Swiss Canton Voters Overwhelmingly Adopt 1.8 Percent Flat Tax

More than 90 percent of voters in the Swiss Canton of Obwalden have voted for a flat tax of just 1.8 percent. This is positive news for tax competition within Switzerland, and it doubtlessly will put even more pressure on Europe’s welfare states to reform oppressive tax regimes. Presumably voters in other Cantons will now petition for a chance to vote for low-rate flat tax systems, and maybe it is just a matter of time ‘til one of them decides to completely eliminate the income tax. Swissinfo reports:

Obwalden has become the first Swiss canton to adopt a flat income tax rate, with more than 90 per cent of the electorate voting in favour of the move. The decision, announced by the authorities after a vote on Sunday, comes after a court ruled the canton’s previous degressive tax model unfair. From next January Obwalden will impose a rate of 1.8 per cent on all categories. The new model also exempts the first SFr10,000 ($8,700) of income from taxation, a measure designed to benefit those on lower incomes the most. …In Switzerland there is high competition among the cantons to set the lowest tax rates to attract wealthy individuals and companies. …European neighbours have frequently expressed outrage that their rich citizens are opting to empty their pockets into Swiss coffers rather than their own. But Switzerland has defended its position as providing healthy competition.

Rudy, Hillary, and Power

I have some thoughts in last Tuesday’s New Hampshire Union Leader about Senator Clinton, Mayor Giuliani, and the use and abuse of power:

Clinton, always eager to wield power on behalf of her vision of the public good, has just endorsed new government mandates on health care and energy along with a $50 billion spending program for global AIDS. Meanwhile, revelations about Giuliani’s secretive use of New York City police and his refusal to allow the city comptroller to audit his security spending reflect his lifelong affinity for using and abusing power.

Clinton calls herself a “government junkie.” She says, “There is no such thing as other people’s children” and promises to work on “redefining who we are as human beings in the post-modern age.”…

Giuliani seems much less committed to any particular vision of government’s role. Rather, throughout his career Giuliani has displayed an authoritarian streak that is deeply troubling in a potential President who would assume executive powers vastly expanded by President Bush….

Giuliani wants power concentrated in whatever position he holds at the time, and Clinton wants the federal government to have vast powers to do good as she sees it. Not a happy choice for the voters in a free country.

Bulgaria Now an Official Member of the Flat Tax Club

The Sofia News Agency reports that a 10 percent flat tax has cleared a final hurdle in the Bulgarian Parliament. The article notes that the new tax system requires a signature from the President, but this is expected to be a formality. So it’s time to play the unofficial theme song of the global flat tax revolution and welcome the 23rd jurisdiction to the club:

Bulgaria’s parliament passed on second reading on Monday the amendments introducing a flat tax rate in the country. …The amendments are final and only a veto from president Georgi Parvanov can stop them from becoming law, although he has given no indication he plans to do so. …The leaders of the three parties in Bulgaria’s ruling coalition have agreed in summer on the tax reform, with a flat rate of 10%, the lowest in Europe, replacing the progressive taxation system with three brackets. Since Estonia introduced a flat tax system in 1994, enjoying stable GDP growth, eastern European countries have been attracted to the flat tax that promises to attract foreign investments and increase transparency.

“Good News” on the Trade Deficit?

Against a backdrop of a lot of negative economic news, the Commerce Department this morning reported the “good news” that the U.S. current account deficit shrank in the third quarter to $178.5 billion. The current account is the broadest measure of U.S. trade with the rest of the world, including not only goods and services but income from investments and unilateral transfers such as foreign aid.

I use scare quotes around “good news” because it isn’t really obvious why we should all be cheering a smaller current account deficit. Many of the same stories that hail an “improving” trade account also report that one of the main reasons behind it is the slowing U.S. economy compared to the rest of the world. Slower economic growth at home means less demand for imports, while faster growth abroad boosts the export of U.S. goods. I’m all for increased exports, but since when is slower domestic growth good news?

An interesting figure from the current account report is the flow of investment income. In the third quarter Americans earned $20 billion more in interest, dividends and profits on our investments abroad than foreigners earned on their investments in the United States. This despite the fact that foreigners own about $2.5 trillion more in U.S. assets than Americans own in assets abroad. The reason for the seeming discrepancy is that the assets we own abroad have a much higher return, while foreigners have (so far) remained content to earn a lower return on their more liquid and secure investments in the United States.

Opponents of trade liberalization constantly point to the trade deficit as evidence that U.S. trade policies are failing. We’ve debunked that claim at the Center for Trade Policy Studies, but perhaps one bit of genuine good news in today’s report is that critics of trade will have a slightly smaller target to aim at.

It’s Always in the Last Place You Look

Ed Morrissey at Captain’s Quarters writes, “In the first five years of his presidency, Bush could barely find his veto pen. Now, however, freed of the burden of defending a free-spending Republican Congress, Bush has discovered his inner Reagan.”

Maybe the veto pen really was lost for years, and it just turned up in the White House Book Room.

Bill of Rights Day

Since today is Bill of Rights Day, it seems like an appropriate time to pause and consider the condition of the safeguards set forth in our fundamental legal charter.

Let’s consider each amendment in turn.

The First Amendment says that Congress “shall make no law … abridging the freedom of speech.” Government officials, however, insist that they can make it a crime to mention the name of a political candidate in an ad in the weeks preceding an election.

The Second Amendment says the people have the right “to keep and bear arms.” Government officials, however, insist that they can make it a crime to keep and bear arms.

The Third Amendment says soldiers may not be quartered in our homes without the consent of the owners. This safeguard is doing so well that we can pause here for a laugh.

The Fourth Amendment says the people have the right to be secure in their persons, houses, papers, and effects, against unreasonable searches and seizures. Government officials, however, insist that they can storm into homes in the middle of the night after giving residents a few seconds to answer their “knock” on the door.

The Fifth Amendment says that private property shall not be taken “for a public use without just compensation.” Government officials, however, insist that they can take away our property and give it to others who covet it.

The Sixth Amendment says that in criminal prosecutions, the person accused shall enjoy a speedy trial, a public trial, and an impartial jury trial. Government officials, however, insist that they can punish people who want to have a trial. That is why 95% of the criminal cases never go to trial. The handful of cases that do go to trial are the ones you see on television — Michael Jackson and Scott Peterson, etc.

The Seventh Amendment says that jury trials are guaranteed even in petty civil cases where the controversy exceeds “twenty dollars.” Government officials, however, insist that they can impose draconian fines against people without jury trials. (See “Seventh Amendment Right to Jury Trial in Nonarticle III Proceedings: A Study in Dysfunctional Constitutional Theory,” 4 William and Mary Bill of Rights Journal 407 (1995)).

The Eighth Amendment prohibits cruel and unusual punishments. Government officials, however, insist that jailing people who try in ingest a life-saving drug is not cruel.

The Ninth Amendment says that the enumeration in the Constitution of certain rights should not be construed to deny or disparage others “retained by the people.” Government officials, however, insist that they will decide for themselves what rights, if any, will be retained by the people.

The Tenth Amendment says that the powers not delegated to the federal government are to be reserved to the states, or to the people. Government officials, however, insist that they will decide for themselves what powers are reserved to the states, or to the people.

It’s a depressing snapshot, to be sure, but I submit that the Framers of the Constitution would not have been surprised by the relentless attempts by government to expand its sphere of control. The Framers themselves would often refer to written constitutions as mere “parchment barriers” or what we would describe as “paper tigers.” They nevertheless concluded that putting safeguards down on paper was better than having nothing at all. And lest we forget, that’s what millions of people around the world have — nothing at all.

Another important point to remember is that while we ought to be alarmed by the various ways in which the government is attempting to go under, over, and around our Bill of Rights, the battle will never be “won.” The price of liberty is eternal vigilance. To remind our fellow citizens of their responsibility in that regard, the Cato Institute has distributed more than three million copies of our “Pocket Constitution.” At this time of year, it’ll make a good stocking stuffer. Each year we send a bunch of complimentary copies to the White House, Congress, and the Supreme Court so you won’t have to.

Finally, to keep perspective, we should also take note of the many positive developments we’ve experienced in America over the years. And for some positive overall trends, go here.