Category: tax policy

Categories
government transparency tax policy

The Block Stops Here

We were initially told that the IRS had apologized to Tea Party and patriot groups for blocking them from non-profit tax status.

But there has been no apology.

Instead, last Friday, Lois Lerner, the head of the tax-exempt division of the Internal Revenue Service, confided to a group of tax attorneys at an American Bar Association conference in Washington. She admitted that the IRS had indeed been guilty of unfairly delaying and blocking Tea Party and conservative groups from establishing tax-exempt organizations, as these dissident groups had been complaining about for years.

Who was to blame? Only mere “low-level employees” — no senior management, heaven forfend.

Then it was disclosed that senior IRS muckety-mucks actually knew in 2011 — well before the IRS commissioner assured Congress that the agency wasn’t doing precisely what it was doing. Now, latest disclosures put the beginning of the political bias policy all the way back to 2010.

Of course, the IRS vehemently denies that politics played any role.

And what about Barack “buck-stops-here” Obama?

“I first learned about it from the same news reports that I think most people learned about this,” the president said in response to a question, adding, “I think it was on Friday.”

In denial, the president spun, “If, in fact, IRS personnel engaged in the kind of practices that had been reported on and were intentionally targeting conservative groups” and “if you’ve got the IRS operating in anything less than a neutral and non-partisan way, then . . . it is contrary to our traditions.”

Well, if these ifs weren’t so (traditionally?) evasive, we might take the prez seriously.

This is Common Sense. I’m Paul Jacob.

Categories
free trade & free markets tax policy

Denmark to Citizens: Drop Dead!

That might as well have been the headline of the Spiegel Online article. What else could Der Spiegel mean by the words “Health Be Damned: Denmark Hopes Cheaper Soda Will Boost Economy” except that Denmark’s government is endangering the lives of citizens merely to promote their prosperity and to respect their rights to life, liberty and the pursuit of happiness?

Letting individuals again govern their own beverage intake, unimpeded! How is that not tantamount to shoving them over a cliff?

On the other hand, if you live in Denmark, enjoy soda, and dislike being harassed for doing so — thank goodness for tax competition.

Steep new taxes on drinks like beer and soda have been sending Danes across the border for these items. They have long shopped in Germany anyway, but the “sinful drink” taxes have inspired an increase in the international jaunts. Research by a Danish grocers’ association suggests that over the past year, members of some 57 percent of Danish households have zipped over to Germany to buy beverages onerously taxed at home. Denmark officials therefore plan to phase out the new taxes.

The government has already abandoned a notorious “fat tax” on foods with saturated fats. It seemed that Danes disliked the higher prices and unemployment caused by the tubby tax.

At least for now, then, Denmark officials have declared defeat on key fronts in the paternalistic war on soda, fats and liberty.

So, take heart, victims of America’s nanny state! The incursions are reversible.

This is Common Sense. I’m Paul Jacob.

Categories
free trade & free markets tax policy

The “Fair” Tax That Wasn’t

Talk of tax “fairness” may be all the rage today, but it takes me back to 1980 and Jimmy Carter’s “windfall profits tax.”

In the previous year, then-President Carter had delivered his infamous “Malaise Speech,” in which he had addressed concerns about the energy crisis, going on and on about this program and that, and the need for “energy independence,” but not mentioning the one good thing done during his administration regarding energy: the beginning of energy market deregulation.

Carter’s Democratic Party was, like today’s Democrats, concerned about “fairness.” Because of the deregulation, they expected energy companies to reap “windfall profits.” Which those businesses somehow didn’t “deserve.”

Arguable, that.

But skip morality for a moment, and look at it from an economic point of view. The new, extra profits from a deregulated market would have enticed more investment into the areas where the “windfalls” were being made, thus increasing production, reducing prices. To the benefit of all.

Instead, Congress enacted the tax, and Carter signed it 33 years ago yesterday. And for six years, domestic production of oil produced “negative” profits. All Congress really did was delay and diminish the economic recovery to be expected from deregulation.

Congress also got much less revenue from the tax than projected.

The Crude Oil Windfall Profits Tax was repealed in 1988, and we experienced great growth in the 1990s.

A word of caution, I think, to those who bandy about “fairness” to the exclusion of sense, or worry overmuch about energy company profits, today.

This is Common Sense. I’m Paul Jacob.

Categories
free trade & free markets tax policy

Impossible, They Say

Modern economics takes a long, circuitous route to the old wisdom of classical political economy: Laissez faire is best.

This ideal of free markets was pretty clearly established by Adam Smith, J.B. Say, David Ricardo, and others long ago. Frédéric Bastiat explained it best in layman’s terms.

But modern economic theory, with lots of math I don’t pretend to follow, often backs it up, too. Sure, sure: Much of modern theory sort of assumes unlimited government as the alternative to “market failure.” But the more you look (and look critically) at that theory — and increasing numbers of economists are doing just that — the more the case for government involvement falls flat.

This struck me as I was reading economist Garett Jones:

There’s an old story about a mathematician asking Paul Samuelson for one idea in economics that was simultaneously true and not obvious. Samuelson’s answer [was the Law of Comparative Advantage].  Today, I’ve got another: The Chamley-Judd Redistribution Impossibility Theorem.

Chamley and Judd separately came to the same discovery: In the long run, capital taxes are far more distorting tha[n] most economists had thought, so distorting that the optimal tax rate on capital is zero.  If you’ve got a fixed tax bill it’s better to have the workers pay it.

Jones goes on:

Under standard, pretty flexible assumptions, it’s impossible to tax capitalists, give the money to workers, and raise the total long-run income of workers.

Not, hard, not inefficient, not socially wasteful, not immoral: Impossible. 

Hard as policy wonks and their patrons, the politicians, may try, any redistribution from the owners of capital to workers will make workers worse off.

Jones discusses some of the niceties of the theory.

But I confess: to me it’s all déjà vu. Or, to conjure up another French term, laissez faire all over again.

This is Common Sense. I’m Paul Jacob.

Categories
free trade & free markets national politics & policies tax policy

In the Name of Loving

The aptly named decision Loving v. IRS—it’s so true, you know—provides a modest victory in the war of tax-takers versus everybody else.

The ruling, brought to our attention by the Institute for Justice, a party to the lawsuit, concerns IRS regulation of tax preparers. The IRS wants to force non-attorney, non-CPA tax preparers to take an exam, pay annual fees, and take hours of courses every year. District Judge James Boasberg has ruled the regs unlawful.

The regulations govern people hired by others. It would be really crazy if every non-credentialed taxpayer had to pass an exam, pay fees, and take courses every year just for the pleasure of filling out the forms we must complete in order to give IRS our money.

But the regulations are really crazy anyway. They violate the freedom of professional tax preparers. Also, by making it more expensive to be a tax preparer, they reduce the taxpayers’ tax-preparation choices and/or increase the costs of preparation services.

If judges regularly consulted such desiderata as our freedoms and rights when assessing assaults on them, many more regulations would be voided—say, 99.9 to 100 percent or thereabouts. Boasberg’s ruling hinges more narrowly on the important fact that Congress never gave IRS authority to regulate tax preparers.

The IRS has moved that the ruling be suspended pending its appeal. Let them lose the motion and lose the appeal, and I’ll be loving it.

This is Common Sense. I’m Paul Jacob.

Categories
ideological culture tax policy

An Actor’s Act

Think you can raise taxes without negative consequences? Consult Gerard Depardieu.

The great French actor (known for his prominent schnozz) moved across the border to Belgium, and is giving up his French passport. While other well-off folks who have moved out of their native land, such as billionaire Bernard Arnault, pretend that their moves are for non-tax reasons, Depardieu has no problem admitting that he’s leaving his country to avoid next year’s whopping new wealth tax.

For this, he has been criticized by France’s prime minister, Jean-Marc Ayrault, who publicly censured Depardieu for a lack of patriotism “at a time of cutbacks” and judged the actor’s decision “shabby.”

“Paying a tax is an act of solidarity,” Ayrault intoned on TV, “a patriotic act.”

Depardieu rightly objects, accusing the socialist government of President Francois Hollande of “driving France’s most talented figures out of the country”:

“I am leaving because you consider that success, creation, talent, anything different, must be punished,” he said.

Depardieu said that during his long career he had paid 145m euros (£118m) to the French taxman.

“At no time have I failed in my duties. The historic films in which I took part bear witness to my love of France and its history,” he said.

But it’s hard to maintain “solidarity” with a beloved country going socialist. Depardieu will find a lot of sympathy with his plight from even not-so-rich Americans. You know, we who put freedom and achievement and principle above kleptocracy.

This is Common Sense. I’m Paul Jacob.

Categories
media and media people national politics & policies tax policy

The Muppet Is Right

Anti-tax activist Grover Norquist is being mocked by oh-so-funny lefty pundit Matthew Dowd because Dowd dislikes the anti-higher-tax-rate pledge Norquist invites politicians to sign.

Some long-serving Republicans have renounced the commitment they made to their constituents to “oppose any and all efforts to increase the marginal income tax rates for individuals and/or businesses.” Senator Saxby Chambliss says he cares “more about the country than . . . about a 20-year-old pledge.” Co-Republican and co-pledge-signer Senator Lindsey Graham agrees.

“Grover Norquist is an impediment to good governing,” Dowd said on This Week, ABC’s Sunday morning talking-head program. “The only good thing about Grover Norquist is, he’s named after a character from Sesame Street. ”

Welcome to sound-bite alley. Lucky for Norquist his first name isn’t Elmo or Snuffleupagus, eh?

Expanding on the theme of Norquist’s putative irrelevancy, Time’s Joe Klein says Norquist has passed his “sell-by date.”

Let me interject a question neither about muppets nor sour milk: What is “good governing”?

Does it require stripping the wallets of taxpayers to fund every conceivable government program concocted by those who would run every aspect of our lives?

Those who most eagerly wish to loot the rest of us seem, at the moment, to have the upper hand. That doesn’t mean that the rest of us should supinely wait to be rolled over. The fight for freedom is always relevant. So is keeping one’s word.

This is Common Sense. I’m Paul Jacob.

Categories
national politics & policies tax policy too much government

Let’s Jump!

When I was a kid, my mother would rhetorically ask, “If your friends jumped off a cliff, Paul, would you?”

Moot question now. My friends don’t dare jump, nor do my political enemies. Face it, Ma, nobody wants to do a swan dive off the fiscal cliff.

Except for me.

It now appears that enough House Republicans will join Democrats in voting to raise taxes on the so-called “wealthy,” thus hiking up taxes on some of my countrymen. It will do little to raise revenue, and nothing to control spending.

We taxpayers should stand together. I oppose being divided and conquered. And when they ask us to turn over Spartacus — er, the wealthy — we should each declare, “I am wealthy!”

Debt-delivering, big-spending politicians relentlessly provide us with pious pronouncements to the effect that, though we simply must stop piling up such debt and cut wasteful and out-of-control spending, because such fiscal responsibility remains unthinkable, at present, we must postpone responsibility till later.

They see the fiscal cliff and insist we climb higher.

Let’s face this fiscal cliff honestly, let’s not pretend that the acme of responsibility is funding government on the backs of the few. Besides, if there is no political will to make spending cuts today or tomorrow, why would anyone expect such backbone to miraculous appear . . . later?

I see the cliff and say, “Let’s jump!” While we can still land safely.

This is Common Sense. I’m Paul Jacob.

Categories
individual achievement initiative, referendum, and recall tax policy

The Lion of Oregon

When I think of Oregon, I often think of Don McIntire. Last Friday, 74-year-old Don died from a heart attack suffered at home.

I knew him as a great storyteller, with a Mark Twain sort of wit. But McIntire was best known in the Beaver State as a longtime taxpayer activist, specifically the main proponent of Measure 5, a 1990 citizen initiative that limited the state’s oppressive property taxes.

Then-Governor Barbara Roberts hyperbolically predicted that if voters passed Measure 5, “people would die.” Nonetheless, voters enacted the citizen initiative . . . and lived to tell about it.

Learning of McIntire’s passing, Jason Williams with Oregon Taxpayers United recalled the many phone calls he’d received from senior citizens, expressing their “heartfelt gratitude for Measure 5” and saying, “If it wasn’t for Don McIntire, I wouldn’t be able to live in my home today.”

Radio talk show host Lars Larson recognized McIntire as “a tax hero to millions of Oregonians whose taxes were reduced by literally billions of dollars because of the tireless efforts of this man.”

“Don McIntire was a giant in Oregon’s limited government movement,” said Cascade Policy Institute founder Steve Buckstein. “He gave tirelessly of himself for literally decades to reign in the government he thought was too large and too intrusive. . . . Every Oregonian who wants to keep government in check owes Don McIntire a huge debt of gratitude.”

Thanks, Don, for siding with taxpayers. Rest in peace.

This is Common Sense. I’m Paul Jacob.

Categories
national politics & policies tax policy too much government

Avoid the Big Gov Trap

We do not face just one problem, but our many problems tend to come down to one thing: trying to do too much through government.

Last weekend, at Townhall, I noted that the most wildly popular economic policy doctrine of the last hundred years, Keynesianism, has not — its proponents say — been properly given a chance during the two biggest financial contractions of our time, the Great Depression and the recent mortgage-backed securities implosion. In both cases, more money was needed for proper “stimulus.”

Ironic, perhaps, since Keynesianism has been used as an excuse to run deficits and increase debt for scores of years.

Yes, even a doctrine designed to play into the hands of politicians gets abused by politicians.

The lesson: Excuses to grow government are not revolutionary insights, they’re traps.

Yesterday I talked about how the “Laffer Curve” point where raising the tax rate actually reduces revenue is lower for capital gains than for general income. But one consequence of a revenue-maximizing capital gains rate is that there would then be rich investors who wind up paying a smaller percentage of their incomes in taxes than do common laborers.

Tax fairness is an issue that should not be ceded to those caught in the clichés of the age. Think of tax fairness, instead, as a rationale for a limit. Not as an excuse to raise tax rates punitively, hatefully, foolishly (like the current president wants).

Bring all tax rates down to the level of the tax with the lowest revenue-maximizing rate. Don’t raise capital gains taxes, lower the income tax. 

Taxes would then be fair. And government would have to be reduced to accommodate the fairness, and thus more limited.

Less of a trap.

This is Common Sense. I’m Paul Jacob.