Archive for 2007
Naomi Wolf, Second Amendment Sister?
Naomi Wolf has an article in today’s Washington Post tied to her new book, The End of America: A Letter of Warning to a Young Patriot. The essay is actually a lot less leftist than the book. She deplores the civic illiteracy among young people that leaves them feeling ”depressed, cynical and powerless.” And she blames influences on both left and right: the Bush administration’s portrayal of “freedom and checks and balances as threats to national security,” of course, and also the No Child Left Behind Act’s emphasis on math and reading rather than civics and history. But also, she notes, “When New Left activists of the 1960s started the antiwar and free speech student movements, they didn’t get their intellectual framework from Montesquieu or Thomas Paine: They looked to Marx, Lenin and Mao.”
Perhaps her most interesting claim is this:
Teenagers and young adults often have no clue why the United States is different from, say, Egypt or Russia; they have little idea what liberty is.
Few young Americans understand that the Second Amendment keeps their homes safe from the kind of government intrusion that other citizens suffer around the world; few realize that “due process” means that they can’t be locked up in a dungeon by the state and left to languish indefinitely.
I rather suspect that this lefty writer who has written a whole book and launched an organization to “protect and defend the Constitution from assault by any President” meant to cite the Fourth Amendment, not the Second Amendment.
But maybe I’m being cynical. Maybe Naomi Wolf knows full well that it is the Second Amendment that ”keeps [our] homes safe from the kind of government intrusion that other citizens suffer around the world.” The Fourth Amendment may promise “the right of the people to be secure in their persons, houses, papers, and effects, against unreasonable searches and seizures.” But without the Second Amendment, and the well-armed citizenry it protects, how secure would our rights be? Certainly there’s no Second Amendment in Egypt or Russia, the countries she notes in contrast. The Soviet Constitution guaranteed its citizens freedom from search and seizure. But it did not guarantee the right to keep and bear arms.
So welcome, Naomi Wolf. And as the effort moves forward to protect our Fourth Amendment rights and to get Congress to remember its Article I powers, remember that there’s also an effort currently underway in the Supreme Court to protect our Second Amendment rights.
England’s Free-Market Future?
No, the title does not refer to possible policy changes if Tories win the next election (after all, that would require a smaller-government agenda). Instead, it is a somewhat tongue-in-cheek reaction to a story in England’s Daily Mail about couples who choose sterilization because they think children cause an unacceptable carbon footprint.
It is probably reasonable to assume that these people have a statist orientation. Since voting patterns and ideological orientation tend to be passed from one generation to the next, the electorate presumably will shift over time in a more market-friendly direction (or at least won’t shift as quickly in the wrong direction).
From the article:
Had Toni Vernelli gone ahead with her pregnancy ten years ago, she would know at first hand what it is like to cradle her own baby, to have a pair of innocent eyes gazing up at her with unconditional love, to feel a little hand slipping into hers — and a voice calling her Mummy. But the very thought makes her shudder with horror. Because when Toni terminated her pregnancy, she did so in the firm belief she was helping to save the planet.
…At the age of 27 this young woman at the height of her reproductive years was sterilised to “protect the planet”. Incredibly, instead of mourning the loss of a family that never was, her boyfriend (now husband) presented her with a congratulations card. …”Every person who is born uses more food, more water, more land, more fossil fuels, more trees and produces more rubbish, more pollution, more greenhouse gases, and adds to the problem of over-population.” While most parents view their children as the ultimate miracle of nature, Toni seems to see them as a sinister threat to the future.
…Toni is far from alone. When Sarah Irving, 31, was a teenager she sat down and wrote a wish-list for the future. …Sarah dreamed of helping the environment — and as she agonised over the perils of climate change, the loss of animal species and destruction of wilderness, she came to the extraordinary decision never to have a child. “I realised then that a baby would pollute the planet — and that never having a child was the most environmentally friendly thing I could do.” …[Her husband] Mark adds: “Sarah and I live as green a life a possible. We don’t have a car, cycle everywhere instead, and we never fly. We recycle, use low-energy light bulbs and eat only organic, locally produced food. In short, we do everything we can to reduce our carbon footprint. But all this would be undone if we had a child. That’s why I had a vasectomy. It would be morally wrong for me to add to climate change and the destruction of Earth.”
New Data Show Lagging Living Standards for Welfare States
The Paris-based Organization for Economic Cooperation and Development is hardly a hotbed of free-market thought. So it is particularly remarkable that the OECD has just released new figures on per capita gross dometic product and per capita consumption.
The latter data, for AIC (“actual individual consumption”), are especially interesting since they allow comparisons of living standards across nations. For the 30 member nations of the OECD, the United States is second, with per capita consumption that is 152 percent of the OECD average, trailing only the small tax haven of Luxembourg.
Europe’s major welfare states, by contrast, do not fare so well. France is at 106, Sweden at 104, and Germany at 103, meaning that their living standards are only about 70 percent of U.S. levels.
The report also has data for both 2002 and 2005. During that period, Iceland enjoyed the biggest increase in living standards, climbing from 113 percent of the OECD average to 128 percent of the average. Not coincidentally, Iceland has been lowering tax rates and reducing the burden of government.
European Politicians, Global Warming, and Moral Preening
European leaders (and their doubtlessly bloated staffs) plan to fly to Lisbon to sign a treaty and then fly to Brussels for a summit the following day.
This has caused a bit of griping, but not because taxpayer funds are being wasted, but rather because all those private jets will cause a large carbon footprint. So in a hollow gesture, the political heads of three countries are going to share a jet.
Gee, how thoughtful.
The EU Observer reports on the farce:
At the insistence of the Portuguese EU presidency, all 27 EU leaders and their delegations will fly to Lisbon on 13 December for a special signing ceremony of the bloc’s new treaty — and then jet on to Brussels for a regular EU summit meeting the next day. The cumbersome travel arrangements allow Portugal to call the new treaty the ‘Lisbon Treaty’ — but they have also led to criticism that EU leaders are setting a bad example by preaching about green values but then unnecessarily contributing to global warming through the short round trip. To reduce at least part of the summit’s carbon footprint, the Benelux leaders will board a Dutch government airplane when flying to and from Lisbon — something suggested by Mr Balkenende.
Without the Farm Bill, We Would All Starve Tomorrow
Farmers’ groups would have us believe that without the multi-billion dollar dollops of taxpayers’ money that flow to farmers, the abundance of food we will all tuck into tomorrow would be reduced to a few grains of (probably foreign) rice. So, with Thanksgiving upon us, I thought I would provide an update of the Farm Bill debate.
Because of procedural wranglings, the Senate last week suspended consideration of the farm bill, possibly until early next year. The Republicans objected to Senate Majority Leader Harry Reid’s wish to limit the number of amendments that could be offered to the farm bill, meaning that time-honored Republican favorites such as the estate tax could not be considered. So, the bill was pulled. Assuming the Senate can pass a re-introduced bill in December, it will probably not go to conference before January.
In the meantime, our esteemed lawmakers are trading jibes about who is to blame for the current gridlock. Pity the farm-state Senators who have to go back to constituents to explain why the farm bill has been held up. In practice, so long as a bill is passed sometime in early 2008, it will probably not affect many farmers. Just in case though, and to placate farmers who say they are incapable of making planting decisions or securing loans without some sort of guarantee of government support, a bill to extend the current farm bill has been introduced.
What does all this mean for reform? Is the current stasis a positive sign? It would be if it reflected a deep unease about the farm bill and a fundamental, principled objection to the very premise of American farm policy. But, alas, so far the debate has been characterized by differences over the best way to deliver farm welfare (see my previous post) and how to spend any savings from higher commodity prices. Even the “alternative” farm bill, introduced by Sens. Richard Lugar (R, Ind.) and Lautenberg (D, N.J) delivers only modest relief to taxpayers, instead spending money on things such as the “Seniors Farmers’ Market Nutrition Program” ($200 million) and $75 million for “socially disadvantaged farmers and ranchers.”
President Bush’s veto threat still looms but, again, I have doubts about how committed he is to vetoing the bill, especially as the presidential election draws near. And, after all, he signed the egregious 2002 Farm Bill.
Swiss Report Exposes EU’s Hypocritical “State-Aid” Attack against Tax Competition
In a fight that may be a precursor to World Trade Organization battles involving America, the European Commission has been persecuting Switzerland because pro-market cantonal tax laws supposedly are a form of state aid. The EU’s state-aid rules prohibit (at least in theory) handouts to individual companies since subsidies create an un-level playing field, and the EC apparently thinks that low taxes in Swiss cantons are akin to a subsidy. Switzerland is not a member of the European Union, but the EC argues that a trade treaty obliges the Swiss to obey rulings from Brussels. Tax-news.com reports on a recent meeting, noting that the Swiss are holding firm against outside interference:
The EC argues these cantonal company tax regulations restrict trade in goods between Switzerland and the EU, and distort competition. … the Swiss delegation, led by Alexander Karrer, Head of the Monetary Affairs and International Finance Division in the Federal Department of Finance, and including representatives from the cantons, argued that Swiss taxes do not distort bilateral trade, because the types of company concerned in Switzerland have no, or at most subordinate, business operations which are taxed normally. … Furthermore, the Swiss emphasised that both domestic and foreign-controlled companies are entitled to take advantage of holding-company privileges. The European Commission is basing its legal argument against Switzerland on the latter’s alleged breach of state aid rules, which, in the EU, are in place to prevent member states from favouring certain companies and industries with beneficial tax rules and subsidies. But the Swiss say that the EC’s arguments rest on shaky very legal ground, pointing out that the country is neither an EU member or part of the Single European Market, nor party to the competition regulations of the EC Treaty, including those on state aid. Moreover, Bern insists that even if the tax laws in question were covered by the 1972 Free Trade Agreement, they would not fall under the EU’s definition of state aid, because they do not favour certain companies or industries.
Interestingly, the Swiss government recently released a report exposing the European Commission’s hypocrisy. The full report is only available in French and German, but Pierre Bessard of the Institut Constant de Rebecque in Switzerland shared with me his useful analysis. On the broader issue, Pierre noted that the report revealed that the EU allows many exceptions to its supposed prohibition of fiscal state aids, and allows generous subsidies while limiting tax competition, while Switzerland does not subsidize businesses but allows greater tax competition, which leads to innovation in the public sector and relative government efficiency.” And on the specific issue of state aid, Pierre also explains that the report reveals that “65% of state subsidies in the EU go to manufacturing and services, and only 26% to agriculture.” In other words, the subsidies for business in the EU, which clearly do create an un-level playing field, are more than twice the size of the widely criticized subsidies from the Common Agricultural Policy. In Switzerland, by contrast, individual businesses do not receive handouts and instead are allowed to compete in a low-tax environment
At first glance, this Swiss-EC spat may seem interesting just to tax geeks, but do not be surprised if the United States is ensnared in this type of fight at some point in the future. Statist academics and policymakers already are making the argument that low tax rates “distort” trade by causing jobs and investment to migrate away from high-tax jurisdictions. It is not inconceivable to think that the European Court of Justice might accept this argument at some point, thus paving the way for more extensive tax harmonization in Europe. The next step would be the World Trade Organization. I hope my fears are misplaced, but experience teaches us that politicians are very clever at expanding the power of the state.
Britain’s “Incapacity” Racket
The United Kingdom has an “Incapacity” program for people allegedly unable to work. And like the “Disability” portion of America’s Social Security program, the British system is a magnet for fraud. The Times reports that more than $8 million was paid to people who are “too fat” to work. But this is a drop in the bucket compared to the people receiving handouts for mental health reasons. In an obvious sign that people are scamming the system (unless the UK’s government-run health care system is even more dangerous than current stories suggest), the number of people who are ostensibly incapacitated has tripled in less than 30 years:
Almost two thousand people who are too fat to work have been paid a total of £4.4 million in benefit, it emerged last night. Other payments went to fifty sufferers of acne… Billions of pounds is being paid in benefits to people claiming to be unable to work because they suffer from depression, stress, fatigue and unknown or unspecified diseases. …Frank Field, a former Social Security Minister, said last night that too many people were working the incapacity benefit system to avoid work. “It is a racket, which governments have allowed to exist for far too long. I do not blame people for working the system, it is the job of politicians to stop them doing it.” …The number on incapacity benefit has more than trebled since 1979… More than £2 billion was paid in 2006-07 for mental health complaints, including £518 million to those with what are described as “unknown and unspecified” diseases.
Corporate Tax Lobbying
In the popular media, Capitol Hill is swarming with corporate tax lobbyists pushing lawmakers to enact unjustified loopholes for their businesses. Sometimes that is true, but probably more often businesses are on the Hill fighting against unjustified revenue grabs by politicians trying to soak them with tax hikes invisible to the general public.
The big tax bill recently introduced by House Ways and Means chairman, Charles Rangel, provides many examples of unjustified revenue grabs. A corporate tax lawyer sent me a one-pager on proposed changes to LIFO inventory accounting:
LIFO in a Nutshell
Among provisions of Chairman Rangel’s “Tax Reduction and Reform Act of 2007” is repeal of the LIFO method of valuing inventory. According to scoring by the Joint Tax Committee, repeal would raise additional tax revenue of over $100 billion over ten years. Although complicated in its details, the rationale for LIFO is both simple and sensible – the best way of measuring the income of businesses with rising costs of supplies . . . LIFO is an abbreviation for “last-in-first-out”. This is opposed to the other common inventory accounting convention which is “FIFO” for “first-in-first-out” . . . LIFO is considered a more accurate accounting method when inventory costs are rising, by taking into account the greater costs of replacing inventory. This gives a better measure of both the financial condition of the business . . . After thorough consideration of the issue by the Congress, LIFO came into the tax law in 1939.
To sum up: Out of the view of average voters, Mr. Rangel wants to change established law of seven decades to shake an added $100 billion (that’s with a “b”) out of U.S. manufacturers, in a way that apparently doesn’t make any economic sense and will damage their competitiveness, while federal revenues are pouring into the Treasury and have already risen above historically normal levels.
Three cheers for the corporate tax lobbyists who fight this sort of nonsense!
Supreme Court To Hear Landmark Case
The Supreme Court just announced that it will decide a landmark lawsuit concerning the constitutionality of the District of Columbia’s ban on guns. This is terrific news. My colleague, Bob Levy, senior fellow in constitutional studies here at Cato, is the prime mover behind the lawsuit. The whole idea of challenging the DC ban several years ago was to get a good Second Amendment case to the Supreme Court, i.e. plaintiffs who were responsible people who simply wanted to keep a handgun in their home for self-defense purposes. The Court will be hearing arguments in the case early next year and we can expect a ruling in the case by late June.
For a quick podcast interview with Bob Levy about the lawsuit, go here (or subscribe via iTunes). To listen to or watch a Cato policy forum about the lawsuit, go here. For Cato scholarship about the right to keep and bear arms, go here. For lawyers and law students interested in all the details about the lawsuit, go here and here.
Tax Agency Failures
Laptops lost with taxpayer personal information. Sluggish bureaucracy. Massive fraud from tax credit schemes. Tax credits called a “nightmare” of complexity. Thousands of administrative errors and unwarranted penalty notices.
Sounds like the IRS. But it’s another country with a high-rate, loophole-ridden income tax. The United States is not the only country that needs a flat tax.
Derek Jeter Battles the New York Tax Bureaucracy
The Wall Street Journal opines on the New York government’s attempt to extort more money from the Yankee shortstop. The most interesting revelation is that Jeter apparently followed the rules and avoided being in the state for more than 183 days, but the tax collectors want to apply a different rule simply because Jeter has expressed his “love for New York.” Who knew free speech could be so expensive?
New York’s tax bureaucracy…has made a refugee out of one of its most famous icons. …Who can blame him? Florida has no personal income tax, while New York’s rate for the top bracket is 6.8%, rising to [10.5]% in New York City… That makes for one of the worst tax burdens in America — and politicians are proud of it. …New York tax laws also take a notoriously wide view of “residency.” Literally tens of thousands of people only work in-state Tuesday to Thursday each week to avoid spending the requisite 184 days per year that would subject their full income to the state tax regime. And Albany’s taxmen try to catch them with things like travel records, credit-card usage and phone logs. …state auditors don’t dispute that his primary residence was in Florida before 2001 or after 2003, or even that he spent most of the year down south over the target period. Rather, they’re employing the more subjective “domicilery test.” They point to Mr. Jeter’s Manhattan apartment, his “numerous public statements professing his love for New York,” and allege he has “immersed himself in the New York community.” Gosh. Yankee owner George Steinbrenner is also a primary resident of Florida, no doubt for the same reasons as Mr. Jeter and who knows how many other professional athletes.
There are broader lessons to be learned from this episode. First, taxpayers respond to incentives, even if politicians like to pretend that high tax rates don’t impact behavior. Second, federalism is a good idea because it creates both good examples and bad examples. Third, maybe if New York wasn’t such a high-tax hell-hole, my beloved Yankees could concentrate on reclaiming their birthright by winning the World Series.
Hopkins on Gerson
Kara Hopkins has an elegant review of Heroic Conservatism, former Bush speechwriter Michael Gerson’s book, over at The American Conservative. Worth reading in full, but here’s a taste. Gerson on war:
Shortly after Gerson began scripting Bush, reporters noticed Biblical phrases creeping into the presidential rhetoric and wrote, with cryptologist’s glee, that Bush was sending coded messages to his Christian base. The truth was more perverse. As Presbyterian minister Fritz Ritsch noted, when Bush alluded to the hymn “There’s Power in the Blood” in a State of the Union text, he spoke of the “wonder-working power” not of the “precious blood of the Lamb” but of “the goodness and idealism and faith of the American people”—the world’s substitute saviors. Similarly, the president referred to the U.S. as “the light of the world,” which the “darkness” has been unable to put out—a clear invocation of John 1:1-5. As evangelical pastor Gregory Boyd pointed out, “In this paradigm, what applies to Jesus (“the light of the world”) can be applied to our country, and what applies to Satan (“the darkness”) can be applied to whomever resists our country. We are of God; they are of the Devil. We are the light; they are the darkness. Our wars are therefore ‘holy’ wars. With all due respect, this is blatant idolatry.”
And on Gerson’s big government conservatism:
[None of this is] to say that social justice isn’t a Christian concern. But Gerson is more stirred by abolitionists and activists like William Wilberforce and Martin Luther King Jr., and the sweeping social change they wrought, than he is by Christ’s own model, which was conspicuously short on political impact and long on individual acts of mercy. He implies that his giants—poverty, AIDS, illiteracy, genocide—are too big for hand-to-hand combat. Thus the Biblical call to “do unto the least of these”—the hallmark of which is personal sacrifice—must be replaced by government programs—the wellspring of which is coercion. If this constitutes an act of worship, it honors a failed god.
Again, worth a read. I haven’t seen Gerson get a favorable reading anywhere this side of the Ethics and Public Policy Center.
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