Denmark’s Meager Tax-Cut Package

The good news is that Danish politicians have announced that taxes will be reduced. This is welcome news in a nation with the world’s highest income tax rate. Indeed, the tax burden is so onerous that even the OECD suggested it might not be a good idea to subject 40 percent of workers to marginal tax rates of more than 70 percent. Unfortunately, the tax cuts that have been proposed are akin to putting a band-aid on a compound fracture. Instead of reducing the top tax rate, the government merely intends to adjust the income level where the top bracket takes effect. While this surely is better than nothing, the government also is raising taxes on energy and increasing an already bloated welfare system. Tax-news.com reports on Denmark’s less-than-exciting reforms:

The Danish government has announced its intention to cut taxes by DKK10 billion (EUR1.34 billion) per year in 2008 and 2009 in a bid to stimulate the labour market, and improve incentives to work. Under the proposed reforms, announced by the government on Tuesday, the income ceiling for the middle and top income tax brackets will be raised to DKK353,000 per year from DKK304,100, and to DKK381,300 per year from DKK365,000, respectively. …In the same announcement, the Danish government also promised that a broad economic plan for the next eight years would not raise any taxes between now and 2015. The economic package also promises DKK50 billion in extra spending to improve Denmark’s welfare system between 2009 and 2018. …To help offset the tax cuts, the government also announced that green taxes on energy consumption would increase from 2008 to match inflation. This would increase taxes on heating, water and electricity.

24 Hours of Ronald Reagan

On TCM, that is. This Friday, the world’s greatest TV channel will broadcast 15 of Reagan’s movies from 6 a.m to 6 a.m. In primetime, they’ll start with “John Loves Mary.” I hope my sister Mary, who married a man named John, gets to watch it. And then at 8 p.m. it’s the classic “Bedtime for Bonzo.” It’s actually pretty amusing to see Reagan as a young liberal college professor trying to prove the “nurture” side of the nature-vs.-nurture argument and saying that there are no bad kids, just bad environments. And then stay tuned for two of Reagan’s best, “Kings Row” – which gave him the title for his first autobiography, “Where’s the rest of me?” – and “Knute Rockne, All American,” in which he said for the first but certainly not the last time, “Win one for the Gipper.”

Now if only TCM would bump one of the lesser movies and stick in “The Speech” from 1964, we could hear Reagan say something more important, like

You and I are told increasingly that we have to choose between a left or right, but I would like to suggest that there is no such thing as a left or right. There is only an up or down – up to a man’s age-old dream, the ultimate in individual freedom consistent with law and order – or down to the ant heap of totalitarianism, and regardless of their sincerity, their humanitarian motives, those who would trade our freedom for security have embarked on this downward course.

And wouldn’t that be a welcome alternative to alternating images of Bushes and Clintons on our TV sets?

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Another Great Moment in Local Government

At first, I thought this must be a gag story from The Onion, but a school in Arizona actually suspended an eighth-grade boy for five days (in a fit of generosity, later reduced to three days) for drawing a picture of a gun. It is not clear, though, whether the school’s absurd policy also means students are not allowed to do term papers about World War II, since that might necessitate discussion of weapons and violence:

An East Valley eighth-grader was suspended this week after he turned in homework with a sketch that school officials said resembled a gun… But parents of the 13-year-old, who attends Payne Junior High School in the Chandler Unified School District, said the drawing was a harmless doodle of a fake laser, and school officials overreacted. …Payne Junior High officials did not allow the Tribune to view the drawing. The Mostellers said the drawing did not depict blood, injuries, bullets or any human targets. They said it was just a drawing that resembled a gun. …The boy said…he was just drawing because he finished an assignment early.

Trouble in Utah, with a Capital “T”

School choice supporters were thrilled at the passage of the first universal voucher program in Utah this year. Unfortunately, the unions got enough signatures to put the law up for a referendum vote this fall and are gearing up to demolish it.

The Education Intelligence Agency Communiqué for this week reports that the National Education Association board of directors had an emergency conference call to consider a request by the Utah Education Association for $3 million to overturn the voucher law. The verdict?

“EIA has not yet heard the official results of the vote, but feels confident stating the request was approved.”

Referenda are very difficult to win under any circumstances. But with the referendum scheduled for the vote this November when there will be little or nothing else on the ballot for most communities, turnout for the voucher issue is going to be the one and only thing that matters.

The unions have their money, their network, and their members. And $3 million can help a lot of bodies turn out.

Voucher supporters are working overtime to make sure they top the union turnout, but every voucher supporter (and at least one friend wouldn’t hurt) will have to make it to the polls this November to give the union a run for its money. Otherwise, the first universal voucher program to pass in the U.S. won’t be the first to be implemented.

Sockin’ it to Honduras

A constant refrain from Democrats in Congress is that the Bush administration has been lax about enforcing the terms of U.S. trade agreements. Such a conclusion reveals a true naivete about trade diplomacy. The U.S. Trade Representative maintains ongoing dialogues with our trade partners during which many trade irritants are addressed and resolved without need of resort to the stick.

But Congress wants to see more of the stick, and more of the stick it shall see. Apparently our poor, but industrious Honduran neighbors have been shipping too many socks stateside. U.S. imports of cotton, wool, and man-made fiber socks from Honduras rose from 10.9 million dozen pairs in 2005 to 15.2 million dozen pairs in 2006, an increase of nearly 50 percent. In 2007 through June, imports from Honduras are up about 60 percent from the same period in 2006.

Under the terms of the Dominican Republic-Central America-United States Free Trade Agreement (CAFTA-DR), the U.S. government can impose special safeguards in the form of new a tariff if a textile or apparel product:

“is being imported into the United States in such increased quantities, in absolute terms or relative to the domestic market for that article, and under such conditions as to cause serious damage, or actual threat thereof, to a domestic industry producing an article that is like, or directly competitive with, the imported article.”

The Committee for the Implementation of the Textile Agreements (CITA), an agency within the Commerce Department, initiated proceedings for such a safeguard last week. If it makes an affirmative finding, duties of 13.5 percent will be imposed later in the year.

Despite the surge in sock imports from Honduras, the country still accounts for only about 4 percent of U.S. consumption. How can such a miniscule presence account for “serious damage” or even the threat thereof to the domestic industry?

The safeguard rule is a farce, and its application to a country which depends heavily on its few manufacturing industries, and where two-thirds of the citizens live in poverty, explains a lot about why international regard for
America is in decline.

Czech Republic Joins the Flat Tax Club

Following up on Marian’s earlier post, it’s time to cue up the unofficial theme song of the flat tax revolution and review one of the first English-language news reports about the Czech Republic becoming the 20th jurisdiction to adopt a low-rate flat tax. The Prague Daily Monitor reports that the vote in the Chamber of Deputies clears the only real obstacle to a low-rate tax system:

The cabinet’s package of public-finance reforms passed the final vote in the Chamber of Deputies yesterday thanks to two unaffiliated opposition MPs who voted with the governing coalition. Starting next year, the legislation will gradually reduce corporate and personal-income taxes, cut social spending and introduce cash fees for health care. It still requires Senate approval and President Václav Klaus’s signature, but no resistance is expected from either. …

The reform package will gradually lower the corporate tax rate from today’s 24 percent to 21 percent next year, 20 percent in 2009 and 19 percent in 2010. The existing progressive taxation of personal income at 12 to 32 percent will be replaced by a flat tax of 15 percent in 2008 and 12.5% in 2009. The personal income tax will be calculated from super-gross income, including social and health insurance contributions paid by the employee and the employer. This means effective taxation will be 23.1 percent of gross income in 2008 and 19.4 percent in 2009.

Buy Time and Pray for a Miracle

That’s essentially what the Bush administration’s strategy for Iraq amounts to, if the public statements of the administration, including Bush’s speech to the VFW today, are any indication. (“Fact sheet” available here.)

President Bush began the speech by likening the war in Iraq to the wars in Japan, Korea, and Vietnam. The president went into detail describing his view that in its essence the war against Japan was an “ideological struggle” rather than a traditional war against one of the most advanced societies on Earth that had attacked the U.S. homeland. Bush focused on the democracy-building aspect of the aftermath of defeating Japan, and likened it to the current effort in Iraq.

The president ignored the fact that the “ideological struggle” against Japan was won after we dropped two nuclear bombs on its territory. He skirted the role of the Japanese emperor in uniting Japan’s ethnically and religiously homogeneous population behind the U.S. forces who occupied the islands after V-J Day. He ignores the fact that Japanese politics were not fractious like Iraq’s, with the faction displaced by democracy fearing that the depredations it visited on the other factions would be returned in kind under democracy.

Moving to Korea, Bush ignores the fact that U.S. forces accepted essentially a stalemate in that conflict, with Eisenhower signing an armistice that allowed the “forces of tyranny” in that conflict to remain in power with U.S. acquiescence in Pyongyang.

In the most contentious turn, Bush waded into the Big Muddy of the Vietnam analogy, pointing out (paraphrasing) that “the price of America’s withdrawal was paid by millions of Southeast Asians.” As Jim Henley has pointed out, the price of America’s involvement in Vietnam was also paid by millions of Southeast Asians who perished as the conflict raged.

However, it is also worth remembering that U.S. soldiers stopped dying after we left, and that the “dominoes” that were to have fallen from India to Japan didn’t fall. The United States won the Cold War just a decade and a half later. Our defeat in Vietnam did not prevent victory in the Cold War, and defeat in Iraq will not ensure defeat in the struggle against terrorism. Meanwhile, does the president believe we should have stayed in Vietnam? At what enormous cost in blood and treasure?

Bush then amplified the oddity of turning to the Vietnam analogy by introducing body counts to the debate over Iraq, noting that US forces are capturing or killing an average of 1,500 “al Qaeda terrorists per month” since the beginning of the year. This again is a paraphrase since I don’t have a copy of the Bush speech, but if that figure is true, we are creating an awful lot of new terrorists, since even by the almost-certainly-inflated statements of al Qaeda in Mesopotamia itself, they only had 12,000 fighters as of November 2006.

It seems unlikely that the president’s speech is going to change many minds about Iraq, but the “the surge is working” narrative has already caused a small bump in support for the war. It seems incredibly doubtful that the Democratic Congress will be able to do anything to force the president to move in the direction of withdrawal.

At this point the smart money would probably bet on having over 100,000 troops in Iraq when the president leaves office. If we get out without a total meltdown, the president will be revered in hawkish circles as a visionary. If the next president–or a subsequent president–withdraws and chaos ensues, the Bush people will claim that it isn’t their fault, that things were moving in a positive direction when they left office.

Probably the smarter money would say what folks at the Pentagon and in the intelligence community are saying–that we’ll likely have troops in Iraq for another 10 years. Ted Koppel told NPR that a senior military official told him that Hillary Clinton had admitted that if she is a two-term president, we’ll still have troops in Iraq at the end of her second term.

Given the views of the candidates who have a realistic shot at the presidency, it’s tough to see how any president would get us out entirely much sooner.