Robert Reich, Wrong Again

President Clinton’s secretary of labor, Robert Reich, complains on Marketplace Radio that the new immigration bill may encourage immigration by high-skilled people. He argued:

A century ago, America’s immigration policy was best summarized in Emma Goldman’s famous lines on the Statue of Liberty: “Give me your tired, your poor, your huddled masses yearning to breathe free.”

It’s a lovely poem, and it’s true that America was the land of opportunity for millions of people. But as Julian Simon pointed out, on the whole immigrants in the 19th century were not tired, poor, huddled masses. He cites findings from economist P. J. Hill:

[I]mmigrants, instead of being an underpaid, exploited group, generally held an economic position that compared very favorably to that of the native born members of the society.

Reich is wrong again. But then, he’s notoriously loose with the facts.

Update: An alert reader points out that I was still half-asleep when I heard this commentary and cut-and-pasted Reich’s words. Of course it wasn’t the anarchist Emma Goldman who wrote the words on the Statue of Liberty, it was the New York City poet Emma Lazarus.

European Treasury Chiefs Try to Discourage French Tax Cuts

Nicolas Sarkozy, the new President of France, has been flirting with tax cuts. Some of his ideas, such as lowering the corporate rate and reducing death taxes and/or wealth taxes, would be very beneficial for the French economy. Others, such as special tax breaks for overtime work, are gimmicky. But in all cases, as the EU Observer reports, European Finance Ministers are pouring cold water on the notion of less money for government. Cynics suspect that the Finance Ministers do not like tax competition and that they use any excuse to discourage tax cuts in other nations. But even if their concerns –that deficit reduction is the most important goal of fiscal policy – are genuine, it is ironic that they are rather vocal when discouraging tax cuts and remarkably silent when it is time to comment about proposed increases in the burden of government spending. This is hardly a European phenomenon. Many American politicians cry crocodile tears about deficits when tax policy is being debated, but routinely vote for bigger government:

EU finance ministers meeting in Luxembourg on Tuesday (5 June) urged France to stick to its EU deficit reduction targets amid concerns about the implications of president Nicolas Sarkozy’s tax-cutting plans. … Mr Juncker’s warning is in response to plans announced by Mr Sarkozy last month to give the country a “fiscal shock” by undertaking a series of tax-cutting measures likely to cost up to €20 billion. The proposed measures include almost entirely scrapping inheritance tax and cutting tax on overtime.

The Mouse that Roared

Luxembourg is a tiny nation with less than 500,000 residents, but its tax-haven policies have made it one of the world’s wealthiest countries. Other European states resent Luxembourg’s success, not surprisingly, because their own citizens often prefer to work, save, shop, and invest where taxes are lower. But rather than lower their own taxes to be more competitive, they try to bully Luxembourg into changing its laws. The latest skirmish deals with whether Luxembourg companies should be forced to act as deputy tax collectors for foreign governments when they make online sales to residents of other EU nations. The International Herald Tribune reports that tiny Luxembourg is resisting the 26 other EU nations and defending its fiscal sovereignty:

Luxembourg, which has become a center for e-commerce in Europe because of its low sales tax, held off an assault on that lucrative business Tuesday by the rest of the European Union. At a meeting of EU finance ministers in the small but prosperous duchy, Luxembourg refused to agree to a lifting of the tax advantages that have prompted iTunes, Skype, eBay and other big Internet companies to set up shop there. That effectively blocked the package, because adoption of tax measures requires unanimous agreement by all 27 EU members. Telecommunications companies, satellite broadcasters and other companies providing online services apply a value added, or sales, tax based on where the company is established, not where the customer is. That makes Luxembourg, where VAT on Internet-related sales is 15 percent, an attractive place to operate. … EU ministers had hoped for a deal that would force companies to charge sales tax on services delivered online at the rate set in the country where they are bought. Such a move could prove a boon to tax collectors in countries like Germany and France. … This is not the first time that the Grand Duchy has been at the center of controversy over tax rates. For years French and German savers have invested their cash in Luxembourg and avoided tax on interest income.

Crocko, Part 2

Michael Moore is promoting his movie Sicko on the Oprah Winfrey Show today.  I found the following quote from Moore on Oprah’s web site:

The law demands and requires that a corporation like a health insurance company maximize the profits for the shareholders, and if they don’t do that, they’re violating the law. … If they are required by law to make a profit, and the only way they can make a profit is by denying claims or cutting people off of their insurance or never taking them on in the first place, then that’s not good for us.

Huh??  Exactly what law is he talking about?  Aren’t a lot of HMOs – the real care-deniers of the private sector – explicitly non-profit entities?  And don’t government programs like Medicaid (hardly a for-profit concern) also deny access to covered services?

As I’ve said before:

I’m actually looking forward to agreeing with Sicko about how the U.S. health care sector is bloated and inefficient, and how health care providers routinely rip off taxpayers. But I can’t help this feeling that Moore is going to recommend that we turn that mess over to a sector of the economy that is even larger, even less efficient, and an even bigger rip off.

Gordon Brown’s Dismal Fiscal Legacy

What developed nation has taken the biggest steps in the wrong direction since the turn of the century? The answer is not France, Germany, or Sweden. The United Kingdom has that dubious honor. Government spending has jumped from less than 38 percent of GDP in 2000 to more than 45 percent of economic output today. That is the largest increase among OECD nations, and the United Kingdom now has a bigger burden of government than Germany. Higher taxes are an obvious consequence, and Tax-news.com reports on the grim developments:

The average Briton is effectively paying ten pence more on the pound in income tax as a result of Gordon Brown’s ten years in charge of the nation’s purse strings, according to a new report. The study by business advisers Grant Thornton attributes about 70% of this increase in the tax burden to so-called ‘fiscal drag’, also known as ‘bracket creep’ whereby the government fails to adjust marginal income tax brackets in line with wage inflation, meaning more taxpayers have been dragged into the higher income tax bands during Brown’s tenure at the Treasury. This effect also applies in other areas of taxation, such as inheritance tax, where house prices have rocketed during the last ten years, but the threshold at which IHT becomes payable has, comparatively, barely moved. The government’s own figures show that 3.5 million taxpayers now pay tax at the higher rate of 40% - a 58% rise since the Labour government came to power in 1997. …And despite Brown’s decision to decrease the rates of corporate and personal income tax by 2% in his last budget before succeeding Tony Blair as Prime Minister, tax advisers say that lost revenue will be clawed back and more through less-publicised tax changes elsewhere. Francesca Lagerberg, head of Grant Thornton’s national tax office, noted: “Despite headline announcements in this year’s Budget of dropping the basic rate of income tax, aligning national insurance contributions and reducing mainstream corporation tax, the reality is that other increases will lead to a maintenance of the status quo.” “Aligning national insurance to a higher tax threshold will in total eat away most, if not all of the savings generated from cutting the basic rate of income tax by 2 pence to 20 pence from April 2008,” she added.

Albanian Government Approves 10 Percent Flat Tax

According to a regional news report, another nation has joined the flat tax club, meaning that as of July 1 there will be 18 countries with income tax systems that treat taxpayers equally. With a low rate of 10 percent, Albania will have – at least temporarily – the world’s lowest flat tax rate. The corporate rate also will drop to 10 percent, and other tax rates have also been reduced:

In a move aimed at creating a friendlier investment climate and making the economy more competitive, the Albanian government approved a fiscal package last week that includes implementing a 10% flat tax – the lowest level in Southeast Europe. Corporate taxes will also be slashed to 10%. …Advocates of the move say it will bring many benefits. In addition to attracting Foreign Direct Investment, they say, it will encourage the legalisation of the shadow economy and simplify tax collection. Economic activity increases, and so does honest reporting of income, while tax evasion drops. …The government hopes to implement the legislation by July 1st, with the exception of the corporate tax reduction, which will be implemented January 1st, 2008. The Democratic Party-led government has already instituted various tax reductions during the past two years. The most important of these was the reduction of social security contributions from businesses, from 29% to 20%, and a lowering of taxes on small businesses.