Tax Competition Drives Good Policy in Canada

A National Post report from Canada illustrates how jurisdictional competition pushes policymakers to adopt better tax law. Indeed, both the left and right are fighting over who can make the biggest reduction in the corporate tax rate. As the article notes, this is a remarkable development since politicians used to treat companies as cash cows.

With nations all over the world lowering corporate rates, America’s punitive tax treatment of business is becoming an even bigger obstacle to competitiveness:

Who would have thought federal politics would come to this: Liberals and Conservatives competing over who would lower corporate taxes the most! …That…marks an amazing turn of fortune, an historic reversal of at least half a century of corporate-bashing tax increases, of surtaxes on taxes, of capital taxes piled on surtaxes rolled over from year to year.

…[T]here is certainly much to be said for [Canadian Prime Minister] Flaherty’s corporate tax objectives. First he aims to get the federal tax rate down to 15% by 2012. Then he wants the provinces to join the national corporate tax competition by cutting their rates to 10%, thus lowering Canada’s nationwide corporate tax rate to 25%. That means, said Mr. Flaherty, that “Canada’s corporate tax rate will become the lowest among the major industrialized economies.” It’s a good objective — for the economy, for growth, for innovation — and a sign perhaps that most Canadians have come to appreciate that nations and their citizens get rich by freeing business enterprises rather than by plundering them for instant cash.

…Countries all over the planet are rushing to trim tax rates on business… Jack Mintz, of the University of Toronto, pointed out yesterday that Italy has just slashed that rate by 4.5 percentage points. Other countries are cutting rates in large increments of up to seven percentage points, as in Germany. The new Flaherty cuts are good, says Mr. Mintz, but not good enough. “Why not cut rates right away?” It’s also not clear that 25% is low enough to maximize business activity and attract business investment to Canada. In his recent tax competitiveness study for the C.D. Howe Institute, Mr. Mintz called for a national corporate tax rate of 20%.

…The next needed political transformation: It’s OK to cut taxes on the rich.

Cato and the ‘Republican Tent’

Justin is quite right to object to John Quiggin’s charge that Cato has somehow soft-pedalled its opposition to the the Iraq war. But I wanted to also object to his comment about Cato “remaining within the Republican tent,” which I personally found even more aggravating.

There certainly are a few issues where Cato scholars have agreed with the White House, with Social Security reform and immigration being the most obvious examples. But there are also plenty of examples of Cato scholars sharply criticizing the White House and the Republican leadership. Here is Cato’s Neal McCluskey criticizing the president’s signature education policy initiative. Here is a Cato paper criticizing the Republicans’ expansion of Medicare. Here are two books criticizing the Republicans for abandoning their small-govenment roots. Here is Gene Healy and Tim Lynch’s devastating brief on the Bush administration’s civil liberties record. Here is a critique of the GOP’s Federal Marriage Amendment. Here is a podcast of yours truly opposing the White House’s stance on warrantless wiretaps. Here is Cato’s Jim Harper arguing against the REAL ID Act, which is backed by the White House. Here are repeated critiques of the Republicans’ pork-laden energy bill. Here is Cato’s Roger Pilon arguing for lifting the ban on “drug reimportation,” a ban the White House supported.

I could go on, but you get the idea. And that’s in addition to all the foreign policy work Justin already noted. Cato scholars criticize Republican policymakers constantly. We are not, and have never sought to be, “within the Republican tent.” Unfortunately, partisanship seems to have so curdled public discourse that many on the political left seem to reflexively assume that anyone who’s not in “the Democratic tent” must ipso facto be in the Republican tent. Even a cursory review of our recent work makes it clear that’s not true.

What You Need to Know About Driver Licensing and Illegal Aliens

After 700 words of Sturm und Drang about lawsuits and partisan machinations over whether illegal aliens should be able to get drivers’ licenses, CNSNews.com reporter Fred Lucas quoted me briefly:

“Identification systems aren’t a good security tool,” Harper told Cybercast News Service. “Driver licensing isn’t a good tool for immigration control. It will just result in illegal immigrants driving without a license.”

That sums it up nicely. Just thought I’d share it.

(The story says that unlicensed driving dropped by a third when New Mexico de-linked driver licensing and immigration status. Actually, unlicensed driving dropped by two thirds, from 33% to 11%, lower than the national average.)

What Are We Supposed to Do?

John Quiggin posts that Glenn Reynolds no longer claims to be a libertarian. Quiggin argues that “the idea that a relaxed attitude to sex and drugs and support for economic policies that favour your own social class (note that “shmibertarians” happily square their anti-tax line with support for higher taxes on the poor) can trump the authoritarian implications of militarism, from Gitmo to collusion in government lies, is now pretty much dead.”

To which most of my Cato colleagues — one could probably count on one hand the exceptions and still have enough fingers left to smoke a cigarette — would say “Good riddance to bad rubbish.” The same number of people who would differ with that might give a fig what Glenn Reynolds’ reason is today for why George Bush is a heroic figure. But then, curiously, Quiggin goes on to argue that

The implications go further I think. Given that the Republicans are now definitively the war party (not that the Democrats have yet become the peace party, but that’s another story), it’s hard to see how libertarian Republicans can survive, any more than Dixiecrats survived Nixon’s Southern strategy. The recent decision by RedState to ban Ron Paul supporters is a pretty clear indication of how real Republicans think about this. This has big implications for a thinktank like Cato, which has opposed the war (but very sotto voce — a visitor to their website would be hard pressed to tell that there even was a war) while remaining within the Republican tent.

Emphasis and gnashing teeth mine. To this my (two, now three) colleagues in the foreign policy program at Cato and I would reply, “Have you read any of our work on foreign policy?” I’m sorry there was nothing on our front page yesterday about the war, but to say we’ve been sotto voce and that one would be hard pressed to tell, after looking at our foreign policy work, that “there even was a war” just shows that Mr. Quiggin may need a tutorial on how to use the intertubes.

Here’s our latest call (the first one was issued in 2004, as I recall) for immediately beginning to withdraw, having all U.S. troops out in six months. Here’s my boss Chris Preble assaulting two pro-war liberals in the pages of The National Interest. Humbly, here I am arguing that while getting out is going to be bad, that opponents have ridiculously inflated the costs to better make the case for staying. And factor into that roughly a gazillion conferences, panels, forums, interviews, talk radio and TV appearances, blog posts, talks with Capitol Hill folks, and sundry other think-tankery.

Now, we’re not posting articles every day about the Iraq war, it’s true. To be totally candid, I have very little left to say. It was a disastrous idea to get in, we should have gotten out immediately, we should still get out immediately. Full stop. We have precious little control over either the security environment over the long term or the political environment at all, so pouring money, men, or materiel in is throwing good stuff after bad. I imagine, although I’m not a soothsayer, that things will get noticeably worse for a time after we withdraw — but that this will happen whether we get out this year, next year, or in 10 years.

But in a nutshell, that’s about all I have to say. And I’ve been saying it to anybody who asks. Unfortunately, the New York Times hasn’t asked, and the Washington Post certainly hasn’t asked. For whatever reason, both op-ed pages remain more interested in what the neocons are saying. Probably that’s because they still have the president’s ear, and the papers want to run pieces that relate to policy options he’s actually considering.

Maybe it’s our absence from these venues that’s why Quiggin doesn’t know we’ve been arguing against the war. But to just parachute in to our site’s front page and declare our voices too soft for his liking is a bit much. For better or worse, we’ve been out there, lonely, arguing for withdrawal and against the ideas that spawned the war.

If I had to bet, though, I’d bet money that we’ll still be in Iraq in a meaningful way 10 years from now. Which is why, to my mind, it’s become all the more important that we don’t get the gang back together to play a reunion concert in Iran. Which is why, among other things, we’ve published a paper on what we should do now with Iran, a paper arguing that if a proactive policy fails, it would be better to live with a nuclear Iran than start another war, and a bunch of other stuff on Iran. Here’s a half-day event on Iran that we did that recently was mentioned in an Esquire profile of Flynt Leverett.

In short, I’m not sure what Mr. Quiggin wants us to do. If he has any sharp suggestions for stopping the war, I’m certainly open to them.

Ivory Tower Can’t Blame State Taxpayers

In a House Education and Labor Committee hearing yesterday, higher education experts asserted that schools have had to constantly raise tuition well in excess of inflation because states keep short-changing them on funds. Indeed, Cal State Long Branch President F. King Alexander suggested that in order to rein in costs, Washington should cut higher ed funding to states that cut their own funding. In other words, he said that the feds should only lavish more taxpayer money on universities in states that themselves lavish more taxpayer money on them.

The problem with the “states are cheap” argument is that it’s utterly false. Public college prices have risen at the same time that state and local funding has grown.

Let’s look at absolute state and local funding. Using the latest available federal data and adjusting for inflation, state and local spending rose from $40.1 billion in the 1980-81 academic year to $69.9 billion in 2000-01, a 74 percent increase. According to data from the College Board (figure 6 in the linked report), during that same period the inflation-adjusted published cost of tuition, fees, room and board (TFRB) at four-year public institutions rose from roughly $7,000 to about $10,000, a 43 percent increase. So prices at public institutions rose at the same time state and local appropriations were increasing.

Perhaps, though, funding is a problem of reductions in spending per-pupil. Perhaps state and local support has risen, but not kept up with increasing enrollment. Using data from the State Higher Education Executive Officers (figure 3 in the linked report) we see that there is a little more support for the ivory tower’s complaint that schools just don’t get enough public funding — but not much more. State and local appropriations are clearly cyclical, rising as a result of good economic times and decreasing in response to bad. But it is also clear that there has not been a general decline in state and local funding per-pupil. Indeed, in the 1980-81 to 2001-01 period we explored earlier, the SHEEO data show that inflation-adjusted public funding per full-time equivalent student rose from $6,517 to about $7,371, a 13 percent increase.

So what does all this tell us? Pretty simply, the same thing former Harvard University President Derek Bok wrote in his book Universities in the Marketplace: “Universities share one characteristic with compulsive gamblers and exiled royalty: there is never enough money to satisfy their desires.” Including, especially, taxpayer money.

Tales from the Clinton Dynasty

Nina Burleigh, who covered the Clinton White House for Time and who once said of President Clinton, ”I’d be happy to give him [oral sex] just to thank him for keeping abortion legal,” reviews a new biography of Bill and Hillary Clinton in the Washington Post. She writes, “The details are riveting as ever. Who can get enough of POTUS sweating on the phone at 2 a.m. with a love-addled 24-year-old woman, placating her with job promises, knowing his world is about to explode as surely as a Sudanese powdered-milk factory?”

It seems a cavalier way to refer to the bombing of a factory in a poor country, a factory that was not in fact making nerve gas, and a bombing that happened suddenly, just three days after Clinton’s traumatic speech to the nation about the Monica Lewinsky scandal. Critics suggested that he wanted to change the subject on the front pages. Bombings aren’t funny, and Burleigh’s jest does nothing to put to rest the cynical, “Wag the Dog” interpretation of Clinton’s action.

Medical Marijuana

Three views on medical marijuana. 

For Drew Carey, click here.  (recommended)

For Mitt Romney, click here.

For Rudy Giuliani, click here.

More here.  I should also note that after California voters approved a medical marijuana referendum in 1996, Bill Clinton and Janet Reno vowed to enforce the federal law.  They stepped up the DEA raids and Bush continued the policy.