The ancient Mediterranean was a world of cities and in the eastern Mediterranean at least, it had been long before the Roman period. By the beginning of the Roman Republic (509 BC), the pattern of organization was broadly similar in Italy, Sicily, coastal North Africa, Egypt, the Levant, Mesopotamia, Anatolia and Greece: agricultural land was broken up into the territory of cities (so that each city consisted of both its urban core but also its agricultural hinterland). Those cities might then either be independent, as with the poleis of Greece and the various communities of pre-Roman Italy, or be the basic administrative units of larger empires, as in the Persian Empire (or later Roman Italy). And so, while most people still lived in the countryside, most of that countryside was in turn attached to an urban center which was the center of political, economic, religious and cultural life.
This was the world the Romans knew and the world they were most comfortable governing. Consequently, while the Romans were utterly uninterested in “civilizing” anyone, when they conquered areas which weren’t urbanized, they tended to found cities or encourage local urbanization in order to create the administrative structures through which the Romans could extract revenue most efficiently.
As mentioned above, the Romans generally wanted these cities to be mostly self-governing. While at conquest, the Romans found themselves managing a bewildering array of different styles of local urban government, over time a mix of Roman administrative preference and cultural diffusion tended to produce a fairly similar set of civic institutions. City governments, which also administered their rural countryside, were run by a town council which consisted of the wealthiest notables of the town – the curiales – in much the same way that the Roman upper-class had dominated the running of the city during the Republic. Roman authority generally protected the curiales and their wealth from the sorts of popular uprisings that tempered many Greek oligarchies in the classical period and in return the curiales managed the population and the collection of taxes for the Romans.
The curiales both managed the town affairs and were also expected to use their own wealth to fund public activity and works: maintain temples and baths, fund religious rituals and festivals, and so on. Through the first and second century, that process was mostly responsible for providing the cities of the Roman Empire with the impressive collection of often still-visible public works they boasted: baths, theaters, amphitheaters, aqueducts, temples, courthouses, public spaces and so on. While some of these structures were little more than the public posturing of the elites, many of them were open to the general public and will have represented, in as much as anything before the industrial revolution could, meaningful improvements in the lives of regular people.
While most of the wealth of any of these cities was derived from the rents and taxes extracted from their agricultural hinterlands, these cities also substantially lived off of trade and markets. Because the local city typically housed the local market, they were the obvious point for local products to enter the stream of provincial-wide or empire-wide trade or for distant imports to reach their final customers. We’ll come back to this next time when we discuss trade and the economy, but for now I want to note that this trade provided a fair bit of the economic vitality of these cities but also that it did in fact reach down beyond mere luxury goods into the basic staples that even the relatively poor might buy.
The decline and fall of these Roman cities is most extensively described in J.H.W.G. Liebeschuetz’ aptly titled, Decline and Fall of the Roman City (2001). Given his title, as you might imagine, Liebeschuetz is in the “decline and fall” camp, arguing that the classical city which defined the Roman world largely did not survive it. Regional patterns differ, with Liebescheutz identifying three “patterns”: I) Western and Central Anatolia, II) Syria, Palestine and Arabia, III) the west, including North Africa).
We’ll deal with the situation in the east in just a moment, so let’s focus here on the cities of the west, which were at the start generally smaller, less wealthy and generally far younger than those of the east (with some exceptions in Italy). Decline sets in fastest and is most severe in Britain, with the final collapse of the cities coming as early as the 360s, whereas in North Africa, the classical city doesn’t seem to tip into decline until after 400.
While each individual region and indeed each city will have been subject to its own unique conditions, a few basic causes seem to have been active everywhere to some degree. First, the crisis of the third century seems to have fundamentally disrupted empire-wide Roman trade, which then stabilized at a lower level for the fourth century, before declining precipitously in the fifth. That first decline seems to have been somewhat offset by the increased demands of imperial administration and in particular the centralized taxation in-kind and movement of goods which had to move through cities. Peter Brown describes the late Roman state as, “the crude but vigorous pump which had ensured the circulation of goods in an otherwise primitive economy” (The Rise of Western Christendom, 2nd ed., 13). We’ll return to this when we discuss the shape of the economy next time, but for now it works as a crude, but vigorous description of that facet of the late Roman economy.
At the same time, as Liebescheutz describes, the role of the curiales steadily atrophies in the fourth century. On the one hand, much of the authority and power of being on the council was steadily eroded as those functions were pulled upwards into the imperial bureaucracy. At the same time, members of the curial class who sought imperial office could get immunities from the progressively more severe taxation which otherwise often fell on the curiales and so the imperial elite often crowded out the curiales when it came to wealth and prestige in the community. As they lost both control and responsibility for their cities, the curiales‘ investment in public works and monumental architecture also ceased (though local elites do invest in church-building and monastic foundations), leading to the decay of the physical urban centers.
Finally, the warfare of the fifth century had its impact, though as Liebescheutz notes, it cannot be presented as a sole cause simply because many urban areas were already clearly in decline when conflict hit. In the case of Britain, the cities were gone by 420, decades before the arrival of any invaders. Nevertheless, political instability and violence in the fifth century seems to have delivered death-blows to ailing communities, especially in the Balkans and along the Rhine.
The end result was that in the West, urbanism declined severely between the fourth and sixth centuries. Rome, once a city of a million people, collapsed down to a population of just 80,000. Arles, which had been a thriving Roman city with an amphitheater, an aqueduct, a chariot-racing track, a theater and full city walls shrunk so severely that the remains of the city moved inside its amphitheater, repurposing it as a new set of city walls, with the town square in the middle and houses built in the stands. While many towns survived in their new, shrunken and impoverished form, urbanism in Europe outside of the Eastern Roman Empire would largely have to be reinvented during the High Middle Ages, (though with some key institutional survivals from the Roman era and often rising out of the diminished remains of Roman cities). Instead, the society of the early Middle Ages was overwhelmingly rural in both population and focus. If on politics we have a bit of a mix between decline and continuity, when it comes to the cities that made up the old political system, the “decline and fall” knight strikes a clear blow: the system of social organization that characterized the ancient world practically vanished and would have to be redeveloped centuries later. The institutions that had maintained it (like the curiales) largely vanished, replaced in some cases by local “notables” and in other cases by ruralization.
Bret Devereaux, “Collections: Rome: Decline and Fall? Part II: Institutions”, A Collection of Unmitigated Pedantry, 2022-01-28.
April 17, 2026
QotD: The decline of cities in the late western Roman Empire
April 16, 2026
The EU has managed to revive smuggling as a viable career
We’ve all read reports on how bold and forward-focussed the European Union is, but do we give them equal credit for their diligent efforts to revive dying industries?
Title page of a book covering the trial of seven smugglers for the murder of two revenue officers. In the preface the author says “I do assure the Public that I took down the facts in writing from the mouths of the witnesses, that I frequently conversed with the prisoners, both before and after condemnation; by which I had an opportunity of procuring those letters which are herein after inserted, and other intelligence of some secret transactions among them, which were never communicated to any other person.”
W.J. Smith, Smuggling and Smugglers in Sussex, 1749, via Wikimedia Commons.
In late March, European Union (E.U.) officials announced they had taken down a five-country cigarette-smuggling operation and seized over 40 tons of tobacco products. The ambitious network reportedly transshipped the cigarettes far and wide to obscure their sources and destinations, while also hiding them in hidden compartments built into cargo containers. Why would smugglers go through such effort to move perfectly legal products, and why would the authorities care? In Europe, as in the United States, the answer is the same: sky-high taxes.
Smuggled Smokes in Hidden Compartments
In announcing its efforts against the smuggling network operating in Italy, France, Poland, Switzerland, and the U.K., the European Public Prosecutor’s Office, which worked with international law enforcement agencies as well as police in all five countries, noted the smugglers used “maritime and commercial routes designed to evade customs inspections”, passed shipments “through Georgia, Kenya, the Netherlands and Turkey, in order to hide the true origin of the illicit goods”, and that “false bottoms were used as hidden compartments built into containers to conceal the tobacco”.
At the conclusion of the investigation, “enforcement activities were carried out at the Port of Genoa, leading to the seizure of close to 41 tonnes of manufactured cigarettes, with an estimated loss of customs duties, excise duties and VAT exceeding €10 million”.
Absolutely nothing motivates government officials like the extraction of taxes from the public. And lots of tax money is at stake when it comes to cigarettes.
Taxes Make Up Most of the Price of Cigarettes
This month, the Tax Foundation, which has a branch in Brussels, reported that “cigarette smokers in the European Union pay far more in excise taxes than they do for the cigarettes themselves”. Report authors Jacob Macumber-Rosin and Adam Hoffer wrote that excise taxes in the E.U., which are intended to deter smoking as much as to raise revenue, start at the equivalent of $2.11 per pack and that the “total excise duty is at least 60 percent of the national weighted average retail price”. Value-added taxes are tallied after excise duties are levied.
“The highest tax in the EU is levied in Ireland at €10.71 ($12.58) per pack of 20 cigarettes, followed by France at €8.09 ($9.51) and the Netherlands at €7.77 ($9.13)”, they added.
April 6, 2026
Cross-country booze woes
On his Substack, Brian Lilley discussed the frustrations of Canadian drinkers thanks to our odd and often illogical regulations around the sale of alcohol:
How Canadian Premiers think they’d have to operate if they let private enterprise into the alcohol trade.
New York City Deputy Police Commissioner John A. Leach, right, watching agents pour liquor into sewer following a raid, 1921.
Wikimedia Commons.
I landed in Saskatoon after a late in the evening flight from Toronto on Thursday. As we headed to a family gathering south of the city, we stopped to pick up some refreshments to add to the festivities.
First off, I’ll say private liquor stores in Sask, like the ones run by Sobey’s or Co-Op are generally quite nice. It’s proof that you can have private liquor stores, the province won’t fall apart and consumers can get their products in a nice, clean, friendly environment.
This is in reference to the silly Canadian abhorrence of private liquor sales … most of our provincial governments are deeply involved in the booze trade, and regularly imply that letting any more of that business go into private hands will instantly create a maple-flavoured version of Al Capone’s empire during Prohibition.
You can also buy booze here that is forbidden in Ontario.
But holy crap is beer expensive here!
[…]
The combined federal and provincial tax rate for Quebec is about 31.5%, Ontario’s is 43% and Sakatchewan’s are the highest in the country at 49.4%.
While beer is more expensive in Sask, Ontario made liquor is cheaper here…
Why is it that in Saskatoon I can buy a bottle of Wiser’s whiskey, made in Windsor, Ontario, for about $10 cheaper than I can at the LCBO, Ontario’s government run liquor stores?[…]
In Saskatchewan, consumers can choose what to buy…
Ontario has had a ban on the sale of American alcohol products via the LCBO since March 2025. In Saskatchewan, as in Alberta, you can choose whether to buy your Kentucky bourbon or California wine.
That’s a lot of sweet, sweet bourbon for sale at a Sobey’s store in Saskatoon.
If you want to buy some California wine in Saskatoon, you can.
So far, Alberta and Saskatchewan are alone in allowing the regular sale of American alcohol. Consumers who want to boycott here can and I’m sure many do. I hear plenty of anti-Trump/anti-American attittudes here so sales are likely lower than they were pre-tariff.That said, you are an adult and can buy Yankee hooch if you want to.
That won’t be happening in Ontario anytime soon.
March 26, 2026
An alternative reading of the American Revolution
As the majority of my current readers are Americans (or Chinese folks using VPNs to pretend to be Americans), the following could be interpreted as clickbait. Just sayin’.
Upper Canadian Cavalier suggests that the events leading up to the Anglo-Colonial unpleasantness of 1776 onwards have been subject to a preferred reading that tidies up all the inconvenient details and sweeps them under the rug of a revolution against “royal tyranny” (even though HRM King George III was much more liberal than he’s ever given credit for, and a revolution against “an elected Parliament” doesn’t have the right ring to it):
Declaration of Independence by John Turnbull (1756-1843), showing the Committee of Five (Adams, Livingston, Sherman, Jefferson, and Franklin) presenting their draft of the Declaration of Independence to the Second Continental Congress in Philadelphia on 28 June, 1776.
Public domain image via Wikimedia Commons.
The American founding narrative is a document produced by a litigation class to justify actions already taken. Its authors were not philosophers who became rebels. They were rebels who hired philosophers.
This is not a fringe position. It is not the invention of bitter foreigners or tenured radicals looking to dismantle something they never understood. It is the conclusion you reach when you put down the mythology and pick up the actual historical record, the ledgers, the court documents, the correspondence that was never meant to be read by posterity, the testimony of people who were there and whose version of events was systematically buried because they were on the losing side. The American Revolution is the most comprehensively mythologized event in the history of the English-speaking world, and the mythologizing began before the gunpowder had cleared.
Start with the money, because it almost always starts with the money. The Navigation Acts, which colonial propagandists framed as instruments of imperial oppression, were a trade regulatory system that had been in place for over a century and under which the colonies had grown from scattered coastal settlements into some of the most prosperous communities in the Atlantic world. The specific enforcement measures that triggered the revolutionary crisis came after the Seven Years War, a conflict in which Britain spent the modern equivalent of billions of pounds defending the American colonies against French and indigenous pressure across an entire continent. When the war ended in 1763, the British national debt had nearly doubled. Parliament looked at the colonies, looked at the bill, and suggested with what strikes any disinterested observer as elementary reasonableness that the people who had benefited most from the war might contribute something toward its cost.
The Stamp Act of 1765 taxed legal documents, newspapers, and pamphlets at rates that were substantially lower than what ordinary subjects in Britain were already paying. The Townshend Acts taxed glass, paint, paper, and tea, luxury goods, not necessities. At their peak, the total tax burden on the American colonies amounted to roughly one shilling per person per year. The average British subject at home was paying twenty-six shillings. The colonial merchant class, which had grown fat on a century of salutary neglect and profitable smuggling, responded to this modest request for contribution with riots, the formation of extralegal enforcement committees, the physical destruction of property, and the systematic intimidation of anyone who disagreed. They called this liberty.
John Hancock, whose signature on the Declaration of Independence is so oversized that his name became a synonym for a signature, was the wealthiest smuggler in colonial America. His fortune was built on molasses, wine, and dry goods moved outside the official imperial trade system at substantial profit. In 1768, British customs officials seized his sloop Liberty on evidence of wine smuggling. The seizure triggered a riot. The customs commissioners were driven from Boston under threat of violence and had to take refuge on a Royal Navy vessel in the harbor. Hancock was prosecuted and represented by John Adams, who got the charges dropped on procedural grounds. The same John Adams who would later write the Massachusetts Constitution. The same John Adams who, when asked to describe his greatest service to his country, cited his defense of the British soldiers at the Boston Massacre trial. These relationships are not incidental. They are the operating structure of the revolutionary movement.
The Boston Massacre has been taught to American schoolchildren for two hundred and fifty years as evidence of British brutality. Here is what actually happened. On the evening of March 5, 1770, a small detachment of British soldiers posted outside the Custom House was surrounded by a crowd estimated at several hundred people, who pelted them with ice, rocks, oyster shells, and pieces of coal, struck them with clubs and sticks, and screamed at them to fire, daring them repeatedly to shoot. Private Hugh Montgomery was knocked to the ground by a club blow. When he recovered he fired. The other soldiers, believing an order had been given, fired as well. Five people died. It was a tragedy. What happened next is the part that gets edited out of the curriculum. John Adams, cousin of the great agitator Samuel Adams, agreed to defend the soldiers and did so brilliantly. Six of the eight soldiers were acquitted outright. The remaining two were convicted of manslaughter rather than murder and were released after being branded on the thumb, the standard punishment. The jury found that the crowd had been the aggressor. Adams later wrote that the case was one of the best pieces of service he ever rendered his country, by which he meant he had established a legal record that contradicted the propaganda his cousin was already distributing. The propaganda survived. The verdict did not make it into the textbooks.
Samuel Adams, the moral conscience of the Revolution, the man who could manufacture outrage from raw air, had a financial history that his hagiographers handle with extraordinary delicacy. He had inherited his father’s malting business and run it into insolvency. He had then served as a tax collector for the town of Boston and accumulated a personal shortfall of several thousand pounds, money he had collected and failed to remit, that the town had been attempting to recover from him through legal action for years. He was an active defendant in debt proceedings during the very period when he was organizing the Sons of Liberty and writing pamphlets about the tyranny of arbitrary taxation. The Revolution did not merely advance Samuel Adams’s political philosophy. It made his financial problems disappear. When you understand this, his extraordinary energy in the cause of independence begins to look less like principle and more like survival.
March 18, 2026
Virginia sees California’s tax schemes and says “hold my beer”
In The Freeman, Erik W. Matson pleads with the Virginian government not to “California our Commonwealth”, as the new governor keeps cribbing tax policies from Gavin Newsom’s playbook:
The state seal of Virginia. I am told that the motto Sic semper tyrannis does not actually stand for “Thus always to taxpayers”, all appearances to the contrary.
In 1966, fresh off four busy years of touring, the Beatles returned to the UK to discover they were on the brink of bankruptcy. Their earnings had placed them in the top tax bracket, putting them at the mercy of the Labour government’s 95% supertax. George Harrison, in response to this tyranny, penned the lyrics to what became the first track on their next album Revolver: “Taxman”.
Let me tell you how it will be
There’s one for you, nineteen for me
‘Cause I’m the taxmanHarrison’s words resonate across the pond today, especially for those living and working in the state of California. Consider the recent case of Sam Darnold, quarterback of the Seattle Seahawks. Darnold earned $178,000 for winning Super Bowl LX in February 2026, which was played in Santa Clara — and promptly found himself owing California $249,000, thanks to the state’s so-called “jock tax“. For almost three decades, the state has had the highest top marginal income tax rate in the US. Capital gains in California are treated — and taxed — as ordinary income, pushing many into higher tax brackets. At the state and local level, California features a garden variety of invasive taxes and surcharges to fund everything from tourism to mental health support initiatives. Add to this the recently proposed 2026 Billionaire Tax Act, which would impose a one-time 5% tax on the worldwide net worth of California residents worth more than $1 billion. The act would also amend the state constitution to remove the cap on taxes on intangible property (and likely cost the state $25 billion!).
California’s predatory tax regime, sadly, seems increasingly familiar to those of us living in the Commonwealth of Virginia. Thanks to the initiatives of the new governor Abigail Spanberger, Virginia is barreling down a trail of “California-ization.” In some sense, as Adam Johnston has recently discussed, our California-ization has been underway for over a decade, largely due to the influx of legal and illegal immigrants to the deep-blue suburbs in Northern Virginia. But it has entered a new and more aggressive phase under Spanberger, a former member of Congress’s Blue Dog Coalition who, two months in, is governing like anything but. Spanberger and her administration are openly attempting to gerrymander the Commonwealth’s congressional map in an effort to wipe out the state’s Republicans. They have also proposed an expansive set of truly California-esque taxes, subsidies, and regulations antithetical to liberty, prosperity, and “affordability.”
In January, City Journal‘s Judge Glock catalogued some of Spanberger’s initial ideas for governance, including her desire to subsidize housing for state employees and low-income residents and regulate the Commonwealth towards carbon neutrality. Unsurprisingly, the bulk of her ideas would, as Glock says, “drive up expenses for one group of consumers in order to benefit another group deemed more deserving”. If Spanberger’s officially announced agenda from November 2025 is any indication, the “more deserving” include smokers (taking a tactic straight from California’s playbook), solar farms, and scofflaw tenants (compare California’s 2019 Tenant Protection Act!).
Since the convening of the General Assembly, Virginia Democrats’ wildest dreams have metastasized into a concrete body of legislative proposals that promise at once to limit Virginians’ freedoms and nickel-and-dime us into oblivion. House Bill 978, for example, introduces new taxes on:
recreation, fitness, or sports facilities; nonmedical personal services or counseling; dry cleaning and laundry services; companion animal care; residential home repair or maintenance, landscaping, or cleaning services when paid for directly by a resident or homeowner; vehicle and engine repair; repairs or alterations to tangible personal property; storage of tangible personal property; delivery or shipping services; travel, event, and aesthetic planning services; and digital services.
Building on the architecture of the widely unpopular vehicle tax (which, despite what Spanberger proposed during her campaign, is likely here to stay), House Bill 557 proposes local personal property taxes on electric-powered lawn equipment — including mowers, trimmers, blowers, and chainsaws — used to maintain “commercial, public, or private gardens, lawns, trees, shrubs, or other plants”. These suggested taxes on electric-powered equipment complement a proposal in House Bill 881 encouraging the regulation and even outright banning of gas-powered leaf blowers — again following the lead of California.
February 17, 2026
The ludicrous idea of an “unrealized gains tax”
Governments everywhere are always on the lookout for more ways to raise revenue, so any suggestion of an untapped resource they can tax will get their attention. Apparently the current hot idea is an unrealized gains tax, which @wokeandwoofing satirized thusly:
Also on the social media site formerly known as Twitter, @Yogi frames the proposed new tax for Gen Z readers:
Unrealized gains tax for Gen-Z:
You buy a Pokémon card for $50.
Someone offers you $500 for it. You say no. You love that card. You’re keeping it.
The government says: “Cool, but that card is worth $500 now. You owe us $100 in taxes.”
You: “… I didn’t sell it.”Government: “Don’t care. Pay up.”
You don’t have $100 lying around. So you’re forced to sell the card you love just to pay a tax on money you never received.
Next month? That card drops back to $50.
Your card is gone. Your money is gone. And the government shrugs.
That’s a wealth tax on unrealized gains. They don’t pay you back the tax …
Now picture this.
Your mom calls you crying. She has to sell the house she raised you in. Not because she can’t afford it. She’s lived there 30 years. It’s paid off.
But some website says it’s worth more now and the government says she owes $15,000 she doesn’t have.
So she sells your childhood home. The kitchen where she made you breakfast. The doorframe where she marked your height every birthday.
Gone.
To pay a tax on money that was never real.
Now picture the opposite.
Your dad put everything into his small business. For 20 years he built it from nothing. One year the business is “valued” at $2 million on paper. He owes a massive tax bill. He empties his savings. Sells his truck. Borrows money. Pays it.
Next year the market crashes. His business is worth $200,000.
He lost everything to pay a tax on a number that doesn’t exist anymore.
Does the government give him his money back?
No.Does the government give him his truck back?
No.Does the government care?
No.They sold this idea as “taxing billionaires”. But billionaires have armies of lawyers, offshore accounts, and trusts. They’ll be fine.
You know who won’t be fine? Your mom. Your dad. Your neighbor with a small business. The farmer down the road who’s had the same land for four generations and now has to sell it because dirt got expensive.
You’re not taxing wealth. You’re taxing people for owning things.
It’s like getting a parking ticket for a car you might drive somewhere someday.
They want you to own nothing and be happy. To fund the fraud, waste and abuse of the welfare state they created.
There is enough money. More tax isn’t needed. It’s all a lie. But you’ve been gaslit into believing this is a rich vs poor debate.
I hope you understand what’s at stake.
January 22, 2026
California considering a new way to kill the golden goose
When I first heard about California’s proposed “Billionaire Tax” I thought it was a joke — nobody could be that economically illiterate. But I was wrong and the state really does seem to want to make their state economy a new case study in economics courses of the future. J.D. Tuccille explains why the tax, if implemented, is likely to impact a lot more folks who don’t rank as plutocrats:
California’s potential adoption of a one-time 5 percent “billionaire tax” on the net worth of high-value individuals is already sending wealthy residents fleeing for the exits. By one estimate, at least a trillion dollars has moved beyond the reach of state officials. But a new analysis says the tax may be even more onerous than advertised. Californians may need to get used to the sight of moving vans leaving the state.
Give Us 5 Percent of Everything You Own
Sponsored by a chapter of the Service Employees International Union, the proposed billionaire tax is set to appear as an initiative on the California ballot in November. According to the summary approved by state Attorney General Rob Bonta, the measure “imposes one-time tax of up to 5% on taxpayers and trusts with covered assets valued over $1 billion; covered assets include businesses, securities, art, collectibles, and intellectual property, but exclude real property and some pensions and retirement accounts”. If passed, the tax would apply to people resident in California as of January 1, 2026 — a retroactive element bound to be challenged in court.
[…]
Five Percent Understates the Pain
“The 2026 Billionaire Tax Act, a California ballot initiative, would ostensibly impose a one-time tax of 5 percent on the net worth of the state’s billionaires,” notes Jared Walczak for the Tax Foundation. “Due, however, to aggressive design choices and possible drafting errors, the actual rate on taxpayers’ net worth could be dramatically higher. One particularly momentous policy choice has the potential to strip the founders of some of the world’s largest companies of their controlling interests and force them to sell off a significant portion of their shares.”
According to Walczak, there are many ways in which the initiative creates situations under which “tax liability would be vastly more than 5 percent of net worth”. He focuses on six of them: valuations based on voting interests; assessment rules that can overvalue privately held businesses; excessive underpayment penalties that encourage overvaluing privately held businesses; anti-avoidance rules that tax more than the amount of transfers; provisions on spousal assets and debt to relatives that would tax nonresidents’ assets; and deferrals that would tax wealth that no longer exists.
As an example, Walczak points to the initiative’s means for valuing voting shares that aren’t publicly traded. DoorDash founder Tony Xu owns 2.6 percent of the company but controls 57.6 percent of voting rights. The initiative specifies, “the percentage of the business entity owned by the taxpayer shall be presumed to be not less than the taxpayer’s percentage of the overall voting or other direct control rights.”
That means Xu could be taxed on his voting rights rather than his economic stake in the company. That turns a $2.41 billion ownership interest into a $4.17 billion tax liability. It could force the conversion of voting shares to common stock for sale (subject to capital gains tax), and loss of control of the company.
The other provisions examined by Walczak also impose potential tax liabilities far beyond the 5 percent claimed by the initiative’s sponsors.
Charles Fain Lehman explains that the proposed tax will end up making everyone in California worse off:
… If you pick up all of Google’s employees and put them in Texas — where some of California’s billionaires might look to relocate — then one might assume they would be just as productive.
That would be a reason for non-Californians to be relatively sanguine about the wealth tax’s effects. Yes, it will be bad for California fiscally. But the titans of technology and entertainment can just set up shop in a red state and continue their work unabated.
But what if cities themselves have some additive effect? What if there’s something special about Los Angeles or San Francisco per se? What if the specific concentration of human capital in a specific place yields more than the output you’d expect if you put that same capital in a different place?
Source: Bhalothia et al, fig. 6.
As it turns out, that’s exactly what happens. Take recent research from economists at UC San Diego and Northwestern University. They use data on over 500 million LinkedIn users across 220,000 cities worldwide to ask how moving from one city to another affects an employee’s wages (a measure of their productivity). Because they observe the same people moving multiple times, they can disentangle the effects on wages of moving to a given city from the qualities of the people moving between cities.
The results are remarkable. The authors estimate that 93 percent of global wage variation is attributable to city effects, rather than to the qualities of workers themselves. That effect shrinks when you’re talking about movement within the developed world — someone moving from Bangalore to San Francisco gets a bigger wage bump than someone moving from Omaha to San Francisco, for example. But even looking at movers within their own developed country, cities explain something like 30 to 50 percent of the variance in wages.
In other words: it’s not just that people with better skills move to otherwise more desirable cities. Cities themselves make people worth more — meaning that they also increase total productivity and output, and therefore make the economy stronger.
How can it be that where you work is so important for how much you produce? The basic answer is what economists call agglomeration effects, the gains that come when firms cluster together. Agglomeration effects come, in general, from lowered barriers to exchange — of material goods, but also of ideas. Lots of start-up founders move to San Francisco because that’s where they can meet other start-up founders, and be on “the cutting edge” of what’s happening in their field. That’s only possible in a specific physical place.
Even if you put all the start-up founders in the same new part of Texas, moreover, they would still be worse off. Agglomeration economies come also from local culture and supportive industry infrastructure. Los Angeles as a city is built to support entertainers; San Francisco is built to support programmers. If you move those industries to Miami or Austin, neither city will be able to offer the same amenities — which is why both have struggled in their efforts to replace their Californian counterparts.
In other words: if California’s major industries leave California, they can’t be rebuilt somewhere else. Dismantle Silicon Valley, and you can’t just put it back together in Miami. We’ll still have technology companies, sure. But all else equal, they will be less productive than they would have been if they had stayed put. And we’ll all pay the price.
December 30, 2025
Tariffs are an economic burden, even when you claim they’re paid by foreigners
At the Foundation for Economic Education, David Hebert responds to a recent pro-tariff puff piece from financial columnist, Matthew Lynn:
As Lynn acknowledges, “the tariffs are a tax”. Because they are a tax, they are going to be paid by someone in some form. You can’t have money flowing into the Treasury without someone paying that extra money in some way. Broadly speaking, we can divide the potential payors of American-imposed tariffs into three camps: American consumers, American importers, and foreigners.
One of the oft-cited effects of a tariff is to reduce the amount of imports coming into America. This makes sense and is in fact one of the numerous goals administration officials have pointed to. Insofar as American consumers and importers end up paying the tariff, they will buy less of the now-more-expensive foreign products. We’re already seeing this happen in the US, which Lynn alludes to throughout his article.
If foreigners pay the tariff, they’ll sell less of the now-tariffed goods to the US. This will, as President Trump and others have correctly identified, hurt their bottom line. To offset at least some of this, these countries will try to sell more of their products to their domestic consumers or consumers in countries other than the US. This is exactly what we have seen and what we are seeing, as other countries around the world are securing new trade deals with one another and deliberately excluding the United States from said deals.
So, Lynn is correct to point out that foreign corporations have incurred costs because of the Trump tariffs. However, despite his repeated implication to the contrary, this is not money that goes to the US Treasury. Volkswagen, for example, has raised the price of its 2026 models by up to 6.5 percent, largely due to tariffs, and has indicated that this is just the beginning. That’s more money coming out of American consumers’ pockets. At these higher prices, American consumers are purchasing fewer Volkswagens than last year. Volkswagen’s losses from the tariffs include an almost 30 percent decline in profits from auto sales. Importantly, sales that do not happen count toward the reduced profit that Volkswagen reported but generate no tariff revenue for the Treasury to collect. That Lynn, a financial commentator, does not understand this distinction is deeply troubling.
Who Really Pays the Tariff?
Lynn’s central argument rests on a fundamental confusion between what economists refer to as the “legal incidence” and the “economic incidence” of a tax. Legally, because tariffs are a tax on imports, it is the US importers who must write the check to Customs and Border Protection. But this says nothing about who actually pays the tariff.
For example, when landlords’ property taxes go up, who pays? The landlord will obviously write the check to the county assessor, but unless Lynn thinks that landlords are running charities, that cost gets passed on to tenants in the form of higher rent, less frequent maintenance, or fewer included benefits (utilities or access to designated parking, for example). The legal incidence falls on the landlord, but the economic incidence falls disproportionately on renters, i.e., young Americans already besieged by high housing costs.
Tariffs work the same way. US Customs and Border Protection bills the American importer directly, which is the legal incidence of the tariff. But the economic burden gets distributed among American consumers, American importers, and foreign exporters, depending on the particulars of the individual markets.
Lynn cites the Harvard Pricing Lab finding an approximately 20 percent “pass-through rate,” meaning that American consumers are only paying about one-fifth of the tariff costs. He treats this as a permanent feature of the tariff regime and as proof that foreigners are footing the bill. But the question isn’t who writes the check today, it’s who bears the cost over time. And here, the evidence directly contradicts Lynn’s fables.
As we have seen, pass-through rates are not static, but evolve over time as markets adjust. And every piece of evidence suggests that the pass-through rate has been and is continuing to rise rapidly. Goldman Sachs and the Council on Foreign Relations tracked the evolution over just this administration. Their findings are stunning: In June, US businesses absorbed about 64 percent of the tariff costs, American consumers about 22 percent, and foreign exporters about 14 percent in the form of reduced profits. Just four months later, American businesses absorbed just 27 percent, while American consumers absorbed 55 percent and exporters absorbed 18 percent. Projections for 2026 continue the trend with consumers absorbing 67 percent, exporters 25 percent, and importers just 8 percent.
The logic behind this is simple and has been echoed by President Trump and Scott Bessent themselves. In the initial months following Liberation Day, American importers could not quickly shift to alternative suppliers, giving them little leverage to demand price cuts from existing foreign vendors. Many American importers also believed (or hoped?) that the tariffs were simply a negotiating tool that would be bargained away. Having built up inventories before April, they were able to avoid raising consumer prices, with the belief that the “temporary pains would be worth the long term gains.”
That’s no longer the case. As the BLS notes in its latest import price index report, the price of imports has barely changed. This matters because US importers, not foreign sellers, are legally required to write the tariff check. American buyers pay the foreign company’s price, then pay the tariff on top of it. If foreigners were truly absorbing the tariffs, they’d have to lower their prices to compensate, and we would see a decrease in the import price index. We haven’t. The index is flat, which is evidence that the burden of the tariff is, as economists warned, being paid disproportionately by Americans in one form or another. As the Council on Foreign Relations analysis points out, by October, importers have “had time to seek alternative suppliers, giving them a bit more negotiating leverage.” More importantly, the “trade deals” that the administration has inked have made it clear that substantially higher tariffs are here to stay. All of this gives importers and retailers good reason to continue passing more of the costs along to consumers.
We are already seeing evidence of this happening. The Federal Reserve Bank of Boston’s survey of small and medium-sized businesses, for example, confirms this dynamic. Firms expecting tariffs to persist for a year or longer plan to pass through three times more of their cost increases to consumers than firms expecting short-lived tariffs. As of August, over 45 percent of affected businesses expected their costs to be impacted for longer than a year.
But how does all of this compare to the pass-through rate felt during the 2018–2019 tariffs? The Harvard Pricing Lab — the same data that Lynn cites — actually undermines his entire argument. After just six months, the 2025 tariff pass-through rate is indeed around 20 percent. But if we compare this to the 2018 tariffs, the difference is night and day. After Trump’s first-term tariffs, the pass-through rate stayed under 5 percent after a full year. This isn’t evidence that these tariffs are working. It’s evidence that these tariffs are hitting consumers harder and faster than the previous round.
December 14, 2025
QotD: Why are Castles?
Castles differ from that other standby of medieval fortifications — city walls — in one crucial way, and that difference sheds a lot of light on their military application.
The walls of Cittadella, Italy (photo by Edoardo Bortoli, CC BY-SA 4.0).
A massive city wall, like the one shown above, has the very clear purpose of limiting access to a city or town. Close the gates, and no one can get in. Try to get in, and we’ll shoot you! The walls are meant to protect the settlement, both its inhabitants as well as its structures and physical wealth.
A castle, on the other hand, has a much smaller footprint than a city. It might only be a few buildings and a courtyard. Indeed, as we’ll see later in the series, the earliest castles (the classic “motte and bailey” design) were relatively small fortifications of earth and timber, capable of being built in a matter of days.
Image of a motte and bailey style castle. This particular one would take much longer than a few days to make, but it’s worth noting that even this “primitive” castle of timber and earth would have been a serious problem for any attacker. (Duncan Grey – Display Board of Huntingdon Hill Motte and Bailey Castle – CC BY-SA 2.0).
Especially if a lord was not in residence, a castle might only have a garrison of a few dozen, a far cry from the walls around urban centers that protected thousands or tens of thousands of lives!
So why bother?
Because, unlike a city wall which is meant to defend everything within it, a castle isn’t built in order to protect a tiny bit of land on top of a hill. Instead (say it with me, class): a castle is built to deny an enemy freedom of movement.
It’s not about what’s inside the walls. It’s about what’s outside the walls.
A castle allows you to control a disproportionately large area of land.
That control matters a great deal, because land was the source of wealth in pre-modern contexts. In societies where 80-95% of the populace were farmers, wealth and power came from controlling arable land. Capital did not derive principally from urban centers — wealthy and valuable as those were.1
Before we go further into how that impacts war and politics, I want to take a moment and dig deeper into why a castle allows its owner to control the land, because it’s something that’s usually glossed over, and understanding this dynamic will have a significant bearing on everything else we talk about here.
The Ugly Nature of Rule
As I’ve explained before, in order to actually rule an area, the ruler needs to have a monopoly on legitimate violence within that area. The emphasis here is on legitimate violence, which is significantly different than just “brute force”; force alone will always be a temporary and unstable method of rule. [You can read this explainer for more on that.] A ruler’s legitimacy allows that monopoly to continue unopposed.
One of the main reasons why a ruler needs that monopoly is that it allows for the collection of resources for use by the state. I’m going to lump all this together under the word “taxes”, but to be clear: in pre-modern societies, “taxes” could include manual labor commitments, payments in kind (in crops, in material, etc.), or in cash.
For all that, the ruler needs his agents to have unfettered access to the country he aims to rule; his tax collectors, law enforcers, merchants, judges, and certainly his lords and military all need to be able to move freely throughout the realm in order to do all the necessary business of maintaining law, order, and the collection of taxes.
Those are the most basic elements of statehood, the most basic mechanism of ordinary, everyday governing.
Castles fit into that system the same as any other governmental or administrative center: it’s a place to collect and store resources, a place for state agents to shelter, a locale for arbitration of justice, a residence for a lord … A castle can be a courthouse, police station, secret service listening post, governor’s mansion, and revenue service office all in one.
And a castle is fortified for much the same reasons that governmental buildings across history have always been fortified.
Even if the majority of a subject populace believes your rule is legitimate — a big if! — then there will still be people who chafe at the collection of taxes and who feel wronged by the administration of justice. Those outliers — if indeed they even are outliers — might try something stupid, like taking back their resources or stabbing your
thugspeace-loving tax collectors. Better to have everything locked up, right?And if the castle is large, and visibly imposing? Well that doesn’t hurt, does it?
That’s the every-day purpose of castles, at least in the sense that on any average Tuesday morning, that’s what the castle is for. That’s what people in the castle are doing. Ruling.
Eric Falden, “What Were Castles Actually For?”, Falden’s Forge, 2025-07-29.
1. There are exceptions, of course, such as thassalocratic polities. But sea-faring societies don’t built castles and are therefore WAY outside the bounds of this discussion.
December 4, 2025
The Swiss vote overwhelmingly against a new wealth tax
As the California government wants to impose a new wealth tax, it’s worth checking how similar schemes are viewed in other jurisdictions. The Swiss voters were given an opportunity to scalp their very richest citizens and permanent residents with a proposed wealth tax, but it went down with 78% voting against it:
“Switzerland on Sunday overwhelmingly rejected a proposed 50% tax on inherited fortunes of 50 million Swiss francs ($62 million) or more, with 78% of votes against the plan, an outcome that even exceeded the two-thirds opposition indicated in polls,” Reuters reported this week.
All Swiss cantons already tax assessed gross worldwide assets, minus debts and with exceptions, making it one of the few countries in the world to retain a wealth tax. But competition among cantons keeps the tax burden relatively low and, as the Tax Foundation notes, “the Swiss wealth tax acts as a substitute for a capital gains tax and an estate tax, which are common in other countries”. The referendum would have imposed an additional and very steep national tax.
This was actually the second recent failed attempt to impose a national wealth tax on inheritances. Seventy-one percent of Swiss voters rejected a 2015 proposal for a 20 percent tax on estates and gifts of over 2 million francs. The revenues would have been earmarked for old-age pensions.
‘Inequality in Opulence is Better than Equality in Poverty’
The 2025 tax scheme openly played to envy. It was targeted at combating “inequality” by seizing half the assets of the rich and allocating proceeds to offset the climate damage they allegedly cause.
Finance Minister Karin Keller-Sutter opposed the proposal, warning that “many wealthy people would simply emigrate to avoid the tax and keep their wealth”. She also pointed out that while all but two of the country’s 26 cantons tax inheritances, “the people have abolished inheritance tax for children and spouses in many cantons”. She added, “I think it is right that what was developed in the nuclear family can be passed on”.
Philosopher Olivier Massin, a professor at the University of Neuchâtel, criticized the motivation driving much of the campaign for the tax. He wrote that “inequality is by nature neither good nor bad” and that envy is the main driver of egalitarianism. “Envy being inglorious, we grimace in indignation, making what is ultimately only the expression of resentment a moral cause.”
Massin added that “inequality in opulence is better than equality in poverty”.
And Switzerland is undoubtedly “opulent” — or, at least, prosperous — with a per capita gross domestic product of $103,669 as compared to $85,809 for the U.S., according to the World Bank. It builds that wealth with a second-place score in the current Index of Economic Freedom (the U.S. is now ranked at 26), suggesting that less government meddling in economic matters is the best way to increase prosperity.
November 26, 2025
The importance of “a bicycle shop in Bermuda” to Mark Carney’s financial affairs
It’s no secret that Prime Minister Mark Carney is a rich man. When he entered politics, he put his financial holdings into a blind trust to satisfy the federal government’s ethical and conflict of interest rules. But through this arrangement, he still owns significant positions in companies whose fortunes can (and are) affected by the actions of his government. On Monday, this was discussed at some length by a Parliamentary committee in Ottawa, as reported on his Substack by Dan Knight:
On November 24, in a basement room of West Block, MPs spent two hours asking a very simple question that everyone in Ottawa is suddenly pretending is complicated:
If Mark Carney gets richer when Brookfield does better, and Brookfield is running big climate and infrastructure funds out of what one MP described as a bicycle shop in Bermuda, how on earth is that not a problem for the Prime Minister of Canada?
The man in the hot seat was Justin Beber, Chief Operating Officer of Brookfield Corporation. His job was to calm everyone down. Instead, under oath, he calmly confirmed just about everything the government would rather you didn’t think about too hard.
He started with the corporate biography. Brookfield, he reminded the committee, is a massive global investor headquartered in Toronto. It has more than 600 direct employees in Canada, more than 15,000 workers in its operating businesses, and it paid over $750 million in federal tax last year, not counting provincial and local taxes. All of that is true. None of it changes the basic conflict: the sitting Prime Minister still has long-term compensation that rises when Brookfield, and certain Brookfield funds, succeed.
Conservative MP Michael Barrett went straight there. He asked Beber whether, when Brookfield’s value increases, the value of stock options and deferred share units also increases. Beber said yes. Then Barrett asked whether that changes if those options and units are placed in a blind trust. Beber said no. It does not. The economic reality is exactly the same: if Brookfield’s share price goes up, those instruments are worth more, whether they are in Mark Carney’s brokerage account or parked with a trustee behind frosted glass.
[…]
Cooper spelled out why it matters. Carney, he said, knows what kind of public policy could improve the success of the fund. The fund’s success determines his future bonus pay. Without knowing who the investors are or all of the fund’s positions, Canadians have no way to see where those incentives may line up — or collide — with the national interest. These are not theoretical conflicts. They are simply invisible ones.
Eventually, after some confusion over terminology, Beber did confirm that Transition Fund I has invested in 20 companies and that their names are listed in the ethics annex. Only one of those firms, Entropy, is in Canada. The rest of the portfolio, and the roster of big-money investors behind it, sits offshore, beyond any serious public scrutiny, while the Prime Minister’s upside rides on how well those bets pay off.
The tax side of the story is just as revealing. Bloc MP Luc Thériault put it bluntly: tax avoidance is not a conspiracy theory, it is a business model so widespread that the OECD and G20 built an entire 15 percent global minimum tax regime to deal with it. He cited Canada Revenue Agency estimates of tens of billions of dollars in lost federal revenue each year, including billions attributable specifically to tax avoidance. He asked Beber whether Brookfield engages in tax avoidance. Beber refused to use the term. “We practice tax planning”, he said, like “any other company”. He repeated that Brookfield pays all taxes that are “due and payable” in the jurisdictions where it operates.
That phrase sounds reassuring until you remember who writes the rules that decide what is “due and payable”, and who benefits when the system can be routed through Bermuda via something that, on paper, looks like a bicycle shop.
[…]
At some point, the pattern becomes impossible to ignore. The Prime Minister of Canada left a giant global investor with standard executive incentives, kept his vested long-term instruments, retained a carried interest in a $15 billion Bermuda-run climate fund that will operate into the 2030s, and knows exactly which sectors that firm is betting on. His government is now pouring public money and regulatory support into many of those same sectors. The firm uses structures justified as “tax transparent” that just happen to run through low-tax jurisdictions, including one address a Conservative MP described as a bicycle shop in Bermuda. The man running the firm’s operations will not say the Prime Minister’s potential upside is small. He will not say the global minimum tax is being met in practice. He will not disclose who the fund’s other investors are.
You do not need to be an expert in securities law to see the conflict. You do not need to be an expert in global taxation to see why a bicycle-shop registration in Bermuda is not about cycling. You just need to watch what they are desperate not to talk about directly: the hard link between public power in Ottawa and private profit offshore, wrapped in legal jargon, buried in annexes, and shielded from sunlight by a blind trust and a lot of very careful answers.
November 22, 2025
Democrats may come to regret their “refuse illegal orders” messaging
Many current and former military folks ridiculed the Democrats for their sudden discovery of the right (and obligation) to refuse illegal orders … which has been part of western military doctrine since the end of World War Two. I poked some fun at them as well, but J.D. Tuccille points out that it’s a weird stance for the party that is always fully in favour of government agents’ maximizing their powers:
I favor government employees defying orders and sabotaging the instruments of the state as much as the next libertarian (well, maybe a little more). But I suspect the Democratic lawmakers urging members of the military and the intelligence community to “refuse illegal orders” haven’t entirely thought through their positions. While their advice is commendable so far as it goes, as officials of a political party known for its expansive view of the role of government their words are likely to come back and bite them on their collective asses. It’s hard to imagine them being so enthusiastic about a reboot of this message directed at the Bureau of Alcohol, Tobacco, Firearms, and Explosives (ATF), Environmental Protection Agency (EPA), and IRS agents under a Democratic administration.
Lawmakers Say: Refuse Illegal Orders
In a video message released this week, Democratic Sens. Elissa Slotkin of Michigan and Mark Kelly of Arizona, and Reps. Chris Deluzio of Pennsylvania, Maggie Goodlander of New Hampshire, Chrissy Houlahan of Pennsylvania, and Jason Crow of Colorado, introduce themselves with emphasis on their past roles in the military and intelligence agencies.
“We want to speak directly to members of the military and the intelligence community,” they say. “We know you are under enormous stress and pressure right now. Americans trust their military, but that trust is at risk. This administration is pitting our uniformed military and intelligence community professionals against American citizens. Like us, you all swore an oath to protect and defend this Constitution. And right now, the threats to our Constitution aren’t just coming from abroad, but from right here at home.”
That’s a nice lead-in. Then we get to the heart of the message: “Our laws are clear. You can refuse illegal orders. You can refuse illegal orders. You must refuse illegal orders. No one has to carry out orders that violate the law or our Constitution.”
Stirring stuff. And accurate. Referencing a Vietnam War-era atrocity, retired General Philip M. Breedlove, former Supreme Allied Commander in Europe, told NewsNation regarding the video, “Since My Lai, the way we have interpreted this is, as a combatant, as a military officer, you are not obligated, not obligated, to carry out an illegal or an immoral order. You simply refuse the order.”
[…]
Take Advice to Refuse Illegal Orders Seriously, and Apply It Universally
So, if we’re to take seriously — and I believe we are well-advised to do so — the six Democratic lawmakers’ advice that “no one has to carry out orders that violate the law or our Constitution,” there are interesting implications for our political culture. That’s because much of what the federal government does on a daily basis flouts constitutional protections and offends human decency.
So, how would Slotkin and Kelly, and Deluzio, Goodlander, Houlahan, and Crow, respond to campaign a few years from now under the next Democratic administration urging ATF and IRS agents, federal regulators, and general workers to refuse orders? How would they treat an attempt to recruit more whistleblowers like Manning and Edward Snowden?
Don’t get me wrong, I think the advice the lawmakers offer is praiseworthy. But I look forward to seeing it applied universally and becoming a permanent feature of our dealings with government. I suspect that likelihood hasn’t occurred to those six legislators, but thanks to them for showing the way.
In counterpoint to my original take on the issue, on the social media site formerly known as Twitter, Cynical Publius expresses his belief that the Democrats are actually encouraging disobedience to legal orders that they happen to dislike:
I’m not sure I’ve ever been angrier at Democrats than I am right now.
As a career Army officer, I take this latest nefarious chicanery from these filthy Congressional Democrat veterans quite personally,
It is loathsome and disgusting. You know, I know, they know and even their brainwashed acolytes know that what they are REALLY doing is encouraging active duty service members to refuse to follow lawful orders under the guise of pretending the orders are “unlawful”.
What these Democrat filth are doing is encouraging a form of military coup where service members get to decide not to do things they disagree with politically by pretending those otherwise lawful things are “unlawful”.
This is the greatest threat to US internal stability since the last time Democrats started a civil war. A military ruled by politics is no military at all. Instead, it is a group of armed thugs akin to the South American military juntas of the 1970s.
I cannot overstate what an extreme threat this situation is to our nation.
This is a precursor to civil war, initiated and deliberately created by traitorous elected officials hiding behind the honor of the uniform they once wore but now disgraced.
I have never been angrier.🤬
October 15, 2025
QotD: Taxes in a zero elasticity world
Walter E. Williams, “Let’s Not Waste a Crisis”, Townhall.com, 2020-05-12.
September 27, 2025
Canada’s supply management cartels benefit “an affluent few, burdening the poorest, and creating needless friction with allies and trading partners”
In Reason, J.D. Tuccille explains to an American audience why Donald Trump has been playing hardball with Canada on trade issues:
President Donald Trump justifies his enthusiasm for prohibitively high tariffs by insisting the U.S. is being “ripped off” by other countries. It’s a strange argument, since people only trade with one another if they see benefit in the deal. But the president is right to complain that other governments impose trade barriers of their own that are often every bit as burdensome as the high taxes Americans pay on imports. If foreign officials honestly wish to restore something like free trade, they should emphasize dropping their own barriers in return for lower U.S. levies. Case in point: Canada, which sends three-quarters of its exports across its southern border but imposes damaging restrictions on imports.
In a February proclamation of trade war on the world, Trump announced, “the United States will no longer tolerate being ripped off” and complained that “our trading partners keep their markets closed to U.S. exports”. The first part of that claim is silly. But the second part has a kernel of truth.
A glimpse at that truth came in June when Trump angrily posted that Canada “has just announced that they are putting a Digital Services Tax on our American Technology Companies” and, as a result, “we are hereby terminating ALL discussions on Trade with Canada”.
The threat had the desired impact. Canada rescinded the tax immediately before it was supposed to take effect. While nominally targeted at all large tech companies, in practice that meant American companies and everybody knew it, since U.S. firms dominate the industry.
But that was only the tip of the iceberg when it comes to Canada’s trade barriers. Also in June, international trade attorney Lawrence Herman, a senior fellow at Canada’s C.D. Howe Institute, bemoaned proposed legislation in the Canadian parliament that he characterized as “yet another regrettable effort to enshrine Canada’s Soviet-style supply management system in the statute books.”
He added, “the bill would prohibit any increase in imports of supply-managed goods – dairy products, eggs and poultry – under current or future trade agreements”.
The legislation about which Herman complained has since become law.
[…]
More skeptically, Fraser Institute senior fellow Fred McMahon notes, “supply management is uniquely Canadian. No other country has such a system. And for good reason. It’s odious policy, favouring an affluent few, burdening the poorest, and creating needless friction with allies and trading partners.”
McMahon elaborates that the supply management process is controlled by agricultural management boards which “employ a variety of tools, including quotas and tariffs, and a large bureaucracy to block international and interprovincial trade and deprive Canadians of choice in dairy, eggs and poultry”.
But as we’ve seen so many times over the years, it disproportionally benefits Quebec, and the Liberals desperately need those Quebec votes to stay in power, so the government would rather destroy the national economy rather than give up on our Stalinist supply management cartels.
September 18, 2025
NYC smokers get most of their cigarettes from the black market
Smokers in New York City pay very high taxes for their nicotine delivery systems, so it shouldn’t have surprised public health officials that many would turn to the black market … but the state and local taxes add so much to the price of a pack of cigarettes that most of the supply now comes from the black market:
“Enjoyin’ a cigarette at busy Time Square, NYC” by Mel Schmidt is licensed under CC BY 2.0 
.
In 2023, New York raised its cigarette excise tax by $1.00 to $5.35 per pack. New York City imposes its own tax of $1.50 per pack, and that’s before you include federal and sales taxes, making for the most expensive smokes in the country. That is, cigarettes are expensive in New York for those who pay those taxes. But state officials were warned that such a high rate would drive consumers to the black market, and that’s exactly what happened. According to recent research, more New Yorkers than ever are turning to tax-evading illicit sources for their nicotine needs.
Taxes Into Good Health — or Not
When the New York excise tax was hiked, the Albany Times-Union noted, “it’s the nation’s highest and brings a pack of cigarettes at many retailers to about $12 … Health advocates hailed the increase, saying it will lead to fewer smokers and cancer deaths. Anti-tax groups, though, predicted it will increase trafficking in illicit untaxed cigarettes in the state.”
Health advocates like taxing vices on the theory that raising taxes simultaneously generates government revenue while escalating prices for allegedly bad things — like cigarettes — out of reach of many consumers. What they rarely consider is that there are other options, such as buying cigarettes smuggled from jurisdictions with lower levies.
“New York has created a cigarette-smuggling empire, and the worst is yet to come,” Todd Nesbit, an economics professor at Ball State University, and Michael LaFaive, of the Mackinac Center for Public Policy, warned even before the 2023 tax increase. “It’s the unavoidable consequence of the state’s decades long history of raising the cigarette tax.”
“If enacted, consumers will go across borders to do their shopping or rely on black-market suppliers,” agreed the Tax Foundation’s Adam Hoffer. “Tax revenues will fall, illicit activities will thrive, and law enforcement spending will need to increase.”
In fact, as Nesbit, LaFaive, and Hoffer emphasized, even before the dollar-per-pack tax hike, more than half of cigarettes sold in the state of New York lacked local tax stamps and were smuggled from elsewhere. Since 2023, illicit dealers appear to have claimed even more market share.
