A Saner Way to Collect Taxes

Tax day is always a good time to get everyone's attention momentarily so you can present ideas for a better way to collect taxes. For purposes of this post we won't be addressing what the legitimate use of those tax dollars should be.

 Dan Mitchell of the Cato Institute has made several videos in the past to extol the virtues of eliminating our insanely complex and distortional tax code and replacing it with a sane alternative.

Whatever I could write about this subject would be just a tad less understandable and compelling than his presentation so I'll let him do the explaining. (Okay, it's more than a tad less, but I like to delude myself into thinking I have something to add.)

Dan's post today on his own blog, International Liberty, is well worth your time. It has a trillion great links to interesting stuff about how we are getting screwed. (A trillion? Why yes, I use govt. accounting methods.)       -- Grant Davies

 

Congratulations, It's a Boy! - A Gay Man Adopts a Son

Editors note:

For a number of reasons most of the readers of this blog are familiar with Dan Mitchell. One reason is because we frequently feature his videos and essays here. Another is because he is on TV almost daily engaging in debate with some leftist economist or being interviewed about tax policy or the like. 

The most likely reason is that he is a guest contributor to this blog and most of you wouldn't dream of missing a post on this site. 

Okay, as usual, I engaged in some creative description (deception?) to make this blog seem more impressive than it actually is. The truth is Dan has given us express permission to republish his posts whenever we want. So we do that on a semi-regular basis. I try not to post too many of them because they always make my posts seem amateurish by comparison.

Dan's offerings are always interesting and educational but sometimes he hits it out of the park. The following essay is one of those home runs. Be sure to check out his blog, International Liberty. You'll be more well informed and generally happier if you do.

A Clever Example of Tax Avoidance, but a Quandary for Leftists and Social Conservatives

June 29, 2013 by Dan Mitchell

I generally believe that social conservatives and libertarians are natural allies. As I wrote last year, this is “because there is wide and deep agreement on the principle of individual responsibility. They may focus on different ill effects, but both camps understand that big government is a threat to a virtuous and productive citizenry.”

I even promoted a “Fusionist” principle based on a very good column by Tim Carney, and I suspect a large majority of libertarians and social conservatives would agree with the statement.

But that doesn’t mean social conservatives and libertarians are the same. There’s some fascinating research on the underlying differences between people of different ideologies, and I suspect the following story might be an example of where the two camps might diverge.

But notice I wrote “might” rather than “will.” I’ll be very curious to see how various readers react to this story about a gay couple that is taking an unusual step to minimize an unfair and punitive tax imposed by the government of Pennsylvania.

John met Gregory at a gay bar in Pittsburgh nearly 45 years ago and immediately fell in love. …Now, as lifelong partners facing the financial and emotional insecurities of old age, they have legally changed their relationship and are father and son — John, 65, has adopted Gregory, 73. The couple was worried about Pennsylvania’s inheritance tax. “If we just live together and Gregory willed me his assets and property and anything else, I would be liable for a 15 percent tax on the value of the estate,” said John. “By adoption, that decreases to 4 percent. It’s a huge difference.” …the couple had considered marrying in another state, but because their primary residence was in Pennsylvania, which does not recognize same-sex marriage, they would still be subjected to the inheritance law.

The Judge who approved the adoption obviously wasn’t too troubled by this unusual method of tax avoidance.

The judge did turn to John and said, “I am really curious, why are you adopting [Gregory]?” “I said, ‘Because it’s our only legal option to protect ourselves from Pennsylvania’s inheritance taxes,’” said John. “He got it immediately.” The judge agreed to sign the adoption papers on the spot and handed it to the clerk. Then he turned and looked at John, “Congratulations, it’s a boy.”

So what’s your take on this issue? For some groups, it’s easy to predict how they’ll react to this story.

1. If you have the statist mindset of England’s political elite or if you work at a bureaucracy such as the OECD, you’ll think this is morally wrong. Not because you object to homosexuality, but because you think tax avoidance is very bad and you believe the state should have more money.

2. If you’re a libertarian, you’re cheering for John and Gregory. Even if you don’t personally approve of homosexuality, you don’t think the state should interfere with the private actions of consenting adults and you like the idea of people keeping more of the money they earn.

3. If you’re a public finance economist, you think any form of death tax is a very perverse form of double taxation and you like just about anything that reduces this onerous penalty on saving and investment.

But there are some groups that will be conflicted.

1. Social conservatives don’t like big government and bad tax policy, but they also don’t approve of homosexuality. And, in this case, it’s now technically incestuous homosexuality! If I had to guess, most social conservatives will argue that the court should not have granted the adoption. We’ll see if there are some good comments on this post.

2. Leftists also will be conflicted. They like the death tax and they want the government to have more money, but they also believe in identity politics and wouldn’t want to offend one of their constituent groups.  I’m guessing identity politics would trump greed, but I suspect their ideal approach would be to tax all inheritances at 15 percent.

In my fantasy world, needless to say, there’s no death tax and the entire issue disappears.

Late Night Talkers Take Aim at Obama and Other Statists

The following collection of jokes is republished with the permission of International Liberty. There are some really funny (or sad, if you choose) jokes about the President. There are also a few about other people who don't know anything about the current tri-fecta of scandals.

May 25, 2013 by Dan Mitchell

I’ve been sharing one-liners from the late-night talk shows for a long time, mostly because I enjoy mocking politicians (and also because the folks at News-max are very good at compiling them).

So I think I have at least a vague sense of where they are coming from. Well, ever since Jay Leno announced that he’s retiring, it sure seems like his jokes have veered in an anti-Obama direction.

Enjoy his latest, as well as contributions from others.

Jay Leno

Time magazine found a picture of President Obama at his high school prom back in 1979. Let me tell you how long ago that was. Back then, Obama had to ask a girl for her phone number. He couldn’t illegally obtain it through the Justice Department.

It is not looking good for President Obama. Today, his teleprompter took the Fifth. In fact, the White House has changed its slogan from “Yes, we can” to “No, I can’t remember.”

The latest scandal in Washington, of course, is raising questions about the IRS. You know, I have a question. Why is it called the Internal Revenue Service? How is having your money confiscated a service?

A Democratic congressman said that he worries that the IRS scandal might have a chilling effect on the IRS and that they might be afraid to audit people. So finally some good is coming out of all of this.

White House officials continue to insist that President Obama knew nothing about the IRS scandal until we all heard about it in the news last week. They said because there was an investigation under way, it would have been inappropriate to tell him. And besides, Obama was too busy not knowing anything about Benghazi.

Anthony Weiner has formally announced he is running for mayor of New York City. He posted a video announcing it just after midnight — and traditionally, being online in the middle of the night has always worked so well for Mr. Weiner.

President Obama gave the commencement address at Morehouse College over the weekend. Great speech, very inspiring. He told the young graduates their future is bright — unless, of course, they want jobs.

The White House admitted President Obama’s chief of staff had advance warning that the IRS was targeting conservative groups. President Obama says the first time he heard about the IRS and AP scandals was from the media. See, that’s why President Obama holds press conferences. It’s not to explain what’s going on. It’s to find out what’s going on.

These White House scandals are not going away any time soon. I’ll tell you how bad it’s looking for President Obama: People in Kenya are now saying he’s 100 percent American.

This week will mark the 37th time House Republicans have tried to repeal Obamacare. If Republicans really wanted to do away with Obamacare they should just endorse it as a conservative non-profit and let the IRS take it down.

President Obama announced the appointment of a new acting commissioner of the IRS — the other guy was fired. See, they’re called “acting commissioner” because you have to act like the scandal doesn’t involve the White House.

A lot of critics are now comparing President Obama to President Nixon. The good news for Obama? At least he’s no longer being compared to President Carter.

This week marks the 40th anniversary of the Watergate hearings. For those of you too young to remember, back then the administration had an enemies list. They were spying on reporters, and they used the IRS to harass groups they didn’t like. Thank God those days are gone forever.

A lot of critics are comparing President Obama to President Richard Nixon, which is unfair. Nixon’s unemployment rate was only 5 percent.

Today the White House unveiled its latest high-tech weapon: the IRS audit.

I love what IRS commissioner Steve Miller said today about this whole targeting conservative groups thing. He said, “Mistakes were made, but they were in no way made with a political or partisan motivation.” Yeah, “Mistakes were made” — try saying THAT during your next IRS audit.

David Letterman

I feel bad for Barack Obama. He’s got the Benghazi scandal, the IRS scandal, and the FBI wiretapping phones. The president is in so much trouble politically, he’s thinking about killing bin Laden again.

Have you folks been paying attention to what’s going on in Washington? In a matter of six weeks we have three big scandals, and it looks like President Obama and all his buddies in the White House may go to prison. Finally, some good news for the Romney campaign.

People always say this to me: “Hey, Letterman,” they say. “Why don’t you make jokes about Obama?” All right, I’ll tell you why. I don’t make jokes about him. Because I don’t want the FBI tapping my phone, that’s why.

Conan

A new international poll finds that the least popular country in the world is Iran. After hearing this, North Korea said, “What do we have to do?”

During a Senate hearing yesterday, Senator John McCain said it was too hard to always have to update apps on his iPhone. No one has the heart to tell him the device he was holding was a garage door opener.

President Obama is in a lot of hot water lately. Despite the scandals, 53 percent of Americans say they approve of the job he’s doing. The other 47 percent are being audited.

A new report just came out. It says someone close to the president knew about the IRS scandal and kept his mouth shut. In other words, we can rule out Joe Biden.

In a new interview, Joe Biden says he spends four or five hours every day with President Obama. In response, Obama said hiring that Obama impersonator was the best decision he’s ever made.

Since President Obama took office, the Democratic Party has lost nine governorships, 56 members of Congress, and two Senate seats. In his defense, Obama said, “Well, I did promise change.”

Jimmy Fallon

Time magazine just released a picture of a 17-year-old President Obama with his prom date. They would’ve published a picture of Joe Biden with his prom date, but his mom didn’t want to be photographed.

A woman in New Jersey just found her missing dog after she grilled pork in her backyard and he came home because of the smell. Unfortunately, he was immediately shoved out of the way by Governor Chris Christie.

Vice President Joe Biden met with two undocumented immigrants this week to promote the new immigration bill. When they learned they had to sit down with Biden, they went ahead and deported themselves.

These scandals at the White House are just getting worse. It turns out that President Obama’s chief of staff knew about the scandal at the IRS three weeks before the president found out. Obama was like, “Anything else you guys aren’t telling me?” And Joe Biden was like, “Uh . . . I broke the copier.”

Eagles’ offensive lineman Evan Mathis posted a picture on Instagram that shows him relieving himself on an IRS building with a caption that says, “Audit this!” Or as the IRS said, “OK, see you tomorrow at noon.”

President Obama is not having a good week. With three scandals shaking the White House, they’re saying this is one of the worst weeks of Obama’s presidency. Obama was like, “How could things get worse?” And Joe Biden was like, “You rang?”

It was just revealed that the Department of Justice secretly recorded the phone calls of AP journalists for two months. Obama promised reporters that the incident will be immediately investigated — by the Department of Justice.

Craig Feruson

The IRS has a new boss after it came out they unfairly targeted tea party groups. The president says the new IRS chief is not only good with numbers, but he has more integrity than the last guy. The new guy is Bernie Madoff.

Let's Party Like It's 2006

Editors note: The following post is republished here with the express permission of the author, Dan Mitchell, who blogs at the excellent site "International Liberty" and who is featured here on a regular basis. People who do not follow his blog on a regular basis are missing out.

Apparently Learning Nothing from the Fannie Mae-Freddie Mac Disaster, the Obama Administration Wants to Subsidize Banks to Make More Dodgy Loans

“Let’s party like it’s 2006!”

 by Dan Mitchell

Let’s assume you didn’t understand how a garbage disposal worked and, for whatever reason, you decided to stick your arm in one and turn it on. You would do some serious injury to your hand.

The rest of us would wonder what motivated you to stick your arm down the drain in the first place, but we would feel sympathy because you didn’t realize bad things would happen. But if you then told us that you were planning to do the same thing tomorrow, we would think you were crazy. Didn’t you learn anything, we would ask?

Seems like a preposterous scenario, but something very similar is now happening in Washington. The Obama Administration is proposing to once again put the economy at risk by subsidizing banks to give mortgages to people with poor credit.

Even though we’re still dealing with the economic and fiscal damage caused by the last episode of government housing subsidies!

Here are some of the unbelievable details from a report in the Washington Post.

The Obama administration is engaged in a broad push to make more home loans available to people with weaker credit…officials say they are working to get banks to lend to a wider range of borrowers by taking advantage of taxpayer-backed programs — including those offered by the Federal Housing Administration — that insure home loans against default. Housing officials are urging the Justice Department to provide assurances to banks, which have become increasingly cautious, that they will not face legal or financial recriminations if they make loans to riskier borrowers who meet government standards but later default.

Brings to mind the famous saying from George Santayana that, “Those who cannot remember the past are condemned to repeat it.”

But what’s especially amazing – and distressing – about this latest scheme is that “the past” was only a couple of years ago. Or, to recall my odd analogy, one of our hands is still mangled and bleeding and we’re thinking about putting our other hand in the disposal.

Some people understand this is a nutty idea.

…critics say encouraging banks to lend as broadly as the administration hopes will sow the seeds of another housing disaster and endanger taxpayer dollars. “If that were to come to pass, that would open the floodgates to highly excessive risk and would send us right back on the same path we were just trying to recover from,” said Ed Pinto, a resident fellow at the American Enterprise Institute.

What’s also discouraging is that the government already is deeply involved in the housing market – even though this is an area where there is no legitimate role for the federal intervention.

Deciding which borrowers get loans might seem like something that should be left up to the private market. But since the financial crisis in 2008, the government has shaped most of the housing market, insuring between 80 percent and 90 percent of all new loans, according to the industry publication Inside Mortgage Finance. It has done so primarily through the Federal Housing Administration, which is part of the executive branch, and taxpayer-backed mortgage giants Fannie Mae and Freddie Mac, run by an independent regulator.

So I guess the goal is to have taxpayers on the hook for 100 percent of loans. “Don’t worry, it’s not our money”
Anybody want to guess whether this will end well?

By the way, this is bad policy even if we somehow avoid a new bubble and big taxpayer losses. Even in a”best case” scenario, the federal government will be distorting the allocation of capital by discouraging business investment and subsidizing residential real estate.

And as shown in this powerful chart, that will have adverse consequences for wages and living standards.
The part of the article that most nauseated me was a quote from the head bureaucrat at the Federal Housing Administration.

“My view is that there are lots of creditworthy borrowers that are below 720 or 700 — all the way down the credit-score spectrum,” Galante said. “It’s important you look at the totality of that borrower’s ability to pay.”

Gee, isn’t that nice that Ms. Galante thinks there are lots of borrowers with good “totality” measures? But here’s an interesting concept. Why doesn’t she put her money at risk instead of making me the involuntary guarantor on these dodgy loans?

I’ve already said on TV that we should dump Fannie Mae and Freddie Mac in the Potomac River. And I’ve argued that the entire Department of Housing and Urban Development should be razed to the ground. But perhaps this cartoon best shows the consequences of the Obama Administration’s new subsidy scheme.

P.S. We also should get rid of housing preference in the tax code. Our economy should cater to the underlying preferences of consumers, not the electoral interests of politicians.

Mickelson Shrugged

By Grant Davies

Yesterday I made a comment on Facebook and Twitter that  "Mickelson Shrugged." I was referring to Phil's thinking aloud about how he would respond to the new tax rates in his home state of  California  that are aimed at guys like him and his family.

Some are now reporting that he is sorry he spilled the beans on his ruminations. Notwithstanding that possible regret on going public before he decided what, if anything, to do, he is now the focus point for discussions on the "Laffer Curve."

Despite what some people say, the "Laffer Curve" merely explains that humans respond to different tax rates in ways that aren't always the same as those imposing the taxes have anticipated. It's a simple concept that nevertheless doesn't fit the world view of those who try to advance the idea that small groups of elite people who have political power should be in charge of the wealth created by others. That group has had much success in convincing economic illiterates that the "Curve" is something else.

In the interest of clarity, here is a look at what might happen to states like California now that they have convinced many people to vote for the immoral proposition that tax rates for some high earners should be higher to allow people like themselves to pay at a lower rate. Of course the explanation comes to us from Dan Mitchell at International Liberty where many economic lessons are explained in a way that almost  anyone can understand.

Many of you may already visit that site on a regular basis so you might wonder why I keep touting it and Dan's great work. The reason is that this site is visited daily by many people who are not regular readers and who land on this site for all kinds of reasons. They hail from all over the globe. It is my hope that those of them who have a taste for freedom will also be exposed to the explanations of why, despite any shortcomings it may have, freedom is the best path to a better society.

To sum it up, I'll paraphrase the caption of a recent cartoon about new businesses in the Golden State.

If someone wants to escape the discrimination inherent with the new taxes on high incomes in California there are several routes they can take. But all of them lead out of California.

The Current Tax Picture Explained - Warning, Very Graphic

I have spent a lot of time over the last few years promoting Dan Mitchell's blog, International Liberty. If anyone who visited there was disappointed, I apologize. I'm guessing that won't be necessary for most who are regular readers of this site.

It's a terrific source of information and informed opinion from a guy who is as amusing as he is enlightening. Of course the opinions are expressed from a libertarian perspective, but what else would you expect from  this blog? It is, after all, about freedom issues.

So here is a picture I swiped from his blog. Warning: the image is graphic and may be disturbing to some people. (Particularly tax accountants, several of whom I count among my friends.)

The post Dan wrote is excellent as usual and I recommend you read it here. The basic theme is about the IRS taxpayer "advocates" and what they are actually advocating. But I couldn't resist posting the picture because I believe that bigger government and more regulations equal less freedom, which is the basic theme of this blog.

Editors note-- In the short time this post has been published this site has been visited by the Justice Dept. and the IRS. Rather odd, I think.

Deck the Halls with Macro Follies

With all the recent stories of people stealing Christmas gifts;

• the theft of the baby Jesus figure from the nativity scene,
• the men who followed the UPS truck to steal the Christmas packages that were being delivered,
• and the thief who stole all the donated gifts from the church,

I thought I would join in the fun and steal another video from Dan Mitchell and give it to all of you for Christmas. That clears up my list!

So here is the great vid full of wonderful songs for the holidays that I carted away from his site. They are about my favorite subject. You guessed it... Keynesian economics!

Merry Christmas!

Question of the Week: Why Do You Hate Republicans?”

If I was a regular reader of this blog (and I guess I am since I have to re-read this drivel multiple times while writing it), I would wonder, "why the hell am I stopping here since this guy so regularly republishes and otherwise swipes all of the stuff Dan Mitchell posts on his blog?" "Why don't I just go to Mitchell's blog myself?"

It's an excellent question. The answer is, you could probably save a couple of clicks and go right there. After all, that's what I do. And no, I don't have a man-crush on Dan. It's just that he writes better than I do and is a PHD economist. (Oh yeah, it's also that he is one of the very few who allows me to republish his work.)

Having said that, you are here now, so here comes a post of his that really hit home. I have felt that some of my friends wanted to ask me the same question as his readers are asking him all the time. Lots of them still think this site is about politics.

Actually, politics is only a byproduct of the message I feel compelled to try to spread. In my case that compulsion is more of a mental disorder than a realistic calling. But I digress.

Question of the Week: “Dan, Why Do You Hate Republicans?”

By Dan Mitchell

I get several emails per week asking my view on various topics and many of the questions raise very interesting issues.

So I’ve decided to start a new feature. Every weekend, I will endeavor to answer one question.
My first chore is to explain why I hate Republicans, and as you can see here and here, there’s certainly ample reason to think I hold GOPers in low esteem.

The actual question, though, is:

You seem to be more critical of Republicans than Democrats and you went out of your way to attack Romney. Doesn’t that play into the hands of Obama?

The answer is yes and no. I don’t mean to sound like a politician, but I view my job as providing nonpartisan analysis on public policy issues. That means I criticize the statist schemes of the folks in Washington, regardless of whether the politicians have a “D” or an “R” at the end of their names. To be fair, I’m probably a bit harder on Republicans, but only because they’re the ones who often pretend that they are on my side.

And sometimes they are on my side. My two favorite presidents are Reagan and Coolidge, and I have great admiration for those few politicians – such as Ron Paul – who almost always do the right thing.

But I also have discovered that bad Republicans usually do more damage than Democrats. Nixon was one of the most statist presidents of my lifetime, and Bush 41 and Bush 43 were almost as bad.

And even the politicians I’m willing to praise, including Ron Paul, sometimes do the wrong thing. And as much as I praise Reagan, he had some huge mistakes, such as the catastrophic health insurance program.

My simple rule of thumb is I will support a politicians who, in my estimation, will be a net plus for liberty. So notwithstanding my reputation for being a libertarian ideologue, I have a very practical approach to politics.

That’s the good news. The bad news is that it’s rather disappointing that so few Republicans satisfy that simple test.

But now let’s return to the question. Doesn’t that view play into the hands of Obama?

 As I said, yes and no. I want to maximize liberty (or minimize statism) in the long run. So if I have a choice between a big-government Republican and big-government Democrat, I sometimes think we’re better off if the Democrat prevails.

Jimmy Carter, for instance, probably wasn’t that much worse than Gerald Ford. And he paved the way for Reagan. And Bill Clinton, in retrospect, was a much better choice than Bush 41. And he paved the way for the GOP landslide in 1994.

So the question before us today is whether Barack Obama is paving the way for a good Republican…or whether he’s a Lyndon Johnson paving the way for a Richard Nixon.


Editors note..Dan blogs at International Liberty. You should visit there often.

This Thanksgiving, Eat the Rich

Cartoons compliments of the irrepressible Dan Mitchell. See a few more here. 

Good News For Business Due to the Election

My friend "TJ" was kind enough to send me an email pointing out some good news in the stock market yesterday. As the prices melted down over three hundred points on the day after the election results were announced, he noticed that the price of one stock was moving higher. The shares which were going up were those of....drum roll....Smith and Wesson!

We shared an on-line laugh over the story. We both have a "different" sense of humor I guess. But when our friend Dan Mitchell of The Cato Institute, wrote the following piece on his blog, International Liberty today, I knew I had to share it.

Like much of what Dan writes, it's funny as hell as well as informative. So I reprint it here today so you can enjoy it too, and maybe pass it along to your friends. And as an extra treat I have included a video taken from his site as well. It's freakin' hilarious. At least to me, since I have this "different" sense of humor. Be sure to watch it. If you laugh, you might be "different" too.


An IQ Test for Criminals and Liberals

November 8, 2012 by Dan Mitchell

A lot of people say Obama is anti-business, but there’s one part of the American economy that is delighted that he got reelected.

No, I’m not talking about bankruptcy lawyers or corrupt lobbyists, though those would be good guesses.

The real winners from Obama’s re-election are America’s gun manufacturers and gun sellers.

Not that I’ve looked at any data. I’m just basing this on the comments I’ve heard over the past few years and the up-tick in such comments in the past 36 hours.

But I’m quite confident that the overall firearms industry has profited from Obama’s tenure.

Anyway, the great economist Frederic Bastiat teaches us to look at both direct and indirect effects (or, as he put it, the “seen” and “unseen”), so I want to highlight a disadvantaged group that will suffer as a result of the Obama-induced increase in gun sales.

Yes, I’m talking about criminals.

To understand the point I’m trying to make, we’re going to do a thought experiment.

Start by closing your eyes and thinking about someone you know who has worked hard, saved some money, bought a nice house, and filled that house with nice things for the family to enjoy.

Now tell yourself, “I want those things as well.”

But you also think, “Damned if I’m going to wake up early every day like that chump and bust my rear end to earn a good life.”

Instead, you decide it’s okay to take things that don’t belong to you, even if it involves some coercion.

So what’s your next step?

No, this isn’t a thought experiment about voting for Obama. Besides, the election is over.

Close your eyes again and think about how you would obtain things that don’t belong to you and without using the government as the middleman.

What would you do? Well, you might beg the person to give you things.

But that might be a bit awkward or demeaning, and the person might say no.

That leaves burglary as your only option. Sort of a private sector version of income redistribution.

Now we get to the key point in our thought experiment.

You sneak up to the house with the nice things and you suddenly see a sign.

Here’s a quiz. What do you do after seeing this sign?

a. break into the house because you once heard a politician or journalist assert that gun ownership doesn’t deter crime?

b. decide after a bit of reflection about potential costs and benefits that it might be more prudent to find another house to rob?

If you need some help with the answer, think about the meaning of this cartoon.

And if you still don’t comprehend, then congratulations. You deserve a starring role in this video.

 

According to an Online Survey, Gary Johnson Is the Presidential Candidate Closest to My Views

 By Dan Mitchell

About one year ago, I took an online quiz put together by the folks at Reason and discovered that Ron Paul was closest to my views.

Not that I was terribly surprised, though I confess that I don’t remember if Gary Johnson was part of the quiz. And, if so, whether there were any differences between him and Ron Paul.

Speaking of Gary Johnson, I just took a quiz at the ISideWith website and it tells me that Gary Johnson shares 97 percent of my views.

That’s not a big shock, but I was surprised that the poll says I’m more Republican than Libertarian.

Methinks the people who put together the poll must be high on crystal meth. Yes, I’m probably a bit more conservative than the average libertarian on issues like terrorism and immigration, but I’m a far, far stronger advocate of limited government than the average GOPer.

But I gather the poll probably matches your views with the rhetoric of various candidates and parties, not their actual records.

And the gap between Republican rhetoric and Republican performance probably explains why just about every prominent libertarian is ignoring the GOP and voting for Gary Johnson, according to this survey by Reason. Unless, of course, they think voting is a waste of time.

P.S. In the for-what-it’s-worth department, the ISideWith people report that Gary Johnson’s views attract majority or plurality support from voters in South Carolina, Georgia, Florida, Alabama, Mississippi, Louisiana, Oklahoma, Arkansas, Texas, Arizona, Utah, Idaho, and Nevada.

P.P.S. Mitt Romney’s views don’t have majority support in any state.

P.P.P.S. Since the United States is supposed to be a constitutional republic rather than a majoritarian democracy, I don’t like any group of voters having the power to muck up my life.

Dan Mitchell is a senior fellow at the Cato Institute. He blogs at International Liberty. His posts are republished here from time to time with his express permission. He gives this site a touch of class.

Does The Ryan Choice Impact the Election?

By Dan Mitchell

The honest answer is that it probably means nothing. I don’t think there’s been an election in my lifetime that was impacted by the second person on a presidential ticket.

And a quick look at Intrade.com shows that Ryan’s selection hasn’t (at least yet) moved the needle. Obama is still in the high 50s.

Moreover, the person who becomes Vice President usually plays only a minor role in Administration policy.

With those caveats out of the way, the Ryan pick is mostly good news.

Here are the reasons why I’m happy.

• I think Ryan genuinely believes in small government, low tax rates, and free markets. Heck, he’s even read Ayn Rand, and is willing to admit that he likes her writings.
• Ryan put together a good budget and got the Republican Party to rally around the plan – a remarkable achievement considering that the same GOPers had just spent 8 years supporting the irresponsible fiscal policies of the Bush Administration.
• He understands that not all entitlement reform is created equal. Instead of supporting means-testing (which produces implicit higher marginal tax rates) and unsustainable price controls, Ryan got his colleagues to support Medicaid block grants and premium support (or vouchers) for Medicare.
• Ryan is a proponent of the flat tax and can competently discuss not only the importance of low tax rates, but also why double taxation is misguided and why it’s wrong to use the tax code to pick winners and losers.

Here are two reasons why I’m worried.

• Both Romney and Ryan are somewhat sympathetic to a value-added tax. My worst-case scenario is they win the election, but then can’t get a good budget approved because of some squishy Republican senators who put self interest above national interest. Romney and Ryan then decide that this European-style national sales tax is the only way – on paper – of making the budget balance. In reality, of course, we’ll suffer the same fate as Europe since the VAT revenues will be used to finance ever-larger government.
• Ryan has some very bad votes in his past, including support for TARP, the auto bailout, the no-bureaucrat-left-behind education legislation, and the reckless Medicare prescription drug entitlement. Everyone says to ignore those votes because Ryan knew he was voting the wrong way, but if he’s already made some deliberately bad decisions for political reasons, what’s to stop him from making more deliberately bad decisions for political reasons?

But as I said above, don’t read too much into Ryan’s selection. if Republicans win, Romney will be the one calling the shots.

Though this does give Ryan a big advantage the next time there’s an open contest for the GOP nomination – either 2016 or 2020.

P.S. I suspect putting Ryan on the ticket will shift Wisconsin into the GOP column. Based on my last prediction, that would be enough to defeat Obama. But I’ll have to contemplate whether the pick hurts Romney’s chances in another state. You’ll have to wait until September 6 for my updated election prediction.

P.P.S. For those who care about politics, some are saying that selecting Ryan was risky because it gives Obama and his allies an opportunity to demagogue the GOP ticket about entitlement reform. I disagree. Even if Romney picked Nancy Pelosi, that demagoguery was going to happen. Heck, they’ve already accused Romney of causing a woman’s death, so I hardly think they’ll be bashful about throwing around other accusations.

Dan Mitchell is a senior fellow at the Cato Institute. He blogs at International Liberty and this post is republished here with his express permission.

Why People Don't Save Enough

Recent developments caused by the Congress, the President, and the Supreme Court may have changed things for the country in a fundamental way. Having said that, some things never change.

The laws of economics are such things. And since the study of economics is fundamentally about how people respond to different stimuli and the choices they make because of them, a discussion about unchangeable things is appropriate now.

The following TV exchange took place recently and our friend Dan Mitchell posted this video on his blog, International Liberty, along with the accompanying excellent commentary concerning the points he made.

You can read the whole post here. My own comments can be found below the video.

Excellent points and well made. I would take this opportunity however to make an additional point which Dan possibly didn't have time to raise during a short TV spot. Or perhaps he disagrees and therefore didn't make the point purposely. (Dan has a PHD in economics and I got a "C" in high school Econ 101, so enough said about that.)

My point is:

Even in a low inflation environment (on a relative basis) the value of the currency has declined steadily and can be expected to deteriorate much more quickly in the future as the velocity of money movement causes the Fed’s printing to cause a much more virulent inflationary cycle.

That money devaluation does not encourage saving, but rather consumption, as people realize that the value of their savings is declining faster than the paltry interest earnings can keep pace with.

It’s only one more way that the government has changed the culture for average Americans and encouraged financial behavior that is deleterious for them over the longer term.

(I’m not an economist, but I sometimes pretend I am one on this blog.)

Birthday and Judgement Day on the Same Day

It’s My Birthday and I Want a Constitutional Present from the Supreme Court

by Dan Mitchell

I was born 54 years ago in the People’s Republic of New York.

Back then, all I wanted was a new baseball glove

But I don’t mention that because I want you to send me a present or to say Happy Birthday.

Instead, I’m hoping at least five of the Justices on the Supreme Court will make this day special by rejecting Obamacare.

And I mean the entire legislation, not just the mandate. I want them to throw out all the new taxes, all the new spending, all the new subsidies, and all the new market distortions.

My video on Obamacare, for instance, completely focused on how the legislation would expand the burden of government. The mandate is a bad idea, without question, but it’s also a big mistake to impose more spending and taxes whengovernment already is far too big.

I’m worried, though, that the Court will reject the mandate and decide the rest of the law is okay. Not only does this mean we’ll be stuck with bigger government, but it also creates a scenario where politicians – including squeamish Republicans – may decide to enact other bad laws.

John Stossel shares my concerns about what may happen after a Supreme Court decision.

I’m scared. I fear that even if the Supreme Court overrules most of Obamacare (or did already, by the time you read this), Republicans will join Democrats in restoring “good” parts of the law…parts of Obamacare are popular. People like getting what they think is free stuff.

John elaborates, noting that politicians may enact laws that destroy the insurance market.

…discrimination is what makes insurance work. An insurance regime where everyone pays the same amount is called “community rating.” That sounds fair. No more cruel discrimination against the obese or people with cancer. But community rating is as destructive as ordering flood insurance companies to charge me nothing extra to insure my very vulnerable beach house, or ordering car insurance companies to charge Lindsay Lohan no more than they charge you. Such one-size-fits-all rules take away insurance companies’ best tool: risk-based pricing. Risk-based pricing encourages us to take better care of ourselves. Car insurance works because companies reward good drivers and charge the Lindsay Lohans more. If the state forces insurance companies to stop discriminating, that kills the business model. No-discrimination insurance isn’t insurance. It’s welfare. If the politicians’ plan was to create another government welfare program, they ought to own up to that instead of hiding the cost.

And since big business has a dismaying habit of getting into bed with big government, John isn’t expecting the insurance industry to defend markets.

Women go to the doctor more often than men and spend more on medicines. Their lifetime medical costs are much higher, and so it makes all the sense in the world to charge women higher premiums. But Sen. John Kerry pandered, saying, “The disparity between women and men in the individual insurance market is just plain wrong, and it has to change!” The industry caved. The president of its trade group, Karen M. Ignagni, said that disparities “should be eliminated.” Caving was safer than fighting the president and Congress, and caving seemed to provide the industry with benefits. Insurance companies wouldn’t have to work as hard. They wouldn’t have to carefully analyze risk. They’d be partners with government — fat and lazy, another sleepy bureaucracy feeding off the welfare state. Alcoholics, drug addicts and the obese won’t have to pay any more than the rest of us. But this just kills off a useful part of insurance: encouraging healthy behavior. Charging heavy drinkers more for insurance gives them one more incentive to quit. “No-discrimination” pricing makes health care costs rise even faster.

I’ve repeatedly written that the only way to fix healthcare is to get rid of thegovernment-created third-party payer problem.

Unfortunately, that will be very difficult precisely because people like the illusion that they don’t pay (even though they do bear the costs in the form of lower take-home wages and higher taxes).

So while I want a full-repeal birthday present from the Supreme Court, that will only provide fleeting happiness unless we solve the third-party payer problemcaused by Medicare, Medicaid, tax distortions, and other forms of government intervention.

Dan Mitchell is a Senior Fellow at the Cato Institute. He blogs at International Liberty. His articles are republished here occasionally with his express permission.

Green Eggs and Ham ala Dan Mitchell

by Dan Mitchell

In my efforts to promote liberty, I’ve noticed that some people seem impervious to logical arguments and empirical evidence.

Since they have a child-like faith in government, perhaps the best way to reach them is with updated versions of children’s stories and fables.

I’ve already shared the PC version of the story about the ant and the grasshopper, as well as the modern fable about bureaucracy, featuring an ant and a lion. Now it’s time for a revised version of Green Eggs and Ham.

I do not like this Uncle Sam,
I do not like his health care scam.

I do not like these dirty crooks,
or how they lie and cook the books.

I do not like when Congress steals,
I do not like their secret deals.

I do not like ex-speaker Nan,
I do not like this ‘YES, WE CAN!’

I do not like this spending spree —
Even a fool knows that nothing’s free.

I do not like the smug replies,
when we complain about their lies.

I do not like this kind of hope.
I do not like it, I’m not a dope!

If your left-wing friends understand this fable, then you can see if they’re ready for more advanced stories, such as the one about using beer to explain the tax system, the joke about using two cows to explain various economic and political systems.

At some point, after years of therapy and education, maybe they’ll even be ready for grown-up analysis!

Dan Mitchell is a senior fellow at the Cato Institute 
He blogs at International Liberty
His articles are republished here from time to time with his express permission.

Making Money In the Lake Wobegon Fantasy World

Unlike today's chattering class,
King Canute understood limits to power

By Dan Mitchell 

I sometimes wonder whether journalists have the slightest idea of how capitalism works.

In recent weeks, we've seen breathless reporting on the $2 billion loss at JP Morgan Chase, and now there's a big kerfuffle about the falling value of Facebook stock.

In response to these supposed scandals, there are all sorts of articles being written (see here, here, here, and here, for just a few examples) about the need for more regulation to protect the economy.

Underlying these stories seems to be a Lake Wobegon view of financial markets. But instead of Garrison Keillor's imaginary town where "all children are above average, we have a fantasy economy where "all investments make money."

I don't want to burst anyone's bubble or shatter any childhood illusions, but losses are an inherent part of the free market movement. As the saying goes, "capitalism without bankruptcy is like religion without hell."

Legend tells us that King Canute commanded the tides not to advance and learned there are limits to the power of a king when his orders had no effect.Moreover, losses (just like gains) play an important role in that they signal to investors and entrepreneurs that resources should be reallocated in ways that are more productive for the economy.

Sadly, modern journalists, regulators, and politicians lack the same wisdom and think that government somehow can prevent losses.

But perhaps that's unfair. They probably understand that losses sometimes happen, but they want to provide bailouts so that nobody ever learns a lesson about what happens when you touch a hot stove.

Government-subsidized risk, though, is just as foolish as government-subsidized success.

Dan Mitchell is a PHD economist, a senior fellow at the Cato Institute, and author of the popular blog "International Liberty."   He is also a friend to this blog and his work is republished here with his express permission. His posts dress up this site immeasurably. I urge you to subscribe to his blog updates so you can be smarter than you otherwise are.

Italians are Revolting

By Dan Mitchell

I wrote last year about a tax protest in Ireland, and I wrote earlier this year about a tax revolt in Greece.

But Irish and Greek taxpayers are wimps compared to their Italian compatriots. When Italians decide to have a tax revolt, they don't kid around. Here are some remarkable details from the UK-based Telegraph.

In the last six months there has been a wave of countrywide attacks on offices of Equitalia, the agency which handles tax collection, with the most recent on Saturday night when a branch was hit with two petrol bombs.Staff have also expressed fears over their personal safety with increasing numbers calling in sick and with one unidentified employee telling Italian TV: “I have told my son not to say where I work or tell anyone what I do for a living.”

As much as I despise high taxes, I don't think petrol bombs are the answer. But I am glad that at least some of the bureaucrats feels shame about their jobs.

Not surprisingly, the political elite wants people to be deferential to predatory government.

Annamaria Cancellieri, the interior minister, said she was considering calling in the army in a bid to quell the rising social tensions.“There have been several attacks on the offices of Equitalia in recent weeks. I want to remind people that attacking Equitalia is the equivalent of attacking the State,” she said in an interview with La Repubblica newspaper.

Here's some advice for Ms. Cancellieri: Maybe people will be less likely to attack "the State" if "the State" stops attacking the people.

But don't expect that to happen. The Prime Minister also demands obedience to "the State" and there's rhetoric about "paying taxes is a duty" from other high-level government officials.

Saturday night’s attack took place on the Equitalia office in Livorno and the front of the building was left severely damaged by fire after the bombs exploded. The phrases “Thieves” and “Death to Equitalia” were sprayed onto outside walls. It came just 24 hours after more than 200 people had been involved in running battles with police outside a branch in Naples which left a dozen protesters and officers hurt. ...There has also been a striking increase in suicides with people leaving notes directly blaming Equitalia and tax demands. Paola Severino, the Justice minister, said: “The economic situation has produced unease but paying taxes is a duty. On one side there is anger and the problem of paying when the resources are scare but on the other side is the fact that they must be paid.” ...Mr Monti has vowed to press on even harder this year to recover the lost money. He is due to have a meeting with Equitalia chief Attilio Befera to discuss the situation and he has already said: “We are not going to take a step back, there will be no giving in to those who have declared was against the revenue and therefore the State. We will not be intimidated.”

Keep in mind, by the way, that this is the government that supposedly is being run by brilliant technocrats, yet they are so incompetent that they appoint the wrong people to posts. But the real problem is that government is far too big, consuming one-half of Italy's economic output.

If Italy's political class wants to improve tax compliance, they should listen to the IMF and academic economists, both of whom point out that lower tax rates reduce incentives for evasion and avoidance.

It also would help to shrink the burden of the public sector. Unfortunately, as is the case with most other European nations, "austerity" in Italy mostly means higher taxes, not less spending.


Dan Mitchell is a senior fellow at the Cato Institute. With express permission, his articles are reprinted here from time to time, particularly when the editor of this site is busy visiting his newborn grand child. You can read more fine articles like this one at International Liberty.

What the State Tax Debate is All About

Dan Mitchell explains a complicated issue in easy to understand language. If you want to know why we need to keep (and expand) tax competition between states and countries you should spend the eleven minutes it takes to watch this video. If you don't have eleven minutes, well, you might never really understand the issue.

Why Is the Obama Administration Trying to Undermine Educational Opportunities for Black Children?

The question is asked by Thomas Sowell. The commentary is provided by Dan Mitchell. The posting was done by me.

Many thanks to Dan for his ongoing permission to re-publish his posts on this blog. It allows me to go play golf today. Every day you don't read the posts at his fine blog, International Liberty, is a day lost to learning something you probably didn't know.

March 13, 2012 by Dan Mitchell

If you care about helping the less fortunate succeed, I’m commenting today on a Thomas Sowell column that will make you sad and angry. It is a story about how powerless and disadvantaged people are being hurt to advance the political interests of some elitists.

Here is the clever way he starts the column. I particularly like the reference to Social Security as a Ponzi scheme, which reminds me of this cartoon.

There have been many frauds of historic proportions — for example, the financial pyramid scheme for which Charles Ponzi was sent to prison in the 1920s, and for which Franklin D. Roosevelt was praised in the 1930s, when he called it Social Security. In our own times, Bernie Madoff’s hoax has made headlines. But the biggest hoax of the past two generations is still going strong — namely, the hoax that statistical differences in outcomes for different groups are due to the way other people treat those groups.

Then he gets to the meat of his topic.

The latest example of this hoax is the joint crusade of the Department of Education and the Department of Justice against schools that discipline black males more often than other students. According to Secretary of Education Arne Duncan, this disparity in punishment violates the “promise” of “equity.” Just who made this promise remains unclear, and why equity should mean equal outcomes despite differences in behavior is even more unclear. This crusade by Attorney General Eric Holder and Secretary of Education Arne Duncan is only the latest in a long line of fraudulent arguments based on statistics. If black males get punished more often than Asian American females, does that mean that it is somebody else’s fault? That it is impossible that black males are behaving differently from Asian American females? Nobody in his right mind believes that. But that is the unspoken premise, without which the punishment statistics prove nothing about “equity.”

Professor Sowell contemplates the motive for this Obama Administration initiative.

What is the purpose or effect of this whole exercise by the Department of Education and the Department of Justice? To help black students or to secure the black vote in an election year by seeming to be coming to the rescue of blacks from white oppression? Among the many serious problems of ghetto schools is the legal difficulty of getting rid of disruptive hoodlums, a mere handful of whom can be enough to destroy the education of a far larger number of other black students — and with it destroy their chances for a better life.

Sowell elaborates further, pulling no punches.

Secretary Duncan and Attorney General Holder want to play the race card in an election year, at the expense of the education of black students. Make no mistake about it, the black students who go to school to get an education are the main victims of the classroom disrupters whom Duncan and Holder are trying to protect. What they are more fundamentally trying to protect are the black votes which are essential for Democrats. For that, blacks must be constantly depicted as under siege from whites, so that Democrats can be seen as their rescuers. Promoting paranoia translates into votes. It is a very cynical political game, despite all the lofty rhetoric used to disguise it. Whether the current generation of black students get a decent education is infinitely more important than whether the current generation of Democratic politicians hang on to their jobs. Very powerful stuff. And it should be disturbing as well.

I’ve already commented on the implicit racism in the minimum wage law and thereprehensible decision by leftists to put the interests of teacher union ahead of the interests of black students.

Now we can add something else to the list.

If you like Professor Sowell’s insights, I’ve highlighted more of his work here,here, here, here, here, here, here, here, here, here, here, here, and here. And you can see him in action here. A truly gifted public intellectual and a (thankfully) prolific writer.