, out of their own pockets. To be fair, there will be a long-term reduction, as fence-sitters will decide unnecessary surgery isn’t worth the money, but there will still be many boys facing the knife who should be protected. I’m not okay with that.

Anyway, who will make the argument that politicians embrace the individual rights of their children and refrain from removing healthy body parts from their own sons? I’ll theorize that at least one candidate running for president with a universal health care platform has ignored the violation of his¹ son’s rights and circumcised the boy, to say nothing of the members of the theoretical decision-making apparatus should a universal health care scheme be implemented.

¹ This ignores Sen. Clinton because I assume she did not have her daughter’s genitals cut. However, she should be included in any consideration of politicians and bureaucrats willing to perpetuate the violation of the genitals of male children.

Equal Opportunity Pandering

I think lingering on identity politics is bad news for any sort of legitimate and effective approach to leadership. It should be irrelevant whether or not a voter is male, female, black, white, and so forth. I’d much rather politicians focus on a coherent agenda based on principles of limited government and equal, guaranteed rights. But every one of them seems incapable, so in the world we live in, I mostly agree with this editorial from today’s Opinion Journal discussing how Democrats actively court female voters while Republicans don’t explicitly do so.

The rest of the female population has migrated into 2007. Undoubtedly quite a few do care about abortion rights and the Violence Against Women Act. But for the 60% of women who today both scramble after a child and hold a job, these culture-war touchpoints aren’t their top voting priority. Their biggest concerns, not surprisingly, hew closely to those of their male counterparts: the war in Iraq, health care, the economy. But following close behind are issues that are more unique to working women and mothers. Therein rests the GOP opportunity.

The “close behind” issues involve a better way to look at traditional topics. The author’s primary example is the tax impact of income for single versus married women. Like I said, I mostly agree, because at least it’s a step away from past thinking.

Still, the essay annoys me because it assumes an unrealistic fact about today’s Republicans.

For that matter, when was the last time a GOP candidate pointed out that their own free-market policies could help alleviate this problem?

Name one Republican candidate who’s interested in free-market policies. The author only implies economic, of course. The current Republicans fail even that narrow test, but I’m not going to accept such a limited view. Free-market policies involve liberty. Politicians do not get free-market credentials for proposing one policy on a platform that pays limited respect to such liberty. Free is free, not a degree of free.

There’s a bonus in the essay – unintended by the author – that underscores the hypocrisy politicians show in shunning restraints for themselves while restricting liberty for everyone else. Especially Even Republicans.

Republicans should customize their low-tax message to explain how they directly put more money into female pockets.

I’m naming the “Republicans put more money into female pockets” meme the David Vitter Plan.

Never trust a politician with your wallet.

I understand the appeal of a Pigou tax to counter the negative effects of gasoline use/carbon output. Theoretically, it’s perfect because it puts the burden on the user creating the problem, which is where it should be. In practice, I see no reason to trust politicians to stay within the bounds of the plan and not dip a finger or shovel into the funds. For example:

President Bush spoke out Thursday against increasing the gasoline tax, an idea being discussed as a potential part of a new Congressional plan to shore up the nation’s bridges after the deadly collapse in Minneapolis.

I get the idea that those who use the road would be paying for the road. That’s fine, except why should bridges be federal expenditures? So why should a national gas tax, collected and managed by the Congress, be used in this capacity? And isn’t a gas tax supposed to offset the negative environmental outcomes of burning gasoline?

Representative James L. Oberstar, Democrat of Minnesota and chairman of the House Transportation and Infrastructure Committee, suggested this week that a tax increase might be needed to finance a proposed trust fund to repair bridges in the Federal Highway System, [sic] A large percentage of the bridges have been identified as having structural problems.

The key here is that, under current Congressional “leadership”, a large percentage of bridges managed by the federal government have uncorrected structural problems. The same legislative body that allowed this situation to develop without adequate (though, not necessarily appropriate) funding is somehow competent to manage a new influx of cash. Gotcha. I certainly trust the Congress to spend increased gas taxes where they’re needed. It’ll be just like shoring up Social Security with the trust fund receipts.

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On an amusing side note, President Bush is certainly bold:

Asked about the gasoline proposal, which could amount to an increase of 5 cents a gallon under schemes floating around Congress, Mr. Bush said, “Before we raise taxes, which could affect economic growth, I would strongly urge the Congress to examine how they set priorities.”

More than six years in and he’s finally suggesting that Congress examine how it sets priorities. It’s not like he could’ve vetoed any excessive spending and request that it be redirected to infrastructure. (Again, I’m only conceding that the federal government is involved in infrastructure, not that it should be involved.) No, he’s solely the tool of Congress to approve what they approve.

Or he could examine how he sets priorities. If I recall correctly, and I do, several years ago President Bush was busy demanding that the Congress pass a bigoted constitutional amendment. Apparently hating gays is a higher priority than preventing bridges from falling down.

Legitimate is the enemy of more revenue.

I never got around to writing about the egregious fines (multi-year fines for minor infractions to “generate revenue”) for traffic offenses that went into effect in Virginia July 1st. As expected, they’ve already been struck down as unconstitutional, although not for the reason I would’ve guessed. There’s still a long path before the fines are history, but the political nature of the discussion is fascinating in exposing exactly how uninterested politicians are in leadership.

Del. David E. Poisson (D-Loudoun), who voted for the transportation package, said he expects the fees to surface in his race against Republican challenger Lynn Chapman.

“I was never a fan of the abuser fees,” Poisson said. “I spoke against them when the session ended and continue to maintain that they’re not a reliable source of transportation revenue. But it was very, very clear to me that this was, at least in the view of the majority, an essential ingredient in the overall package. Had we opposed any element of the package, it all would have failed.”

If the majority (Republicans) supported it, I don’t understand why it would’ve failed if the minority (Democrats) had opposed it. What I see is political shenanigans on both sides. Republicans wanted to get something done without raising taxes to pay for it. Democrats wanted money to spend, period. I won’t accept “I voted for it but I really opposed it.” Principles, principles, principles. This is more conspiring than opposing forces compromising.

I don’t think Maryland Gov. O’Malley is dense.

First, the obvious:

Maryland’s efforts to close a gaping budget shortfall next year could result in higher income taxes for the state’s more affluent residents — and a possible break for those earning less.

Gov. Martin O’Malley (D) and leading lawmakers say they are giving serious consideration to overhauling the state’s tax brackets, which are among the flattest in the nation. Everyone with taxable income of more than $3,000 a year pays the same rate.

To close a “gaping budget shortfall,” Maryland could try not spending so much money. Novel, I know, but it’s been known to work for middle-, lower-, working-, and even upper-class families where expenses exceed income.

But there are (Democratic, not that it really matters) politicians involved, so that idea is not only not feasible, it’s not “fair”.

O’Malley called the structure “patently unfair” this week, saying at a Democratic breakfast in Frederick that Peter Angelos, the wealthy trial lawyer who owns the Baltimore Orioles, should not pay the same rate as “the woman who cleans his office.”

“I’m in favor of progressive taxation, where people who make a lot more pay more,” O’Malley told reporters recently.

Does everyone in Maryland pay the same dollar amount to the state? Do Peter Angelos and his cleaning woman each pay $500, to pick a random tax amount? No? Then people who make “a lot” more in Maryland already pay (a lot) more. Anyone who believes otherwise is either too dense to be qualified for public office or a liar.

Sen. Clinton is Rod Tidwell.

Sen. Clinton and her populist buddies are opportunists, nothing more. Consider:

“Our tax code should be valuing hard work and helping middle-class and working families get ahead,” [Senator Hillary Clinton] said in Keene, N.H., as she campaigned for the Democratic presidential nomination. “It offends our values as a nation when an investment manager making $50 million can pay a lower tax rate on her earned income than a teacher making $50,000 pays on her income.”

It should equally offend our values when a teacher making $50,000 pays a lower rate on her earned income than an investment manager making $50 million pays on her income. Having a tax code that is used as a tool to push agendas, pick winners and losers, demonize success, and generate fleeting economic “equality” offends our values. Set a base exemption and tax everything – and everyone – else equally, at a rate as low as possible, regardless of an individual’s economic results.

Let me ask a question or two. If there is unfair treatment here, and it seems there is, why is the explanation always that the rich aren’t paying enough? Why is the problem never that the poor are paying too much?