If You’re in New York and Can Spare a Little Time, You Could Spare a Life

Former Cato Institute interns and New York residents Constantino Diaz-Duran and Chris Kilmer are organizing an effort on behalf of an Egyptian student they’ve never met who faces a terrible penalty for writing his opinions on his personal blog. The event will take place Wednesday, January 31 starting at 3:30 pm at the Egyptian Consulate in New York at 1110 2nd Avenue, between E. 58th and E. 59th.

Kareem is scheduled to be sentenced on Thursday.  A respectful message to the Egyptian government – whether in front of the Consulate or by email, fax, or phone – encouraging them to do the right thing and let him go could save a young man’s life.

New Tax Proposal Combines Social Engineering and Class Warfare

Congressional Democrats want to use the tax code to penalize large corporate severance packages. But this should be a matter for stockholders to decide, not headline-seeking politicians. The Wall Street Journal, meanwhile, explains that the middle class often feels the brunt of tax schemes designed to punish the so-called rich:

One of the ways the Senate bill does this is to place a cap on the amount of “deferred compensation” that a company can award its top executives in a given year. The cap is equal to $1 million or the executive’s average salary for the previous five years, whichever is lower. But rather than simply tax any deferred compensation above that threshold as income, it imposes an additional 20% penalty tax on deferred comp above the limit. The Joint Committee on Taxation predicts this provision will bring in $800 million over the next decade. We’ll go out on a limb and predict it brings in an amount closer to $0.

Senate leaders describe this cap on deferred compensation as closing a loophole in the 1993 law that barred companies from deducting from their taxes more than $1 million of salary paid to their CEO and other top execs. Never mind that employee salaries have always been a deductible business expense. This was the last time Democrats ran Congress, and thus the last time they could sock it to the successful.

That 1993 law has itself become a classic example of unintended consequences. The biggest “loophole” in that law was an exemption carved out for performance-based compensation, which was meant to alleviate concerns about Congress setting pay rates in the private sector. Back then, even tub-thumping Senator Carl Levin said “I don’t support the government setting CEO pay in the tax code.” Which he and his mates proceeded to do anyway. And businesses promptly responded by shifting CEO pay away from salary and toward stock options and bonuses to circumvent the cap.

[…]

[T]his time, a much larger pool of people than CEOs could be hit by the new deferred comp cap. People who make a lot less than $1 million have occasion to defer some of their salary, and at many companies even middle managers can do so. If this bill becomes law, those non-millionaires potentially face a 55% tax rate on the income they might otherwise have tried to defer. The tax code is riddled with provisions, such as the Alternative Minimum Tax, the estate tax and any number of phaseouts and caps, that were sold politically as targeting only the “super-rich” but now capture taxpayers of far more modest means.

The Laws of Arithmetic

Robert J. Samuelson writes,

Last year, then-Gov. Mitt Romney made headlines by signing legislation to cover all the state’s uninsured… Romney suggested that annual premiums for a single worker might total $2,400. But when insurance companies recently provided real estimates, the cost was much higher: $4,560.

I told you so.

The problem of paying for health-care coverage, which politicians are declaring they have “solved,” is really just beginning. The only way to make zero-deductible health insurance available at low cost is with a large subsidy; how much will depend on negotiations with insurance companies. Only when the size of the necessary tax increase becomes clear will Massachusetts’s leaders learn the laws of arithmetic.

Everyone is asking whether the Massachusetts plan can work in other states.  It seems to me that the only fair assessment is that it isn’t even working in Massachusetts.

Fighting Government-Run Health Care (Some Exceptions May Apply)

I receive the occasional email from Sarah Berk in her official capacity as the executive director of a group called Health Care America.  (Disclosure: Sarah and I used to work for the same U.S. Senator.)  Typically, these emails riff on the theme:

“Health Care America promotes common-sense policies that limit government control … in the U.S. health care system.”

A recent example is an email informing me that “Health Care America has recently released two op-eds that explain why increased government-control over our health care system reduces consumer choice, quality and innovation.”

So I’m always amused to find an example of government control that Health Care America thinks is just hunky-dory.  And then another.  And another.  And yet another.

For example, Health Care America supports:

  1. Socialized drug coverage for seniors.
  2. Government barriers to trade that prevent Americans from purchasing prescription drugs from abroad. 
  3. State laws that require people to purchase health coverage and that regulate health insurance in a manner reminiscent of HillaryCare: “The recent success of Massachusetts Gov. Mitt Romney in creating a universal system using the private sector demonstrates that it is possible to reach bipartisan agreement on positive changes.”
  4. Government control over charity care in general: “Health Care America believes in the social safety net that is funded by government.”
  5. The nightmarish Medicaid program in particular: “the U.S. rightfully invests significant resources in the program.”
  6. Expanding the State Children’s Health Insurance Program.  According to Health Care America’s ad campaign: ”SCHIP is a notable health care success story…Expanding SCHIP to allow states to cover custodial adults is one easy way to get more children covered by the program.”

How does an organization come to adopt such a sharp yet selective distaste for government control?  And with so many types of government control that it supports, why the strident anti-government rhetoric?

Public Choice in Action

The Washington Post ran a story today that could be a case study in a Public Choice textbook, “Maverick Costco CEO Joins Push to Raise Minimum Wage.”

The chief executive of Costco Wholesale, the nation’s largest wholesale club, yesterday became the most prominent member of a new organization of business owners and executives pressing Congress to approve an increase in the federal minimum wage.

Wow, Costco’s Jim Sinegal must be a really moral and public-spirited CEO. Sinegal “said he signed onto the effort because he thinks a higher minimum wage would be good for the nation’s economy as well as its workers.” The CEO explained: “The more people make, the better lives they’re going to have and the better consumers they’re going to be… It’s going to provide better jobs and better wages.”

Who does Sinegal think he is fooling? His real aim is to use the government to squash any low-end competition. 

Costco, of Issaquah, Wash., would suffer no direct impact from a higher minimum wage because its lowest-paid employees now make about $11 an hour, Sinegal said, adding that the average worker in the company’s 504 stores in the United States makes $17 an hour.

The Global Market for Kannadian Call Centers

“How can I help you, today, eh?” 

No, not that Canada. Kannada: the native language of 70 percent of Karnatakans.

Karnataka is the Indian state whose capital city, Bangalore, has been described as “the back office of the world.” Bangalore is awash in call centers, boasts over 200 high tech companies, and is reported to have the highest number of engineering colleges of any city in the world. Bill Gates has made a promotional and recruiting trip to the city.

Bangalore’s economic success rests not simply on its wealth of skilled technicians, but on their ability to work in English. There is no global market for Kannadian call centers. There is a global market for English ones.

And that’s where two visions of India’s educational future collide. On the one hand, we have the School Choice India campaign of the New Delhi-based Centre for Civil Society. This campaign would like to see independent schooling brought within reach of every family in India, and the overwhelming majority of non-government schools in that country teach all their classes (other than, of course, native language classes) in English. They do so because that is what their customers demand.

On the other hand we have the government of Karnataka, and the highly influential linguistic nationalists who wish to promote the use of Kannada and who see English as tainted by its association with India’s colonial past. Back in 1994, the Karnatakan government passed a law – not initially enforced – banning English-medium schools. According to recent reports, it plans to start enforcing that ban in April of this year, under pressure from Kannadian activists, shuttering any schools that refuse to comply.

If the ban goes ahead, it will undoubtedly be short-lived, as Bangalore’s businesses start making plans to relocate to other Indian cities and the full economic ramifications are more widely grasped. The fact that it is even being contemplated is just one more excellent example of why centralized control over the curriculum is a bad idea, eh.