Political Correctness • Perfect Observations on the Zimmerman case
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Statistics: Posted by singular — Wed Jul 24, 2013 5:23 am
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Dr. Ron Paul has been a three-time candidate for President of the United States; as a Libertarian in 1988 and as a Republican in 2008 and 2012. He served for many years as the U.S. Representative for Texas’s 14th congressional district, and is widely known for his libertarian views and his criticism of the federal government’s foreign, domestic, and monetary policies.
In this video from a Council for a Competitive Economy event in 1981, Dr. Paul shares with the audience his views on how political philosophy can drive social change—in other words, how ideas inform politics. He also speaks briefly on U.S. monetary policy and the gold standard and answers audience questions.
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The United States has spent decades attempting to micromanage the Middle East. The result is a long series of disastrous failures. Egypt is the latest example.
Almost everyone in Egypt now blames America—despite almost $75 billion in financial assistance to Cairo over the years. Instead of backing away, President Barack Obama is digging America in deeper. The administration is ignoring U.S. law by continuing financial aid.
The United States turned Egypt into a well-paid client during the Cold War after Egypt switched sides and later made peace with Israel. But the case for continuing subsidies has disappeared.
The law requires halting assistance. If what happened in Cairo was not a coup it’s time for an update to George Orwell’s 1984. In fact, it appears that the military planned its takeover for months.
The Egyptian military is a praetorian institution which has been the foundation of dictatorship for a half century. Egyptian military officers are pampered apparatchiks who control as much as 40 percent of the economy. They always have served power and privilege rather than democracy and liberty.
Moreover, foreign “aid” has subsidized Egypt’s catastrophic economic failure. Like government-to-government assistance elsewhere, American subsidies have discouraged economic reform.
As for political influence, Cairo long ago realized that it could count on receiving Americans’ money irrespective of its behavior. Egyptian governments have never listened to Washington’s advice regarding either economic or political reform. That hasn’t changed since the coup.
Deputy Secretary of State William Burns visited Cairo a couple weeks ago and activists on both sides refused to see him. The top military leader met with him, but ostentatiously ignored Burns’ pleas.
Even if the money theoretically brought influence, the Gulf States have promised Egypt at least four times as much as Washington. Why should Cairo listen to America?
The military already is well-funded domestically, and much of America’s assistance goes for prestige weapons, such F-16s. Nor does Washington need to pay the generals not to break the peace with Israel. They know that conflict with Israel would be suicidal.
Unfortunately, the liberal opposition is living an illusion if it believes that security forces which backed dictatorship for six decades now represent liberal values. As I point out in my new Forbes online column:
[I]t will not be long before those who advocate democracy and liberty find themselves in the army’s cross-hairs. Literally, given the military’s penchant for using live ammunition against protestors. Democracy advocates who subvert democracy should expect nothing less.
Finally, America’s reputation is on the line internationally. The Muslim Brotherhood may be no friend of liberty, but political Islamists are far more dangerous if excluded from the political process. And the coup will resonate beyond Egypt. To work so hard to avoid applying the law in order to support a coup against the man who won the first free presidential election in Egyptian history will make a mockery of any future pronouncements about America’s commitment to democracy.
Washington’s best hope is to disengage, leaving Egyptians to decide their own future. That would respect the rule of law in the United States. It also would restore a degree of leverage, if Egypt’s military actually values Washington’s cash and support. It is time to halt American assistance to Egypt.
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From the Zimmerman case we have proof the msm are liars and will misrepresent to follow their corrupt agenda. We also see that the black entitlement and victim status they embrace remains from generation to generation. Were the founding fathers aware that the black race would be this way in the future, explaining their views they thought the races should be separate? Look at the riots, the 73% rate of black women as single mothers, and the Zimmerman case where the black leaders and their useful idiots of both races tried to lynch an innocent man.
Why cannot all blacks be like Walter Williams, Thomas Sowell, Ethel Waters, etc
George Zimmerman: Real American Hero
July 24, 2013 by Bob Livingston
George Zimmerman: Real American Hero
George Zimmerman helped pull a family from a crashed and overturned vehicle.
George Zimmerman demonstrated why he was watching out for his community as a neighborhood watch volunteer on the night that Trayvon Martin was shot. He cares about his community.
Last Friday, he demonstrated it again. He was one of two men who pulled a family from a crashed and overturned vehicle in Sanford, Fla., less than a mile from where he shot Martin.
The corrupt persecutor who prosecuted the case against Zimmerman, Angela Corey, tried to portray him as a wannabe cop. But the reality is that Zimmerman is obviously an observant and conscientious American citizen who cares about others.
So despite thousands of death threats directed at him and his family, Zimmerman stepped out of his vehicle and helped pull to safety a family that he didn’t even know. It was something he didn’t have to do.
When someone puts his life in danger and helps others without regard to his own safety, he becomes a hero in my book.
The race-mongering punditry is already out saying it never happened, even though Sanford Police Department Capt. Jim McAuliffe told ABC News that it did.
Statistics: Posted by singular — Wed Jul 24, 2013 5:31 am
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Yesterday, the American Federation of Teachers (AFT) released the results of a poll conducted by a Democratic polling firm supposedly showing that American parents don’t support a plethora of education reforms, including school choice, and would rather increase funding for public schools. A closer examination reveals that the some of the AFT’s poll questions were designed to push respondents into giving the answers that the AFT wanted, which is why their results are so different from previous polls from more credible organizations.
Here’s an example of how the AFT phrased their questions:
With which approach for improving education do you agree more?
APPROACH A) We should focus on ensuring that every child has access to a good public school in their community. We need to make the investments needed to ensure all schools provide safe conditions, an enriching curriculum, support for students’ social and emotional development, and effective teachers.
APPROACH B) We should open more public charter schools and provide more vouchers that allow parents to send their children to private schools at public expense. Children will receive the best education if we give families the financial freedom to attend schools that meet their needs.
It’s no surprise that 77 percent agreed with the first approach and only 20 percent agreed with the second. Either “invest” in “good” public schools in your “community” and receive all sort of wonderful goodies (“enriching curriculum!” “effective teachers!”) or forgo all that so that some parents can send their kids to private school “at public expense.” Aside from the fact that this is a false choice (competition can actually improve public school performance and school choice programs can save money), the wording is blatantly designed to push respondants toward Approach A.
But what if we rewrote those options?
APPROACH A) We should focus on ensuring that every child has access to a good public school in their community. Children will receive the best education if the public invests in better public school safety, curriculum, support services, and teachers.
APPROACH B) We should focus on ensuring that every child has access to good public charter schools and private schools in their community. Children will receive the best education if the public invests in giving families the financial freedom to choose the schools that meet their needs.
This question is clearly more fair than the AFT poll’s since it employs similar wording in each answer. If we wanted to push respondents toward Approach B, we could replace “invests” with “at the public expense” and employ additional shenanigans like the AFT poll did (e.g. – “choose the schools with the most enriching curriculum and most effective teachers”).
Fortunately, we don’t have to imagine how the public would respond to fairly-worded questions. Harvard University’s Program on Education and Governance conducts an annual survey of the public’s views on education policy that meets the highest standards for fairness and rigor. The survey eschews language designed to push respondents in a certain direction and often asks the same question with multiple wordings. According to the 2012 Harvard poll:
- 54% of parents favor giving all families a “wider choice” to “enroll their children in private schools instead, with government helping to pay the tuition” compared with 21% opposed.
- 46% of parents favor giving low-income families a “wider choice” to “enroll their children in private schools instead, with government helping to pay the tuition” compared with 21% opposed.
- When not given a neutral option, 50% of parents favor giving low-income families a “wider choice” to “enroll their children in private schools instead, with government helping to pay the tuition” compared with 50% opposed.
- When the question omits the words “a wider choice” and only asks about using “government funds to pay the tuition of low-income students who choose to attend private schools,” 44% of parents are in favor with 32% opposed.
Note that while support fluctuates depending on the wording, no matter how Harvard asked the question there was still more support among parents for school choice than opposition.
Moreover, when asking about scholarship tax credits instead of vouchers, the support was even higher:
- 57% of parents supported “a tax credit for individual and corporate donations that pay for scholarships to help low-income parents send their children to private schools” compared with 16% opposed.
- When not given a neutral option, 73% of parents supported “a tax credit for individual and corporate donations that pay for scholarships to help low-income parents send their children to private schools” compared with 27% opposed.
The AFT’s poll results only look so different from Harvard’s because their poll was designed to reflect what the AFT wanted to hear rather than what the public really believes.
View full post on Cato @ Liberty
MONDAY, JULY 22, 2013
The Democrats Finally Embrace Money Printing
Quantitative Easing is no longer just a palliative Federal Reserve policy—it has just become a political issue. Which is why it will get bigger—and worse.
If you’ve been following American political theater since the start of the Global Financial Crisis in 2008, you’ve probably noticed how many (but not all) Republicans line up on the side of fiscal austerity and tight-money policies so as to limit the fiscal deficit and reduce the government debt (at least when it comes to non-military spending. And non-law enforcement spending. And non-bank-saving spending.)—
Who says the Dems don’t like money?
—whereas the Democrats have insisted that the government needs to take on more debt, and spend its way back to prosperity. In the Dems’ worldview, deficits and debt don’t matter: What matters to them is how much is the government going to spend in order to “save the economy”. (“Paging Professor Krugman!”)
But last Thursday, during the testimony Federal Reserve Chairman Ben Bernanke gave to the Senate Banking committee, Democratic senators questioned why Bernanke was thinking of tapering off the bond purchasing programs of Quantitative Easing (QE). They wondered out loud if maybe QE should continue “until the economy further improves”.
In other words, the Democrats have finally realized that not only does QE mean they don’t have to rein in the deficit—QE also means that they can expand the deficit, confident that additional debt will be bought and paid for by the Federal Reserve. Confident that additional debt will be monetized by the Federal Reserve—because after all, that’s what QE is: Debt monetization, and everybody knows it.
(What, you really think that the Fed is gonna one day unwind its QE position? Sterilize all that money printing and rein in its balance sheet to less than $1 trillion, as per the status quo ante the Global Financial Crisis? Hue’ón, you buy that, then open your wallet, ‘cause I got a bridge to sell you.)
Which means that, with their calls for more QE, it’s clear that the Democrats have finally embraced flat-out money-printing.
It took a long time for them to arrive at this place. Before QE, all the Democrats cared about was deficit spending—they essentially did not care about monetary policy per se, except where low interest rates affected home buyers. Whenever they focussed on the Federal Reserve and its chairman, they concentrated on the jobs creation side of the Fed mandate, or else (cosmetically) on the regulatory side. (The Dems are in the pockets of the banksters to the same degree that the Republicans are. The Republicans are just more blatant about it.)
But even though Quantitative Easing started in 2008, it seems as if Democrats didn’t really “get it”. They viewed it as a way to save the banksters’ collective bacon—they didn’t see it as the way by which the Federal government could go into limitless debt.
But with Thursday’s testimony, it’s clear like a bomb blast that the Democrats finally understand what QE really means. This is the reason-why of the Democratic senators’ questions/comments during Thursday’s testimony: The Chairman of the Senate Banking Committee, Tim Johnson (D-SD) wondered whether it might be too soon to “taper off” Quantitative Easing. Senator Robert Menendez (D-NJ) later asked, “Isn’t it still way too soon to consider any kind of policy tightening?” Senator Chuck Schumer wondered aloud about more hawkish Fed board members, and how Bernanke’s departure next year would affect QE.
The upshot of all the questioning was that it revealed how the Democratic senators implicitly realize that it is the size of QE—and not the size of the deficit or the debt ceiling—that restricts how much the government can spend.
Democrats would probably deny and dismiss this characterization. They might well argue that their concern for the size of QE purchases is so as to ensure low unemployment. But QE does not affect unemployment directly. After all, it’s a bond-buying program. It affects unemployment indirectly—not to say circuitously—by providing price support to Treasury bonds, which thereby allows the Federal government to issue more bonds without fear of rising interest rates, and thereby have more cash to spend in order to soak up the unemployment by way of fiscal spending.
It is QE and QE alone that is providing price support to the bond markets, and ensuring that the Treasury Department has a buyer of last resort for all those bonds that it is issuing to cover the debt. At this time, QE purchases amount to some $85 billion-with-a-“B” per month—over a trillion dollars per year. Which is the lion’s share of the yearly Federal government deficit.
So Democrats might claim that they want more QE in order to get more jobs—but those jobs are by way of Keynesian-style Federal government deficit spending. Viewed this way, QE is Paul Krugman’s best friend: QE allows as much deficit spending as the Democrats or Krugman might ever want.
The B-story to this narrative is the coming nomination and confirmation of Ben Bernanke’s successor.
Anti-QE advocates, such as some Republicans and most clear-eyed observers of the state of the economy, have been nearly hysterical about how Quantitative Easing creates bubbles in equities and real estate markets, and sets the stage for a serious, perhaps catastrophic debasement of the dollar. These people (myself among them) want the next chairman of the Fed to get out of the QE business altogether, and deflate all these bubbles so that the economy might crash and reset in a more or less controlled manner, as opposed to a currency panic and collapse, which (from hard experience) is much, much worse.
But now, as Democrats come to see how useful QE is in expanding Federal government spending and thereby (in their eyes) “saving the economy”, they will insist on a new Fed chairman who will continue QE, if not expand it.
Enter Janet Yellin, the vice-chair of the Federal Reserve, and the odds-on favorite to be the confirmed nominee. (Ignore Larry Summers’ surge in the betting pools. Obama despises him, and I think the hash he made with Harvard’s endowment—which a lot of people are all of a sudden reminiscing about as his profile rises in the Fed chairmanship race—will be enough to torpedo his chances.) She is famously dovish with regards to QE, concerned more than anything with full employment. If she becomes the next Fed chairman, she will certainly not taper QE, if unemployment levels are not to her liking. And if the situation continues to deteriorate, employment-wise, she will in all likelihood expand QE, so as to tacitly provide the Federal government with room to expand its deficit, confident that the Fed will buy up all those T-bonds it issues.
That’s why Janet Yellin will most definitely be the next Fed Chairman. Bonus for the Dems: She’ll be the first woman Chair of the Fed, which will earn them a few silly op-eds that will be missing the real point—the real point about Yellin being that she’s a QE-to-infinity-and-beyonder.
Anti-QE advocates always thought that the debate about QE-or-not-QE was a strictly economic debate: Technocrats on one side, technocrats on the other, like a super-nerdy version of dodgeball. But now with the Democratic senators questioning why Ben Bernanke is going to taper off QE, and whether he should continue it and/or expand it, the issue of Quantitative Easing has ceased being a technical, inside-baseball, What-would-Gary-Gygax-say debate, and become a political issue.
Now that the Democrats have realized how essential QE is to the continued Federal government deficits, there is no doubt as to what they are going to demand: More QE. A lot more QE. And to make sure this is the outcome, they will put a Fed Chair who agrees—i.e., Yellin.
Which means that Quantitative Easing is about to become a political issue. The Dems won’t want QE-IV or QE-V, or (as I’ve called it) QE-?—no, what the Democrats will want is Super-QE. QE-on-Steroids, QE-to-the-friggin’-Moon.
And to any anti-QE argument that Quantitative Easing might lead to a collapse of the dollar, the pro-Super-QE Dems will argue that, in five years of QE, there hasn’t been a significant rise in inflation—which they will therefore claim indicates that QE cannot cause inflation and thus the dollar cannot crash because of QE.
QE? Meet QED.
The More-QE Dems won’t be alone: The more populist, more irresponsible, more war-mongering Republicans (“Paging Senator McCain!”) will agree with these money-printing Dems—and join the bandwagon of Super-QE. Because more QE means more deficits with which to pay for pork and prisons and wars, without the pain of raising taxes. Which is what McCain Republicans want.
So for a significant majority of the House and the Senate, more QE—Super-QE—is most definitely in the offing: They will lobby the Fed for it, and they will ultimately vote for a new Fed chair who will explicitly guarantee that QE will not only continue, but will be expanded. Which is what Janet Yellin tacitly promises.
Once the Democrats start to seriously push for more QE over and above the current $85 billion per month levels, it will only be a matter of time before the dollar is broken.
How will the dollar break? I’ve argued since donkey’s ears that all that cash sloshing through the system because of QE will flow to commodities, sending them stratospherically higher, the rise in commodity prices cascading throughout the economy, until rising prices become a self-reinforcing phenomenon. And since the economy is too weak to apply some Volcker-style inflation-fighting interest rate hikes, rising prices will quickly turn from ’70’s style stagflation to hyperinflation.
You think I’m smoking righteous weed when I say this? Well then think it over a bit, because it’s all right there: Once the markets realize that Super-QE has been implemented, sure, equities, bonds and real estate will blast off—for a while. But the rush by a significant segment of the market will be to get out of every paper asset, and into hard commodities and precious metals. And that, as I have argued repeatedly, is when hyperinflation will take off.
Democrats—or more properly, Democratic politicians—have always been a little slow when it comes to economics. It only took them five years to figure out what Quantitative Easing really means. But now that they have, the Dems are going to ride that QE pony into the ground—and if that means ruining the dollar and thus breaking the economy, well . . . it was all done in order to “save the economy”.
And aren’t good intentions enough?
Statistics: Posted by yoda — Wed Jul 24, 2013 12:51 am
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Many opponents of immigration reform have labeled any type of legalization for unauthorized immigrants “amnesty.” In common terminology, an amnesty is a general forgiveness for past offenses. Calling immigration reform amnesty brands it with a scarlet letter in the minds of many who are skeptical of reform. A recent video made by the Cato Institute explains just some of the many steps an unauthorized immigrant will have to go through to become legalized if the Senate’s immigration reform becomes law:
Here are some of the steps (this is not an exhaustive list) an unauthorized immigrant must follow to earn the initial registered provisional immigration (RPI) status:
- In the country prior to 2012
- Pays any and all outstanding tax bills (not back taxes)
- Goes through national security and background checks
- $1,000 fine
- $500 fee
- Then the unauthorized immigrant will receive a work permit valid for six years
After six years, the immigrant will need to apply for another RPI permit:
- Proves that she’s been employed for virtually the entire six year period
- Be at no less than 100 percent of the federal poverty level
- $500 fee
After four years, the immigrant can apply for a green card if she:
- Proves she can speak English
- Proves she hasn’t been on welfare
- Passes another round of background and security checks
- Pays all of the normal fees associated with a green card
- The federal government meets most of its immigration enforcement goals
That doesn’t seem like amnesty to me.
View full post on Cato @ Liberty
This is a good list but I will say that one couldn’t go online or microwave a burrito in 1975.
Click here for the list.
View full post on AgainstCronyCapitalism.org
Al Qaeda prison break: Hundreds of militants flee Iraq’s notorious Abu Ghraib jail
http://worldnews.nbcnews.com/_news/2013 … hraib-jail
By Kareem Raheem and Ziad al-Sinjary, Reuters
BAGHDAD/MOSUL, Iraq — Hundreds of convicts, including senior members of al Qaeda, broke out of Iraq’s Abu Ghraib jail as comrades launched a military-style assault to free them, authorities said on Monday.
The deadly raid on the high-security jail happened as Sunni Muslim militants are re-gaining momentum in their insurgency against the Shiite-led government that came to power after the U.S. invasion to oust Saddam Hussein.
Suicide bombers drove cars packed with explosives to the gates of the prison on the outskirts of Baghdad on Sunday night and blasted their way into the compound, while gunmen attacked guards with mortars and rocket-propelled grenades.
Other militants took up positions near the main road, fighting off security reinforcements sent from Baghdad as several militants wearing suicide vests entered the prison on foot to help free the inmates.
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Ten policemen and four militants were killed in the ensuing clashes, which continued until Monday morning, when military helicopters arrived, helping to regain control.
By that time, hundreds of inmates had succeeded in fleeing Abu Ghraib, the prison made notorious a decade ago by photographs showing abuse of prisoners by U.S. soldiers.
"The number of escaped inmates has reached 500, most of them were convicted senior members of al Qaeda and had received death sentences," Hakim Al-Zamili, a senior member of the security and defense committee in parliament, told Reuters.
"The security forces arrested some of them, but the rest are still free."
One security official told Reuters on condition of anonymity: "It’s obviously a terrorist attack carried out by al Qaeda to free convicted terrorists with al Qaeda."
A simultaneous attack on another prison, in Taji, around 12 miles north of Baghdad, followed a similar pattern, but guards managed to prevent any inmates escaping. Sixteen soldiers and six militants were killed.
Sunni insurgents, including the al Qaeda-affiliated Islamic State of Iraq, have been regaining strength in recent months and striking on an almost daily basis against Shiite Muslims and security forces among other targets.
The violence has raised fears of a return to full-blown conflict in a country where Kurds, Shiite and Sunni Muslims have yet to find a stable way of sharing power.
Photojournalist Michael Kamber joins MSNBC’s Craig Melvin and fellow photojournalists Carolyn Cole and Ed Kashi to talk about his new book, "The Untold Stories From Iraq: Photojournalists on War".
Recent attacks have targeted mosques, amateur football matches, shopping areas and cafes where people gather to socialize after breaking their daily fast for the holy Muslim month of Ramadan.
Relations between Islam’s two main denominations have been put under further strain from the civil war in Syria, which has drawn in Shiite and Sunni fighters from Iraq and beyond to fight against each other.
In the northern city of Mosul, 240 miles north of Baghdad, a suicide bomber detonated a vehicle packed with explosives behind a military convoy in the eastern Kokchali district, killing at least 22 soldiers and three passers-by, police said.
Following the attack, leaflets were found near mosques in Mosul signed by the Islamic State of Iraq and the Levant, which was formed earlier this year through a merger between Syrian and Iraqi affiliates of al Qaeda.
Suicide bombings are the hallmark of al Qaeda, which has been regrouping in Mosul, Iraq’s third-largest city and capital of the Sunni-dominated Nineveh province.
A separate attack in western Mosul killed four policemen, police said.
Nearly 600 people have been killed in militant attacks across Iraq so far this month, according to violence monitoring group Iraq Body Count.
That is still well below the height of bloodletting in 2006-07, when the monthly death toll sometimes exceeded 3,000.
Reuters contributed to this report.
‘The battlefields are merging’: Surge in violence raises fears of new war in Iraq and beyond
Fears of civil war in Iraq after 1,000 are killed in a month
May marks deadliest month in Iraq in 5 years
Lynndie England, jailed for Abu Ghraib abuses, says she doesn’t feel bad about Iraqis’ treatment
This story was originally published on Mon Jul 22, 2013 5:02 PM EDT
Copyright 2013 Thomson Reuters. Click for restrictions.
Statistics: Posted by Tonibug — Tue Jul 23, 2013 10:19 pm
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Wall Street Journal Condemns OECD Proposal to Increase Business Fiscal Burdens with Global Tax Cartel
Daniel J. Mitchell
What’s the biggest fiscal problem facing the developed world?
To an objective observer, the answer is a rising burden of government spending, which is caused by poorly designed entitlement programs, growing levels of dependency, and unfavorable demographics. The combination of these factors helps to explain why almost all industrialized nations—as confirmed by BIS, OECD, and IMF data—face a very grim fiscal future.
If lawmakers want to avert widespread Greek-style fiscal chaos and economic suffering, this suggests genuine entitlement reform and other steps to control the growth of the public sector.
But you probably won’t be surprised to learn that politicians instead are concocting new ways of extracting more money from the economy’s productive sector.
They’ve already been busy raising personal income tax rates and increasing value-added tax burdens, but that’s apparently not sufficient for our greedy overlords.
Now they want higher taxes on business. The Organization for Economic Cooperation and Development, for instance, put together a “base erosion and profit shifting” plan at the behest of the high-tax governments that dominate and control the Paris-based bureaucracy.
What is this BEPS plan? In an editorial titled “Global Revenue Grab,” The Wall Street Journal explains that it’s a scheme to raise tax burdens on the business community:
After five years of failing to spur a robust economic recovery through spending and tax hikes, the world’s richest countries have hit upon a new idea that looks a lot like the old: International coordination to raise taxes on business. The Organization for Economic Cooperation and Development on Friday presented its action plan to combat what it calls “base erosion and profit shifting,” or BEPS. This is bureaucratese for not paying as much tax as government wishes you did. The plan bemoans the danger of “double non-taxation,” whatever that is, and even raises the specter of “global tax chaos” if this bogeyman called BEPS isn’t tamed. Don’t be fooled, because this is an attempt to limit corporate global tax competition and take more cash out of the private economy.
The Journal is spot on. This is merely the latest chapter in the OECD’s anti-tax competition crusade. The bureaucracy represents the interests of
high-tax governments that are seeking to impose higher tax burdens—a goal that will be easier to achieve if they can restrict the ability of taxpayers to benefit from better tax policy in other jurisdictions.
More specifically, the OECD basically wants a radical shift in international tax rules so that multinational companies are forced to declare more income in high-tax nations even though those firms have wisely structured their operations so that much of their income is earned in low-tax jurisdictions.
So does this mean that governments are being starved of revenue? Not surprisingly, there’s no truth to the argument that corporate tax revenue is disappearing:
Across the OECD, corporate-tax revenue has fluctuated between 2% and 3% of GDP and was 2.7% in 2011, the most recent year for published OECD data. In other words, for all the huffing and puffing, there is no crisis of corporate tax collection. The deficits across the developed world are the product of slow economic growth and overspending, not tax evasion. But none of this has stopped the OECD from offering its 15-point plan to increase the cost and complexity of complying with corporate-tax rules. …this will be another full employment opportunity for lawyers and accountants.
I made similar points, incidentally, when debunking Jeffrey Sachs’ assertion that tax competition has caused a “race to the bottom.”
The WSJ editorial makes the logical argument that governments with uncompetitive tax regimes should lower tax rates and reform punitive tax systems:
…the OECD plan also envisions a possible multinational treaty to combat the fictional plague of tax avoidance. This would merely be an opportunity for big countries with uncompetitive tax rates (the U.S., France and Japan) to squeeze smaller countries that use low rates to attract investment and jobs. Here’s an alternative: What if everyone moved toward lower rates and simpler tax codes, with fewer opportunities for gamesmanship and smaller rate disparities among countries?
The piece also makes the obvious—but often overlooked—point that any taxes imposed on companies are actually paid by workers, consumers, and shareholders.
…corporations don’t pay taxes anyway. They merely collect taxes—from customers via higher prices, shareholders in lower returns, or employees in lower wages and benefits.
Last but not least, the WSJ correctly frets that politicians will now try to implement this misguided blueprint:
The G-20 finance ministers endorsed the OECD scheme on the weekend, and heads of government are due to take it up in St. Petersburg in early September. But if growth is their priority, as they keep saying it is, they’ll toss out this complex global revenue grab in favor of low rates, territorial taxes and simplicity. Every page of the OECD’s plan points in the opposite direction.
The folks at the Wall Street Journal are correct to worry, but they’re actually understating the problem. Yes, the BEPS plan is bad, but it’s actually much less onerous that what the OECD was contemplating earlier this year when the bureaucracy published a report suggesting a “global apportionment” system for business taxation.
Fortunately, the bureaucrats had to scale back their ambitions. Multinational companies objected to the OECD plan, as did the governments of nations with better (or at least less onerous) business tax structures.
It makes no sense, after all, for places such as the Netherlands, Ireland, Singapore, Estonia, Hong Kong, Bermuda, Switzerland, and the Cayman Islands to go along with a scheme that would enable high-tax governments to tax corporate income that is earned in these lower-tax jurisdictions.
But the fact that high-tax governments (and their lackeys at the OECD) scaled back their demands is hardly reassuring when one realizes that the current set of demands will be the stepping stone for the next set of demands.
That’s why it’s important to resist this misguided BEPS plan. It’s not just that it’s a bad idea. It’s also the precursor to even worse policy.
As I often say when speaking to audiences in low-tax jurisdictions, an appeasement strategy doesn’t make sense when dealing with politicians and bureaucrats from high-tax nations.
Simply stated, you don’t feed your arm to an alligator and expect him to become a vegetarian. It’s far more likely that he’ll show up the next day looking for another meal.
P.S. The OECD also is involved in a new “multilateral convention” that would give it the power to dictate national tax laws, and it has the support of the Obama administration even though this new scheme would undermine America’s fiscal sovereignty!
P.P.S. Maybe the OECD wouldn’t be so quick to endorse higher taxes if the bureaucrats—who receive tax-free salaries—had to live under the rules they want to impose on others.
View full post on Cato @ Liberty