David Cameron's Foolish (or Cynical) Naivete about the Laffer Curve

Even though he's allowing the budget to grow twice as fast as inflation, some people seem to think the new U.K. Prime Minster is a fiscal conservative. I'm skeptical. Not only is spending rising much too fast (there are promises of more restraint in the future, but I'll believe it when it happens), but Cameron and the Tory/Liberal coalition government are increasing the value-added tax and increasing the capital gains tax. Perhaps worst of all, they are leaving in place the new 50 percent tax rate that former Labor Prime Minister Gordon Brown imposed in hopes that class-warfare policy would help him get elected. But as this Daily Telegraph story suggests, it is quite likely that the higher tax rate will lose revenue as productive people escape to Switzerland and other jurisdictions not influenced by the politics of hate and envy.

One-in-four hedge fund employees has already left London to move to Switzerland, which is said to have a more stable tax regime, according to consultancy Kinetic partners. Calculations by the company claim the UK could have already forgone about £500m in tax revenues, based on the 1,000 or so hedge fund managers it says have already left the country. ...High-profile departures this year include Alan Howard, founder of Brevan Howard, and Mike Platt, founder of BlueCrest Capital.

This story shows both the power of the Laffer Curve and the importance of tax competition. The greedy politicians in England doubtlessly resent the "brain drain" to Switzerland. Like their U.S. counterparts, politicians view taxpayers as serfs who are supposed to blindly produce more income for the ruling class to expropriate and redistribute.

While I'm obviously not a big fan of British fiscal policy, America is worse in one important way. At least British taxpayers have the liberty to leave without being raped by the U.K. tax authority. Once they leave the United Kingdom and make their home in Switzerland, they are no longer British taxpayers. Americans who want to move, by contrast, are unable to escape the punitive internal revenue code. Indeed, the United States is one of the few nations in the world to have exit taxes, an odious approach generally associated with loathsome regimes such as the Soviet Union and Nazi Germany.

New Orwellian Tax Scheme in England Would Require all Paychecks Go Directly to the Tax Authority

Our tax system in America is an absurd nightmare, but at least we have some ability to monitor what is happening. We can't get too aggressive (nobody wants the ogres at the IRS breathing down their necks), but at least we can adjust our withholding levels and control what gets put on our annual tax returns. The serfs in the United Kingdom are in much worse shape. To a large degree, the tax authority (Inland Revenue) decides everyone's tax liability, and taxpayers have no role other than to meekly acquiesce. But now the statists over in London have decided to go one step farther and have proposed to require employers to send all paychecks directly to the government. The politicians and bureaucrats that comprise the ruling class then would decide how much to pass along to the people actually earning the money. Here's a CNBC report on the issue.

The UK's tax collection agency is putting forth a proposal that all employers send employee paychecks to the government, after which the government would deduct what it deems as the appropriate tax and pay the employees by bank transfer. The proposal by Her Majesty's Revenue and Customs (HMRC) stresses the need for employers to provide real-time information to the government so that it can monitor all payments and make a better assessment of whether the correct tax is being paid. ...George Bull, head of Tax at Baker Tilly, told CNBC.com. "If HMRC has direct access to employees' bank accounts and makes a mistake, people are going to feel very exposed and vulnerable," Bull said. And the chance of widespread mistakes could be high, according to Bull. HMRC does not have a good track record of handling large computer systems and has suffered high-profile errors with data, he said. ...the cost of implementing the new system would be "phenomenal," Bull pointed out. ...The Institute of Directors (IoD), a UK organization created to promote the business agenda of directors and entreprenuers, said in a press release it had major concerns about the proposal to allow employees' pay to be paid directly to HMRC.

This is withholding on steroids. Politicians love pay-as-you-earn (as it's called on the other side of the ocean), largely because it disguises the burden of government. Many workers never realize how much of their paychecks are confiscated by politicians. Indeed, they probably think greedy companies are to blame when higher tax burdens result in less take-home pay. This new system could have an even more corrosive effect. It presumably would become more difficult for taxpayers to know how much government is costing them, and some people might even begin to think that their pay is the result of political kindness. After all, zoo animals often feel gratitude to the keepers that feed (and enslave) them.

The Joy of Government-Run Healthcare

Here's some horrifying news from the United Kingdom, where the government-run healthcare system allowed 239 patients to die of malnutrition in 2007. Another 8,000-plus entered the system for malnutrition and actually deteriorated.

In 2007, 239 patients died of malnutrition in British hospitals, the latest year for which figures are available. A wag might say it must be the English cuisine. But the real roots of this tragedy lie in Britain's government-run medical system, which tells us something about what we might expect from ObamaCare in the years ahead. A British charity, Age U.K., has been seeking for years to raise awareness of the issue. Yet despite increases in screening, training and inspection programs, the problem has only gotten worse. The charity reports that in 2007-2008 148,946 Britons entered hospitals suffering from malnutrition and 157,175 left in that state, meaning that hospitals released 8,229 people worse-off nutritionally than when they entered. In 2008-2009, that figure was up to 10,443. The problem is not a lack of food. Hospital malnutrition mostly affects the elderly or otherwise frail, who often need individualized mealtime assistance. Spoon-feeding the elderly may not seem like the best use of a nurse's time, but for some it may literally be a matter of life and death. Yet the constant scarcities created by government medicine, along with the never-ending drive to trim costs, has led the National Health Service to give nurses additional responsibilities and powers in recent years. Inevitably, this leaves them with less time to make sure patients are getting fed.

No system is perfect, so the point of this post is not to assert that there is something especially inhumane and/or incompetent about the British system. Instead, the real lesson is that doctors and hospitals generally try to please the people paying the bills. In government-run systems, that means appeasing politicians. This doesn't preclude good patient care, but it does mean that other factors may have too much of an impact on decisions. In a market-based system, though, medical professionals have a greater incentive to focus on patients.

I should also say that this is not an endorsement of the American system, which also suffers from the third-party payer problem. In part, this is because of direct government financing, but also because of excessive use of insurance caused by government-created distortions.

Dishonest British Budgeting...Just Like We Do It in America

According to news coverage, United Kingdom Prime Minister Cameron is imposing deep and savage budget cuts. I was interviewed by the BBC recently, for instance, and asked whether 25 percent spending reductions were too harsh. And here's an excerpt from a New York Times story that is very representative of the news coverage.

Like a shipwrecked sailor on a starvation diet, the new British coalition government is preparing to shrink down to its bare bones as it cuts expenditures by $130 billion over the next five years and drastically scales back its responsibilities. The result, said the Institute for Fiscal Studies, a research group, will be “the longest, deepest sustained period of cuts to public services spending” since World War II. ...Public-sector unions are planning a series of strikes. Charities — which Mr. Cameron has said should take over some of the responsibilities now held by the state — say that they are at risk of collapse because they are so dependent on government money. And the chief executive of the Supreme Court, the country’s highest, said she did not know whether the court would be able to function at all if its budget were cut by 40 percent.

To be blunt, this type of analysis is completely false. There are no budget cuts in the United Kingdom, at least in terms of total government spending. Instead, the politicians are measuring cuts against some imaginary baseline, which is the same scam that happens in Washington. So if spending increases by 4 percent instead of 7 percent, that is characterized as a 3 percent budget reduction. The chart shows what is happening with overall government spending in the United Kingdom. Notwithstanding phony stories about budget cuts, spending in Prime Minister Cameron's first year is climbing by more than 4 percent - twice as fast as needed to keep pace with inflation.


This doesn't mean that Cameron isn't doing anything right. There is a two-year pay freeze for bureaucrats, for instance, which is at least a small step in the right direction. But the Tory-Liberal Democrat coalition is not a good role model for those who want limited government and fiscal responsibility. There are promises of spending restraint in future years, but those belong in the I'll-believe-it-when-I-see-it category. Spending is supposed to increase by less than 1 percent in next year's budget, for instance, but politicians are very good with tough talk of fiscal discipline in future years. But if we judge them by what they're doing today rather than what they're claiming will happen in the future, Cameron's policies leave much to be desired.

The tax side of the fiscal equation is even more depressing. There is small reduction in the corporate tax rate, but otherwise there is considerable bad news. The new government is leaving in place the new 50 percent top tax rate imposed by Gordon Brown as an election-year class-warfare gimmick. It is boosting the capital gains tax rate from 18 percent to 28 percent. And it increased the VAT rate from 17.5 percent to 20 percent.

Taxpayer-Funded Sex Trips to Amsterdam?!?

I think Viagra subsidies for sex offenders are an absurd example of government stupidity in America. I'm also amazed that European taxpayers are forced to pay for penile implants for bureaucrats at the European Commission. But I'm almost speechless to learn that British taxpayers are financing hanky-panky with prostitutes in Amsterdam for some disabled citizens. According to the Daily Mail, taxpayers across the pond also are paying for lap dances, though it's unclear why some beneficiaries are allowed to travel to foreign countries while others stay home. I have great sympathy for people who are disabled, and I certainly have no problem with them purchasing sexual services, but I agree with the guy from the Disability Alliance that this is not an appropriate role for government.

A 'man of 21 with learning disabilities has been granted taxpayers' money to fly to Amsterdam and have sex with a prostitute. His social worker says sex is a 'human right' for the unnamed individual - described as a frustrated virgin. His trip to a brothel in the Dutch capital's red light district next month is being funded through a £520million scheme introduced by the last government to empower those with disabilities. They are given a personal budget and can choose what services this is spent on. The man's social worker, who spoke on the condition of anonymity, said his client was an 'angry, frustrated and anxious young man' who had a need for sex. ...The trip emerged in data from Freedom of Information requests which revealed that many councils are using the money from the government's Putting People First scheme to pay for prostitutes, visits to lap dancing clubs and exotic holidays. ...Critics yesterday said the use of taxpayers' money to fund sex trips abroad as 'deeply worrying'. In Greater Manchester and Norfolk, social care clients have used their payments for internet dating subscriptions. ...Neil Coyle, director of policy at Disability Alliance, said most people with disabilities did not want or expect the state to pay for sexual services. 'Public bodies don't exist to find people sexual partners,' he said.

Taxpayers vs Bureaucrats, the Foreign Edition

If misery loves company, we can be very happy about these two stories about over-compensated bureaucrats from outside our borders. The first story comes from Europe, where the Daily Telegraph reports that pension costs are skyrocketing for bureaucrats with the European Commission and other European Union entities. With the average pension being more than $88,000 per year, that's hardly a surprise. This adds injury to injury since EU bureaucrats already get paid much more than workers in the productive sector of the economy.

Internal estimates, seen by The Daily Telegraph, show huge cost increases as growing numbers of officials in an expanded EU qualify for retirement, often at a younger age than the taxpayers who fund their generous pensions. Over the next three years alone, the cost of EU civil service pensions is expected to rise by 16 per cent to an annual bill for taxpayers of £1.3 billion. ... EU officials are allowed to retire at the age of 63, younger than Britons who have just had their retirement age increased from 65 to 66 by 2016. ...According to unpublished Commission figures, the pension bill will by 2040 risen 97 per cent to over £2 billion, with a British contribution of over £350 million. ...The average annual pension pocketed by the 17,471 retired eurocrats benefiting from the scheme is £57,194, while the highest ranking officials can pocket pensions of over £102,000.

Our second story comes from the Cayman Islands, where bureaucrats (as well as some politicians) have figured out the double-dipping scam, getting a lucrative pension while still receiving a salary. But the Cayman Islands at least deserve credit for limiting the damage. All bureaucrats hired after 1999 participate in a mandatory savings system, thus limiting the long-run risk for taxpayers.

A significant number of employees in the Cayman Islands Civil Service receive a monthly pension as well as a salary, according to records obtained by the Caymanian Compass. There are 65 people who have retired from the civil service under the defined benefit pension programme - which means they are receiving a monthly pension while continuing to work in government, according to information from a Freedom of Information request made by the Compass. Those workers are typically employed on a fixed-term contract and, therefore, also receive a salary. ...There were 171 employees working in the civil service who were age 60 or over at the date the Compass made its open records request. The ability of civil servants and Cayman Islands legislators to ‘double dip’ is not to the liking of at least one lawmaker, who raised the issue in the Legislative Assembly in June. North Side MLA Ezzard Miller told the assembly that a change in the parliamentary pensions law in recent years has allowed elected officials to receive the same benefit as civil servants - to retire while continuing to serve in the assembly. In essence, Mr. Miller said, those lawmakers can “get a double dip” – continue to receive their salaries while earning a pension at the same time. ...Cayman Islands civil servants who joined the service after mid-April 1999 no longer receive defined benefit pension payments. In other words, the newer civil service employees will receive a lump sum payment from their pension funds rather than a monthly pension.

Should Interpretive Dances about Sexual Abuse of Altar Boys Receive Taxpayer Subsidies?

I may have to rethink my pessimistic assessment of David Cameron. As I've noted before, he strikes me as a George-Bush-style big-government faux conservative. But according to this Washington Post article, the coalition government in the UK may impose some real budget cuts (as opposed to phony Washington-type cuts that are just reductions in planned increases) on arts funding. The right level of subisdies for art is zero, of course, so I'm sure I'll still be disappointed, but if Cameron can do the same thing across the budget and actually shrink the burden of government spending to less than 45 percent of GDP, I may be in a position of having to (cheerfully) admit that I was wrong. Here's an excerpt from the story.

The art scene exploded in Britain over the past decade.... The fuel for that boom: a surge in generosity from Britain's single biggest patron of the arts -- the government. But now cash-strapped and desperate to slash the largest budget deficit in Europe, the new ruling coalition of Conservatives and Liberal Democrats is moving to close the curtain on an era of what they describe as excessive government patronage. The coalition is preparing to cut arts funding so dramatically that it could sharply reduce or sever the financial lifelines for hundreds of cultural institutions from the National Theatre to the British Museum. The cuts would be more than a temporary fix. Officials are calling for a permanent shift toward the U.S. model of private philanthropy as the main benefactor of the arts... The move underscores the profound changes in the role of government that are taking place from Greece to Spain to Britain. It happens as European nations scramble to rein in runaway spending, in part by slashing public funds to sectors that came to survive -- even thrive -- because of them. In Britain, public aid to theaters, museums and other institutions jumped from $654 million in 2000 to $876 million this year... the budget cuts to the arts are a small part of a broader push by the coalition government to slash spending and right Britain's finances over the next four years. ...critics say the cuts to arts funding -- cultural leaders say they have been warned that reductions could reach 40 percent over four years -- appear set to be among the deepest... Large arts institutions in Britain often garner more than 50 percent of their budgets from public funds, compared with roughly 10 percent for major institutions in the United States. That is precisely what the British government says must change. Although the cuts have not yet been detailed, some organizations, including the UK Film Council, are already in the process of being shut down. The government has also demanded major institutions come up with contingency plans for 25 to 30 percent reductions in public funding. Officials from the ruling coalition are openly calling for a shift to U.S.-style fundraising to fill the gap. But critics insist it could take a generation or more to open the wallets of the British elite. Compared with the United States, there is a relatively small culture of philanthropy in Britain, with little special social status bestowed on corporations or wealthy individuals who support the arts. ...cultural leaders are largely resisting the notion of dramatically increased dependence on private funding, pointing to the severe shortfalls U.S. arts institutions faced as donors cut back in the aftermath of the recent financial crisis. They are also opposed on artistic grounds, insisting it would put more pressure on institutions to censor their works. Spalding, for instance, said it was exactly the independence afforded by government funding that has helped London become a beacon for controversial pieces, such as one staged last year at Sadler's Wells in which the pope sexually abuses an altar boy through interpretive dance.

I'm particularly amused by the final excerpt about taxpayer subsidies for an interpretive dance about the Pope molesting altar boys. Is Britain so messed up that a moocher like Spalding thinks it is compelling to cite that bit of "art" as an argument for government funding? I imagine that Spalding thinks of himself as bold and brave for being associated with such a production. Does anybody think that this leech would put on a similar production focusing on Mohammed rather than the Pope?

Taxpayers vs. Bureaucrats, Part XXXII

American taxpayers are not the only ones getting ripped off by lavish pay and perks for bureaucrats. The Daily Mail reports on a new study about public sector pay in the United Kingdom:

Public sector employees work nine years less than their private sector counterparts but are paid 30 per cent more, a bombshell report reveals today. Extraordinary research tells a tale of two Britains - a state sector awash with taxpayers' cash while the rest of the economy struggles to stay afloat. Public sector workers enjoy better pay than those in the private sector, as well as better pensions, shorter hours, and earlier retirement. Over their lifetimes, those in the private sector work 23 per cent longer - equivalent to an extra nine years and ten weeks - than public sector employees. This is thanks to a combination of shorter hours, more time off and earlier retirement. The findings explode once and for all the old idea that public sector workers have better job security and gold-plated pensions because they have lower salaries. ...The report, by centre-Right think tank Policy Exchange, also found that the chance of being made compulsorily redundant in the civil service is an astonishing 0.00007 per cent. Generous pension schemes in the state sector are now worth up to 15 per cent on top of salary, the report says, while public sector pay costs have soared by more than a third in real terms over the last seven years - three times faster than in the private sector. ...etween 1997 and 2007 public sector productivity fell, while productivity in the private sector increased by nearly 28 per cent - leaving the former only two-thirds as productive as the latter. Between 2002 and 2009, the number working in the public sector increased nearly five times more quickly than numbers in the private sector.

Tax Freedom Day in the U.K. Video

The Taxpayers Alliance has a brief but compelling video, entitled "How long do you work for the tax man?," which shows how an ordinary worker in the United Kingdom spends more than one-half his day laboring for government. "What will they tax next?" is still the best policy video to come out of the U.K., in my humble opinion, but this one is very much worth watching - especially since America is becoming more like Europe with each passing day.



What makes the video particularly depressing is that it only considers the tax burden. Regulations and government spending also are a burden on average workers, largely because of foregone economic growth.

Great Moments in Government-Run Healthcare

British healthcare is often criticized for long waiting lines and slovenly conditions, but that's just part of the story. Here's a frightening story about a women who actually got treated - and died as a result. To be fair, this presumably is a tragic exception and most people in the United Kingdom surely receive adequate care. That being said, how can medical professionals miss a six-inch handle stuck in someone's butt?!? Here's an excerpt from the Sun newspaper:

A young mum died after a series of blunders by doctors who failed to spot a six-inch long toilet brush handle embedded in her buttock, an inquest was told today. Cindy Corton, 35, was left with the bizarre injury after a drunken fall in a friend's bathroom in 2005 but "serious errors" by doctors then led to her death. It was two years before Cindy, who was in constant pain, was able to convince doctors that the thin serrated plastic handle was stuck in the flesh of her bottom. By then what should have been a routine procedure to remove it had become much more dangerous because the handle had become embedded in her pelvis. After two unsuccessful operations in 2007 the mother-of-one was in such agony that she agreed to undergo further surgery in June last year despite being told it could prove fatal. Cindy of Sleaford, Lincs, spent more than ten hours in surgery at Nottingham's Queens Medical Centre but died from massive blood loss. ...Cindy's husband, a construction manager, is now taking legal action against United Lincolnshire Hospitals Trust. ...He added: "Cindy got a very poor service from the NHS. I'm sure she would have got better treatment in foreign countries."

Cameron Should Restrain Spending, not Raise Taxes

The chart below shows everything you need to know about why the United Kingdom is a fiscal disaster. Over the past 10 years, the burden of government spending has skyrocketed from 36.6 percent of GDP to more than 53 percent of GDP. Taxes, meanwhile, have remained largely unchanged, averaging about 40 percent of GDP.

Since the OECD numbers show that the fiscal crisis in the U.K. is solely the result of a bloated public sector, the obvious solution is...you guessed it, higher taxes.

David Cameron's new coalition government has announced support for a higher capital gains tax and is signalling that this will be followed by an increase in the value-added tax.

There are some proposals to curtail the growth of spending, including some pay cuts for Prime Minster Cameron and other political figures, but I will be very surprised if those amount to more than window dressing. The United Kingdom, I fear, has gone past the point of no return in the journey toward becoming indistinguishable from the decrepit welfare states in the rest of Europe.

Say Goodbye to England

Okay, the title of this post is an absurd exaggeration, but I am not optimistic about the future of the United Kingdom. Government spending has exploded over the last ten-plus years (the largest expansion in the burden of government spending among developed nations), and this unsurprisingly has led to punitive class-warfare policies. I saved this article from the Daily Mail from a couple of months ago because I was curious to see whether predictions about talent fleeing London would prove accurate:

London will become the most highly taxed financial centre in the world when the new 50 per cent income tax rate for those earning £150,000 or more comes into force next month. Taxes will be higher than for financial workers living in the other key centres of New York, Paris, Frankfurt, Geneva, Zurich, Dubai and Hong Kong, KPMG calculated. The findings will raise fears that Labour's levies are driving businesses and bankers overseas and threatening Britain's competitiveness. ...Tullett announced last December that it will help employees move abroad if they want to avoid the top rate of tax, and Mr Smith said workers are already looking at relocating. Graeme Leach of the Institute of Directors said: 'The 50 per cent rate is a policy that should never have been announced. The indirect impact on entrepreneurial aspiration, business confidence and foreign investment is likely to be significant.

As we can see from this Bloomberg article, it appears that the feckless big-government policies of all the major parties are driving productive investors and entrepreneurs to jurisdictions with better tax law. Switzerland seems to be the biggest beneficiary. As you read the details below, one thing to keep in mind is that at least Brits are free to emigrate. The U.S. government imposes repugnant Soviet-style exit taxes designed to ransack successful people who want the freedom to move someplace with more liberty:

...more than 100 bankers, hedge fund managers and wealthy retirees are gathered on a cold March night to plot their escape from Britain. Swiss government officials and Geneva-based financial advisers have come to London to lure rich residents with glowing descriptions of the country’s low taxes, safe streets, private-banking options and convenient ski weekends. ...Next door, an overflow crowd of 50 more attendees enjoys wine and canapes as they watch the presentation on closed- circuit televisions in a mahogany-lined library, which includes a chart showing the prevalence of English as a language for doing business in Switzerland. A JPMorgan Chase & Co. banker who declined to be identified confides he’s planning to relocate next year. His main complaint: higher U.K. taxes, a theme the Swiss delegation has pounced upon. “Some people think it’s morally wrong to be working for the government for more than half the year,” says Jonathan Ivinson, a Geneva-based tax partner at international law firm Hogan & Hartson LLP... London’s highest earners must now pay a 50 percent tax on incomes above 150,000 pounds ($227,200) that came into force on April 6, replacing a 40 percent top rate. ...During the campaign, both Brown and Cameron said they backed additional curbs on the U.K. financial industry -- including a bank transaction levy -- and agreed that Britain’s dire financial state would lock in higher tax rates for the foreseeable future: ...As the taxman’s take grows larger, Switzerland is shaping up as the most-welcoming alternative for British exiles. Light- touch regulation and the willingness of cantons, as regional governments are called, to negotiate special tax rates for both individuals and businesses have prompted at least 30 London hedge fund managers to consider moving to Geneva in the past year, says Shelby du Pasquier, a Geneva-based partner at Lenz & Staehelin, a Swiss law firm. Investment management and advisory services aren’t regulated in Switzerland, apart from anti-money laundering rules, and the federal government and several cantons last year reduced taxes on dividend payments for entrepreneurs, including owners of hedge fund firms, he says. ...Geneva has already attracted some of London’s top talent. Alan Howard, co-founder of Brevan Howard Asset Management LLP, Europe’s largest hedge fund firm, has rented office space in Geneva for 60 traders relocating from London. ...BlueCrest Capital Management Ltd., Europe’s third-largest hedge fund firm, has opened a Geneva office for as many as 70 traders and analysts who have worked in London on its two biggest funds. They’re being joined by BlueCrest co-founder Michael Platt and Leda Braga, manager of the $9 billion BlueTrend fund, according to people familiar with the firm’s transitional plans. ...The departures of those principals prove that the threat to London’s prominence as a financial center is real, says Stuart Fraser, head of policy at the City of London Corporation, which runs the financial district. ...U.K. top tax rates will exceed those in Germany and France for the first time since 1989, according to a study by accounting firm KPMG. A banker earning 1 million pounds a year in London will now take home less than his counterparts in Frankfurt, Hong Kong, New York, Paris, Singapore and Zurich, KPMG says. “The U.K. has abandoned one of its key principles when it comes to tax, which is predictability,” says Bertrand des Pallieres, founder of SPQR Capital LLP, a London-based hedge fund firm with about $700 million in assets as of April. He left the U.K. last year and opened an office in Geneva after the new tax rate was announced. It’s not only funds looking at leaving. Broker Tullett Prebon said in December it would allow its 700 employees in London to move to “more certain tax regimes.” Several of Tullett Prebon’s major desks are now planning to move key personnel, the company says. ...London Mayor Boris Johnson estimates that up to 9,000 bankers, hedge fund managers and private-equity executives could leave the city, according to a letter he sent to the Labour government in January. ...Marcel Jouault is working to make sure that agitated Britons wind up in Pfaeffikon, a village on the shore of Lake Zurich. Pfaeffikon’s 11.8 percent corporate tax rate and 19 percent personal income levy are both Switzerland’s lowest, helping the village lure funds that handle about $100 billion in investments, according to hedge fund research firm Opalesque Ltd.

I Don't Care Who Wins (or Who Won) the British Election

The leader of the Conservative Party in the United Kingdom, David Cameron, may wind up being Prime Minister of a minority government, but it almost surely does not matter. Cameron is a Bush/Nixon-style Tory, quite comfortable with a bloated government and high tax rates. He has refused to say he will repeal Labor's recent 10-percentage-point increase in the top tax rate, and as far as I know he has not identified any spending cuts - even though the budget exploded in recent years. Iain Murray of the Competitive Enterprise Institute is from the other side of the Atlantic, and his analysis has been quite persuasive from the beginning. Here's what he wrote for National Review this morning (I especially like what he recommends on Scotland):

The final question is whether this Cameron minority government can survive for long. I think it can if it governs from the center. That, of course, would be an utter disaster for small-c conservatism and the nation, which needs a dose of fiscal conservatism now more than anything else. However, that is the core conservative policy least embraced by Cameron's Conservative party. If the party grows a backbone, we might see a tough budget rejected, a vote of confidence and a new election. More likely, I fear we'll see a "nice" budget that will gain majority support and weak government from the center. One final point. If I had my druthers, I'd offer a deal to the Scottish Nationalists for a referendum on Scottish independence. The Scots have clearly and decisively rejected unionism, so it is time for them to taste the consequences of that rejection. The public finances of the United Kingdom of England, Wales, and Northern Ireland would improve markedly and the Conservatives would have a solid majority. I can't see why this option isn't on the table.