Tag: obama

Three Cheers to Swiss Government for Resisting U.S. Fiscal Imperialism

Switzerland has better tax policy than America and a far stronger human-rights policy regarding personal privacy. This makes the IRS unhappy, since the tax police would like to find out if some Americans have overseas bank accounts.

In an odious display of fiscal imperialism, the Department of Justice is demanding that one of the Swiss banks divulge any information about American clients - even though this would mean imposing America’s bad law on a foreign institution operating on foreign soil.

Thankfully, the Swiss government has stepped in to ensure that the bank cannot be extorted.

Bloomberg reports:

Switzerland said it would seize UBS AG data to prevent the U.S. Justice Department from pursuing a U.S. court order seeking the identities of 52,000 American account holders in a crackdown on tax evaders. The assertion came in court papers yesterday in federal court in Miami, where the Justice Department sued UBS on Feb. 19, a day after the bank avoided U.S. prosecution for helping wealthy Americans evade taxes. The U.S. effort to enforce a summons seeking the names would force UBS to violate Swiss laws barring disclosure of such data, the filing said.

The Swiss government “will use its legal authority to ensure that the bank cannot be pressured to transmit the information illegally, including if necessary by issuing an order taking effective control of the data at UBS that is the subject of the summons,” according to the filing.

…“It is hoped that it will be unnecessary for the Government of Switzerland to take the extraordinary action of issuing an order to seize the information at issue, but such an action should be expected if the IRS continues to pressure UBS to violate Swiss law,” according to the filing.

Socialist Surtax for Health Care

In their desperate bid to find half a trillion dollars or so to fund a health care expansion, Democrats have no shortage of bad ideas. Indeed, their new idea is even worse than last month’s dastardly plan to hike taxes on beer and wine.

The Democrat’s new idea is to slap a special “surtax” on high earners. A surtax is simply a flat additional charge based on adjusted gross income. The model for the new scheme seems to be a four percent surtax proposed by House tax writer Charlie Rangel in 2007.

Elsewhere I’ve explained why tax hikes on high earners is poor economic policy.  But politically, what’s striking is how far American economic policy is moving to the left of policies in other major nations.

The chart shows that the current top U.S. personal income tax rate (including the average state rate) is 42 percent, which is the same as the average in the 30 nations of the Organization for Economic Cooperation and Development (OECD).

President Obama already plans to increase the top federal rate from 35 percent to 40 percent at the end of 2010. That would push the combined federal-state rate to 47 percent, substantially above the average of other major industrial nations. Imposing a 4-percent surtax on top would push the top rate to 51 percent, which would be higher than many nations that were traditionally more socialist than America, including France (46%), Germany (48%), and Italy (45%).

Obama and the Democrats chafe at being labeled “socialists”, and it’s true that Republicans are just as socialist when it comes to spending policies. But tax rates higher than France? Tax rates over 50%? Come on Democrats, you’ve got to be kidding!

Who’s Blogging about Cato

Here’s a roundup of bloggers who are writing about Cato research, commentary and analysis. If you’re blogging about Cato, cmoody [at] cato [dot] org (let us know.)

  • Freedom Politics blogger Thomas J. Lucente Jr. cites foreign policy expert Christopher Preble in a post about the U.S. military withdrawal from Iraq.
  • Writing about the political situation in Honduras, Patrick Murphy draws from Juan Carlos Hidalgo’s analysis on the president’s removal.
  • At the Americans for Tax Reform blog, Tim Andrews cites David Boaz’s post that lists the “taxes proposed or publicly floated by President Obama and his aides and allies.”
Topics:

The Politicians and the Founders

Both President Obama and Sen. John McCain cited the Founders in their weekly radio addresses today, as they made the case for government actions that would have appalled those Founders. Obama invoked “the indomitable spirit of the first American citizens who made [independence] day possible” in arguing for a federal takeover of education, energy, and health care.

He might have trouble explaining how his policies reflect the spirit of the men who left us such words as these:

He has erected a multitude of New Offices, and sent hither swarms of Officers to harrass our people, and eat out their substance.

If we can prevent the government from wasting the labors of the people, under the pretence of taking care of them, they must be happy.

Were we directed from Washington when to sow and when to reap, we should soon want bread.

A wise and frugal Government, which shall restrain men from injuring one another, shall leave them otherwise free to regulate their own pursuits of industry and improvement, and shall not take from the mouth of labor the bread it has earned. This is the sum of good government.

Meanwhile, McCain called for the American government to more vigorously support the protesters in Iran. What would the Founders say to him?

The great rule of conduct for us in regard to foreign nations is in extending our commercial relations, to have with them as little political connection as possible….Harmony, liberal intercourse with all nations, are recommended by policy, humanity, and interest.

Peace, commerce, and honest friendship with all nations, entangling alliances with none.

[America] has abstained from interference in the concerns of others, even when conflict has been for principles to which she clings, as to the last vital drop that visits the heart. …Wherever the standard of freedom and Independence has been or shall be unfurled, there will her heart, her benedictions and her prayers be. But she goes not abroad, in search of monsters to destroy. She is the well-wisher to the freedom and independence of all. She is the champion and vindicator only of her own.

Maybe each week there should be three national radio broadcasts: one from the incumbent president, one from the other big-government party, and one reflecting the views of the Founders.

Consumer Financial Product Commission Distracts from Real Reform

Today the Obama Administration released a 152-page draft bill to create a new Consumer Financial Product Commission. While intended to protect against consumer confusion and reduce the likelihood of future financial crises, the proposed agency will at best have little impact and at worst contribute to the next financial crisis, with the added effect of decreased homeownership and increased litigation.

The president promises that “those ridiculous contracts with pages of fine print that no one can figure out – those things will be a thing of the past,” The president ignores that those “ridiculous contracts” and “fine print” are the result of previous rounds of so-called consumer protections. The disclosures one receives with a mortgage or a credit card are those mandated by some level of government. They don’t call those credit card disclosures a “Schumer Box” because they were invented by a baron of industry. In addition to the government-mandated disclosures that have failed, are the endless amount of fine print added to protect companies from frivolous litigation. The Obama approach to that problem is to increase the amount of litigation.

If the president were serious about avoiding the next housing bubble and financial crisis, he would propose eliminating some of the various federal policies that contributed to the housing bubble. For instance, how about requiring real down payments when the taxpayer is on the hook – as with Fannie Mae, Freddie Mac and the Federal Housing Administration (FHA). Talk about bad incentives; under FHA, a borrower can put almost nothing down and if the loan goes bad, the government covers the lender for 100 percent of their losses.  No wonder we had a housing bubble. In addition, the proposed agency does nothing to address the underlying causes of any type of credit default: unemployment, unexpected health care costs or divorce.

Once again, when given the opportunity to address the real flaws in our financial system, the administration chooses to appease the special interests and provide a distraction from the underlying causes of our current financial crisis.

Attention GM Shareholders (That Means You!)

As my colleague Doug Bandow pointed out this morning, today’s Washington Post has an analysis about the uncertain prospects of GM ever making taxpayers whole again. It is a very similar analysis to the one I gave in this L.A. Times Dust-Up installment four weeks ago, although I find prospects unlikely, rather than just uncertain.

If GM emerges from bankruptcy next month in accordance with the pre-packaged Obama plan (as expected), taxpayers will be on the hook for $50 billion. That $50 billion will buy taxpayers a 60 percent stake in the company, which according to the laws of mathematics means that GM has to be worth $83.33 billion for the taxpayers to get their equity back without making a dime in capital gains or interest.  In the L.A. Times, I asked:

How and when will that ever happen? At its peak in 2000, GM’s value (based on its market capitalization) stood at $60 billion. Thus, the minimum benchmark for “success” will require a 38% increase in GM’s value from where it was in the heady days of 2000, when Americans were purchasing 16 million vehicles per year. U.S. demand projections for the next few years come in at around 10 million vehicles. Taxpayer ownership of GM is something we should all get used to, and the “investment” is only going to grow larger. Think Amtrak.