Quotulatiousness

May 4, 2013

Tax “competition” is a feature, not a bug

Filed under: Government, USA — Tags: , , , — Nicholas @ 08:49

At the Adam Smith Institute blog, Tim Worstall explains that Adam Smith was right about conspiracies to raise prices, especially when we look at governments:

Imagine that you don’t like the taxes that are being imposed upon you. No, go on, just imagine. You as an individual voter don’t actually have much influence over this. Which is why that option of exit is so important. The ability to simply say “The hell with you lot” and leave. We should note that there are very definitely some campaigners who insist that that exit route should be closed off. As, largely, it already is for US citizens. They can leave the US, certainly, but find it very difficult indeed to escape the clutches of the IRS.

Mitchell’s also making a very good Smithian point there. It is indeed true that once businessmen have gathered together for that conspiracy against the public then it is indeed competition from alternative suppliers that is said public’s only method of beating the conspiracy. And so it is with government: we can only preserve a modicum of freedom (and a modest portion of our wallet) if we are indeed free to choose among competing providers of those governmental services.

Which is what much of the conspiracy among governments is all about: seeking to deny us that exit, that protection from their monopoly.

April 27, 2013

The misplaced outrage over Amazon’s tiny tax bill in the UK

Filed under: Books, Britain, Business, Economics, Europe, Media — Tags: , , , , — Nicholas @ 08:40

Tim Worstall explains that the current efforts by various campaigners including Stephen Fry are not only a waste of time and effort, but betray a fundamental misunderstanding of how the EU is set up:

There are several points that could be made. One being that selling to Brits from Luxembourg is not tax dodging, it’s exactly what the EU intends the Single Market should be. A, umm, single market across 27 countries. A second might be that even if we start to whine about UK warehouses, tax is still not due here. Our double taxation treaty with Luxembourg means that such warehouses do not lead to tax being due. And that’s from 1968 or so when Wilson ruled: it’s also a standard part of all double taxation treaties and for good reason.

(For example, the metals trade uses warehouses in Rotterdam as the point at which a contract is concluded. The cut flowers business warehouses in a small village near Schipol. Should Holland get all the tax from the world’s metals and flower businesses? Or should everyone be taxed where they really are, not the warehouses?)

But there’s much worse than this. We’ve had the Margaret Hodges screeching that we’re talking about immoral, not illegal. The TJN and other fools similarly scream about how awful it is that people can do business without paying tax. And it is precisely all of this activism that leads these gentle booksellers to spend their year collecting signatures. To absolutely no avail whatsoever.

For in the year they are complaining about, last year, 2012, Amazon did not make a profit. A $39 million loss in fact according to their accounts. It’s simply not true that “tax dodging” by Amazon is leading to the crucifixtion of the independent book shop. That’s a lie that’s been foisted upon people by the obfuscations of the campaigners.

April 25, 2013

Populist talk on taxes may please the voters (sometimes), but it won’t help the economy

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

In Maclean’s, Stephen Gordon explains why the only kind of tax hikes that seem in any way “popular” are particularly bad if implemented:

Magical thinking might be smart politics, but it’s not very good economics. Here are the two most popular themes:

  1. Higher corporate income taxes. From a political marketing point of view, the appeal of increasing corporate income tax (CIT) rates is obvious: “Hey, I’m not a corporation, so it’s no skin off my nose.” But the economics of CIT rates are very dodgy indeed: higher CIT rates are the most costly way of generating revenue and are most harmful to economic growth. It also turns out that workers and consumers are the ones who ultimately bear the burden of higher CIT rates. (If you start taxing corporate profits, shareholders will eventually move their money to jurisdictions with more competitive rates, reducing the availability of investment capital. In the long-run, that results in lower output and weaker labour demand. More on that here.) But even if you were willing to pay these costs, higher CIT rates don’t generate much in the way of new revenues.
  2. Increased taxes on high earners. While there may be good reasons for wanting to use the personal income tax system to counter recent trends in the concentration of income, policymakers should be under no illusions about how much new revenue taxing the rich will bring in. There simply aren’t that many high earners to tax, and they have access to expert tax planning advice: there is overwhelming evidence showing that those with high incomes can and will respond to higher tax rates by reporting lower taxable income.

April 24, 2013

Tax day is approaching…

Filed under: Cancon, Government, Humour — Tags: — Nicholas @ 13:11

April 16, 2013

The anti-libertarian legacy of Margaret Thatcher

Filed under: Britain, Government, Law, Liberty — Tags: , , , , , , — Nicholas @ 09:31

Sean Gabb explains why Thatcher should not be considered in any way “libertarian”:

She started the transformation of this country into a politically correct police state. Her Government behaved with an almost gloating disregard for constitutional norms. She brought in money laundering laws that have now been extended to a general supervision over our financial dealings. She relaxed the conditions for searches and seizure by the police. She increased the numbers and powers of the police. She weakened trial by jury. She weakened the due process protections of the accused. She gave executive agencies the power to fine and punish without due process. She began the first steps towards total criminalisation of gun possession.

She did not cut government spending. Instead, she allowed the conversion of local government and the lower administration into a system of sinecures for the Enemy Class. She allowed political correctness to take hold in local government. When she did oppose this, it involved giving central government powers of supervision and control useful to a future politically correct government. She extended and tightened the laws constraining free speech about race and immigration.

Her encouragement of enterprise never amounted to more than a liking for big business corporatism. Genuine enterprise was progressively heaped with taxes and regulations that made it hard to do business. Big business, on the other hand, was showered with praise and legal indulgences. Indeed, her privatisation policies were less about introducing competition and choice into public services than in turning public monopolies into corporate monsters pampered by the State with subsidies and favourable regulations — corporate monsters that were expected in return to lavish financial rewards on the political class.

April 14, 2013

Alternet: Ten facts about state lotteries and the poor

Filed under: Cancon, Economics, Government, USA — Tags: , , , — Nicholas @ 11:20

While I don’t object to lotteries existing, I still don’t think governments should be running them, but they’re involved in most states and provinces:

State lotteries amount to a hidden tax on the poor. They eat up about 9 percent of take-home incomes from households making less than $13,000 a year. They siphon $50 billion a year away from local businesses — besides stores where they’re sold. And they are encouraged by state-sponsored ads suggesting everyone can win, win, win!

State lotteries, which once were illegal, now exist in most states. What many people don’t know about lotteries is that they prey on those who can least afford it; most people never win anything big; and 11 states raise more money from lotteries than from corporate taxes. Beyond the moral, mental health or religious debates over gambling, lotteries are another example of how society preys on the poor and the working-class.

Let’s look at why state lotteries do far more harm than good — especially at the bottom of the economic ladder.

[. . .]

4. They hit the poorest the hardest. “Simply put, lotteries take the most from those who can least afford it,” wrote economist Richard Wolff. “Instead of taking those most able to pay (the principle of federal income tax in the U.S.), state leaders use lotteries to disguise a regressive tax that falls on the middle and even more on the poor.” A 2010 study found that households with take-home incomes of less than $13,000 spent on average $645 a year on lottery tickets, which is about 9 percent of their income. The reason people play lotteries varies, but it mixes hopes and dreams with desperation: poorer people see it as a slim chance to radically improve their standard of living.

5. Communities of color, less-educated spend the most. Numerous academic studies have found that non-whites spend much more on lotteries than whites, with one study putting the figure at $998 for African Americans and $210 for whites. Household with incomes under $25,000 spent an average of about $600 a year, while $100,000-plus earners spent about $300 year. People who never graduated from college spent the most, about $700 a year, while graduates spent under $200.

Of course, being Alternet, we have to have at least one of our traditional straw men to knock down:

7. They give the wrong message about solving poverty. Lotteries reinforce libertarian political messages, suggesting that everyone needs to take individual action in response to society’s inequities, even though the government has helped well-connected individuals, businesses and industries become rich for decades. This easy money for states diverts political debate away from society-wide analyses and solutions to what prevents people from moving up the economic ladder. Instead, it pushes individuals in marginal circumstances toward gambling as their hope for gain.

I’m not sure what is “libertarian” about corporate welfare, crony capitalism, and other economic distortions on the part of government to favour certain people over others, but setting aside the slur, this is otherwise a valid point. Encouraging people to take individual action? I don’t see buying a lottery ticket as falling into that category.

April 10, 2013

Despite government denials, the iPod duty is alive and well

Filed under: Bureaucracy, Business, Cancon, Government — Tags: , , , , — Nicholas @ 08:13

Expect to pay more for your iPods and similar devices, says Mike Moffatt in the Globe and Mail:

Last week, I wrote that the federal government’s changes to tariffs in Budget 2013 would result in new import duties on models of MP3 players and three of four models of Apple iPods. The tariff changes involve changing the tariff status of 72 countries, so music devices manufactured in China, Indonesia and Malaysia will pay a 5 to 6 per cent tariff rather than their “preferential” rate of zero, starting in 2015.

The article caused quite a stir, and the government denied it was true. A spokeswoman for Finance Minister Jim Flaherty said the article was wrong. “Music devices like iPods are imported into Canada duty-free under a long-standing special tariff classification from 1987,” she wrote. That classification, which was unaltered by the recent budget, is known by its number: 9948.00.00. (We’ll call it 9948 for short.)

However, a close reading of the relevant document, Tariff Item 9948.00.00 (9948 for short), shows that to qualify for the special classification, the importer must meet strict criteria.

My position that importers cannot meet the requirements of 9948 rests on three straight-forward premises:

1. It appears that sellers of iPods and MP3s are required to collect “end use certificates” from the final consumer on each sale, and be able to present these to the CBSA if audited.

2. The 9948 requirement for “end use certificates” appears to be actively enforced by the CBSA.

3. Retailers cannot reasonably collect these certificates from consumers when they buy an iPod.

These three, put together, make retail sales of iPods and MP3 players ineligible for 9948 and therefore subject to an iPod tariff. What follows is my evidence.

The importer must maintain a database (what Moffatt calls “an iPod registry”) of personal information on the final purchasers of the devices, but there is no matching legal requirement on the consumer to provide this personal information (which would probably violate privacy laws in any other context).

The CBSA’s Memorandum D10-14-51 requires that consumers attest that they will use the iPod in a manner in which it is “physically connected” to a computer (though not necessarily permanently so, according to the memo) and will “enhance the function” of that computer. The consumers must attest that their devices will be “solely used for the purpose for which they were imported.”

If a consumer uses a device in a manner not covered by 9948 during the first four years of ownership, the importer is required to “make a correction to the declaration of tariff classification and pay any applicable duties and taxes.”

This rule is not trivial. CITT Appeal No. AP-2008-023 discusses the need for sellers claiming the tariff reduction (here Code 2101, the predecessor to 9948.00.00) to show that the end consumer is using the goods in the manner described on the certificate.

But there is no practical way an importer could possibly verify and ensure that that the retailer’s customers have not changed how they are using iPods and MP3 players.

April 4, 2013

Harper Conservatives actually love big government … but on the cheap

Filed under: Cancon, Economics, Government — Tags: , , , , , — Nicholas @ 12:49

Stephen Gordon points out that the “small government” rhetoric from Stephen Harper’s Conservatives is so much hot air:

If asked, the Conservatives will tell you that they favour a smaller government that intervenes sparingly in the functioning of the market, and it’s been pretty well-established that a medium- and long-term goal of the Conservative government has been to reduce the share of Canadian GDP that is taxed and spent by the federal government. But lower taxes and lower levels of spending are not the same thing as a smaller government.

Here are the highlights (sic) of the “Strengthening the Competitiveness of the Manufacturing Sector” section of Chapter 3.2 of the budget plan:

[. . .]

  • $920 million to renew the Federal Economic Development Agency for Southern Ontario (FedDev Ontario) for five years, starting on April 1, 2014. Seriously? A slush fund economic development agency for Southern Ontario?
  • $200 million for a new Advanced Manufacturing Fund in Ontario for five years, starting on April 1, 2014, funded from the renewed FedDev Ontario. More pork to be distributed to firms that enjoy the favour of the government.
  • Building on the success of the National Shipbuilding Procurement Strategy, the Government will better ensure that purchases of military equipment create economic opportunities for Canadians by developing key domestic industrial capabilities to help guide procurement, by promoting export opportunities, and by reforming the current procurement process to improve outcomes. The Conservatives can’t even be bothered to sustain the fiction that government procurement should be aimed at obtaining the best value for the taxpayer. Public money is to be spent where politicians want to see public money being spent.

[. . .]

You don’t need a big government to interfere with markets, or to weaken property rights and the rule of law. The decision to forbid shareholders of Potash Corp from selling their holdings to BHP Billiton didn’t cost the federal government a dime. Nor did instructing banks to not offer lower mortgage rates. And then there’s the example of the government’s preference for the clumsy and heavy hand of regulation over more efficient, market-based approaches to reducing greenhouse gas emissions.

I don’t think it’s quite correct to say that the Conservatives want a smaller government. They seem happy to run a government that is as big and dumb as its predecessors — so long as it’s cheap.

March 23, 2013

Human Achievement Hour 2013

Filed under: Economics, Environment, Liberty, Politics — Tags: , , , , — Nicholas @ 00:01

Oh, right. It’s once again time for the Gaia-worshippers to do an hour’s penance for the crime of being alive in an industrialized society. The Competitive Enterprise Institute proposes a different way of using that hour:

On Saturday, March 23 at 8:30pm (local time), some people, businesses and governments around the world will choose to sit in the dark for one hour as a symbolic gesture to take action against climate change. The organizers of Earth Hour say that they [no] longer expect energy use to actually drop during the hour, but instead see it as a way for people to show their commitment to reducing energy use and taking action beyond the hour.

It’s absolutely every person’s right to decide if they want to conserve energy for whatever reason; they are free to sit in the dark as long as they want. However, it should not be their right to impose their beliefs or opinions on others. And that is what is at the heart of the environmentalist movement. While many participants in Earth Hour sincerely want a cleaner environment — a desire most of us share — the environmentalist movement whether implicitly or explicitly seeks to clamp down on human progress by reducing energy consumption whether through regulation and taxation. They want to make fossil fuels, which they see as dirty, more expensive to encourage the use of renewable “greener” energies.

Despite any good intentions, the ultimate result of environmentalist policies is not a healthier, cleaner environment. Instead we will see a population that is sicker and poorer. The only way we achieve technology that is “greener” is by building on older “dirtier” technology. As we make it harder and more expensive for those in the business of creating new technologies, all we do is slow progress and make it that much longer to reach more environmentally friendly solutions.

March 13, 2013

Follow-up on the LAPD’s pickup truck shooting spree

Filed under: Law, Liberty, USA — Tags: , , , , , — Nicholas @ 12:16

Remember this gem of a story from last month? At the time, Jon (my former virtual landlord) strongly suggested I park my Toyota Tacoma in the garage just to avoid being targeted by random police “marksmen”.

Pickup shooting by LAPD

Here’s the follow-up that only makes the story that much more ridiculous:

“LAPD and Galpin Ford wanted [the women] to pose for a photo opportunity and pay income tax on the truck,” the NBC report reads, citing Jonas. “The women no longer want the truck after they were told they needed to fill out a 1099 form for the donation.”

For those of you who don’t know that a 1099 form is, it’s for tax form for “miscellaneous income.”

“You tried to murder the woman, now you’re telling her she can’t have a four-wheel drive, you’re telling her she can’t sell it and you’ve got to be taxed on it?” Jonas said. “How would anyone react to that?”

“Jonas plans on filing a government claim, which is a precursor to any lawsuit filed against a government agency. He said he felt the truck was being touted as a ‘reward or prize’ instead of a sincere gesture by the LAPD,” NBC 4 News notes:

I can’t improve on the comment Jon sent along with this link: “At this rate, I am surprised that the LAPD has not tried to bill the women for the 100+ rounds of ammunition.”

March 3, 2013

California’s retroactive tax grab

Filed under: Business, Government, USA — Tags: , — Nicholas @ 13:03

The state of California seems determined to drive out the remaining businesses that pay taxes. Here’s Wendy McElroy with news of a retroactive change to a small business tax break:

California cannot chase business away fast enough, it seems: high taxes, cap-and-trade, voracious unions, bankrupt cities, and now retroactive taxation.

Shortly before the Christmas holidays and oh so quietly, the California Franchise Tax Board (FTB) rescinded a tax break that dated back to 1993. The Qualified Small Business Stock (QSBS) exclusion allowed small businesses and investors who met certain conditions to exclude or to defer 50 percent of the profits of sold stock from their personal income taxes. The incentive was intended to lure startup companies of under $50 million into the state.

Now those who were ensnared have not only lost that tax break for the future; many are also being taxed retroactively back to 2008. Plus interest. Plus possible penalties.

February 25, 2013

Hollywood’s addiction problem

Filed under: Business, Government, Media, USA — Tags: , , , — Nicholas @ 09:19

It’s not addiction to drugs — although we can be sure there’s more than enough of that — it’s addiction to government subsidies, tax credits, and special privileges not available to ordinary businesses:

With campaign season over, you’re not likely to hear stars bringing up taxes at [the] Academy Awards show. But the tax man ought to come out and take a bow anyway. Of the nine “Best Picture” nominees in 2012, for example, five were filmed on location in states where the production company received financial incentives, including The Help (in Mississippi) and Moneyball (in California). Virginia gave $3.5 million to this year’s Oscar-nominated Lincoln.

Such state incentives are widespread, and often substantial, but they don’t do much to attract jobs. About $1.5 billion in tax credits and exemptions, grants, waived fees and other financial inducements went to the film industry in 2010, according to data analyzed by the Center on Budget and Policy Priorities. Politicians like to offer this largess because they get photo-ops with celebrities, but the economic payoff is minuscule. George Mason University’s Adam Thierer has called this “a growing cronyism fiasco” and noted that the number of states involved skyrocketed to 45 in 2009 from five in 2002.

In its 2012 study “State Film Studies: Not Much Bang For Too Many Bucks,” the Center on Budget and Policy Priorities found that film-related jobs tend to go to out-of-staters who jet in, then leave. “The revenue generated by economic activity induced by film subsidies,” the study notes, “falls far short of the subsidies’ direct costs to the state. To balance its budget, the state must therefore cut spending or raise revenues elsewhere, dampening the subsidies’ positive economic impact.”

February 23, 2013

The DHS paperwork error that resulted in a boat being seized

Filed under: Bureaucracy, Cancon, Government, USA — Tags: , , , , — Nicholas @ 09:15

There are few things more frustrating to deal with than officious bureaucrats with a rule book (and a gun). Here’s an example of how “the rules” matter more than common sense or rationality:

DHS takes documents supplied by the builder and creates a government form that includes basic information about the boat, including the price.

The primary form, prepared by the government, had an error. The price was copied from the invoice, but DHS changed the currency from Canadian to U.S. dollars.

It has language at the bottom with serious sounding statements that the information is true and correct, and a signature block.

I pointed out the error and suggested that we simply change the currency from US $ to CAD $ so that is was correct. Or instead, amend the amount so that it was correct in U.S. dollars.

I thought this was important because I was signing it and swearing that the information, and specifically the price, was correct.

The DHS agent didn’t care about the error and told me to sign the form anyway. “It’s just paperwork, it doesn’t matter,” she said. I declined.

She called another agent and said simply “He won’t sign the form.” I asked to speak to that agent to give them a more complete picture of the situation. She wouldn’t allow that.

Then she seized the boat. As in, demanded that we get off the boat, demanded the keys and took physical control of it.

What struck me the most about the situation is how excited she got about seizing the boat. Like she was just itching for something like this to happen. This was a very happy day for her.

February 22, 2013

Andrew Coyne: Liberals still trying to avoid serious reforms

Filed under: Cancon, Media, Politics — Tags: , , , , , — Nicholas @ 00:01

Andrew Coyne tries to explain why the Liberal Party of Canada increasingly looks like it will embrace Justin Trudeau as its new saviour leader.

Perhaps it was an impossible thing to expect. Perhaps it was even unfair. To demand that the Liberal Party of Canada, after a century and more as the party of power, should reinvent itself as a party of ideas; that it should, after a string of ever-worse election results culminating in the worst thumping in its history, ask itself some searching questions, including whether Canada still needed a Liberal Party, and if so on what basis — perhaps it was all too much to ask.

Because, on the evidence, the party isn’t capable of it. Or perhaps it simply doesn’t want to. Either it does not believe such a process is necessary. Or it does, but can’t bear it. Whatever may be the case, nearly two years after that catastrophic election, the party shows no interest in reinventing itself, still less in any healthy existential introspection. The policy conference that was to be the occasion for this came and went; the months that followed were similarly void.

[. . .]

Because the party seems determined to give itself to Justin Trudeau, come what may. Now, it is true that Trudeau has himself offered up a policy morsel or two. He favours liberalizing the drug laws and accepting takeovers by foreign state-owned enterprises in the oil sands. He opposes tightening Quebec’s language laws and boutique corporate tax credits. He was for the long-gun registry, but is against bringing it back.

But beyond that? He has his father’s views on the Quebec question, without doubt. But the only broad statement of his economic policy we have is his unswerving devotion to “the middle class.” And while the same criticism could be made of the other candidates — a grab bag of positions does not add up to a philosophy, still less a raison d’etre for the party — only Trudeau has made a virtue of his opacity. To take more forthright positions now, he argues, would prejudge the sorts of grassroots consultations he intends to hold — after he is leader.

February 9, 2013

QotD: When God sticks his nose into public health and taxation issues

Filed under: Britain, Food, Health, Humour, Quotations, Religion — Tags: , , , — Nicholas @ 00:01

It is not an original thought to say that public health crusaders often resemble religious zealots, but seldom is the comparison more literal than in the case of Mike Rayner, director of the British Heart Foundation Health Promotion Research Group.

[. . .]

So far, so mundane. Another illiberal battler against the free market with a heightened sense of his own importance and his nose in the trough. The only point of interest is that Mr Raynor is a Church of England priest who is guided by voices.

    In all of this I see a sacred dimension. You may not believe that I have heard God aright but I think God is calling me to work towards the introduction of soft-drink taxes in this country and I am looking forward to the day when General Synod debates the ethical issues surrounding this type of tax rather than some of the other issues that august body seems obsessed by.

Golly. Where to begin? On a theological note, I do wonder whether Jesus would really be in favour of a deeply regressive stealth tax that would take from the poor to give to the rich. Perhaps the reason the General Synod does not debate tax policy is because they recall the old “render under to Caesar…” message and realise that it’s none of their business.

If we weren’t already sceptical about the documents coming from Mr Rayner’s team of would-be policy-makers, the fact that its director believes that God has told him to bring about a fat tax in this land should be enough to make us suspect that a tiny bit of research bias might have crept into his work. Considering that the Almighty has approved of the policy, what are the chances of his loyal servant producing evidence that would question its efficacy?

Christopher Snowdon, “Fat tax campaigner: ‘God told me to do it'”, Velvet Glove, Iron Fist, 2012-05-21

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