October 7, 2015

A Deeper Look at Tradeable Allowances

Filed under: Economics, Environment — Tags: , , , , — Nicholas @ 03:00

Published on 18 Mar 2015

Since the passage of the Clean Air Act, SO2 emissions have decreased by 35%. Part of this is due to tradable allowances, which created a market solution to the external costs of SO2 emissions. In this video, we look at the lessons of tradable allowances for SO2 and see if a similar market-based solution could work to decrease other pollutants, such as CO2.

October 1, 2015

US tax cut proposals fail the laugh test

Filed under: Economics, Government, Politics, USA — Tags: , , , — Nicholas @ 05:00

At Ace of Spades H.Q., Ace responds to a recent Kevin Williamson post:

It is standard conservative theory that tax cuts and spending cuts go hand in hand. But after decades of ever-rising spending, coupled with occasional tax cuts, I’m not so certain of that any longer.

I believe it was after Reagan that Republican theorists began justifying his model of tax-cuts-now-spending-cuts-later as the “starve the beast” theory of limiting government — if we cut taxes, therefore cutting government’s resources, we should, logically, force the government to adapt itself to living with fewer taxpayer dollars. Ergo, spending should be forced down by the practicalities of the situation — either you start cutting spending, or else you start running up dangerous, Greece-level of debts.

The problem is that this country has always elected the “or else” part of this syllogism: We are racking up dangerous, Greece-levels of debts, and we’re barely even talking about that any longer.

The problem has grown so immense that we’ve decided to declare it officially a Non-Problem. (It will decide to re-assert itself as a Really Big Problem in a short period of time.)

So I no longer believe in the “starve the beast” theory, because the “starve the beast” theory relies upon Americans understanding the mid-to-longer term trajectory of their spending choices, which they plainly do not.

Since Americans are not capable of understanding the mid-to-longer term trajectory of their spending choices, it seems to me the only way to impose budget discipline and spending rollback is to offer Americans an immediate, as opposed to future, confrontation with reality: that is, if Americans wish to have so much government, they should be forced to pay for the level of government they are choosing, and not defer that payment (as they apparently will choose, every single time) into the future, to be imposed upon their children.

But, instead, they must be forced to reckon with the level of government they are choosing now by paying the full freight and cost of that government now.

That is to say: I believe that rolling back spending is only possible when Americans are made to feel the costs of the government they’re choosing, and that will only happen when they’re forced to actually pay for it.

The biggest hurdle, after the economic illiteracy of the voting public, is the starkly clear self-interest of the politicians: they can get re-elected only if they pander sufficiently to the voters. The voters, who do not understand how the government works (and refuse to believe it when you tell them) … want ever-more of it to benefit them as soon as possible. Telling the voters that you’ll not only not give them more but that you’ll be giving them significantly less is a great way to lose your next election (assuming you don’t get thrown out of office before that even comes up).

September 25, 2015

Reducing income inequality

Filed under: Bureaucracy, Business, Economics, USA — Tags: , , , , — Nicholas @ 02:00

Tim Worstall in Forbes:

There’s a fascinating and very long essay over in National Affairs about how we might cut income inequality. And, contrary to what any number of Democratic candidates for office will tell you, the answer isn’t to impose ever more regulation upon the economy. Rather, it’s to strip away some of the regulation that allows certain favoured income groups to make excessive incomes. Excessive here defined as greater than the economic value they add to the lives of the rest of us, something they achieve by carving out economic rents for themselves. I would, myself, go rather further than the writer, Steven Teves, and start using Mancur Olson’s analysis, that this is what democratic (note, democratic, not Democratic) politics always devolves down into, a carving up of the public sphere to favour certain interest groups. But even this milder version gives us more than just hints about what we should be doing:

    At the same time, however, we have seen an explosion in regulations that shower benefits on the very top of the income distribution. Economists call these “rents,” which we can define for simplicity’s sake as legal barriers to entry or other market distortions created by the state that create excess profits for market incumbents.

Let us take one very simple example of such rents. The earnings of those who possess taxi medallions in cities where there’s an insufficient number issued. Until very recently one such medallion, allowing one single cab to operate on the streets of NYC 24/7, had a capital value of $1 million. That led to a rent, a pure economic rent, of $40,000 a year to allow one cab river to use that medallion for 12 hours of the day. and, obviously, another $40,000 to allow another to use it for another 12 hours a day.

That is purely a rent: and one created by New York City not issuing enough medallions to cover the demand for cab services. Uber has of course exploded into this market and the success of that company, along with its many competitors, shows how pervasive the creation of such rents by limiting taxi numbers has been in cities around the world. That is an obvious and very clear creation of a rent purely through bureaucratic action.


Deregulating the economy will remove many of those rents. This will reduce income inequality. So, why aren’t those who rail against income inequality shouting for deregulation? Good question and the only proper answers become increasingly cynical. Unions exist for the purpose of creating rents for their members. So, given the union participation in the Democratic Party we’re not going to see calls for deregulation from that side. And different groups, those car dealers perhaps, the doctors, have their hooks into the Republican Party too.

My own answer is that it needs to be done in the same manner that Reagan treated the tax code. Not that I’m particularly stating that Reagan’s tax changes were quite as wondrous as some now think they were, only that it all had to be approached on a Big Bang basis. Everything had to be on the table at the same time so that while there were indeed those who would defend their little corner the over riding interest of all was that all such little corners got eradicated. With this rent creation, given that so much of it is at State level, that won’t really work. Except for one idea that I’ve floated before.

September 21, 2015

Greek businesses discover the receipt

Filed under: Business, Economics, Europe, Government — Tags: , , , — Nicholas @ 04:00

Megan McArdle is in Athens, where she’s finding that Greek businesses have started handing out receipts for transactions that once would have been undocumented (the better to hide revenue from the taxman):

I was last in Greece in 2006, during the twilight years of the boom that peaked during the Athens Olympics. Back then, Greece was notable to Americans for its lack of receipts. This is convenient for the shoppers, who don’t have to hunt around for somewhere to toss yet another piece of unwanted paper. But it was also convenient for vendors who wanted to underpay the tax authorities.

The inability of the Greek government to collect the taxes it is owed is one of the recurring themes of coverage of the financial crisis. This problem is sometimes exaggerated, but everyone agrees that it’s very real. And since the burden of structural adjustment is falling on fiscal reforms — rather than, say, firing unproductive members of the vast government workforce — that’s a big problem.

Widespread evasion narrows the tax base, forcing the government to set higher rates. If the evasion were spread evenly across all sectors of the economy, then these two things would roughly cancel out. Unfortunately, it’s not. Some sorts of taxes are easier to evade than others. Employment taxes are hard to evade, while self-employed professionals like doctors and lawyers have found it relatively easy to shelter most of their incomes. As a result, the cost of employing a new staff worker is quite high (especially since those workers are incredibly difficult to fire). The value-added tax here is now 23 percent, close to the EU maximum rate. (Thank God for that maximum, joked one journalist I met; otherwise, who knows how high they’d have raised it.) That’s making up for taxes that aren’t collected elsewhere.

The good news is that Greece has at least made progress on collecting sales tax. They’re hardly at the level that our Internal Revenue Service would accept, but most of the places I’ve gone have automatically given me a receipt, printed out by a cash register. The taxi drivers mostly offer printed receipts. One did ask me how much he should make it out for. (Note to boss: I told him to make it out for the amount of the fare.) I’m told that on the islands, collection is less sure. But here in Athens, they are slowly but surely improving their collection apparatus.

Greece is attempting to do in the space of a few years what other economies did over the course of decades. Most people think of a cash register primarily as a way to add up the value of the sale, but in fact, that is the least of its functions. Its most attractive feature to the merchants who adopted them back in the late 19th century was that they made it harder for clerks to steal. (That’s why old registers made a noise every time the cash drawer opened; that prevented employees from stealthily recording sales and then pocketing the money, or alternatively, giving goods to their friends without being paid.) Over time, of course, revenue authorities realized that cash register tickers were also a good way to ensure that employers gave the state its due.

Command and Control Solutions

Filed under: Economics, Government — Tags: , , , , , — Nicholas @ 02:00

Published on 18 Mar 2015

What happened to the cleanliness of your clothes after the U.S. Department of Energy issued new washing machine requirements? The requirements — which require washers to use 21% less energy — mean that washers actually clean clothes less than they used to. Is “command and control” an efficient way to achieve the desired outcome (which is less pollution)? Rather than a standard requirement, such as the Department of Energy issued, a tax on electricity would provide users with greater flexibility in their washing—and would prompt people to purchase machines that use energy more efficiently and keep their clothes clean.

Are there times when a command and control solution to a problem makes the most sense? We look at the eradication of smallpox as one example.

September 14, 2015

Cash is still king … and we’d be insane to abolish it

Filed under: Business, Economics, Liberty — Tags: , , , , , — Nicholas @ 03:00

In the Telegraph last month, Matthew Lynn made the case against eliminating cash:

Trying to get a plumber in France? In the rather unlikely event that you can actually find one who isn’t still on his grandes vacances, gone above his permitted 35 hours a week, or indeed long since relocated himself to South Kensington, then you’ll also have to make sure that you can pay by cheque or bank transfer.

From today, France is banning the use of cash for transactions worth more than €1,000, or slightly more than £700. On one level, that is about combating crime and terrorism. But on another, it is also part of a growing movement among academics and now governments to gradually ban the use of cash completely. It is inefficient, oils the underground economy, and makes it harder for central banks to manage the economy, or so runs the argument.

Much like gold, it is a “barbarous relic”, as some publications loftily dismiss it. The trouble is, cash is also incredibly efficient. And it is a crucial part of a free society. There is no convincing case for abolition.

When it comes to creeping state control, it is no surprise to find the French out in front. In the wake of this year’s attack on the Charlie Hebdo office, the government has clamped down on the use of cash. The maximum permitted transaction has been reduced from €3,000 to €1,000, and any cash withdrawal of more than €10,000 will be automatically flagged up to the police (tourists have a higher limit, but even that is being reduced to €10,000 – just in case you are planning on ordering some very expensive wine on your next trip to Paris).


In reality, cash is far too valuable to be given up lightly. In truth, the benefits of abolition are largely oversold. While terrorists and criminals may well use cash to buy weapons, or deal in drugs, it is very hard to believe that they would not find some other way of financing their operations if it was abolished. Are there really any cases of potential jihadists being foiled because they couldn’t find two utility bills (less than three months old, of course) in a false name to open an account? The web is full of false payment systems and anonymous names.

Nor is clamping down on the black economy such a big deal. Admittedly these things are hard to measure, but according to research by the London School of Economics, the black economy only accounts for 10pc of British GDP, which is the fourth lowest in the EU. Many of the people working in it are below the tax threshold anyway, and certainly below the VAT threshold. So the tax collected even if you clamped down completely is unlikely to amount to more than 1pc of GDP. As for negative interest rates, do we really want those? Or have we concluded that central bankers are doing more harm than good with their attempts to manipulate the economy?

August 31, 2015

The NDP and federal corporate taxes

Filed under: Cancon, Economics, Government — Tags: , , , — Nicholas @ 04:00

In Maclean’s, Stephen Gordon looks at how the New Democratic Party is talking about their approach to corporate taxation during the current election campaign:

… the OECD says that the current combined (that is, federal plus state/provincial) corporate income tax rate in the US is 39 per cent. In Canada, it’s 26.3 per cent (the federal rate of 15 per cent plus an average provincial rate of 11.3 per cent.) Getting us up to something resembling the U.S. rate (in the absence of changes in provincial rates) would require increasing the federal rate to around 27 per cent.

The NDP has made use of several different reference points since then. For example, rolling back the cuts made under the Conservative government would bring the rate back up to 22 per cent. Increasing the federal rate to 19 per cent would bring us up to the average of the other G7 countries. The NDP’s target is apparently now down to 17 per cent or so.

As far as the prospects for Canadian economic growth go, this steady reduction is good news: corporate income taxes are the most harmful to economic growth. The growing recognition of the negative effects of corporate tax rates explains why Canada and other OECD countries have made it a point to reduce corporate income taxes over the past few decades […]

If you look at just the relationship between federal corporate income tax rates and federal income tax revenues, you get pretty much the same story. Even though federal corporate tax rates have fallen by more than half over the past 30 years, corporate income tax revenues have continued to fluctuate around two per cent of GDP.

Canadian corporate tax rates and revenue 1985-2014

There are at least two reasons why you might think that higher corporate tax rates might not result in higher corporate tax revenues:

  1. Higher corporate tax rates reduce the after-tax rate of return on investment. Everything else being equal, this reduces investment, capital accumulation and profits. Less profits means less corporate income to tax.
  2. Higher corporate taxes produce an incentive for multinational firms to shift taxable activities away from high-tax jurisdictions.

In the short and medium term, the second point is probably more important.

August 26, 2015

Harper’s “boutique” tax credits

Filed under: Cancon, Economics, Government, Politics — Tags: , , — Nicholas @ 03:00

Colby Cosh explains why Stephen Harper is so fond of certain kinds of tax system distortions (tl;dr — they work … politically if not economically):

On Sunday, Conservative Leader Stephen Harper announced that his government, if re-elected, would introduce a tax credit for memberships in service clubs like the Canadian Legion or the Kiwanis. This modest measure — and Harper himself emphasized its modesty — is already being greeted with some derision. Apparently this is because a tax break for service clubs is an absurd, baroque complication of the tax code, unfit to stand alongside sensible traditions like the Prince Edward Island aerospace tax credit, the Nova Scotia digital media tax credit, the British Columbia book publishing tax credit, the Ontario computer animation tax credit, the Manitoba odour control tax credit for farms, Quebec’s tax credit “for the modernization of a tourist accommodation establishment” or the various items exempted almost randomly from the GST, such as condominium fees and music lessons.

One senses that the Canadian media have decided, curiously late in the country’s history, that tax-code wrinkles introduced with the aim of social engineering are ridiculous, if the aims thereof are conservative ones. Furthermore, we have concluded that lifting taxes on Elks or Knights of Columbus memberships, and thus putting them on more or less the same footing as religious tithes, is especially ridiculous.

The Conservative party will be awfully disappointed if the press does not engage in some snickering here. The work of the Kinsmen or Rotary is not especially visible if you never cross Eglinton Avenue; the very names of these groups have a rustic flavour on the tongue, carry a whiff of old-school WASP dominance and gray-flannel respectability. Break out into the smaller cities, if you dare, and the traces become somewhat clearer: a seniors’ centre here, an air-ambulance fundraiser there. In smaller towns, service clubs are often practically synonymous with capital-S Society. Laugh at the idea of a tax break for the Legion, but make sure you are still laughing on election night.

August 19, 2015

Canada looks very good on an international ranking you won’t hear about from our media

Filed under: Cancon, Economics — Tags: , , , — Nicholas @ 05:00

Our traditional media are quick to pump up the volume for “studies” that find that we rank highly on various rankings of cities or what-have-you, but here’s someone pointing out that Canada’s ranking is quite good, but it’s not the kind of measurement our media want to encourage or publicize:

First, we must identify a nation’s currently employed population. Next, all public sector employees are removed to obtain an adjusted productive workforce. It may be objectionable that certain professions, like teaching, nurses in single payer systems and fire fighters, are classified as an unproductive workforce, but as our system is currently designed, the salaries of these individuals are not covered by the immediate beneficiaries like any other business but are paid through dispersed taxation methods.

Finally, this productive population is divided into the nation’s total population to identify the total number of individuals a worker is expected to support in his country. To remove bias toward non-working spouses and children, the average household size is subtracted from this result to get the final number of individuals that an individual must support that are not part of their own voluntary household. In other words, how many total strangers is this individual providing for?

The Implied Public Reliance metric does a far better job of predicting economic performance:

Canada - implied public reliance

Greece, the nation with the debt problem, is currently expecting each employed person to support 6.1 other people above and beyond their own families. This explains much of the pressure to work long hours and also explains the unstable debt loads. Since a single Greek worker can’t possibly hope to support what amounts to a complete baseball team on a single salary, the difference is covered by Greek public debt, debt that the underlying social system cannot hope to repay as the incentives are to maintain the current system of subsidies. To demonstrate how difficult it is to change these systems within a democratic society, we just have to look at the percentage of the population that is reliant on public subsidy.

Canada - reliant on public funding

Oh, and by the way … Greece is doomed:

The numbers imply that 67 percent of the population of Greece is wholly reliant on the Greek government to provide their incomes. With such a commanding supermajority, changing this system with the democratic process is impossible as the 67 percent have strong incentives to continue to vote for the other 33 percent — and also foreign entities — to cover their living expenses.

August 8, 2015

Election issue – the Netflix tax, “much ado about nothing?”

Filed under: Business, Cancon, Media, Politics — Tags: , , , , , — Nicholas @ 04:00

Michael Geist looks at the major federal party leaders’ reactions to discussion of a “Netflix tax”:

As part of the digital strategy discussion, I stated that questions abound, including “are new regulations over services such as Netflix on the horizon?”

Prime Minister Stephen Harper addressed that question yesterday with a video and tweet in which he pledged that the Conservatives will never tax digital streaming services like Netflix and Youtube. Harper added that the Liberals and NDP have left the door open to a Netflix tax, but that he is 100% opposed, “always has been, always will be.” Both opposition parties quickly responded with the NDP saying they have not proposed a Netflix tax and the Liberals saying they have never supported a Netflix tax and do not support a Netflix tax.

So is this much ado about nothing?

Not exactly. First, there are groups and provincial governments that support a Netflix tax or mandated contribution to fund the creation of Canadian content. These include the Ontario and Quebec governments along with many creator groups. Earlier this year, I obtained documents under the Ontario Freedom of Information and Protection of Privacy Act that showed that the Ontario government spent months working toward a recommendation to expand the regulation of new media, including Canadian content requirements and increased regulation of foreign online video providers.

Second, while the Liberals and NDP have not proposed a Netflix tax, they have called for requirements that online video providers disclose revenues, Canadian content availability, and subscriber numbers to Canadian regulators. This is a very soft form of regulation that Netflix and Google have rejected as beyond the power of the Broadcasting Act. Providing information to allow for more informed regulatory analysis does not seem particularly unreasonable, but the companies unsurprisingly fear that that analysis could ultimately lead to calls for more regulation or payments.

Third, the real Netflix tax is the prospect of a levying sales taxes on digital products such as music downloads or online video services. It was the Conservatives that raised this possibility in the 2014 budget, launching a consultation on the issue that garnered supportive comments from companies such as Rogers, which noted that Canadian-based online video services such as Shomi operate at a disadvantage since they collect GST/HST, but Netflix does not. With many countries moving toward some form of digital taxation (as I noted in a January 2015 column on the issue, the real challenge lies in the cost of implementation), it seems inevitable that Canada will do the same in order to level the playing field and recoup a growing source of revenue. The Conservatives would presumably seek to differentiate between a generally applicable sales tax and a tax or fee targeting online streaming services, though many may feel it is a distinction without a difference.

July 16, 2015

QotD: The proper role of government

Filed under: Government, Liberty, Quotations, USA — Tags: , , — Nicholas @ 01:00

Good government is a constable — it keeps the peace and protects property. Parasitic government — which is, sad to say, practically the only form known in the modern world — is at its best a middleman that takes a cut of every transaction by positioning itself as a nuisance separating you from your goals. At its worst, it is functionally identical to a goon running a protection racket.


The desire to be left alone is a powerful one, and an American one. It is not, contrary to the rhetoric proffered by the off-brand Cherokee princess currently representing the masochistic masses of Massachusetts in the Senate, an anti-social sentiment. It is not that we necessarily desire to be left alone full stop — it is that we desire to be left alone by people who intend to forcibly seize our assets for their own use. You need not be a radical to desire to live in your own home, to drive your own car, and to perform your own work without having to beg the permission of a politician — and pay them 40 percent for the privilege.

Principles are dangerous things — whiskey is for drinking, water and principles are for fighting over. The anti-ideological current in conservative thinking appreciates this: If we all seek complete and comprehensive satisfaction of our principles, then there will never be peace. This is why scale matters and why priorities matter. In a world in which the public sector consumes 5 percent of my income and uses it for such legitimate public goods as law enforcement and border security, I do not much care whether the tax system is fair or just on a theoretical level; and while I may resent it as a matter of principle, the cost of my consent is relatively low, and I have other things to think about. But in a world in which the parasites take half, and use it mainly to buy political support from an increasingly ovine and dependent electorate, then I care intensely.

Kevin D. Williamson, “Property and Peace”, National Review, 2014-07-20.

July 3, 2015

“People with money have alternatives”

Filed under: Cancon, Economics — Tags: , , , — Nicholas @ 02:00

Frances Woolley on the hidden advantages even a modest amount of money can provide:

Less often observed is that wealth itself generates consumption benefits, even if one never spends a dime of it.

I own a 12 year old Toyota Matrix. The front fender has collided with one too many snow banks, and is now held together with string. The exhaust system has seen better days. It breaks down occasionally. But overall it’s very cheap to run.

If I was poor, it would be tough having an old, unreliable car. The unexpected, yet inevitable, major repairs would be a financial nightmare. $750 to repair the clutch. $200 to fix the axle seal. If the car broke broke down, and I couldn’t get to work, I might lose my job.

But because I’m financially secure, I can afford a cheap car. I can self-insure against financial risks: unexpected repair costs, taxi fares, rental cars, and so on. I can afford to get my car towed. If it was beyond repair, I could get another car tomorrow.

The real value of having $10,000 in the bank isn’t $200 in interest income, or the stuff $200 in interest income might buy. $10,000 in the bank creates a little bit of room to take risks. One could call it the “implicit value of self-insurance generated by own capital.” It’s the comfort of being rich (or having rich relatives). It’s real. It’s valuable. But it wouldn’t be taxed if Canada had a consumption tax.

Admittedly, the insurance value of having wealth isn’t taxed under an income tax either. But at least under an income tax some of the return on wealth is taxed, so there is, at least potentially, some shifting of the tax burden onto those with wealth.

The greatest freedom money offers is the freedom to walk away. Your bank doesn’t offer you unlimited everything with no monthly fees? Walk away. There’s always someone else who wants your money. Your phone plan is too expensive? Walk away (o.k., that may not be the best example).

People with money have alternatives, which makes their demand for goods and services elastic. Food may or may not cost more in poor areas. But a rich person can shop at Value Village if he chooses. A poor person may not be able to afford expensive purchases which save money in the long run, like bread machines or high efficiency appliances or pressure cookers. Consumption taxes aim to tax the amount of stuff people actually consume. But if poor people pay a higher price for their stuff than rich people, is a system that taxes only consumption spending, without taking into account the ability to command consumption wealth conveys, fair?

June 27, 2015

QotD: The corporate tax game

Filed under: Bureaucracy, Business, Law, Quotations, USA — Tags: , , , , — Nicholas @ 01:00

You can think of corporate taxation as a sort of long chess match: The government makes a move. Corporations move in response — sometimes literally, to another country where the tax burden is less onerous. This upsets the government greatly, and the Barack Obama administration in particular. Treasury Secretary Jack Lew has written a letter to Congress, urging it to make it stop by passing rules that make it harder to execute these “inversions.”

I’ve got a better idea: What if we made our tax system so attractive to corporations that they would have no interest in moving themselves abroad?

The problem with this extended chess game is that every move is very costly. First, it adds to the complexity of the tax code. With every new rule — no matter how earnestly said rule attempts to close a “loophole” — it becomes harder to know whether you are in compliance with the law. This is true on both sides; corporate tax law has now passed well beyond the point where it is possible for a single expert to be familiar with its ins and outs. This makes it harder to plan business expansions, harder to forecast government revenue, and it requires both sides to hire more experts in order to determine whether corporations are compliant. It also means more lawsuits, and longer ones, as both sides wrangle over how this morass of laws should be applied to real-world situations.

You can think of it this way: Every new law has possible intersections with every other tax law in existence. As the number of laws grows, the number of possible intersections grows even faster. And each of those intersections represents both a possible way to avoid taxes and a potential for unintended consequences that inadvertently outlaw something Congress never intended to touch. This growing complexity makes it more and more difficult for either companies or lawmakers to forecast the ultimate effects of new tax laws.

Megan McArdle, “We Don’t Need a Corporate Income Tax”, Bloomberg View, 2014-07-16.

June 17, 2015

When you tax something, you get less of it

Filed under: Economics, Government, Politics, USA — Tags: , — Nicholas @ 03:00

At International Liberty, Dan Mitchell points out an example of leftists who genuinely want higher taxes on “the rich” even when the higher rate will return less money to the government:

Every so often, I’ll assert that some statists are so consumed by envy and spite that they favor high tax rates on the “rich” even if the net effect (because of diminished economic output) is less revenue for government.

The Laffer Curve

In other words, they deliberately and openly want to be on the right side (which is definitely the wrong side) of the Laffer Curve.

Critics sometimes accuse me of misrepresenting the left’s ideology, to which I respond by pointing to a poll of left-wing voters who strongly favored soak-the-rich tax hikes even if there was no extra tax collected.

But now I have an even better example.

Writing for Vox, Matthew Yglesias openly argues that we should be on the downward-sloping portion of the Laffer Curve. Just in case you think I’m exaggerating, “the case for confiscatory taxation” is part of the title for his article.

Here’s some of what he wrote.

    Maybe at least some taxes should be really high. Maybe even really really high. So high as to useless for revenue-raising purposes — but powerful for achieving other ends. We already accept this principle for tobacco taxes. If all we wanted to do was raise revenue, we might want to slightly cut cigarette taxes. …But we don’t do that because we care about public health. We tax tobacco not to make money but to discourage smoking.

The tobacco tax analogy is very appropriate.

May 16, 2015

QotD: The true nature of government

Filed under: Government, Quotations, USA — Tags: , — Nicholas @ 01:00

The governments of these United States, from the federal to the local level, have managed to insinuate themselves between citizens and their property at every point of significance. In that, our governments are very much like most other governments, liberal and illiberal, democratic and undemocratic. We have allowed ourselves to be in effect converted from a nation of owners to a nation of renters. But while medieval serfs had only the one landlord, we have a rogue’s gallery of them: the local school board, the criminals at the IRS, the vehicle-registry office, etc. Never-ending property taxes ensure that as a matter of economic function, you never really own your house — you rent it from the government. Vehicle registration fees and, in some jurisdiction, outright taxes on automobile ownership ensure in precisely the same way that you never really own your car: You rent it from the government. Stock portfolio? Held at the sufferance of politicians. A profitable business? You’ll keep what income they decide you can keep. Your own body? Not yours — not if you use it for profitable labor.

A Who down in Whoville? You should be so lucky: Welcome to Whomville, peon.

Kevin D. Williamson, “Property and Peace”, National Review, 2014-07-20.

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