Quotulatiousness

October 28, 2014

Facebook‘s UK tax picture

Filed under: Britain, Business, Economics — Tags: , , , , — Nicholas @ 07:17

Tim Worstall explains why it’s not a scandal that Facebook doesn’t pay more taxes in the UK:

In fact, it’s actually rather a good idea that Facebook isn’t paying UK corporation tax. For the standard economic finding (also known as optimal taxation theory) is that we shouldn’t be taxing corporations at all. Thus, as a matter of public policy we should be abolishing this tax: and also perhaps applauding those companies that take it upon themselves to do what the politicians seem not to have the courage to do, make sure that corporations aren’t paying tax.

That isn’t how most of the press sees it, of course

[...]

That’s an extremely bad piece of reporting actually, for of course Facebook UK did not have advertising revenue of £371 million last year: Facebook Ireland had advertising revenue of that amount from customers in the UK that year. And that’s something rather different: that revenue will be taxed under whatever system Ireland has in place to tax it. And this is the way that the European Union system of corporate taxation is supposed to work. Any company, based in any one of the 28 member countries, can sell entirely without hindrance into all other 27 countries. And the profits from their doing so will be taxed wherever the brass plate announcing the HQ of that company is within the EU. This really is how it was deliberately designed, how it was deliberately set up: it is public policy that it should be this way.

We could also note a few more things here. The UK company itself made a loss and that loss was because they made substantial grants of restricted stock units to the employees. And under the UK system those RSU grants are taxed as income, in full, at the moment of their being granted. Which will mean, given those average wages, at 45% or so. And we should all be able to realise that a 45% tax rate is rather higher than the 24% corporation tax rate. The total tax rate on the series of transactions is thus very much higher than if Facebook has kept its employees as paupers and just kept the profits for themselves. Further, those complaining about the tax bill tend to be those from the left side of the political aisle: which is also where we find those who insist that workers should be earning the full amount of their value to the company which is what seems to be happening here.

October 22, 2014

What would Milton Friedman do?

Filed under: Economics, Environment, Politics, Science — Tags: , , — Nicholas @ 07:20

David Friedman, who we can safely assume has a better sense of the late Milton Friedman’s thoughts and beliefs than most people, disagrees with a recent Forbes article asking WWMFD:

A recent Forbes article is headlined “What Would Milton Friedman Do About Climate Change? Tax Carbon.” It reports on a forum at the University of Chicago at which several economists, including Michael Greenstone, described as the “Milton Friedman Professor of Economics at the University of Chicago,” argued that Friedman would have supported a carbon tax. The evidence for that claim was a 1979 clip from the Phil Donahue show where Milton Friedman argued that if the government is going to do something about emissions, they should use an effluent tax rather than direct regulation. He does not actually say that government should do something about emissions, only that there is a case for doing so and, if it is done, the best way to do it is by a tax on emissions.

To get from there to the conclusion that he would have favored a carbon tax requires at least one further step, a reason to think that he would have believed that global warming due to CO2 emissions produced net negative externalities large enough to justify doing something about them. The problem with that claim is that warming can be expected to produce both negative externalities such as sea level rise and hotter summers and positive ones such as longer growing seasons and milder winters. The effects will be spread out over a long and uncertain future, making their size difficult to estimate. My own conclusion, defended in past posts here (one example), is that the uncertainties are large enough so that one cannot sign the sum, cannot say whether the net effect will be positive or negative.

I do not know if my father would have agreed but I have at least a little evidence on the subject, more than offered in the Forbes article. The same issue arose in the earlier controversy over population. Just as it is now routinely assumed that warming is bad, it was then routinely assumed that population increase was bad. Forty years ago I wrote a piece on the subject for the Population Council in which I attempted to estimate the externalities associated with population. I concluded that they were too uncertain for me to tell whether the net effect was good or bad. My father read the piece and commented on it. If he had disagreed he would have said so, and he did not. It is possible that he would have felt differently in the case of climate change, but I can see no reason to expect it.

October 19, 2014

Brace yourselves for Beer Store price hikes

Filed under: Business, Cancon, Government — Tags: , , , , — Nicholas @ 12:38

In the Toronto Star, Rob Ferguson details the provincial government’s new-hatched plans to pry more money out of consumers (by way of the Beer Store monopoly):

Premier Kathleen Wynne says she won’t shrink from a battle with The Beer Store as her government thirsts for a bigger cut of sales despite brewers’ warnings it would mean higher prices for suds lovers.

The comments came Saturday as Wynne commented in detail for the first time on recommendations from a blue-ribbon panel on squeezing more money from publicly owned agencies and the distribution system for beer, wine and spirits.

“They’ve laid out some challenging ideas for us and I’m absolutely willing take those on,” Wynne said of the panel headed by TD Bank chair Ed Clark.

“Will it be easy, will it be a path that is without any challenges? No it won’t be but that’s not a problem from my perspective. That’s exactly why it needs to be taken on,” she added after a 22-minute speech to party members in this border city for a strategy session and victory party after winning a majority in the June 12 election.

Clark’s recommendations Friday were a timely distraction for Wynne with the legislature starting its fall session Monday and her Liberals under fire for a bailout of the mostly vacant MaRS office tower across from Queen’s Park, with taxpayers on the hook for hefty interest payments.

The government already taxes beer at 44%. I guess they think that’s too little.

September 23, 2014

“Rock star economy” leads to first majority government in New Zealand since 1996

Filed under: Economics, Pacific, Politics — Tags: , , , , — Nicholas @ 08:06

Anthony Fensom reports on Saturday’s election results in New Zealand:

New Zealand’s “rock star economy” helped center-right Prime Minister John Key achieve a thumping election victory. But with major trading partner China slowing, are financial market celebrations premature?

The New Zealand dollar, government bonds, and stocks gained after Key’s National Party romped to power in Saturday’s poll, securing its third straight term and the nation’s first majority government since proportional representation was introduced in 1996.

Despite “dirty politics” claims and a late attempted campaign ambush by internet entrepreneur Kim Dotcom, the incumbent National Party won 61 of 121 parliamentary seats and 48.1 percent of the vote, the party’s best result since 1951.

In contrast, the main opposition left-leaning Labour Party, which pledged an expansion of government, secured only 24.7 percent of the vote for its worst performance since 1922. The Greens won 10 percent and New Zealand First 8.9 percent as pre-election predictions of a closer race proved false.

Key pledged to maintain strategic alliances with the Maori, ACT and United Future parties, which won four seats between them, further strengthening his parliamentary majority.

[...]

“Like [Australian Prime Minister] Abbott, Key as a new prime minister inherited a budget and an economy in deep trouble…Six years later, the budget is in surplus, unemployment at 5.6 percent is falling and the economy is growing so strongly the New Zealand Reserve Bank became the first among developed countries to raise interest rates to deter inflation,” noted the Australian Financial Review’s Jennifer Hewett.

“Not only did the Key government cut personal and corporate tax rates, it raised the goods and services tax to 15 percent while steadily reducing government spending over years of ‘zero budgets,’” wrote Hewett, who urged Abbott to “learn some sharp lessons” from Key’s electoral successes.

Key’s party has pledged to cut government debt to 20 percent of gross domestic product (GDP), reduce taxes “when there is room to do so” and create more jobs, aiming to undertake further labor and regulatory reforms as well as boosting the supply of housing.

September 20, 2014

Corporate inversions

Filed under: Business, Economics — Tags: , — Nicholas @ 11:56

The most recent corporate inversion that hit the news — Burger King and Tim Hortons — may or may not work out, but it’s generally a sensible economic strategy that can yield strong results for the shareholders. In the most recent issue of The Freeman, Stewart Dompe and Adam C. Smith talk about why inversions are an example of competitive governance in action:

Populist themes like “economic patriotism” may appeal to voters, but such arguments are nonsensical: Firms are ultimately responsible to their shareholders. As Judge Learned Hand wrote, “Any one may so arrange his affairs that his taxes shall be as low as possible; he is not bound to choose that pattern which will best pay the Treasury; there is not even a patriotic duty to increase one’s taxes.”

If anything, firms have a moral responsibility to minimize their taxable liabilities. The legal structure of a firm establishes the relationship between shareholders, who own the capital, and managers that make operating decisions. Executives have a fiduciary responsibility to pay the lowest tax possible because they are the stewards of their shareholders’ wealth. There is no functional difference between an executive who spends millions of dollars on a lavish party and an executive who gives that money to Washington instead—except that the former is probably a lot more fun to be around.

Think about tax compliance like a rent check owed to one’s landlord, with the added complication that it’s very difficult to move. Suppose a tenant is currently renting multiple apartments at one location, but decides the rent is just too damn high. Since the tenant can’t relocate entirely, suppose she moves some of her stuff out of one of the apartments into a storage unit across town, thus saving significantly on her rent. Would this be seen as unethical in that the tenant is attempting to avoid her fiduciary obligation to the landlord? Of course not. She is simply trying to reduce the costs of residing in a particular location.

In the same vein, minimizing the firm’s tax burden means minimizing part of the firm’s operating costs. Just as a resource manager can identify a more cost-efficient way to produce goods and services, so can a tax lawyer identify a more cost-efficient way of maintaining tax compliance. A business has no moral obligation to always use the same suppliers, be they suppliers of production inputs or corporate charters. The law is the law and firms have the option of changing how they are structured and located in order to minimize their taxable liabilities. If they use loopholes, so be it: Loopholes are by definition legal. Firms only have the obligation to pay the tax mandated by the law.

September 10, 2014

Ontario’s bid to impose a Netflix or YouTube tax

Filed under: Cancon, Media — Tags: , , , , , — Nicholas @ 08:28

Michael Geist reports on the Ontario government’s pitch to the CRTC to impose additional tax burdens on foreign online video services:

As CRTC Chair Jean-Pierre Blais anticipated, the Government of Ontario’s call for regulation of online video services attracted considerable attention, including comments from Canadian Heritage Minister Shelly Glover roundly dismissing the possibility. Glover stated:

“We will not allow any moves to impose new regulations and taxes on internet video that would create a Netflix and Youtube Tax.”

Last night, I received an email from a spokesperson for Ontario Minister of Tourism, Culture and Sport Michael Coteau that tried to soften the call for online video regulation. The spokesperson stated:

“The presentation today provided important elements for CRTC consideration as it undertakes its review. The government is not advocating for any CanCon changes, or that any specific regulations be imposed on new media TV, until more evidence is available.”

I asked for clarification on what “more evidence” means. The spokesperson responded that there will be over 100 presentations at the CRTC hearing and that all need to be heard from before moving forward.

Yet a review of the Ontario government submission to the CRTC and its prepared remarks yesterday make it clear that the government strongly supported immediate regulatory reforms and that the need for “evidence” is actually a reference to revenue thresholds that would trigger mandatory payments by foreign online video providers.

September 7, 2014

Amazon and the taxman

Filed under: Britain, Business — Tags: , — Nicholas @ 11:52

Tim Worstall discusses how Amazon structures its business to meet various efficiency targets, a major one being the need to be as tax-efficient as possible. This upsets many political commentators, who all seem to believe that businesses should structure their activities to pay as much tax as possible:

… it’s exactly the tax laws that create one of those synergies that keeps Amazon as the one single company (even if with many different divisions and P&L centres). Because if it were a series of separate companies then those mature businesses, the ones making profits, could not simply switch their profits over to the subsidisation of those newer businesses. Instead, they would have to declare those profits, 35% would float off towards Uncle Sam and thus there would be less of that free cash flow to invest in those newer businesses.

The way the tax laws work are what keeps Amazon from splitting out those profitable businesses from those ones not yet mature enough to be making a profit.

Which brings me to the second point, one more about British political economy. We have a prolific commentator over here who insists on two separate points. I’ll not name him in order to spare his blushes but he’s often referred to as the UK’s leading tax expert. The first thing he insists upon is that Amazon doesn’t pay very much corporation tax (entirely true) but also that it ought to. The second is that many companies have vast amounts of cash, profits they have made in the past, which they don’t know what to do with. Those cash reserves should therefore be taxed away so that they can be spent on what our tax expert thinks are good uses for other peoples’ money. What I enjoy so much about this is that he manages to believe both things together. A company like Amazon, which obviously does know what to do with its free cash flow, should be taxed more. And companies that don’t know what to do with their free cash flow should also be taxed more.

It’s as if the only answer to anything ever is higher tax rates. Rather like if all you’ve got is a hammer then everything gets treated as a nail. I can’t help thinking that the views of a leading expert in anything, let alone tax, ought to be a little more subtle than that.

August 31, 2014

Politispeak – describing a slower rate of increase as an absolute cut in funding

Filed under: Cancon, Government, Health, Politics — Tags: , , , — Nicholas @ 11:20

Paul Wells says the almost forgotten leader of Her Majesty’s loyal opposition in Parliament is doing his job, but illustrates it with a great example of how political rhetoric sometimes warps reality in favour of a more headline-worthy claim:

Here’s what he said: “After promising to protect all future increases to provincial transfers, Conservatives announced plans to cut $36 billion, starting in 2016,” Mulcair told the CMA. “This spring, Conservatives will announce, with great fanfare, that there is now a budget surplus. I’m here today to tell you that an NDP government would use any such surplus to, first and foremost, cancel those proposed cuts to health care.”

This needs parsing, but first, let’s let Mulcair finish: “Mr. Harper, it’s time to keep your word to protect Canadian health care. After giving Canada’s richest corporations $50 billion in tax breaks, don’t you dare take $36 billion out of health care to pay for them!” He said that part in English, then repeated it in French, which has become the way a Canadian politician delivers a line in italics.

Well. Let’s begin with the $36 billion. In December 2011, Jim Flaherty, then the federal finance minister, met his provincial colleagues to announce his plans for health transfers after a 10-year deal set by Paul Martin ran out in 2013-14. The 2004 Martin deal declared that cash transfers to the provinces for health care would increase by six per cent a year for 10 years. Harper simply kept implementing the Martin scheme after he became Prime Minister.

What Flaherty announced, without consulting with the provinces first, was that health transfers would keep growing at six per cent through 2016-17. Then, they would grow more slowly — how slowly would depend on the economy. The faster GDP grows, the faster transfers would grow. But, if the economy tanked, the rate of growth could fall as low as three per cent per year. Flaherty said this scheme would stay in place through 2023-24.

Add up all the shortfalls between three per cent and six per cent over seven years and you get a cumulative sum of $36 billion. Despite what Mulcair said, this isn’t a “cut,” it’s a deceleration in increases. And $36 billion is the gap’s maximum amount. If the economy shows any health, the gap will be smaller.

We could have fun complaining that Mulcair calls something a “cut” when it extends what is already the longest period of growth in federal transfer payments in Mulcair’s lifetime. But it’s more fun to take him at his word. He promises to spend as much as $6 billion a year in new tax money on health care. Mulcair couldn’t buy much influence over health policy with that money; he would simply send larger cheques to provincial governments. If he has other plans for the federal government, he’d have to pay for them after he’d sent that up-to $6-billion cheque to the provinces.

Emphasis mine.

August 26, 2014

Tax inversions: “Canada, it would seem, is the new Delaware”

Filed under: Business, Cancon — Tags: , , — Nicholas @ 08:04

In Maclean’s, Jason Kirby looks for reasons why Tim Hortons is interested in a deal with Burger King:

For starters, let’s consider Burger King’s motivation for buying Tim Hortons. It is not looking for synergies. Don’t expect to see Burger King roll out twinned stores, with one counter selling Whoppers, the other Timbits, as per Wendy’s strategy when it owned Tims. Instead, Burger King wants to avoid paying U.S. taxes. If the deal goes ahead (no agreement has been finalized) Burger King will achieve this through what’s known as a “tax inversion.” It would buy Tim Hortons, then declare the newly merged company to be Canadian. And because companies in Canada enjoy a lower corporate tax rate than those in America — 15 per cent in Canada compared to an official U.S. rate of 35 per cent — Burger King’s future tax bills could be a lot smaller.

Canada, it would seem, is the new Delaware.

So Burger King is buying Tim Hortons, but in doing so, the combined Tim Hortons and Burger King will be financially engineered to be Canadian, at least on paper. A statement released by the companies following the Wall Street Journal‘s initial report on the deal said Burger King’s largest shareholder, 3G Capital, a Brazilian private equity firm, would own the majority of the shares of the newly created company. And you can be sure any tax savings will flow back to shareholders in the form of higher dividends.

It’s clear what’s driving Burger King to pursue this deal. But there’s been far less attention paid to the question: what’s in this for Tim Hortons?

According to Tim Hortons, the answer — as it unceasingly has been for the past two decades — is the pursuit of international growth. In the statement from Tim Hortons and Burger King, the companies said the coffee chain will have ”the potential to leverage Burger King’s worldwide footprint and experience in global development to accelerate Tim Hortons growth in international markets.”

Update: Kevin Williamson points out that relatively few US companies actually relocate to other countries now, but that the number is clearly increasing and knee-jerk reactions to that by politicians may well make it worse.

There are trillions of dollars in U.S. corporate earnings parked overseas, and progressives want the government to shove its greedy snout all up in that, denouncing “corporate cash hoarders” and blaming un-repatriated corporate earnings for everything from the weak job market to chronic halitosis. Harebrained schemes for putting that corporate cash in government coffers abound. So the current balance could quite easily be tipped. And after years of ad-hocracy under Barack Obama et al., U.S.-style “rule of law” may not be as attractive as it once was. A few more arbitrary NLRB decisions or political jihads from the IRS could change a few minds about the value of U.S. law and governance.

The question isn’t whether you can bully Walgreens out of its plan to move to Switzerland. The question is whether the next Apple or Pfizer ever puts down legal roots in the United States in the first place. Right now, the friction works in favor of the United States, but there is no reason to believe that that will always be the case. You think that Singapore wouldn’t like to be the world’s banking or pharmaceutical capital? That Seoul lacks ambition? That the Scots who brought us the Enlightenment can’t run a decent system of law and property rights? Burger King is not talking about moving to some steamy banana republic for tax purposes, but to stodgy, stable, predictable, boring old Canada. Boring and predictable looks pretty good if you’re Burger King, especially when the alternative is unpredictable and expensive. Unpredictable and expensive is what you date when you’re young and stupid — you don’t marry it.

Update the second:

August 23, 2014

Pennsylvania police to destroy rare wine collection

Filed under: Law, USA, Wine — Tags: , , , — Nicholas @ 12:14

Michelle Minton tells the sad tale of a rare wine fan who got too greedy (as the state tells it) or a state that got too greedy (as Pennsylvania wine fans tell it):

In the fifth century BCE, famous Greek tragedian Euripides supposedly said, “where this no wine there is no love.” This certainly holds true in present day Pennsylvania, which has one of the nation’s strictest alcohol regulatory regimes. And according to Tom Wark, executive director for the American Wine Consumer Coalition, Pennsylvania is “the worst state to live in if you’re a wine lover.” In Philadelphia, one man surely isn’t feeling the brotherly love after police raided his home and seized 2,426 bottles of rare wine—with an estimated value of more than $125,000—that the police reportedly plan to “destroy.”

Arthur Goldman, a 50-year-old lawyer, alleged ran afoul of Pennsylvania’s archaic wine laws by purchasing and selling through unapproved channels. In Pennsylvania, one of ten states that doesn’t allow direct shipping of wine to consumers, the only place one can purchase wine is through state-owned liquor stores. For wine connoisseurs looking for a bottle unavailable for purchase in state stores, the only other option is to order their wine through one of the sanctioned “direct wine shippers” and have it sent to a state store. Of course, this adds a certain cost to the purchase (shipping charge, plus $4.50 handling, the state’s 18 percent Johnstown Flood tax, 6 percent sales tax, and an addition 2 percent Philadelphia tax). With an average shipping rate of $7 per bottle or $22 per case, this means that a typical $50 bottle of wine would end up costing $74. A case of that wine, which would have cost $600 could cost around $832 after jumping through the Pennsylvania Liquor Control Board’s hoops. Of course, Goldman was likely purchasing much rarer and more expensive wines—the tax and shipping costs, assuming the approved direct shipping companies had the wines he wanted—could have been astronomical.

Cops paint a picture of a sophisticated racket meant to make Goldman a lot of money, but his lawyer asserts it was more like a group of 15-20 wine connoisseurs for whom Goldman would procure bottles unavailable in the state, only charging them for his costs.

August 6, 2014

Atlas Shrugged was not an instruction manual”

Filed under: Business, Economics, Government, USA — Tags: , , — Nicholas @ 08:34

Oh, my. A few corporations are using the “corporate inversion” tactic to get out from underneath punitive taxes and the reaction is to talk about making it harder to escape? Tamara K. explains why this is breathtakingly dumb:

Dude, one of the complaints that nuanced cosmopolitan liberals have with Ayn Rand is that her villains are cartoonish caricatures, and here you go popping out an editorial that could have been written by Wesley Mouch. Tone-deafness on this scale is positively breathtaking. Atlas Shrugged was not an instruction manual, you knob.

I suspect more corporations have been considering the pro and con to corporate inversion recently … and the hysterical reaction to the few that have already taken place may trigger a rush to the exits. Nice work, guys!

July 29, 2014

Australia’s bitter experience with carbon mitigation

Filed under: Economics, Environment, Government — Tags: , , — Nicholas @ 06:47

Shikha Dalmia looks at Australia’s recently abandoned carbon tax scheme:

Environmentalists had a global meltdown last week after Australia scrapped its carbon tax. They denounced the move as “retrograde” and “environmental vandalism.”

They can fume all they want, but Australia’s action, combined with Europe’s floundering cap-and-trade program, signals that “mitigation” strategies — curbing greenhouse gases by putting economies on an energy diet — are not winning or workable.

Australia leapfrogged from being an environmental laggard (initially refusing to even sign the Kyoto Protocol) to a leader when its Green Party-backed Labor prime minister imposed a tax two years ago. It required Australia’s utilities and industries to pay $23 per ton of greenhouse gas emissions.

But the tax was an instant debacle.

Australia has the highest per capita carbon dioxide emission in the world and the main reason is that it’s even more coal-dependent than America. Coal supplies 75 percent of its energy needs (compared to 42 percent in America). But contrary to green expectations, the tax didn’t prompt companies to rush toward renewable sources, because they are far costlier.

Rather, utilities passed their costs to households — whose energy bills soared by 20 percent in the first year. Other industries that face hyper-competitive environment such as airlines suffered massive losses. (Virgin Australia alone reported $27 million in losses in just six months.) The tax also made Australian exports globally uncompetitive, deepening the country’s recession.

This spawned a backlash that brought down the Labor government and catapulted into office the Liberal Party’s Tony Abbott, who made a “blood promise” to ditch the tax, which he did promptly once elected, despite warnings that Aussie lowlands are more vulnerable to rising sea levels and other dire consequences of global warming than other countries.

July 17, 2014

Mussolini would recognize (and approve of) “economic patriotism”

Filed under: Economics, Government, History, USA — Tags: , , , , — Nicholas @ 07:58

Kevin Williamson isn’t a fan of the recent upsurge in usage of the term “economic patriotism”, both for practical and historical reasons:

“Economic patriotism” and its kissing cousin, economic nationalism, are ideas with a fairly stinky history, having been a mainstay of fascist rhetoric during the heyday of Franklin D. Roosevelt’s favorite “admirable Italian gentleman.” My colleague Jonah Goldberg has labored mightily in the task of illustrating the similarities between old-school fascist thinking and modern progressive thinking on matters political and social, but it is on economic questions that contemporary Democrats and vintage fascists are remarkably alike. In fact, their approaches are for all intents and purposes identical: As most economic historians agree, neither the Italian fascists nor the German national-socialists nor any similar movement of great significance had anything that could be described as a coherent economic philosophy. The Italian fascists put forward a number of different and incompatible economic theories during their reign, and the Third Reich, under the influence of Adolf Hitler’s heroic conception of history, mostly subordinated economic questions as such to purportedly grander concerns involving destiny and other abstractions.

Which is to say, what the economic nationalism of Benito Mussolini most has in common with the prattling and blockheaded talk of “economic patriotism” coming out of the mealy mouths of 21st-century Democrats is the habit of subordinating everything to immediate political concerns. In this context, “patriotism” doesn’t mean doing what’s best for your country — it means doing what is best for the Obama administration and its congressional allies. This is where my fellow conservatives who write off Barack Obama as a Marxist really get it wrong: He has no meaningful economic philosophy whatsoever. Marxism might be a moral step backward for Barack Obama, but it would be an intellectual step up in the sense that it at least represents a coherent worldview. (“At least it’s an ethos.”) In years of listening to Barack Obama’s speeches, I’ve never detected any evidence that he understands, or even has any interest in, economic questions as such. He is simply a keen political calculator. The conflation of the national interest — “patriotism” — with the interest of the party or the supreme leader is too familiar a demagogic technique to require much explication.

That’s the Washington way: Create stupid financial incentives, complain when people respond to them — and then declare that conformity with your political agenda is identical to patriotism. The production values may be Hollywood slick, but this is just another third-rate sequel: Banana Republic: The Tax Code Strikes Back.

Except the tax code is not striking back. Democrats complain about it, but they rarely if ever try to do anything about the industry handouts and sweetheart deals enshrined therein — given that they wrote so many of them, why would they?

July 15, 2014

QotD: King George III’s minor fit of barking

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

It is a painful thing to confront someone whom one is accustomed to respecting, and to tell that person they are barking mad. Usually one avoids it, or dismisses the other’s strange behavior as “a difference of opinion,” and speaks platitudes about “the importance of diversity,” however when a person is going, “Arf! Arf!” right in your face, there is no way around it. This includes governments, when they become barking mad.

Thomas Jefferson knew this, when he quilled the Declaration of Independence, listing King George’s barking mad behaviors, however there has been a recent, revisionist effort to show that King George the Third wasn’t all that bad, and his blue urine wasn’t due to porphuria, and his spells of foaming at the mouth were but minor episodes, especially when he was young and was busily losing the American colonies. (I think this may in part be due to the fact that porphuria is hereditary, and certain people don’t want the rabble giving Prince Charles appraising looks.)

The argument states that, if you could get an audience at his glittering palace, King George was quite lucid, and even charming, and that the points he raised, about the government’s right to tax, are valid to this day. There is even some reproach towards America and Jefferson for failing to understand King George’s points.

However taxation was not the issue. Taxation without representation was the issue. When one looks back with twenty-twenty hindsight, the solution to the problem seems simple: Simply give the thirteen colony’s thirteen elected representatives in Parliament. It seems like such an obvious thing, to give Englishmen abroad the same rights as Englishmen at home, and seems so conducive to unity and the expansion of an unified kingdom, that to switch the subject to the-right-of-the-government-to-tax seems a sleight of hand bound to stub thumbs, to lead to schism, and to create discord out of harmony. It was, in fact, a barking mad thing for King George to do.

Caleb Shaw, “Barking Mad – A rave, prompted by facing insane heating costs”, Watts Up With That?, 2014-07-14.

July 11, 2014

The lawless hellhole that is post-legalization Colorado

Filed under: Business, Law, Liberty, USA — Tags: , , , — Nicholas @ 07:24

Just as sensible people were predicting, the once peaceful and scenic state of Colorado is now a smoking hole in the ground, infested with twitchy-eyed, machete-wielding savages. (Oh, wait, no … that’s Edmonton):

[Colorado Governor John] Hickenlooper sounds cautiously optimistic, and there are good reasons for that. Possession and consumption of cannabis have been legal in Colorado and Washington since the end of 2012. In Colorado, so has home cultivation of up to six plants and noncommercial transfers of up to an ounce at a time. Since the beginning of this year, anyone 21 or older has been able to walk into a store in Colorado and walk out with a bag of buds, a vape pen loaded with cannabis oil, or a marijuana-infused snack. And for years in Washington as well as Colorado, such products have been readily available to anyone with a doctor’s recommendation, which critics say is so easy to get that the system amounts to legalization in disguise. Despite all this pot tolerance, the sky has not fallen.

A study released yesterday by Colorado’s Marijuana Enforcement Division supports Hickenlooper’s impression that legalization has not had much of an effect on the prevalence of cannabis consumption. The authors, Miles Light and three other analysts at the Marijuana Policy Group, note that the percentages of Coloradans reporting past-month and past-year consumption of marijuana in the National Survey on Drug Use and Health (NSDUH) rose between 2002 and 2010, mirroring a national trend. But consumption fell a bit in Colorado after 2010 while continuing to rise in the rest of the country. That is striking because Colorado’s medical marijuana industry began to take off in the second half of 2009 after the legal standing of dispensaries became more secure.

Another surprising finding is that marijuana use during this period was less common in Colorado than in the country as a whole. Based on NSDUH data from 2010 and 2011, 12 percent of Coloradans 21 or older were past-year users, compared to a national figure of 16 percent. But among those past-year users, daily use was more common in Colorado: 23 percent of them reported consuming marijuana 26 to 31 times a month, compared to a national rate of 17 percent. It’s not clear to what extent Colorado’s medical marijuana system is responsible for this difference in patterns of use.

[...]

Hickenlooper did not mention crime rates, but some opponents of legalization warned that cash-heavy cannabusinesses would invite robberies, leading to an increase in violence. Instead the frequency of burglaries and robberies at dispensaries has declined since they began serving recreational consumers in January. FBI data indicate that the overall crime rate in Denver, the center of Colorado’s marijuana industry, was 10 percent lower in the first five months of this year than in the same period of 2013.

Although the prospect of more money for the government to spend has always struck me as a pretty weak argument for legalization, Hickenlooper is happy to have tax revenue from the newly legal marijuana industry. So far there has not been much: just $15.3 million from the recreational sector in the first five months of 2014 ($23.6 million if you include medical sales), although monthly revenue rose steadily during that period. The economic activity associated with the new industry, including not just marijuana sales but various ancillary goods and services, is bound to be much more significant than the tax revenue. And although Hickenlooper says he does not want Colorado to be known for its cannabis, legalization (along with abundant snow) may have something to do with the record numbers of tourists the state is seeing. It seems clear, in any case, that legalization has not hurt Colorado’s economy, which Hickenlooper accurately describes as “thriving.”

Another benefit of legalization that can be measured in money is law enforcement savings, which various sources put somewhere between $12 million and $60 million a year in Colorado. Those estimates do not include the human costs associated with treating people like criminals for growing, selling, and consuming an arbitrarily proscribed plant. Prior to legalization police in Colorado were arresting 10,000 pot smokers a year. Today those criminals are customers of legitimate businesses, which are replacing the “corrupt system of gangsters” decried by Hickenlooper.

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