October 17, 2016

Hillary Clinton tells us to expect a major US recession shortly after January 20, 2017

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

Fortunately, as Tim Worstall explains, politicians can rarely be believed — especially when it comes to economics:

Hillary Clinton Vows To Slam The Economy Into Recession Immediately Upon Election

This probably isn’t quite what Hillary Clinton intended to say but it is what she did say at a fundraiser on Friday night. That immediately upon election she would slam the US economy into a recession. For what she has said is that she’s not going to add a penny to the national debt. Which, in an economy running a $500 billion and change budget deficit means tax rises and or spending cuts of $500 billion and change immediately she takes the oath. And that’s a large enough and fierce enough change, before she does anything else, to bring back a recession.


Now, what she meant is something more like this. That she has some spending plans, which she does. And she is also proposing some tax rises. And that her tax rises will balance her spending plans and thus the mixture of plans will not increase the national debt. Which is possibly even true although I don’t believe a word of it myself. For her taxation plans are based upon static analyses when we really must use dynamic ones to measure tax changes. This is normally thought of as something that the right prefers. For if we measure the effects of tax cuts using the dynamic method then there will be some (please note, some, not enough for the cuts to pay for themselves) Laffer Effects meaning that the revenue loss is smaller than that under a static analysis. But this is also true about tax rises. Behaviour really does change when incentives change. Thus tax rises gain less revenue in real life than what a straight line or static analysis predicts.

That is, as I say, probably what she means. But that’s not actually what she said. She said she’ll not add a penny to the national debt. Which means that immediately on taking office she’s got to either raise taxes by $500 billion and change or reduce spending by that amount. Because the budget deficit is that $500 Big Ones and change at present and the deficit is the amount being added to the national debt each year. The problem with this being that that’s also some 3.5% or so of GDP and an immediate fiscal tightening of that amount would put the US economy back into recession.

October 5, 2016

“You have to die to eventually get out of the taxes […] few people are willing to take that step”

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

Megan McArdle addresses the social media outrage at revelations from Il Donalduce‘s partial tax returns leaked to the media:

The big news this weekend was the leak of Donald Trump’s 1995 tax returns to the New York Times. The returns showed that in that year, Trump claimed $916 million worth of business losses; those losses, said the Times, “could have allowed him to legally avoid paying any federal income taxes for up to 18 years.”

Liberal social media dissolved into an ecstatic puddle; conservative social media, at least the part that is supporting Trump, angrily denounced the Times for publishing this tripe.

A few sensible people tried to explain that while the story might have well show that Trump was a bad businessman, it didn’t really show any sort of interesting tax shenanigans. And since we had long known that Trump lost a bunch of money in Atlantic City, a story that has been amply and ably covered by folks like our own Tim O’Brien, it didn’t even really offer much news.

Why did people see scandalous tax avoidance in this case? At issue is the “net operating loss,” an accounting term that means basically what it sounds like: When you net out your expenses against the money you took in, it turns out that you lost a bunch of money. However, in tax law, this has a special meaning, because these NOLs can be offset against money earned in other years. You can use a “carryforward” to offset the losses against income made in future years (as many as 15 future years, under the federal tax law of 1995). You can also use a “carryback” to offset those losses against income you made in past years (three in 1995, which when added to the 15-year carryforward term, gives us the 18 years the Times refers to).

To judge from the reaction on Twitter, this struck many people as a nefarious bit of chicanery. And to be fair, they were probably helped along in this belief by the New York Times description of it, which made it sound like some arcane loophole wedged into our tax code at the behest of the United Association of Rich People and Their Lobbyists. They called it “a tax provision that is particularly prized by America’s dynastic families, which, like the Trumps, hold their wealth inside byzantine networks of partnerships, limited liability companies and S corporations.”

Every tax or financial professional I have heard from about the New York Times piece found this characterization rather bizarre. The Times could have just as truthfully written that the provision was “particularly prized by America’s small businesses, farmers and authors,” many of whom depend on the NOL to ensure that they do not end up paying extraordinary marginal tax rates — possibly exceeding 100 percent — on income that may not fit itself neatly into the regular rotation of the earth around the sun.


Rich people do manage their income to minimize their taxes, and some of the means they use to do so should probably be written out of the tax code. But the wealthy individual who manages to make a lot of money while paying absolutely no taxes on it is more a creature of myth than reality. That myth, like many myths, has some basis in fact: It used to be eminently possible to do, thanks to loopholes in the tax code that allowed people to take advantage of real estate losses, among other things. Those loopholes, however, were mostly closed by that notorious liberal crusader Ronald Reagan, during the 1986 tax reform package.

If Trump managed to pay no taxes for years, the most likely way he did this was by losing sums much vaster than the unpaid taxes. This is fair, it is right, it is good tax policy. There are many valid indictments of Trump as a candidate and as a businessman. But on the charge of unseemly tax avoidance, if this is all the evidence we have, then the grand jury would have to return … no bill.

Some politicians absolutely love tax laws, because they get to write them in ways that force taxpayers (both individual and corporate) to behave in certain ways to minimize the taxes they pay, and then they get to pillory disfavoured individuals or corporations in the media or on the campaign trail when they actually follow those arcane and intricate laws and end up paying “less” tax than the politician thinks they should. Win/win from the political hack’s point of view, but lose/lose for the law-abiding taxpayer.

August 29, 2016

Debunking “the 1950s as some sort of golden age of progressivism”

Filed under: History, USA — Tags: , , , , — Nicholas @ 02:00

James O’Brien selects a few imaginative historical myths for debunking:

Here are a few facts about U.S. life 60 years ago, in 1956:

  • The top tax rate was largely irrelevant. The average household income in 1956 was about $4,800. Only 8 percent of families earned more than $10,000 per year. The 91 percent top tax rate (and that really was the top tax rate – a holdover from World War II) kicked in at $400,000 for married couples, or the equivalent of about $3.2 million today). While few individuals made that much money in 1956, people who did earn large sums of money could deduct everything from interest on auto loans to sales taxes, and could – and did – structure things so that their income was funneled through tax shelters at much lower rates.
  • There was a lot less money overall. Adjusted for inflation, that $4,800 average household income would be about $42,000 today. That is roughly 20 percent less than current average household income of about $53,000. Even in 1956, when a Harvard education cost $1000 per year, $400 per month hardly afforded a riotous existence for a family of four. One of the most striking things about 1956 was how little people at the top of their professions earned. Yogi Berra – the highest paid player in Major League Baseball that year – received $58,000. That would be a little over $500,000 today, essentially minimum wage by MLB standards.
  • Tax revenues as a percentage of GDP were about the same as they are today. Since 1945, tax revenues as a percentage of GDP have fluctuated within a fairly narrow range of 15 to 20 percent. The state of the economy, not tax rates, has determined how much the government takes in. Despite the high marginal rates of the 1950s, the tax intake as a percentage of GDP was just 16.5 percent in 1956. It was 18 percent in 2015, so we are actually taking in more, rather than less money, although we are spending it in many new and different areas.
  • Government spent less on everything but defense. The U.S. Federal budget for 1956 might best be described as “Spartan”, not in the sense of being frugal (although it was that) but in the sense of being primarily devoted to preparations for war. In the Cold War climate, defense spending soaked up 60 percent ($47 billion) of the total $76 billion Federal budget – about three times the current percentage — and spending on “social programs” was essentially nonexistent. There was no Department of Education, and total Federal spending on education was just $1.5 billion. Healthcare expenditures were just $1.0 billion; there was no Medicare, (which now represents 15 percent of the total Federal budget), no Medicaid, and certainly no Obamacare. The Interstate Highway Program – so beloved by liberals – was conceived as a defense spending measure and was designed to be self-funding through diesel and gasoline taxes.
  • Opportunities were anything but equal. Racial discrimination was rampant and gender bias was everywhere. Many fields were essentially closed to women and to people of color, while quota systems deterred talented Jewish students from pursuing careers in fields such as engineering and law. We can argue all we want about white privilege in 2016 but in 1956 it was endemic, and bred not just economic but social and cultural inequality.

When we look at the United States in 1956 we see a country with high (but largely irrelevant) marginal tax rates, no social programs to speak of, and a massive defense budget. With Europe still recovering from World War II, the economy is strong, and companies are willing to spend and hire. The country’s focus, however, is not on the welfare of its people, but on its survival in a grim ideological and geopolitical struggle with a ruthless and determined opponent. Those who portray the 1950s as some sort of golden age of progressivism are writing historical fiction, not history.

The 1950s for the United States (and for Canada) were, to borrow a notion from John Scalzi, run in “easy mode” — in game terms, the lowest difficulty setting. There was no peer-level competition in manufacturing or even in services and this provided profit levels that allowed both corporations and workers to enjoy unrealistic long-term conditions that finally came to an end in the gas shocks of the 1970s, after the devastated economies of the defeated Axis powers finally were able to compete again. Twenty-five years of minimal competition left the major corporations totally unable to cope with even minimal competitive pressures from overseas … but willing to use whatever political levers were available to try to quash those foreign upstarts.

But as the courtiers of King Canute were finally obliged to accept, even the King can’t order the tide to recede when it’s convenient.

August 17, 2016

QotD: The Lifestyle Charity Fraud

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

For decades I have observed an abuse of charities that I am not sure has a name. I call it the “lifestyle” charity or non-profit. These are charities more known for the glittering fundraisers than their actual charitable works, and are often typified by having only a tiny percentage of their total budget flowing to projects that actually help anyone except their administrators. These charities seem to be run primarily for the financial maintenance and public image enhancement of their leaders and administrators. Most of their funds flow to the salaries, first-class travel, and lifestyle maintenance of their principals.

I know people first hand who live quite nicely as leaders of such charities — having gone to two different Ivy League schools, it is almost impossible not to encounter such folks among our alumni. They live quite well, and appear from time to time in media puff pieces that help polish their egos and reinforce their self-righteous virtue-signaling. I have frequently attended my university alumni events where these folks are held out as exemplars for folks working on a higher plane than grubby business people like myself. They drive me crazy. They are an insult to the millions of Americans who do volunteer work every day, and wealthy donors who work hard to make sure their money is really making a difference.

Warren Meyer, “The Lifestyle Charity Fraud”, Coyote Blog, 2016-08-04.

August 12, 2016

Good news! Electricity in Ontario is cheaper to produce than ever before!

The bad news? It’s more expensive to consume than ever before, thanks to the way the Ontario government has manipulated the market:

You may be surprised to learn that electricity is now cheaper to generate in Ontario than it has been for decades. The wholesale price, called the Hourly Ontario Electricity Price or HOEP, used to bounce around between five and eight cents per kilowatt hour (kWh), but over the last decade, thanks in large part to the shale gas revolution, it has trended down to below three cents, and on a typical day is now as low as two cents per kWh. Good news, right?

It would be, except that this is Ontario. A hidden tax on Ontario’s electricity has pushed the actual purchase price in the opposite direction, to the highest it’s ever been. The tax, called the Global Adjustment (GA), is levied on electricity purchases to cover a massive provincial slush fund for green energy, conservation programs, nuclear plant repairs and other central planning boondoggles. As these spending commitments soar, so does the GA.

In the latter part of the last decade when the HOEP was around five cents per kWh and the government had not yet begun tinkering, the GA was negligible, so it hardly affected the price. In 2009, when the Green Energy Act kicked in with massive revenue guarantees for wind and solar generators, the GA jumped to about 3.5 cents per kWh, and has been trending up since — now it is regularly above 9.5 cents. In April it even topped 11 cents, triple the average HOEP.

The only people doing well out of this are the lucky cronies of the government who signed up for provincial subsidies on alternative energy (primarily wind and solar), who reap rents of well over 100% thanks to guaranteed minimum prices for electricity from non-traditional sources.

August 2, 2016

QotD: The deadweight costs of different forms of taxation

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

All taxes have something called a “deadweight cost”. This is simply economic activity that doesn’t happen because of the simple fact that we’re levying a tax. If we tax the purchase of apples then fewer apples will be purchased. This is entirely divorced, by the way, from any good that might be achieved by how we spend that revenue collected. We also know that different taxes have different deadweight costs. We even have a ranking of them. At the top, with the highest costs for the revenue collected, we’ve transactions taxes like the financial transactions tax under consideration. This is so expensive that it’s a really, really, bad idea to tax in this manner. Then come capital and corporate taxes, then with lower again deadweights incomes taxes, then consumption and then finally repeated taxes on real property, or land value taxation. If we were interested only in efficiency (we’re not, equity is important too) then we would collect as much as we could from a land value tax, then from Pigou and sin taxes (carbon emissions, cigarettes, booze) then general consumption taxes and so on. Perhaps leaving corporates and capital entirely untaxed. And there’s a whole field of study, optimal taxation theory, that suggests that we really should do that and the general prescription is the progressive consumption tax. There’s general agreement that on purely those efficiency grounds this is about the best we can do with a tax system.

Tim Worstall, “Surprisingly Perhaps, State Republicans Are Actually Correct On The Economics Of This”, Forbes, 2015-02-14.

July 29, 2016

QotD: Prices and taxes

Filed under: Economics, Quotations — Tags: , — Nicholas @ 01:00

Curiously, as a man of the thirteenth century, I “believe” in the price mechanism. (You know: wheat crop fails, price goes up; too much wheat, price goes down.) As a visitor to the twenty-first, I believe it is no longer working. Nearly one full century into the experiment of unlinking money from things, and linking it to “policy” instead, not one person is left on the whole planet with the fondest idea how our system works.

Some years ago I assembled a little team to study what had gone into the price of a loaf of bread. We had to give up. It was too complicated. Bread was officially “untaxed” in the jurisdiction; yet about the only thing we could establish with any confidence, after looking through the production process, was that more than half the price was cumulative direct and indirect taxes.

David Warren, “Deflationary asides”, Essays in Idleness, 2015-01-27.

June 25, 2016

Canada’s massively counter-productive protectionist racket

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

At (of all places) the CBC, Neil Macdonald explains why the Canadian government maintains a ridiculously low limit on what Canadians can purchase from other countries without packages being subject to duty, tax, delay, and possible damage:

As any Canadian who’s ever naively bought anything on the American version of eBay (or, for that matter, any U.S. retail website) must by now know, Ottawa is determined to spoil your bargain.

If the purchase is a penny over $20 Cdn, a federal customs agent can intercept it, open it, delay it, add federal and provincial sales taxes, and, depending on the origin of the merchandise, perhaps pile on some duty charges — basically protectionist taxes.

By the time the government is done, the price of the package can easily rise by 50 per cent. And of course customs brokers usually have to wet their beaks, inflating the final cost of the average package by another 20, 30 or 40 per cent.

Basically, Ottawa has ensured that shipping across our border is such an expensive, paperwork-heavy pain that a lot of American merchants and eBay sellers simply don’t bother shipping to Canada.

The system actually seems designed to be burdensome and sclerotic.

Normally, you’d assume it’s all about increasing the federal government’s tax revenues … the CRA must be raking in the bucks, right? Not at all:

… by keeping that purchase threshold at $20 instead of giving Canadian shoppers a break and raising it to $80, Ottawa spends about $166 million to collect $39 million in additional taxes and duties.

Think about that: Ottawa’s customs officials spend a net $127 million of taxpayers’ money annually, basically to keep Canadians trapped inside the Canadian retail corral.

H/T to SDA for the link.

June 22, 2016

In case you get itchy feet after November’s election results…

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

Matt Welch has a few warnings for Americans of all political stripes who threaten to come to Canada if the wrong politico gets elected president this year:

* Revenge-minded border cops. Casually crossing our northern border with a family of four, as I attempted recently, is no longer a routine matter. Investigators I know who have worked with Canada’s Border Services Agency say that customs officials are ramping up their screening of Americans in advance of a possible November onslaught. And just maybe, after 15 years of U.S. border enforcers giving Canadians a harder time, followed by 12 months of a xenophobic presidential campaign, we might be getting some payback.


* You better like Canadian musicians. Americans can be forgiven for losing track of who among their beloved North American entertainers might say “oot and aboot” after a few Mooseheads. But sitting at one of Toronto’s roughly 1,000 sports bars is a grueling reminder that Canada’s Broadcasting Act, which requires that at least one-third of the content at commercial radio stations emanate from musicians with maple leafs in their passports, is a make-royalties program for the Rushes of the world. If you think American classic rock stations are repetitive, get used to side 1 of “Moving Pictures.”


* You can run from America, but you cannot hide. Think living in Montreal or Vancouver frees you up from the long arm of the Internal Revenue Service? Think again! There are two countries on this whole planet that require federal income tax filing from its nonresident citizens. Eritrea, not particularly known for its good governance, is one of them. Uncle Sam’s the other.

It gets considerably worse from there. Because of a putrid 2010 law called the Foreign Account Tax Compliance Act (FATCA for short, because Washington legislators are nothing if not subtle), U.S. citizens and their spouses who hold more than $10,000 total in non-American financial institutions must file annual disclosures listing the maximum exchange-rate value of each and every such account during the previous year. If you don’t comply, you face steep fines and even jail time.

Ostensibly aimed at fat cats, this law instead has punished the majority nonrich among America’s estimated 8.7 million expatriates. Not only does FATCA impose costly paperwork on individuals, it also requires overseas financial institutions to act as Washington’s international collections muscle, mandating that they seize and transfer to the IRS 30% of deadbeat Americans’ assets. To the surprise of no one who understands basic incentives, foreign banks have been dropping American clients like sacks of flaming garbage.

February 23, 2016

QotD: How Bernie will pay for his campaign trail promises

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

Over on his campaign website Bernie Sanders has a page telling us all how his delightful bribes to the voters will get paid for. The usual populist politician’s trick of just shouting that it will be someone else, not you, no absolutely not you the special little voting snowflake, who will pay for all that you, that special little voting snowflake, are being promised. In Bernie’s case it will be “the rich” who pay for everything. And that’s what means that his taxation plans don’t add up. Simply because there’s not all that many rich people and collectively they don’t have all that much money.

Sure, it’s possible to get a bit more money from them. But at some point in the face of ever rising marginal tax rates, peoples’ behavior will change. There really is some tax rate at which point higher rates don’t produce more revenue, they produce less. And sadly Bernie’s sums don’t take account of this fact. Thus under the current taxation plans all these goodies will not be paid for at all. And this brings us to the essential truth that the European states have all worked out. If you want to bring Big Government to the middle classes then you’ve got to tax the middle classes to pay for Big Government. There just is no other way of raising that sort of amount of revenue.

Tim Worstall, “How Bernie Sanders Won’t Pay For His Proposals”, Forbes, 2016-02-12.

February 14, 2016

QotD: President Herbert Hoover’s lasting economic legacy

Until March 1933, these were the years of President Herbert Hoover — the man that anti-capitalists depict as a champion of non-interventionist, laissez-faire economics.

Did Hoover really subscribe to a “hands off the economy,” free-market philosophy? His opponent in the 1932 election, Franklin Roosevelt, didn’t think so. During the campaign, Roosevelt blasted Hoover for spending and taxing too much, boosting the national debt, choking off trade, and putting millions of people on the dole. He accused the president of “reckless and extravagant” spending, of thinking “that we ought to center control of everything in Washington as rapidly as possible,” and of presiding over “the greatest spending administration in peacetime in all of history.” Roosevelt’s running mate, John Nance Garner, charged that Hoover was “leading the country down the path of socialism.” Contrary to the modern myth about Hoover, Roosevelt and Garner were absolutely right.

The crowning folly of the Hoover administration was the Smoot-Hawley Tariff, passed in June 1930. It came on top of the Fordney-McCumber Tariff of 1922, which had already put American agriculture in a tailspin during the preceding decade. The most protectionist legislation in U.S. history, Smoot-Hawley virtually closed the borders to foreign goods and ignited a vicious international trade war.

Officials in the administration and in Congress believed that raising trade barriers would force Americans to buy more goods made at home, which would solve the nagging unemployment problem. They ignored an important principle of international commerce: trade is ultimately a two-way street; if foreigners cannot sell their goods here, then they cannot earn the dollars they need to buy here.

Foreign companies and their workers were flattened by Smoot-Hawley’s steep tariff rates, and foreign governments soon retaliated with trade barriers of their own. With their ability to sell in the American market severely hampered, they curtailed their purchases of American goods. American agriculture was particularly hard hit. With a stroke of the presidential pen, farmers in this country lost nearly a third of their markets. Farm prices plummeted and tens of thousands of farmers went bankrupt. With the collapse of agriculture, rural banks failed in record numbers, dragging down hundreds of thousands of their customers.

Hoover dramatically increased government spending for subsidy and relief schemes. In the space of one year alone, from 1930 to 1931, the federal government’s share of GNP increased by about one-third.

Hoover’s agricultural bureaucracy doled out hundreds of millions of dollars to wheat and cotton farmers even as the new tariffs wiped out their markets. His Reconstruction Finance Corporation ladled out billions more in business subsidies. Commenting decades later on Hoover’s administration, Rexford Guy Tugwell, one of the architects of Franklin Roosevelt’s policies of the 1930s, explained, “We didn’t admit it at the time, but practically the whole New Deal was extrapolated from programs that Hoover started.”

To compound the folly of high tariffs and huge subsidies, Congress then passed and Hoover signed the Revenue Act of 1932. It doubled the income tax for most Americans; the top bracket more than doubled, going from 24 percent to 63 percent. Exemptions were lowered; the earned income credit was abolished; corporate and estate taxes were raised; new gift, gasoline, and auto taxes were imposed; and postal rates were sharply hiked.

Can any serious scholar observe the Hoover administration’s massive economic intervention and, with a straight face, pronounce the inevitably deleterious effects as the fault of free markets?

Lawrence W. Reed, “The Great Depression was a Calamity of Unfettered Capitalism”, The Freeman, 2014-11-28.

February 9, 2016

Cam Newton’s 198.8% tax rate for his Super Bowl “winnings”

Filed under: Football, Government, USA — Tags: , , , — Nicholas @ 02:00

Dan Mitchell explains how Cam Newton is being taxed at nearly 200% on his California income for playing in the Super Bowl:

When I give speeches in favor of tax reform, I argue for policies such as the flat tax on the basis of both ethics and economics.

The ethical argument is about the desire for a fair system that neither punishes people for being productive nor rewards them for being politically powerful. As is etched above the entrance to the Supreme Court, the law should treat everyone equally.

The economic argument is about lowering tax rates, eliminating double taxation, and getting rid of distorting tax preferences.

Today, let’s focus on the importance of low tax rates and Cam Newton of the Carolina Panthers is going to be our poster child. But before we get to his story, let’s look at why it’s important to have a low marginal tax rate, which is the rate that applies when people earn more income.


Now let’s look at the tax implication for Cam Newton.

    If the Panthers win the Super Bowl, Newton will earn another $102,000 in playoff bonuses, but if they lose he will only net another $51,000. The Panthers will have about 206 total duty days during 2016, including the playoffs, preseason, regular season and organized team activities (OTAs), which Newton must attend or lose $500,000. Seven of those duty days will be in California for the Super Bowl… To determine what Newton will pay California on his Super Bowl winnings alone, …looking at the seven days Newton will spend in California this week for Super Bowl 50, he will pay the state $101,600 on $102,000 of income should the Panthers be victorious or $101,360 on $51,000 should they lose.

So what was Cam’s marginal tax rate for playing yesterday?

    Losing means his effective tax rate will be a whopping 198.8%. Oh yeah, he will also pay the IRS 40.5% on his earnings.

In other words, Cam Newton will pay a Barack Obama-style flat tax. The rules are very simple. The government simply takes all your money.

Or, in this case, more than all your money. So it’s akin to a French-style flat tax.

December 28, 2015

Alberta’s carbon tax scheme

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

Some thoughts from Dave’s Insight on Alberta’s attempt to signal their new-found carbon virtues:

First, let me set the premise. When giving seminars on Tax and/or Profits, I like to ask the question. What is a word for a Company that does not pass all its expenses, including its taxes on to its customers? The answer of course is bankrupt. Maybe not immediately, but eventually. Something I always ask when dealing with businesses, non-profits and governments when they are talking about spending is: Where is the money going to come from? Well, where is the money going to come from?

The NDP government may claim that it will only be three or four hundred dollars per person, sorry, per family. But let’s cut to the chase. In almost the same breath they claim it will raise 3-4 billion dollars per year revenue for the provincial government. Possibly double that in a few years. So where is this coming from? At the end of the day, one way or another it has to come from our pockets. While at first you might think that we export so we can export the tax. However, our exports have to compete with all the other available sources of supply, so we cannot export the tax. If we could, we would still be charging over $100 per barrel for oil, but we cannot. That leads me back to: Where is this 3 to 4 Billion dollars per year (more later) to come from?

Well, there is really only one answer; it might be somewhat invisible, but we Albertan’s will have to pay it, and that my friend works out to about $1,000 per person per year, or $4,000 per family of four. And if it brings in $8 billion in a few years, that is over $8,000 per family of four per year. We will pay it in the form of higher transportation costs (both public and private); higher heating costs and to a lesser extend in the cost of everything we buy from groceries to toys. Of course some will pay more and some less, but to be clear, this will hurt the poorest the most.

H/T to Small Dead Animals for the link.

December 10, 2015

QotD: Freelance writing

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

A few years ago, I was called upon to inform the IRS that a former employee of mine would have liked to be paid more than I had paid him. Given that I have never met a freelance writer who thought he was being paid enough, I thought it a strange request, but I eventually understood the IRS’s line of thinking: The gentleman in question, who was in his 80s at the time, had retired from his former occupation and worked as a freelance writer. His beat involved a great deal of travel, and he deducted the expenses for which he was not compensated — which, the state of the newspaper industry being what it is, was all of them, at least as far as my editorial budget was concerned. The IRS suspected that his writing gig was somehow phony, something he had invented simply for tax deductions. In truth, he was just a freelance writer who didn’t make a lot of money — i.e., a freelance writer indistinguishable from about 88.8 percent of all freelance writers.

Kevin D. Williamson, “Mottos for Miscreants”, National Review, 2014-11-20.

November 13, 2015

QotD: To many the very concept of “tax competition” is anathema

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

I have written a fair bit on this site and elsewhere (I work in the financial/media world) about this subject, and there is no doubt in my mind that the idea that tax competition is harmful is almost always held by politicians and collectivist-minded commentators who want to create a sort of global tax cartel. Cartels are, we learn in our textbooks, harmful although they tend to fracture with time. (The OPEC cartel had a problem in the 80s and 90 sustaining high oil prices, which at one stage went below $10 a barrel). However futile the attempt, however, do not underestimate the harm that is being done in the process of trying to shut down offshore financial centres and the like. The possibility that people can and will take their money elsewhere is one of the few constraints that exist on otherwise rapacious governments. So naturally, governments try to stop this from happening – hence all this talk about shutting down tax “competition”.

When governments claim that tax dodgers are taking food from the mouths of poor babies, treat it with scorn. The money that goes offshore doesn’t disappear down some black hole, never to appear again: that money, if it is to earn a return and outpace inflation, is invested – ie, it is put to work, often far more effectively than would otherwise be the case.

Johnathan Pearce, “The end of tax competition?”, Samizdata, 2014-11-07.

Older Posts »

Powered by WordPress

%d bloggers like this: