New Zealand Tax Reform

In yet another sign of the liberalizing impact of tax competition, New Zealand lawmakers are lowering the nation’s corporate tax rate and moving toward a territorial tax regime (the common-sense approach of only taxing income earned inside national borders).

Kiwi officials openly admit that these reforms are driven by a need to compete with other nations, further confirming the need to protect and promote fiscal rivalry from the anti-competition schemes of international bureaucracies such as the Organization for Economic Cooperation and Development.

Tax-news.com reports on the New Zealand reforms: 

New Zealand Finance Minister Michael Cullen has announced a 3% cut in the country’s rate of corporate income tax along with a series of other measures designed to improve the nation’s international business competitiveness.

The most significant component of Cullen’s 2007 Budget, announced in parliament on Thursday, was the decision to reduce the rate of corporate tax to 30% from April 1, 2008. ”Business has long argued that such a reduction will assist in boosting productivity and competitiveness and attracting more foreign direct investment increasing labour productivity and wage rates,” Cullen stated, adding that the move would also “reduce the attractiveness of structuring businesses so as to report minimal profits within New Zealand.”

…[A]ccording to Cullen, the review of the international business tax regime could be of greater significance than the corporate rate cut or the research and development tax credit in contributing to future economic growth and could cost far less. “Our current tax rules in relation to New Zealand companies investing in offshore activity impose additional costs that are not faced by businesses resident in other countries. This has created an incentive for New Zealand firms to migrate,” Cullen observed. Currently, New Zealand taxes New Zealand residents on their worldwide income. This includes any income that is earned by a foreign company that is controlled by New Zealand residents.

Immigration Reform = National ID?

Yesterday’s “breakthrough” on comprehensive immigration reform is indeed salutary. But as the Washington Post editorializes this morning, “It’s critical that in addressing one set of immigration problems, the legislation doesn’t create a new set.”

One potential problem is the creation of a national ID in the process of expanding worker surveillance for intensified internal enforcement. This was the subject of a hearing in the House Immigration Subcommittee at which I recently testified.

Like many, I’ll be watching carefully to see if a national ID system is part of the ineluctable logic of the immigration reform deal that has been struck. Ineluctably, I’ll be calling it like I see it.

End the Postal Service Monopoly

A recent column in The (Baltimore) Sun explains why the government should not have a monopoly on mail delivery. The column focuses on the theoretical case for private competition.

Two political obstacles stand in the way of making private mail a reality. The first problem is that there are hundreds of thousands of Postal Service employees, and they receive exorbitant compensation packages. Needless to say, they are an automatic constituency against reform. The second problem is that the current monopoly subsidizes rural areas at the expense of urban areas. This means politicians from places like Alaska will fight to keep the monopoly in place.

Principled leadership could make a difference in this fight, but that is in short supply in Washington:

Sure, government is growing and putting its nose into all sorts of new things all the time, but there are very few businesses the government runs entirely, as it does with first-class mail delivery. Most of the important stuff Americans buy — food, clothing, and shelter — is produced almost entirely by the private sector. The result? Nearly everyone is fed, clothed and housed. What’s so special about mail delivery that the government must do it?

[C]ompanies such as FedEx and UPS can deliver packages, which could include letters — but they are limited by law to “extremely urgent” letters (such as overnight deliveries) and forced by law to keep their prices much higher than those of the post office. The postal monopoly costs you, me and all of us who have no choice but to be the post office’s customers if we want to send standard letters, and yet the post office still can’t come close to breaking even.

Meanwhile, the inflation-adjusted cost of other things has plummeted. Consider how much a long-distance telephone call costs compared with 10, 20 or 30 years ago. The price of gasoline seems to keep going up, but adjusted for inflation it has mostly gone down over the decades.

The Washington Post vs. Milton Friedman

Actually, it’s the Post’s education columnist Jay Mathews vs. the Milton and Rose Friedman Foundation’s executive director, Robert Enlow, in a school choice debate being held at Edspresso.com. Robert gets the best of this exchange.

Jay is generally a reasonable guy, and so, naturally, supports school choice programs that allow families to easily choose the public or private school that best serves their kids. His two failings in this debate are: not grasping the transformative nature of a large scale market reform, and allowing his own sense of futility about the prospects for change to color the school choice movement’s real potential.

As do most journalists, Mathews confuses the existing niche of non-profit private schools, and existing tiny voucher programs, with the kind of vibrant, large-scale, significantly for-profit market that could arise under a well-designed statewide school choice program. I explained the difference in this blog post.

It’s also easy to sympathize with how tired Mathews sounds when talking about the futility of real reform in k-12 government schooling. He’s been writing this beat for a long time, and change has been miniscule thus far. But what Mathews seems not to have noticed is that the school choice movement has been steadily growing, and steadily introducing and passing more programs over the past twenty years. For every battle-hardened veteran of the movement that is beginning to tire, there are several sharp new researchers, analysts, and campaigners coming forward to carry on the standard. Not just in the United States, but everywhere from England to India.

Utah may be the first U.S. state to implement a universal school choice program, but even if its program is reversed, another will follow. It’s inevitable. The status quo system will continue to consume more and more money without showing improvement, as it has done for generations now, and eventually people in one of our fifty states will decide they’ve had enough. Once one state tastes educational freedom, and reaps its benefits, the others will fall like dominos to the exigencies of economic and demographic competition.

Perhaps not tomorrow, or next year, but probably within the next ten or twenty, chunks of government school district headquarters will be sold for their historical value on eBay – like relics of the Berlin Wall. And public education will finally be delivered through a market system that can live up to its ideals, rather than by the moribund monopoly we’ve been saddled with for the last century-and-a-half.

Hagel Inches Closer to a Run

Chuck Hagel dropped another veil or two this week in his long tease about running for president. (In Thursday’s Washington Post, Dana Milbank uses both the “Hamlet” and “showing a little leg” metaphors, so I needed something different.) On Sunday’s “Face the Nation” he talked about the need for new leadership and speculated about running on a ticket with New York mayor Michael Bloomberg. Then on Wednesday he somewhat belatedly called for the resignation of Attorney General Alberto Gonzales. And on the same day he gave a speech to the Center for National Policy (a non-partisan think tank run by former Democratic Party officeholders). Milbank reports that he delivered a speech about foreign policy and other problems, complete with lots of speculation about the viability of an independent candidacy in this “perfect storm” of an election year.

If Hagel should run, voters would see a commonsense Midwestern conservative who voted against Bush’s trillion-dollar expansion of Medicare and against his federalization of education, against his friend John McCain’s attempt to outlaw criticism of politicians, and for the Bush tax cuts. Unfortunately, from my perspective, he also voted for the Patriot Act, the Federal Marriage Amendment, and the authorization for war in Iraq. But he’s had second thoughts about some of those. He’s a solid free-trader, though he sometimes votes for a few too many trade subsidies.

But if he hooks up with Bloomberg, who’s on top–the experienced senator with foreign policy credentials or the competent mayor with a billion dollars? They seem to have very different views on lots of issues; Bloomberg is for gun control and all manner of nanny-state provisions, for instance. It’s hard to know if you want Bloomberg and Hagel in the White House until you know who’ll have the Oval Office.

Brink Lindsey on the Daily Show!

Cato vice president for research Brink Lindsey will appear tonight on The Daily Show with Jon Stewart to discuss his new book, The Age of Abundance: How Prosperity Transformed America’s Politics and Culture. Someone over at the Daily Show must have got wind of the fact that Brink’s book is a ripping good yarn that explains (finally!) how the separate reactions of Bible-thumpers and filthy hippies to the abundance of post-WWII America eventually blended to give us the mixed up, crazy, socially liberal, fiscally conservative world we live in today.

Watch Brink dazzle Jon tonight at 11 pm EST on Comedy Central.

Also, be sure to check out Brink’s refurbished website, wherein he dredges the depths of YouTube in search of the elusive essences of zeitgeists gone by.

Topics:

What’s Legal at the New York Times?

The New York Times reports that Venezuelan president Hugo Chavez “is carrying out what may become the largest forced land redistribution in Venezuela’s history…in a process that is both brutal and legal.” In what way is this process legal? The article never says. Presumably the Venezuelan congress has passed legislation authorizing the seizure and redistribution of land. But Chavez controls all 167 members of the National Assembly, and the Assembly has granted him the power to rule by decree. It’s hard to call anything in Venezuela “legal” at this point. One might as well say that Stalin’s executions or Pinochet’s disappearances were “legal.” (And by the way, have you noticed that the Times always refers to Pinochet as a dictator, but to Chavez and Fidel Castro as President or leader?)

If the term “legal” has any meaning other than “the ruler has the power to do it,” then it means that something is done in accordance with the law. The Oxford English Dictionary defines law as “the body of rules, whether proceeding from formal enactment or from custom, which a particular state or community recognizes as binding on its members or subjects.” One of the key elements of law is that it provides stability and certainty. I doubt that all the people of Venezuela recognize land seizures as proceeding in accordance with a body of rules. And certainly the arbitrary rule of a president or a rubber-stamp congress does not provide any certainty in the law.

At least the Times paused to tell us that the process was legal, even if it failed to specify just how. The Wall Street Journal article on the same topic doesn’t bother to consider the question of legality; perhaps that’s just a clearer recognition that in Venezuela there is no law, there is only Chavez.

And the rest of the Times article makes the process pretty clear:

The squatters arrive before dawn with machetes and rifles, surround the well-ordered rows of sugar cane and threaten to kill anyone who interferes. Then they light a match to the crops and declare the land their own….

Mr. Chávez’s supporters have formed thousands of state-financed cooperatives to wrest farms and cattle ranches from private owners. Landowners say compensation is hard to obtain. Local officials describe the land seizures as paving stones on “the road to socialism.”

“This is agrarian terrorism encouraged by the state,” said Fhandor Quiroga, a landowner and head of Yaracuy’s chamber of commerce, pointing to dozens of kidnappings of landowners by armed gangs in the last two years….

But while some of the newly settled farming communities are euphoric, landowners are jittery. Economists say the land reform may have the opposite effect of what Mr. Chavez intends, and make the country more dependent on imported food than before.

The uncertainties and disruptions of the land seizures have led to lower investment by some farmers. Production of some foods has been relatively flat, adding to shortages of items like sugar, economists say.

John R. Hines Freyre, who owns Yaracuy’s largest sugar-cane farm, is now trying desperately to sell the property and others in neighboring states. “No one wants this property, of course, because they know we’re about to be invaded,” said Mr. Hines, 69….

“The double talk from the highest levels is absurd,” Mr. Machado said. “By enhancing the state’s power, the reforms we’re witnessing now are a mechanism to perpetuate poverty in the countryside.”

To be sure, the Times does stress the concentration of land ownership in Venezuela and the delight of many of the squatters at getting the seized land. But it’s a balanced article, other than that pesky word “legal.”

As I’ve written before, too many journalists are treating Chavez’s growing dictatorship in a guarded way. They report what’s happening – nationalizations, land seizures, the unanimous assembly, the rule by decree, the demand to repeal presidential term limits, the installation of military officers throughout the government, the packing of the courts – but they still treat it as normal politics and even report with a straight face that “Chavez stresses that Venezuela will remain a democracy.” Some law, some democracy.