Nonsensical Tax Analysis from Southeastern Europe

While many nations in the region are reaping enormous benefits after adopting a flat tax, Croatia has been a laggard. Tax rates are high and the burden of government is stifling productive forces. Yet politicians, academics, and business insiders are trying to convince themselves that the status quo is acceptable.

The Croatian tax system is not far behind the Austrian system, and is a competitive and modern system, said Christian Widhal from Vienna University at a round table on taxes held in Zagreb Monday. …“Don’t change taxes. Don’t practice on people as people are tired of tax changes. A stable tax system is fundamental for the stimulation of investments. Not even the rates are as crucial as stability, longevity and predictability of the tax system,” said [Chamber of Economy Chairman] Vidosevic. …Suker also brushed up on the discussion concerning a flat rate on income, profit and added value taxes, concluding that such a rate would not be profitable for Croatia, due to such specifics as the war aftermath.

Too bad nobody asked Professor Widhal why Croatia should seek to have a tax system similar to Austria’s. Unless, of course, Croatia wants to stumble along with growth of 1 percent yearly while its flat-tax neighbors grow by 5 percent annually. And too bad nobody asked the Chamber of Economy Chairman why stability is a good thing when tax rates are so high that economic activity leaves the country or goes underground. Last but not least, too bad nobody asked Finance Minister Suker why the tax system should be “profitable” for the government instead of the Croatian people.

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Congress Moves against NSA Spying

Ars Technica reports that an amendment to the FY 2008 Intelligence Authorization Act “upholds the 1978 Foreign Intelligence Surveillance Backed (FISA) as the only means by which to do electronic surveillance—and … requires continuous judicial oversight of requests.”

Divided government is a real boon.

Women Do Better in America than Europe

Even though (or perhaps because) the United States is much less likely to use government intervention to dictate private-sector workplace decisions, the number of women in upper-level positions is significantly greater than in Europe according to the International Labour Organization. The EU Observer reports:

There are more women in top jobs in North America and in Latin America than in the European Union, a major new study by the International Labour Organization (ILO) shows. In the Global Report on Equality at Work 2007 – launched on Thursday (10 May) - North American women take up 41.2 percent of legislative or managing positions while the numbers are 35 percent for women in South America and the Caribbean and 30.6 percent for women in the EU.

Ironically, though not surprisingly, the bureaucrats at the ILO seem to think that more government is required to boost the role of women in the workforce. Too bad they did not grasp the implications of their own statistics:

A major theme of the ILO report is the persistent gender gaps in employment and pay and the need for integrated policies addressing sex discrimination in remuneration and occupational segregation by sex, while reconciling work and family responsibilities.

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John Edwards Wants America to be More Like Slow-Growth Europe

Presidential candidate John Edwards deserves some praise for honesty. He has openly admitted that he wants more taxes and more spending. His chief rivals, as noted by the Associated Press in a story, have been less forthcoming. But honesty does not count for much if a candidate’s proposals will mean less prosperity. Edwards seems to think that European-style levels of government spending can be imposed without European-style levels of stagnation and unemployment:

Edwards is quick to acknowledge his spending on health care, energy and poverty reduction comes at a cost, with more plans to come. All told, his proposals would equal more than $1 trillion if he could get them enacted into law and operational during two White House terms. … To pay for some of his priorities, Edwards would roll back Bush’s tax cuts on Americans making more than $200,000 a year. He also said he would consider raising capital gains taxes to help fund his plans and raise or eliminate the $90,000 cap on individual earnings subject to Social Security taxes to help cover the projected shortfall in the system. … Edwards’ ideas have already opened him to accusations of being just another tax-and-spend liberal, a label put on Walter Mondale, the 1984 Democratic presidential nominee who said he would raise taxes and then lost 49 states to President Reagan. … Edwards has been the most forthcoming Democratic candidate when it comes to describing the details of how he would like to run the country. His chief rivals — Sens. Hillary Rodham Clinton and Barack Obama — have offered few hints about their policy proposals.

Vermont Is a Tax Haven

The Providence Journal reports that Vermont is one of the world’s leading tax havens for “captive” insurance companies. This is both amusing, because it is contrary to Vermont’s image as a refuge for 1960s dropouts, and illuminating, since it shows that the pressure to attract jobs and capital causes even left-leaning politicians to adopt market-oriented policy:

In a development somewhat counter to its apple-cheeked image, Vermont has become a leading tax haven for U.S. companies. As described in a recent New York Times report, the state markets itself alongside Bermuda and the Cayman Islands as the answer to certain types of tax headaches. …Vermont law has permitted the creation of insurance captives for more than 20 years. But it only began aggressively marketing them about a decade ago, presenting captives as a sound alternative to the insurance business that thrives outside U.S. borders. Today, more than 560 American companies have set up camp in Vermont, which also hosts an annual captive-insurance industry conference.

All Walls Are Not Created Equal

On NPR, Daniel Schorr compares the proposed wall along the southern border of the United States to the Berlin Wall and tells us, in the words of Robert Frost, “something there is that doesn’t love a wall.”

I sympathize with him. I don’t like the idea of building a wall around the United States, either. Since the Boazes arrived in America in 1747, we have seen the country prosper as the Buchanans, the Tancredos, the Dobbses, the Maglalangs, the Brimelows, the Arpaios, and millions of others arrived on these shores and were welcomed into the country that my ancestors helped to create in 1776 and 1787.

But there’s a problem with Schorr’s analogy. The Berlin Wall was designed to keep citizens in. The wall (or fence) along our southern border is intended to keep non-citizens out. There’s a very real difference. The Berlin Wall declares that the people of East Germany are the property of the East German state and are not free to live anywhere in the world other than East Germany. The Border Fence merely says that non-U.S. citizens can’t enter the United States without permission; as far as the U.S. government is concerned, they’re free to travel or live anywhere in the world except the United States.

Daniel Schorr might ponder this: He lives in a house with four strong walls and secure locks on the door. He reserves the right to bar entry to his house to anyone, and that helps to protect his life, liberty, and property. But a building with walls and locks to keep people in is called a jail.

As I said, I too don’t want a wall around the United States. But we need better arguments against it than flawed analogies.

Google on Anonymizing Server Logs

Here’s Google’s Global Privacy Counsel Peter Fleischer discussing in more detail Google’s recent laudable decision to anonymize its server logs after 18-24 months. The discussion helps illustrate the diverse interests that must be balanced in choosing how long to maintain information.

It’s often easy to disregard the value that deep wells of raw information have for information-based business. Fleischer explains some of how Google makes use of data to improve its services and protect users. These consumer-beneficial activities must be balanced against the background demand for privacy protection.

Of particular note, of course, is his discussion of the emerging government demands for data retention (some of which conflict with government demands for data destruction). Data retention mandates are outsourced government surveillance, neatly shifting the cost of surveillance to the private sector while avoiding limits on government action like the Fourth Amendment and Privacy Act (in the case of the U.S.). Too put a fine point on it, data retention is bad.

This explication of Google’s thinking is a welcome contribution to public understanding. I did get a little chirping on my B.S. detector where Fleischer says he had talked to privacy activists in developing their plans. I’d like to know which ones. It’s a small enough community that I figure I would have known about it (I say at the risk of sounding self-important).

I’ve been aware in the past of government agencies deluding themselves about taking privacy into consideration because they’ve heard from government contractors selling “privacy enhancing technologies” like immutable audit logs and such. As often as not, this stuff is lipstick on a pig - seeking to make bad surveillance programs acceptable by tacking on complex, fallible privacy protections.

I’m sure Google has done better than that in its consultations with privacy experts. At least, I hope I’m sure.