Another CNBC Battle over Big Government

I tangle once again with my regular nemesis on Street Signs. I almost feel sorry for Christian, since he feels he should fall on his sword to defend the Administration's make-believe "jobs created or saved" numbers. But then I remember that he has an annoying habit of trying to use up all the air time (his scientific name is Filibusteris Interruptus), and I realize that maybe this is karma.

New Jersey and Obamacare

Yesterday's elections were almost a complete disaster for the White House. In the races for governor, the GOP won a huge landslide in Virginia and knocked off the Democratic incumbent in New Jersey. The only silver lining to Obama's dark cloud came in upstate New York, where the collectivist Republican nominee apparently was successful in helping the Democratic candidate beat the Conservative Party candidate.

But this was a 99 percent defeat for the Obama Administration. Especially New Jersey.

From a policy perspective, it will make Democrats on Capitol Hill much more nervous about supporting government-run health care. This does not guarantee the defeat of Obamacare, but it is much less likely now than it was 24 hours ago.

Don't Copy Europe's Mistakes

In this new video from the Center for Freedom and Prosperity, Eline van den Broek of the Netherlands needs only about four minutes to explain why government-run healthcare in Europe is a mistake and why the problems in the U.S. healthcare system are the result of too much government, not too little.

A Continent-Wide Tax Would Hasten the Downfall of Europe

What is now known as the European Union started as a free-trade area, which is something to be admired. But over the decades, the free trade area has mutated into a statist super-bureaucracy pushing for centralization and harmonization. Now, according to leaked documents, the collectivists in Brussels want to impose a direct tax. This would be on top of the already onerous tax systems imposed by member nations. Needless to say, one hopes that one of the 27 nations will use its veto to stop this terrible idea. That would seem to be a simple and obvious task, but the vast majority of politicians in all European nations are terrified of being called anti-European, so even awful ideas become very plausible threats. The UK-based Daily Express reports:

Secret plans to seize more than £4billion a year from Britain and make its citizens pay taxes direct to Europe emerged last night. The leaked proposals, seen by the Daily Express, ...would...mean Brussels being given the power to dip straight into taxpayers’ pockets. Shadow Europe Minister Mark Francois vowed they would be resisted by a Tory government. He said: “The idea of an EU tax is a non-starter. ...Possible taxes suggested in the report – which could be discussed as soon as the start of the European summit in Brussels tomorrow – include levies on phone calls, flights, financial transactions or carbon emissions. ...Matthew Elliott, chief executive of the TaxPayers’ Alliance, branded the idea of direct taxation from Brussels an “outrage”. He added: “Control of taxation must rest solely in the hands of democratically elected politicians who answer to British taxpayers. “The EU has shown time and time again it is greedy for power. This is another sign they will never stop trying to grab it.”

Reagan Warns Against Socialized Medicine

This video has been circulating around the Internet for a while, but it's a classic. If you haven't seen it, take a look. And if you have seen it, it's refreshing to watch it again.

Weekly Economics Lesson: High Taxes Are a Recipe for Reduced Competitiveness

Politicians understand the economic impact of taxation when it serves their interests. They often brag about raising tobacco taxes to discourage smoking. It's not their business to dictate private behavior, of course, but they are right about higher taxes leading to less smoking (they also lead to more cigarette smuggling, but that's a separate issue). Those same politicians, however, conveniently forget about the economic effect of taxes when they impose high tax rates on work, saving, investment, and entrepreneurship. Or maybe they simply don't care. But as is explained in the Wall Street Journal, taxes on productive behavior matter a lot. More than one million people have escaped New York this decade, and punitive taxes clearly have played a role in this brain drain to other states:

Between 2000 and 2008, the Empire State had a net domestic outflow of more than 1.5 million, the biggest exodus of any state, with most hailing from New York City. The departures also have perilous budget consequences, since they tend to include residents who are better off than those arriving. Statewide, departing families have income levels 13% higher than those moving in, while in New York County (home of Manhattan) the differential was even more severe. Those moving elsewhere had an average income of $93,264, some 28% higher than the $72,726 earned by those coming in. In 2006 alone, that swap meant the state lost $4.3 billion in taxpayer income. Add that up from 2001 through 2008, and it translates into annual net income losses somewhere near $30 billion. ...no single reason can be fingered for a million migrants seeking their fortunes across state lines, but one place to start is New York's notorious state and local tax burden. According to the Tax Foundation, between 1977 and 2008, New York has ranked first or second in the country for its state-local tax burden compared to the U.S. average. In the years considered by the Empire Center study, New York's state and local tax burden ranged between 11% and 12% of income. The peak year for taxes, 2004, was followed by the peak year for departures—as New York lost nearly 250,000 people to other states in 2005. And that's before another big tax hike this year. That pattern is consistent with the annual migration patterns, showing that highly taxed and economically lackluster states were most likely to end up in residents' rear view mirrors. According to the annual study by United Van Lines, states like New York, New Jersey, Michigan and Illinois have been big losers in recent years. ...Liberals continue to insist that they can raise taxes ever higher without any effect on behavior, but the New York study is one more piece of evidence that this is a destructive illusion.

The World's Best Tax Haven: In America, but Unavailable to Americans

Tax competition is an issue that arouses passion on both sides of the debate. Libertarians and other free-market advocates welcome tax competition as a way of restraining the greed of politicians. Governments have lowered tax rates in recent decades, for instance, because politicians are afraid that the geese that lay the golden eggs can fly across the border. But collectivists despise tax competition - for exactly the same reason. They want investors, entrepreneurs, and companies to passively serve as free vending machines, dispensing never-ending piles of money for politicians. So when a left-wing group puts together a ranking of the world's "top secrecy jurisdictions" in hopes of undermining tax competition, proponents of individual freedom can use that list as a guide to world's most investor-friendly nations. The good news is that an American state, Delaware, is number one on the list. And since being a tax haven is a magnet for investment, this is good news for U.S. competitiveness. The bad news is that American taxpayers are not allowed to benefit from many of Delaware's "tax haven" policies. Here's what a left-wing columnist in the United Kingdom wrote about the issue:

You're a billionaire but you don't want anyone, least of all the taxman, to know. What do you do? Head for a palm-fringed island paradise or a snow-covered Alpine micro-state? Wrong. The world's most opaque jurisdictions – the ones that will best shield you and your cash from the light – are mostly in the heart of the most sophisticated and powerful global financial centres. London, Luxembourg and Zurich are in the top five most secretive jurisdictions, according the first comprehensive index of financial transparency ever compiled. Yet top of the pile, beating the British Virgin Islands, Belize or Liechtenstein as the best place to hide wealth, is Delaware. One of the smallest states in the US, it offers the best protection for anyone who does not want to disclose their identity as a beneficial owner of a company. That is one very good reason why the East Coast state hosts 50% of the US's quoted firms and 650,000 companies – almost equivalent to one company per Delaware resident. ...Delaware – the political power-base of the US vice-president, Joe Biden – offers high levels of banking secrecy and does not make details of trusts, company accounts and beneficial ownership a matter of public record. Delaware also allows companies to re-domicile within its borders with minimal disclosure, and allows the existence of privacy-enhancing "protected cell" or "segregated portfolio" companies, among many other stratagems useful for protecting the identity of those who do business there.