Topic: Tax and Budget Policy

Euphemisms for Theft

English is a rich language. One reason is that we don’t have an equivalent of l’Academie Française, which tries (and fails) to prevent loan words, neologisms, and deviations from prior rules of grammar. 

Another reason is that political processes keep generating euphemisms designed to disguise horrid behavior. (“Did I say death camps? I meant happy camps.”) 

To honor that tradition, I offer this list of euphemisms for theft:

Email me mcannon [at] cato [dot] org (here) with additional candidates.

The Emergency Du Jour

True to form, Congress has added some non-defense items to the current “emergency” supplemental spending bill that was proposed mainly as a way to fund the troop surge in Iraq.  Among my favorites (as reported in this chart – subscription required – in today’s Congressional Quarterly):

* $1.8 billion in crop subsidies

* $283 million in price supports for milk producers

* $74 million for “peanut storage” subsidies

* $25 million in aid to spinach growers who lost money during the 2006 contamination scare

An Extra $15 Billion for Farm Programs

Further to David’s post yesterday, some telling details about the Senate Budget Committee’s ideas for “fiscally responsible” farm policy. Starting on page 54 of this document, section 306 the “Deficit-Neutral Reserve Fund for the Farm Bill” (which is a cute name – what chances do you give of this staying a “reserve fund”?) states that:

The Chairman of the Senate Committee on the Budget may revise the allocations, aggregates, and other appropriate levels and limits in this resolution for a bill, joint resolution, amendment, motion, or conference report that- 

  1. reauthorizes the Food Security and Rural Investment Act of 2002;
  2. strengthens our agriculture and rural economies;  
  3. provides agriculture-related tax relief; 
  4. improves our environment by reducing our Nation’s dependence on foreign sources of energy through expanded production and use of alternative fuels; or 
  5. combines any of the purposes provided in paragraphs (1) through (4); 

by the amounts provided in that legislation for those purposes up to $15,000,000,000 over the total of fiscal years 2007 through 2012, provided that such legislation would not increase the deficit over the total of the period of fiscal years 2007 through 2012.

Farm lobby groups were relatively happy with the 2002 Farm Bill, and would be still were it not for the inconvenient fact that market prices of some commodities are so high, and projected to remain high, that government spending on price-linked subsidies will probably be relatively low over the next few years (falling from about $15 billion annually to about $8 billion). Apparently, high market prices are not sufficient to please some farm groups, hence the extra $15 billion of your money that the Senate has seen fit to allocate to “any of the purposes provided in paragraphs (1) through (4).”

On today’s agenda, a group of congressmen are introducing a bill regarding the reauthorization of the farm bill. From the press release (via Ken Cook):

The bill reforms the Farm Bill to make a major new investment in the development of renewable energy on American farms, promote resource conservation, provide consumers with healthier food choices, and boost farm profitability. The Healthy Farms, Foods, and Fuels Act of 2007 also includes provisions to reduce greenhouse gas emissions on farms and fight global warming, and to expand programs to bring healthier foods to school cafeterias.

That’s quite a wish list.

Cato’s Center for Trade Policy Studies is on the case, though. Stay tuned for our alternative ideas for the farm policy, released shortly.

Tax Harmonization Equals Higher Taxes

The politicians and bureaucrats in Brussels argue that taxes have to be equalized to improve the “efficiency” of the market. They make this rather absurd claim and then vehemently deny that tax harmonization has anything to do with making taxes higher. So why, then, does every tax harmonization decision in Europe inevitably result in higher taxes? The latest effort to increase the minimum diesel tax in the European Union, as reported by the EU Observer, is ample proof that tax harmonization is about giving politicians more money and power:

The European Commission has tabled a controversial bill to raise the minimum duty on diesel from 2012, aimed at stamping out so-called fuel tourism … Mr Kovacs’s paper suggests harmonizing the minimum level of excise duties at €359 per 1,000 litres of diesel in 2012 and subsequently at €380 in 2014, something which would force 21 EU states to increase their current rates. …fuel tourism cost Germany – believed to be the strongest advocate of the tabled proposal - €1.9 billion in 2004, as excise duties represent roughly between 30 to 60 percent of the pump price and are responsible for six to 18 percent of the running costs of a road haulage business.

Tax Competition Forces Lower Tax Rates in Germany

The Wall Street Journal celebrates the putative announcement of a nine percentage point reduction in Germany’s corporate tax rate. There is a dark lining to this silver cloud since there are hidden tax increases included in the proposal. The initiative also leaves in place some loopholes that could have been used to finance even lower tax rates, but it is nonetheless encouraging to see that one of Europe’s biggest cheerleaders for tax harmonization is being forced to join the tax-cutting bandwagon: 

Europe’s vibrant tax competition has finally reached Germany, which usually prefers to sit back and tut-tut while its neighbors cut taxes and grow their economies. Chancellor Angela Merkel’s cabinet today is expected to slash the top corporate tax rate to 29.8% (the average federal-municipal rate) from 38.7%. That’s still a far cry from flat-tax Slovakia’s 19% or Ireland’s 12.5%. But it would move Germany from the third-highest corporate tax rate in the OECD, after Japan and the U.S., to a more comfortable middle position. …The Finance Ministry missed the opportunity to simplify the tax system in one go. Getting rid of tax exemptions for corporations – thereby broadening the tax base – would have been a useful move. It would have had the added benefit of giving Berlin more room to cut rates beyond the planned nine percentage points. …Over the long run, the corporate tax cuts will likely increase revenues by encouraging economic activity and tax compliance.

How Dumb Do They Think We Are?

For the past six years Democrats have railed against President Bush’s gimmicky, deceptive, wildly unbalanced budgets. Now that they control Congress, they have the power to write their own budgets. And what have they come up with? As the Washington Post explains,

Senate Democrats unveiled a spending blueprint yesterday that envisions a massive expansion of the nation’s health-insurance program for children, as well as billions of additional dollars for other domestic priorities such as public education, veterans’ health care and local police. 

Despite the additional spending, Sen. Kent Conrad (D-N.D.), chairman of the Senate Budget Committee, said the proposal would virtually erase the federal deficit within four years without raising taxes and produce a surplus of $132 billion by 2012.

It’s not true that politicians never learn anything. Conrad and his colleagues have learned a great deal from Bush and his budget spinners.

The Government Is Not the Country

The Washington Post reports,

“Three of the last five years, there’s been no budget for this country,” [Sen. Kent] Conrad said in an interview.

Actually, for the past 218 years, there’s been no budget for this country. The country is a vast, sprawling nation of 300 million people, millions of businesses, and more than 100 million households. The country is not a corporate entity, and it has no budget.

On the other hand, there is supposed to be a budget for the federal government, and Congress is indeed derelict in failing to pass one. But politicians should not forget the distinction between the country and the government.