[brid video=”19165″ player=”1929″ title=”Paul Ryan on Defunding Planned Parenthood We Can’t Set Expectations We Cannot Reach”]
House Speaker Paul Ryan refused to commit to defunding Planned Parenthood during a Sunday interview on CNN with Dana Bash to discuss the fractured caucus.
“We have to be very clear about what we can and can not achieve,” Ryan said. “And we cannot set expectations that we cannot reach.”
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Paul Ryan, who recently replaced John Boehner as House Speaker, said on “Fox News Sunday” that Obama was “untrustworthy” on immigration reform because he tried to use executive orders to “circumvent” Congress and the “legislative process.”
Fred Thompson, former senator and actor, died Sunday at the age of 73. (Photo: AP)
Fred Thompson, the former U.S. senator from Tennessee, “Law & Order” actor and presidential candidate, died Sunday at age 73 after battling a reoccurrence of lymphoma.
The Thompson family announced the news in a statement published in The Tennessean.
“It is with a heavy heart and a deep sense of grief that we share the passing of our brother, husband, father, and grandfather who died peacefully in Nashville surrounded by his family,” the statement said. “Fred once said that the experiences he had growing up in small-town Tennessee formed the prism through which he viewed the world and shaped the way he dealt with life.”
Thompson was born in 1942 and served in the U.S. Senate from December 1994 to January 2003. He ran for president in 2008, and topped the polls with New York Mayor Rudy Giuliani, though neither secured the Republican nomination. After he lost in South Carolina, Thompson dropped out in late January.
“Fred stood on principle and common sense, and had a deep love for and connection with the people across Tennessee whom he had the privilege to serve in the United States Senate. He enjoyed a hearty laugh, a strong handshake, a good cigar, and a healthy dose of humility. Fred was the same man on the floor of the Senate, the movie studio, or the town square of Lawrenceburg, his home,” the family’s statement continued. “Fred believed that the greatness of our nation was defined by the hard work, faith, and honesty of its people. He had an enduring belief in the exceptionalism of our country, and that America could provide the opportunity for any boy or girl, in any corner of our country, to succeed in life.”
After leaving the U.S. Senate, Thompson played District Attorney Arthur Branch on “Law & Order” for five straight seasons, leaving the show to run for president.
2016 Democratic candidates caricature from left to right: Jim Webb, Martin O’Malley, Bernie Sanders, Hillary Clinton, Lincoln Chafee.
During the first Democratic debate, it quickly became obvious that former Virginia Democratic Sen. Jim Webb was on the wrong stage and, perhaps, in the wrong party. Webb, a centrist and former Republican, recently dropped out of the race after failing to gain any traction among voters in an increasingly leftward-shifting Democratic base.
In fact, while we often hear from the mainstream media how far right the Republican Party has moved during President Obama’s tenure, polls consistently show it is the Democratic Party that has moved increasingly farther from the historical center of American politics.
Vermont Sen. Bernie Sanders, a self-declared socialist and 2016 Democratic candidate for president, raised roughly the same amount of money in the third quarter as former secretary of state and frontrunner Hillary Clinton. Further, despite his political orientation, Sanders is either leading or slightly trailing Mrs. Clinton in the early voting states of Iowa and New Hampshire.
The fact is that Democrats are becoming what their political opposition has accused them of becoming–socialists.
According to a new Rasmussen Reports survey, most voters in the Democratic Party now have a positive view of socialism, though they remain almost evenly divided as to whether they like capitalism or socialism more. A recognition of this sentiment was on full display during the first Democratic debate, when Secretary Clinton offered a half-hearted defense of capitalism in defense to an attack from Sen. Sanders.
Worth noting, Clinton, by far, has raised more money from Wall Street than any other candidate on either side of the aisle. As Charlie Gasparino has repeatedly and correctly reported, the relationship between Clinton and Wall Street is a wink and a nod. Nevertheless, the results of the Rasmussen poll are similar to a recent Gallup survey conducted in June, which found 59% of Democrats say they would have no problem voting for a socialist in the presidential election.
In 2010, Gallup found just 36% of Americans overall had a favorable view of socialism, which included 53% of Democrats (41% had an unfavorable view). On the other side of the aisle, 74% of Republicans and 54% of moderates had an unfavorable view of the statist-based system.
What accounts for the trending popularity of socialism, a system of government responsible for the Holocaust and tens of millions of human deaths in the twentieth and twenty-first centuries?
Dan Mitchell, CATO economist and PPD contributor, said during a recent interview with Dana Loesch that Bernie Sanders, by definition, isn’t even a real socialist. Perhaps Mr. Mitchell is on to something. Either Mr. Sanders is being completely dishonest–a possibility Mitchell and Loesch seriously entertained–or he doesn’t really understand the economic and political basics of government philosophy. If so, then why should we expect his followers to understand the difference?
“He doesn’t understand what socialism means,” Mitchell said. “If your an economist, the one thing you learn the technical definition of socialist is government ownership of means of productions… The Cubans are real socialists. Bernie Sanders is not a real socialist.”
Mr. Mitchell is certainly correct on the terminology. Still, statism is statism, regardless of the form it takes. The centralized-loving National Socialist German Workers’ Party (NAZI), which under Adolf Hitler controlled Germany from 1933 to 1945 and advocated totalitarianism, was directly responsible for World War II and the Holocaust. They, as well as their statist communist counterparts post-World War II, held the same territorial expansionary ambitions that leftists oft-criticize capitalist “colonial” powers for having. But the bottom line is that there seems to be too much focus on the brands of statism and too little focus on the result.
“A genuine socialist believes in government ownership of the means of production. In other words, nationalized factories, government-run businesses, and collective farms. If Sanders believes in these policies, he’s remarkably reluctant to share his perspective,” Mitchell wrote in a recent article on PPD. “In reality, Sanders is like Obama. You can call him a statist, a corporatist, or even (as Tom Sowell correctly notes) a fascist.”
I suspect obfuscating these differences and redefining the terminology have undoubtedly driven the increased favorable view of socialism in America, particularly among Democratic Party voters. It would be interesting if pollsters would drill down on these questions in order to confirm my suspicions, which PPD has decided to do over the next few weeks.
What’s the difference between libertarians and conservatives? I’ve touched on that issue before, citing some interesting research which suggests that the underlying difference involves cultural factors such as attitudes about authority.
But let’s narrow the question and look at the specific issue of how conservatives and libertarians differ on people’s right to make decisions about their own bodies.
By the way, this is not a discussion of abortion, which involves another person (or fetus, or baby, or clump of cells, or whatever you want to call it). Since there’s no consensus libertarian view on this issue (other than not having it subsidized by the government), I’ll let others fight it out over whether mothers should be able to abort.
Today, I want to look at whether people should be free to control their own bodies in cases when there’s a much more clear-cut case that there is no harm to others.
But let’s use a different example. The Washington Post recently reported that the government of India wants to prevent low-income women from improving their lives.
The issue is whether these women should be able to act as surrogate mothers.
India is one of the top countries in the world for couples searching for surrogacy that can be done far more cheaply than in the United States and elsewhere. It is a booming — and largely unregulated — business in India, with thousands of clinics forming the backbone of an estimated $400 million-a-year industry.
Before I continue, I can’t resist pointing out that – if we use words properly – the industry is regulated. But the regulation is very efficient because it’s the result of private contracts, not government edicts.
That being said, let’s not get distracted. The main issue is whether these voluntary contracts somehow are exploitative.
Critics have long said that fertility clinics and their clients exploit surrogate mothers — often poor and illiterate women from rural areas who are paid little.
But how on earth is this type of arrangement bad for Indian women?!?
A surrogate mother profiled in The Washington Post was paid $8,000: an amount 12 times what she made as a garment worker.
The article doesn’t specify whether the surrogate mother was paid 12 times what she earned in a year, or whether the pay was for the nine-month period of pregnancy. Regardless, the woman clearly was a big winner.
Yet this practice somehow arouses antagonism among India’s political elite.
India’s Supreme Court recently labeled it “surrogacy tourism” and called for a ban. The government submitted an affidavit to the Supreme Court on Wednesday saying that it “does not support commercial surrogacy” and that “no foreigners can avail surrogacy services in India,” although the service would still be available to Indian couples.
I’m not sure why Supreme Court Justices are lobbying for legislation. Maybe India’s system somehow enables that kind of grandstanding. But it’s not good for poor Indians, or the Indian economy.
More than 6,000 surrogate babies are born in India per year, about half of them to foreign couples, according to one industry estimate. “We are taken aback by the government’s stand against foreign nationals,” said Jagatjeet Singh, a surrogacy consultant in New Delhi. “On one hand, the government is promoting foreign investment and the medical tourism industry. And on the other, they are talking of banning foreign nationals from coming to India for surrogate babies. There are dual standards.”
My guess is that richer people in India (such as members of the political elite) don’t like being reminded that their nation is poor. They’re probably somewhat chagrined and embarrassed that they live in a country where thousands of women will jump at the chance to rent their wombs to foreigners.
But even if that’s an understandable emotion (I’m a bit ashamed when foreigners ask me about FATCA, for instance), that doesn’t justify laws banning voluntary exchange between consenting adults.
Moreover, renting a womb isn’t like working in a strip club or being a prostitute. As a libertarian, I don’t want to criminalize those professions, which just makes life harder for women in difficult circumstances. But we can all understand why there’s some degree of shame associated with stripping and hooking.
Heck, I can even understand why some folks don’t like voluntary kidney sales. It’s human nature, after all, to prefer a world where nobody is ever tempted to make big decisions for reasons of financial duress.
Earning money by being a surrogate mother, by contrast, seems perfectly benign. Perhaps somewhat akin to guys who make money by going to sperm banks.
P.S. A related issue is “sweatshops,” which some folks want to ban even though that denies poor people an opportunity to climb the economic ladder and improve their lives.
Russia President Vladimir Putin gives his first speech to the U.N. General Assembly in a decade on September 28, 2015. (Photo: AP)
To most Westerners who have never experienced the capital of the Russian Federation, a weekend in Moscow probably doesn’t sound like too much fun. Or at least, just the thought of a few days near the Kremlin would make most anxious. The fear of the unknown can be palpable. This post is meant to change all that.
Moscow is an oasis of luxury in the middle of the Russian forest. The oligarchs see to that. Long gone are the old Russian clunker cars, the long Soviet lines, and the gray doom and gloom of its former communist glory. Today Moscow is an adult playground of restaurants, museums, parks, and nightlife. However, there is one thing you need to know–bring lots of money! The devalued ruble has made the excursion easier on your wallet but things are still not cheap.
You will arrive at one of three airports, each of them easy to navigate. Change your money outside of baggage claim as the rates are better in the airport terminal area. Look for the signs for the Aeroexpress train to the city center. There are ticket machines near the entrance to the tracks. The cost is about $8 although the price goes up every time I visit the city as inflation takes hold. The trip is about 35-45 minutes depending on the airport. You will arrive at the Vagzahl or train station. Look for the signs to the Metro.
The underground metropolitan in Moscow is literally one of the great wonders of the world. Each station is ornately adorned in marble, mosaics, and grandeur. The efficiency is amazing as trains arrive every two minutes at most stations. The subway is clean and safe and has free wifi onboard. Take that New York!
There are tons of luxurious hotels in Moscva. Get settled in and then let’s hit the sights!
Red Square (Kracnaya Ploshad) is a must of course. Take the tour of the State Historical Museum, St. Basil’s Basilica, and the Kremlin. Make sure you find Ivan the Terrible’s tomb.
Once you had your fill of the monuments, cathedrals, and castles, go across the square and hit GUM, the old Soviet department store that has now been upgraded to an over the top mall experience with every brand you could imagine. Walk along the side streets and take in the feel of metro Moscow.
Once you’ve bought enough Louis Vuitton, then stroll a few blocks up the street to Mayak, an upstairs pub located above the Mayakovsky Theater, frequented by the Moscow intelligentsia. You’ll run into journalists, poets, and artists, a great place for dinner and a few drinks.
If you’ve got the stamina, try some of the Moscow night life! But only if you like being around tons of beautiful women, just sayin… Be sure to dress well or you won’t pass face control. Muscovite dress very well, beware…
The next morning, after a cappuccino and some syrniki, you have to hit Park Gorkovo, (Gorky Park). A few years back, the territory was completely transformed into a playground of restaurants, theaters, free space, water, landscaping, gardens, music, et cetera. You don’t want to miss this!
Have lunch in a cafe in the sun. Talk to a local, most of them speak English and will be glad to help. If you have time, take the metro out to Tsaritsyno, the half built summer ‘cottage’ of Catherine the Great. It is said, she went there once, hated it, and never went back. It’s now a fabulous park.
If you have more time during one of the days, please visit some of the many museums. Art Play is a avant garde modern art center and well worth the trip!
End the day with dinner at Uilliam’s, a fabulous culinary delight. All of Moscow’s beautiful people want to be seen there – but book a table early!
This quick article has really only scratched the surface of what there is to do in Moscow. If you get the time, (and the visa) it’s well worth the trip!
This year, there was an increase in reports from Connecticut to Florida involving left-wing groups attempting to banish Halloween from public schools to the realm of the dead. However, even though Halloween ranks low on regarding importance to Americans, a new poll from Rasmussen Reports finds most still say let the kids have their costumes, tricks and treats in public schools.
In 2014, 71% of American adults believe children should be allowed to wear Halloween costumes in class, up from 63% the year prior. While that number has remained virtually unchanged, 21% (mostly on the left) still disagree. Yet, it is also true that the number of American adults who say they, themselves, will dress up for Halloween has increased from roughly one-fifth (19%) to a quarter (25%).
Meanwhile, according to research from PPD, there was a 27-percent increase in the number of reported efforts to shutdown Halloween fun for kids in public schools.
The survey of 1,000 American Adults was conducted on October 28-29, 2015 by Rasmussen Reports. The margin of sampling error is +/- 3 percentage points with a 95% level of confidence.
Internal Revenue Service (IRS) headquarters building in Washington D.C. (Photo: AP)s
Last year, I wrote a column for the Wall Street Journal making the case that families would benefit more from lower tax rates rather than targeted tax credits.
My argument was simple and straightforward.
Child-based tax cuts are an effective way of giving targeted relief to families with children… The more effective policy—at least in the long run—is to boost economic growth so that families have more income in the first place. Even very modest changes in annual growth, if sustained over time, can yield big increases in household income.
I then had a follow-up piece that expanded the discussion, responding to critics but also noting that advocates of lower rates and supporters of targeted credits at least agree on the importance of reducing double taxation and also want to address non-fiscal impediments to growth.
Now it’s time for a third installment in the series.
The Wall Street Journalopined today against tax credits, citing the challenges that have arisen on the other side of the ocean.
Parliament blocked David Cameron’s plan to reform family tax credits. There’s a warning here for conservatives…about the dangers of social engineering through taxation. At issue is a convoluted tax benefit developed by Tony Blair in 2003 that was supposed to reward low-income work and childbearing. …This policy hasn’t worked.
The editorial points out that welfare reforms deserve credit for a somewhat improved job market. Moreover, there’s scant evidence of desirable effects on birthrates (an important issue because of the collapsing welfare state, as I just discussed).
To the degree there are more births, it is because of the U.K.’s large immigrant population. Tax policy has no significant impact.
A 2013 Office for National Statistics study noted that the combination of economic climate and tax policy “does not have a clear impact in a particular direction.”
But there definitely is a measurable impact in other ways. People now expect to get checks from the government based on the size of their families.
…the tax credits have become a new entitlement for the child-rearing middle class. …eliminating the credits has proved to be politically difficult. The tax-credit system is so entrenched that it’s as hard to reform as any other entitlement… That’s a lesson for Americans as a debate about tax reform gathers momentum.
And the WSJ expands the lesson.
…the most pro-family tax policies are those that do the most to boost broad-based growth and raise incomes, which means a flatter tax code with lower rates and fewer distorting credits and exemptions. As Britain shows, the danger of using the tax code for pro-natalist social planning is that you end up with an expensive new entitlement that is merely another mechanism for income redistribution and can’t be reformed.
Especially since the tax code already is a convoluted and corrupt mess. Writing for Investor’s Business Daily, Amity Shlaes and Gregory Thornbury make the case for a low-rate flat tax instead of expanded credits.
The fixation on family tax benefits abides, even though the tax code already features dozens of credits and deductions installed in the name of children. …The assumption that such credits are the best gift for the religious family dates back 100 child credits ago… But that doesn’t mean that the policy truly benefits families.
They explain that growth is more important. And you’re more likely to get a better-performing economy when marginal tax rates are reasonable.
…a better policy for families, then and today, is a tax code that does more to realize their aspirations than any political lobby. Such a plan has no child credits but would be simpler and flatter, with a top rate of, say, 20%, 18%, 15% or even, as Carson would have it, 10%. The reasons why this is so have to do with standard tax parameters such as marginal rates and standard tax concepts such as the incentive.
Keep in mind, by the way, that there are tradeoffs. If politicians want big credits, they will want to make up for the foregone revenue by raising tax burdens elsewhere.
Costly tax breaks like the child credit are one reason why top rates are so high in the first place. To compensate for the revenue that such a break forgoes, lawmakers raise rates at the top of the tax schedule or lower the point at which the top rate kicks in.
Last but not least, there’s a moral component to this debate.
There are taxes in the Bible. But nowhere does the Bible say that a great share of the rich man’s money has to go to a secular government. And it never crosses the minds of today’s politicians that they encourage their constituents to violate the 10th Commandment when they stoke resentment and envy. …Our code does feel like a maze because progressivity represents behavioral engineering par excellence. It treats humans like rats who struggle through, avoiding trap doors and hunting for chunks of cheddar cheese without ever gaining much idea of where they are. It’s time for a tax code that treats humans with dignity.
Which, for what it’s worth, includes a generous exemption based on family size. So the goal is to provide some tax relief to families, but to keep it reasonable so that other objectives (such as growth) can be realized.
U.S. Capitol Building on Capitol Hill. (Photo: iStockPhoto)
In my speeches, I routinely argue that an aging population is one of the reasons why we need genuine entitlement reform. A modest-sized welfare state may be feasible if a country has a “population pyramid,” I explain, but it’s a recipe for fiscal chaos when changing demographics result in fewer and fewer people pulling the wagon and more and more people riding in the wagon.
And if you somehow doubt that’s what is happening in America, check out this very sobering image showing that America’s population pyramid is turning into a population cylinder.
The bottom line is that demographics and entitlements will mean a Greek fiscal future for America and other nations. To bolster my case (particularly for folks who might be skeptical of a libertarian message), I frequently cite pessimistic long-run fiscal data from international bureaucracies such as theIMF,BIS, andOECD.
Declining fertility and increasing longevity will lead to a slower-growing, older world population. …For the world, the share of the population older than age 65 could increase from 12 percent today to 38 percent by 2100. …These developments would place public finances of countries under pressure, through two channels. First, spending on age-related programs (pensions and health) would rise. Without further reforms, these outlays would increase by 9 percentage points of GDP and 11 percentage points of GDP in more and less developed countries, respectively, between now and 2100. The fiscal consequences are potentially dire…large tax increases that could stymie economic growth.
Let’s now look at a couple of charts from the study.
The one of the left shows that one-third of developed nations already have negative population growth, and that number will jump to about 60 percent by 2050. And because that means fewer workers to support more old people, the chart on the right shows how the dependency ratio will worsen over time.
So what do these demographic changes mean for fiscal policy?
Well, if you live in a sensible jurisdiction such as Hong Kong or Singapore, there’s not much impact, even though birthrates are very low, because government is small and people basically are responsible for setting aside income for their retirement years.
And if live in a semi-sensible jurisdiction such as Australia or Chile, the impact is modest because personal retirement accounts preclude Social Security-type fiscal challenges.
But if you live just about anywhere else, in places where government somehow is supposed to provide pensions and health care, the situation is very grim.
Here’s another chart from the new IMF report. If you look at developed nations, you can see a big increase in the projected burden of government spending, mostly because of rising expenditures for health care.
Returning to the IMF report, the authors contemplate possible policy responses.
They look at increased migration, but at best that’s a beggar-thy-neighbor approach. They look at increased labor force participation, which would be a very good development, but it’s hard to see that happening when nations have redistribution policies that discourage people from being in the workforce.
And the report is very skeptical about the prospects of government-induced increases in birthrates.
Boosting birth rates could slow down population aging and gradually reduce fiscal pressures. …However, a “birth rate” solution to aging is unlikely to work for most countries. The pronatalist policies seem to have only modest effects on the number of births, although they might affect the timing of births.
So that means the problem will need to be addressed through fiscal policy.
The IMF’s proposed solutions include some misguided policies, but I was surprisingly pleased by the recognition that steps were needed to limit the growth of government.
Regarding pensions, the IMF suggested higher retirement ages, which is a second-best option, while also suggesting private retirement savings, which is the ideal solution.
Reforming public pension systems can help offset the effects of aging. Raising retirement ages is an especially attractive option… For example, raising retirement ages over 2015–2100 by an additional five years (about 7 months per decade) beyond what is already legislated would reduce pension spending by about 2 percentage points of GDP by 2100 (relative to the baseline) in both the more and less developed countries. …increasing the role of private retirement saving schemes could be helpful in offsetting the potential decline in lifetime retirement income.
But if you recall from above, the biggest problem is rising health care costs.
And kudos to the IMF for supporting market-driven competition. Even more important, though, the international bureaucracy recognizes that the key is to limit the government’s health care spending to the growth of the private economy (sort of a a healthcare version of Mitchell’s Golden Rule).
…health care reform can be effective in containing the growth of public health spending. …There is past success in improving health outcomes without raising costs through promoting some degree of competition among insurers and service providers. …Containing the growing costs of health care would help reduce long-term fiscal risks. On average, health care costs are projected to increase faster than economic growth. …Assuming policies are able to keep the growth of health care costs per capita in line with GDP per capita, health care spending will increase at a slower rate, reflecting only demographics. Under this scenario, public health care spending pressures would be greatly subdued: by 2100, health spending would be reduced by 4½ percentage points of GDP in the more developed countries.
Interestingly, of all the options examined by the IMF, capping the growth of health care spending had the biggest positive impact on long-run government spending.
In addition to making necessary structural changes, both of these reforms cap the annual growth of health care spending, which is precisely what the IMF report says will generate the largest savings.
So we’re actually in a very unusual situation. Some lawmakers want to do the right thing for the right reason at the right time.
Texas Sen. Ted Cruz, center, delivers talking points on his new tax plan as Carly Fiorina, left, and Chris Christie, right, listen and participate in the Oct. 28, 2015, GOP debate hosted by CNBC in Boulder, Colo. (Photo: Robyn Beck, AFP/Getty Images)
The tax-reform landscape is getting crowded. I’ve previously reviewed tax plans offered by Rand Paul, Marco Rubio,Jeb Bush, Bobby Jindal, andDonald Trump, and we now have a reform blueprint from Ted Cruz to add to the proposals put forth by other candidates.
Writing for the Wall Street Journal, the Texas Senator unveiled his rewrite of the tax code.
…tax reform is a powerful lever for spurring economic expansion. Along with reducing red tape on business and restoring sound money, it can make the U.S. economy boom again. That’s why I’m proposing the Simple Flat Tax as the cornerstone of my economic agenda.
Here are the core features of his proposal.
…my Simple Flat Tax plan features the following: • For a family of four, no taxes whatsoever (income or payroll) on the first $36,000 of income. • Above that level, a 10% flat tax on all individual income from wages and investment. • No death tax, alternative minimum tax or ObamaCare taxes. • Elimination of the payroll tax and the corporate income tax… • A Universal Savings Account, which would allow every American to save up to $25,000 annually on a tax-deferred basis for any purpose.
From an economic perspective, there’s a lot to like. Thanks to the low tax rate, the government no longer would be imposing harsh penalties on productive behavior. Major forms of double taxation such as the death tax would be abolished, creating a much better environment for wage-boosting capital formation.
Moreover, the reforms Cruz is pushing would clean up some of the most complex and burdensome sections of the tax code.
But Cruz’s plan is not a pure flat tax. There would be a small amount of double taxation of income that is saved and invested, though the adverse economic impact would be trivial because of the low tax rate.
And the Senator would retain some preferences in the tax code, which is somewhat unfortunate, and expand the earned income credit, which is more unfortunate.
It maintains the current child tax credit and expands and modernizes the earned-income tax credit… The Simple Flat Tax also keeps the current deduction for all charitable giving, and includes a deduction for home-mortgage interest on the first $500,000 in principal.
But here’s the part of Cruz’s plan that raises a red flag. He says he wants a “business flat tax,” but what he’s really proposing is a value-added tax.
…a 16% Business Flat Tax. This would tax companies’ gross receipts from sales of goods and services, less purchases from other businesses, including capital investment. …My business tax is border-adjusted, so exports are free of tax and imports pay the same business-flat-tax rate as U.S.-produced goods.
His proposal is a VAT because wages are nondeductible. And that basically means a 16 percent withholding tax on the wages and salaries of all American workers (for tax geeks, this part of Cruz’s plan is technically a subtraction-method VAT).
Normally, I start foaming at the mouth when politicians talking about value-added taxes. But Senator Cruz obviously isn’t proposing a VAT for the purpose of financing a bigger welfare state.
Instead, he’s doing a swap, imposing a VAT while also getting rid of the corporate income tax and the payroll tax.
And that’s theoretically a good deal because the corporate income tax is so senselessly destructive (swapping the payroll tax for the VAT, as I explained a few days ago in another context, is basically a wash).
But it’s still a red flag because I worry about what might happen in the future. If the Cruz plan is adopted, we’ll still have the structure of an income tax (albeit a far-less-destructive income tax). And we’ll also have a VAT.
So what happens 10 years from now or 25 years from now if statists control both ends of Pennsylvania Avenue and they decide to reinstate the bad features of the income tax while retaining the VAT? They now have a relatively simple way of getting more revenue to finance European-style big government.
And also don’t forget that it would be relatively simple to reinstate the bad features of the corporate income tax by tweaking Cruz’s business flat tax/VAT.
My advice to both of them is to ditch the VAT and keep the payroll tax. Not only would that address my concern about enabling the spending proclivities of statists in the future, but I also think Social Security reform is more feasible when the system is financed by the payroll tax.
Notwithstanding my concern about the VAT, Senator Cruz has put forth a plan that would be enormously beneficial to the American economy.
Instead of being a vehicle for punitive class warfare and corrupt cronyism, the tax code would simply be the method by which revenue was collected to fund government.
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which just makes life harder for women in difficult circumstances. But we can all understand why there’s some degree of shame associated with stripping and hooking.
