Americans Shifting to Zero-Income Tax States

A story in the Kansas City Star reveals that millions of Americans are moving to states without income taxes. Not surprisingly, politicians and revenue bureaucrats from high-tax states are monitoring escaping taxpayers in hopes of retaining the ability to seize a portion of their income:

No-income-tax states such as Florida, Nevada and Texas are looking increasingly attractive to people getting ready for retirement. …But before you move to a tax haven, it’s important to pay attention to the fine print of how to move. It’s easy to make seemingly minor mistakes that can trigger a painful audit — and a hefty bill — from the high-tax jurisdiction you thought you had left behind. …Some relatively high-tax states are increasingly cracking down on individuals who claim to have moved out of state, but still maintain strong connections to their former homes. Massachusetts plans to hire additional tax examiners in the next few months, some of whom will be assigned to a special “domicile unit” as part of its tax-audit program. … state income tax rates can run as high as 10.3 percent in California and 8.97 percent in New Jersey. Besides Florida, Nevada and Texas, other states with no state income tax for individuals include Washington, Alaska, South Dakota and Wyoming. New Hampshire and Tennessee don’t have a broad wage-based income tax but do tax interest and dividends. …from April 2000 through June 2006, there was a net migration of 2.3 million people moving from states with income taxes to states with no income taxes, an average of more than 1,000 people moving per day, says Richard Vedder, an economics professor at Ohio University in Athens, Ohio, based on an analysis of census data.

Greenspan Condemns Profligate Republicans

The Wall Street Journal reports that the former Chairman of the Federal Reserve Board strongly criticizes President Bush and congressional Republicans for wasting so much money on ill-conceived government programs:

In a withering critique of his fellow Republicans, former Federal Reserve Chairman Alan Greenspan says in his memoir that the party to which he has belonged all his life deserved to lose power last year for forsaking its small-government principles. In “The Age of Turbulence: Adventures in a New World,” published by Penguin Press, Mr. Greenspan criticizes both congressional Republicans and President George W. Bush for abandoning fiscal discipline. …Mr. Greenspan, who calls himself a “lifelong libertarian Republican,” writes that he advised the White House to veto some bills to curb “out-of-control” spending while the Republicans controlled Congress. He says President Bush’s failure to do so “was a major mistake.” Republicans in Congress, he writes, “swapped principle for power. They ended up with neither. They deserved to lose.” …”Little value was placed on rigorous economic policy debate or the weighing of long-term consequences,” he writes.

Why I Love Michael Kinsley

Though he often disagrees with libertarians and other free-marketeers, Kinsley is one of the few critics who appears to understand the argument for free markets and who acknowledges that there’s something to it:

Student loans are the clearest example of the common Republican confusion between free-market capitalism and business. Capitalism is an economic system that is held, with some justification, to be the best guarantor of prosperity. Business can be capitalism in action, or it can be something entirely different. There is very little about the student loan program that has anything to do with free-market capitalism. Yet whenever the student loan system comes under criticism, lobbyists, “industry” leaders and supportive politicians haul out the same old cliches, as if they were defending Adam Smith’s famous pin factory itself.

I would add, however, that many on the Left likewise confuse government activism with “power to the people.”  Typically, government activism just ends up giving power to business. 

Either way, business wins!

Might Want to Remove the Plank from Your Own Eye First

Somehow I missed New York Sun journalist Eli Lake’s op-ed column earlier this week pooh-poohing NYU professor Barnett Rubin’s startling suggestion that the Vice President’s office was trying to take the debate on Iran in the direction of war. Mr. Lake’s snarky opinion column (and when did journalists start writing regular opinion pieces, anyway?) leaves a lot to be desired. Lake ascribes numerous claims to Rubin that Rubin never made, and has certain problems with sketchily leaked tidbits of his own that bear on his standing to judge others.

First, Lake introduces a claim as Rubin’s that Rubin never made. Lake’s second sentence is this, characterizing Rubin’s claims:

Any day now divisions of American tanks will be rolling toward Tehran as President Bush and the neoconservatives plunge the world into yet another disastrous war.

This would be an easy allegation to deflate, except Rubin never claimed that a ground war was imminent. Readers can view Rubin’s post here and decide whether Lake accurately characterized his claims. The terms “tank” or “ground war” don’t appear, far as I can see.

Mr. Lake appears to fabricate another supposed view of Rubin’s.

[T[he charge from Mr. Rubin amounts to an accusation of bad faith. In Mr. Rubin’s world, you see, Michael Ledeen, Newt Gingrich, or William Kristol do not write about Iran’s support for confessional murderers in Iraq because they have weighed the evidence, considered the regime’s history, or analyzed the testimony of experts.

No, anything these people say about Iran in September will be because Dick Cheney gave instructions, as if anyone who speaks plainly about Iranian supported terrorism or the regime’s nuclear-bomb making reflects a hidden agenda — for the Left it’s either oil or Israel, so take your pick.

This, again, bears no resemblance to the actual post that Prof. Rubin wrote. He didn’t say anything about Israel, anything about oil, or anything about bad faith. A rather less conspiratorial reading of Rubin is that he says nothing about the good faith of the above commentators, but rather thinks that their influence on U.S. national security policy over the past several years has been disastrous, that replicating their strategic malfeasance in Iran would be more disastrous, and that he hopes it doesn’t happen. As Barnett himself writes in the end of his post:

I hesitated before posting this. I don’t want to spread alarmist rumors. I don’t want to lessen the pressure on the Ahmadinejad government in Tehran. But there are too many signs of another irresponsible military adventure from the Cheney-Bush administration for me just to dismiss these reports. I am putting them into the public sphere in the hope of helping to mobilize opposition to a policy that would further doom the efforts in Afghanistan and Iraq and burden our country and the people of the Middle East with yet another unstoppable fountain of bloodshed.

The only imputation of bad faith is from Eli Lake.

Then, Lake moves from attributing to Rubin claims and views that Rubin doesn’t state and doesn’t seem to hold, to accusing him of making a similar claim to one that Seymour Hersh made previously and pointing out that Mr. Hersh’s prediction was wrong. I don’t think Mr. Lake wants to start lining up the predictions of people who agree with him about foreign policy against those of the rest of us and assessing them side-by-side for accuracy. But in any event Lake should know enough that criticizing one person for having bad information and then attempting to use that fact to discredit someone else sounds an awful lot like the bad faith that he falsely accuses Professor Rubin of ascribing to people who agree with him.

Finally, I suspect Eli Lake may want to be careful about pointing out how frequently false information insinuates itself into debates about security policy. Take, for one example, the July article authored by Mr. Lake titled “Iran Is Found To Be a Lair of Al Qaeda.”

In that story, Lake published a claim purportedly leaked to him that the National Intelligence Estimate judged that one of two senior al Qaeda leadership councils “meets regularly in eastern Iran.” Lake wrote that “there is little disagreement that a branch of al Qaeda’s leadership operates in Iran, [but] the intelligence community diverges on the extent to which the hosting of the senior leaders represents a policy of the regime in Tehran or the rogue actions of Iran’s Quds Force, the terrorist support units that report directly to Iran’s supreme leader.”

Unfortunately for Mr. Lake, the story was tersely refuted later that day by the National Intelligence Officer for Transnational Threats, Edward Gistaro. Asked at a National Press Club briefing whether the judgment Lake described was in the final draft report, Gistaro replied “No, it is not. I don’t think it was ever in the draft…. I read [the Sun article] this morning, and I thought, ‘I don’t know where this comes from.’” The transcript of the conference describes “laughter” in the briefing room after this revelation.

In the wake of such developments, and particularly in the wake of easily-drawn analogies to recent controversies, I think those of us who are concerned about the prospect of attacking Iran can be forgiven for at least a twinge of trepidation.

Solutions Day!

Newt Gingrich has always been an irrepressible, gushing font of ideas and information: ”My name, Newt, actually comes from the Danish Knut, and there’s been a major crisis in Germany over a polar bear named Knut,” he told the crowd that had come to hear him debate global warming with Sen. John Kerry back in April. 

But now he’s seeking your input. In just two weeks, Gingrich’s group American Solutions will be hosting an online extravaganza called “Solutions Day.” You may not be interested in Solutions Day, but Solutions Day is interested in you:

On September 27, the anniversary of the Contract with America, we will have the first annual “Solutions Day.”

Solutions Day will be a day of citizen activism. It will be devoted entirely to positive solutions based on positive principles to enable us to transform government and public policy so America can win the future.

Solutions Day will feature an online workshop available to every American.

Since September 27 is a Thursday, we will repeat Solutions Day via the Internet on Saturday, September 29, so people who have to work can be involved.

Which is a smart move, lest we end up with a bunch of solutions heavily skewed toward retirees, stay-at-home moms, the unemployed, and day traders. After all, real change requires input from a broader cross-section of Americans. Real change requires the involvement of informed citizens. Real change requires…, er, real change. That’s the slogan of Gingrich’s effort: “Real Change Requires Real Change.” And it has the virtue of being true both backwards and forwards.

Solutions Day will also feature a series of workshops, like “The End of Government… As We Know It” and “Space — The Race to the Endless Frontier.” And if you miss it both times around, don’t fret: ”All events will be made available on-demand on the Internet.”

Newt being Newt though, he’s full of Big Ideas even now, two weeks before Solutions Day. He unveiled some of those ideas Monday in a war-on-terror speech at AEI.  

This isn’t your typical right-wing stemwinder. It’s classic Gingrich, chock full of chunky idea-nuggets, like peanut brittle for the mind. Here’s Gingrich framing the debate fairly:

America is currently trapped between those who advocate “staying the course” and those who would legislate surrender and defeat for America.

Here he is making clear that the debate should proceed in sober, rational terms, without hysterical fearmongering:

 We need a calm, reasoned dialogue about the genuine possibility of a second Holocaust….   

and here he is taking a long view of the threats we face: 

The Iranian dictatorship had been at war with America for 22 years before 9/11.

That last point may confuse you. For instance, the first thing I thought was: that must be embarassing for them. At war with us for over two decades and we barely notice? Then I thought, wait: if Iran’s at war with us, then why did we just topple their major regional enemy and clear the way for a country dominated by Iran’s close allies? But that just shows I’m not a foreign policy expert, let alone a genius. These things are complicated. Real change requires real change. 

And this is a speech about real change. As in those alternate-history novels he’s famous for, Gingrich presents a bold vision of “An Alternative History of the War since 9/11.” The former Speaker’s biggest ideas for ending terrorism center around continuously warning Americans that we may all be killed; among other things, he’d have us run ”highly publicized simulations of two nuclear and one biological attack each year.” 

Another key idea for Gingrich is that the U.S. should think seriously about launching wars with up to three additional countries. Risky? Sure. But as Newt puts it, “we must adopt a spirit that it is better to make mistakes of commission and then fix them than it is to avoid achievement by avoiding failure.” Just imagine how different things could have been if the Bush administration had been animated by that spirit these last six years.     

Obama and Original Sin

After the 1992 election, the philosopher Jean Bethke Elshtain wrote:

Those who assert that the cultural questions somehow got put behind us in 1992 because economic matters were first and foremost the issues and themes of the presidential election are pushing an illusory hope. The cultural questions — abortion, family values, drugs, and race relations — were all joined in 1992, often in language that underscored just how much people of all political persuasions still look to government as the remedy for every ill, personal and political.

The problem with such reliance is this: democratic politics can reasonably offer hope, but it cannot promise deliverance. Yet deliverance, a dramatic and rapturous sea change to bring in the new and sweep out the old and corrupt, is what loud voices and dominant groups on both the left and the right seek.

The very gridlock that the two major parties and Ross Perot’s angry, antiparty protesters all decried is generated by their own actions in promising deliverance and in deepening cultural cleavages rather than alleviating them by removing some questions from government’s purview, or at least from government’s control as the final arbiter.

One might wonder why the government can offer hope if it cannot provide deliverance. But some things never change.

Among the presidential candidates on offer, Barack Obama most clearly offers deliverance as well as hope. His mixing of religion and politics was clearly on view in a recent debate when he called money “the original sin of politics.”

Should he be elected, Obama will not provide “a dramatic and rapturous sea change to bring in the new and sweep out the old and corrupt.” That is, he will not provide deliverance because doing so is beyond the power of the government or at least beyond the ambit of a constitutionally limited government. Should Obama succeed in ridding politics of “money” (that is, of private financing of campaigns), we will live in a world where the government and its officials control all financing of political struggle. Some would find therein deliverance. Most would not.

In Obama’s defense, you can say that he no doubt truly believes he can bring deliverance to “the people.” And some voters no doubt are demanding deliverance through public financing and other, more coercive forms of the Lord’s work. But Obama is a thoughtful man, and I wonder why he does not realize that his promise of deliverance will frustrate his larger hope to restore faith in government.

As Elshtain suggests, Obama’s inevitable failure to provide deliverance will foster more distrust in the federal government. And rightly so. Such distrust is warranted at any time, not least because promises of deliverance through coercion inevitably violate individual rights. Still, it is puzzling why a thoughtful man like Obama does not conclude with Elshtain that “removing some questions from government’s purview” might be a better way to offer hope,  if not deliverance.

Insurer Plans to Escape Germany’s High Taxes

Tax-news.com reports on the likely shift to Ireland of a major German insurance company, Hannover Re. This is part of a trend as companies of all types are moving out of high-tax nations, with Ireland and Bermuda being major beneficiaries. (Interestingly, the article notes that the U.S. states of Vermont and South Carolina are havens for captive insurance companies.)

Hannover Re, one of the world’s largest reinsurance companies, is considering switching its operations to Ireland or another low tax jurisdiction, the company’s chief executive told a conference recently. According to Bermuda’s Royal Gazette, Wilhelm Zeller, CEO of Hannover Re, told a press conference at the annual reinsurance gathering, Le Rendez-Vous in Monte Carlo, that the $5.5 billion firm is considering moving from its present base in Germany…. “For us, the ideal location, from a fiscal point of view, would be Ireland,” Zeller stated, although he added that setting up headquarters in Dublin could be costly.

While Ireland’s low 12.5% corporate tax and location within the European Union is a big draw for reinsurance and other companies, Bermuda’s 0% rate of tax has lured many insurance companies to incorporate in the jurisdiction from high-tax countries like the UK. Last year, Lloyds of London underwriting firms Hiscox and Omega set up companies in Bermuda, citing the UK’s 30% income tax and its burdensome regulation. They were swiftly followed in January 2007 by another Lloyds firm, Hardy Underwriting plc.

…The 82 new Bermuda incorporations for 2006 compare very favourably with figures recorded by other jurisdictions such as Vermont, which had 37, South Carolina with 29, and the Cayman Islands with 50.