Canadian Columnist Urges Radical Corporate Tax Rate Reduction

Highlighting a recent OECD report that admitted the benefits of tax competition and lower tax rates, a Canadian columnist warns that Canada’s high corporate tax rate is making the nation less competitive. All of the arguments apply even more forcefully to the United States, where the corporate tax rate is about six percentage points higher:

…capital and skilled labour are highly mobile these days. Countries compete aggressively for both with lower and lower tax rates. …The OECD says this competition for lower corporate and personal tax rates will continue. “Globalization favours greater tax competition,” the OECD report says. “It encourages the pursuit of efficiency gains in tax systems - by shifting tax burdens away from capital and labour and toward property and consumption.” …In a single decade, competition has reduced corporate tax rates around the world, the OECD report notes, “in some countries by a considerable amount.” In 1996, the highest corporate tax rate in the world was 60 per cent; in 2006, the highest rate is 40 per cent. …What will the highest rate be a decade hence? Twenty per cent? Ten per cent? Zero per cent? …Whatever the number, it will be much less than 28 per cent and it will necessarily determine Canada’s rate - unless we are not interested in attracting investment capital and highly skilled workers from abroad (or keeping our own from going abroad). Mr. Flaherty’s commitment to lower our corporate rate to 30 per cent over the next five years means his success will in fact ensure failure. You can’t pass the puck to the spot where the receiver now is - he won’t still be waiting there.  Mr. Flaherty needs to pass ahead to the receiver’s future position, which requires a corporate rate of less than 20 per cent by 2011. This ought to be easy. No country has yet hurt itself by reducing tax rates, corporate or personal. …the OECD report tracks the steep decline in corporate rates in one, the subsequent compelling rise in tax revenue in the other. In one decade, the world effectively cut its corporate tax rate in half - and doubled the revenue it gets from it. This is the Laffer Curve, vindicated again. The Laffer Curve expresses a simple, incontrovertible proposition: that decreases in tax rates can increase tax revenue.

Free the Scholars

Justin Logan discussed the “Travesty in Tehran” – the arrest and incarceration of Haleh Esfandiari – astutely yesterday. As he noted, these actions are a real provocation at a time when reduced tensions between Iran and the United States are devoutly to be hoped for. But more importantly, the unjust imprisonment of a peaceful scholar is a striking affront to human rights. The people of both Iran and the United States who want to see Iran as part of a peaceful and democratic world must deplore these actions.

And of course, to make matters worse, Esfandiari is not the only scholar currently being held by the Iranian government. The regime is also holding Kian Tajbakhsh of the Open Society Institute; journalist Parnaz Azima from the U.S.-funded Radio Farda; and Ali Shakeri, a peace activist and founding board member at the University of California, Irvine’s Center for Citizen Peacebuilding. There is no evidence that any of these people are engaged in espionage or threatening Iranian national security. Indeed, most or all of them have worked to improve relations between Iran and the United States and to turn both countries away from a collision course.

Leading human rights groups and activists have spoken out against these arrests. In a joint statement, Amnesty International, Human Rights Watch, Reporters without Borders, the International Federation for Human Rights, and 2003 Nobel Peace Prize laureate Shirin Ebadi urged Iran to stop “harassment of dual nationals.”

To add insult to injury, Esfandiari’s husband was informed yesterday that Citibank had frozen his wife’s bank accounts “in accordance with U.S. Sanctions regulations,” which stipulate that U.S. banks are prohibited from servicing accounts for residents of Iran. A resident? She’s an involuntary resident of the notorious Evin Prison. Late in the evening, after many phone calls and the intercession of the State Department, Citibank relented and unfroze the accounts. As painful as that experience was, her husband no doubt wishes that a day’s worth of phone calls could persuade an Islamic government to admit its mistake.

Is Fred Thompson a Small-Government Conservative?

With former Tennessee senator Fred Thompson creeping ever closer to a formal announcement that he will run for president, it is worth asking whether he is the genuine small-government conservative that has been missing from the top tier of the Republican field (with all due apologies to Ron Paul). A preliminary look at his record suggests that while he is not quite the second coming of Barry Goldwater or Ronald Reagan, he may be much better on most issues than the alternatives.

During his eight years in the Senate, Thompson had a solid record as a fiscal conservative. The National Taxpayers Union gives him the third highest marks of any candidate (trailing only Paul and Rep. Tom Tancredo). While he sponsored or cosponsored legislation over the course of his career that would have resulted in a net increase in federal spending of $3.1 billion, that is the smallest increase among the contenders. (By comparison, John McCain would have increased spending by $36.9 billion). He generally shared McCain’s opposition to pork barrel spending and earmarks, and voted against the 2002 farm bill. He voted for the Bush tax cuts and has generally been solid in support of tax reduction.

He has been a consistent supporter of entitlement reform, voting to means-test Medicare and supporting personal accounts for Social Security.

His record on free trade is solid. In the past he has been supportive of comprehensive immigration reform, but has been critical of the current bill, shifting toward a “control the borders first” position. Still, he has not been Tancredo-like in his anti-immigration statements.

On federalism, there may be no better candidate. His Senate record is replete with examples of his being the lone opponent of legislation that he thought undercut federalist principles. He took this position even on legislation that was otherwise supported by conservatives. He opposes federal action to prohibit gay marriage on federalist grounds, although he supports state bans. One blight on this record is his vote in favor of No Child Left Behind.

On the other hand, he supported McCain-Feingold, although he has now backed away from that position, suggesting the law has been overtaken by events. He told John Fund that he was now willing to consider scrapping campaign finance in favor of full disclosure. And his position on civil liberties generally is troubling. He supported the anti-flag burning constitutional amendment and expansion of federal police powers generally. So far he has given no suggestion that he breaks with the Bush administration on important issues like habeas corpus, torture, and surveillance.

On foreign policy he has been a hawk, and supports continuing the war in Iraq. Alas, that seems standard for the GOP these days, but Thompson appears to also take the neoconservative line on Iran, North Korea, and China. It’s hard to be a small-government conservative while favoring widespread military intervention. War is a big-government program.

Of course, spending the last several years in Hollywood has enabled Thompson to avoid taking positions on many current issues. Once he gets in the race, Thompson will have to be much more specific about his positions. But, given the fact that McCain, Romney, and Giuliani are clearly big-government conservatives, Thompson has an opportunity to seize the small-government mantle.

REAL ID Proponents Miss Yet Another Chance

Writing in National Review Online, the Heritage Foundation’s James Jay Carafano argues that Democrats are killing the REAL ID Act (oh, and that the administration and Senate Republicans aren’t supporting it either). This apparently is a reason to oppose comprehensive immigration law reform. Notably, Carafano passes up yet another opportunity to tell us how REAL ID would add to our nation’s protections.

In my spoken testimony to the Senate Judiciary Committee’s hearing on REAL ID (written testimony here), I characterized the two schools of thought among supporters of REAL ID: the “Just Do It” school and the “Do-Overs” school.

Carafano is from Just Do It. Not engaging on the question whether REAL ID would actually add to our protections, he just implores for its implementation. He never explains exactly how REAL ID would secure us, or why counter-measures wouldn’t lay its alleged benefits to waste. Just Do It doesn’t even attempt making the affirmative case for spending $17 billion undermining our privacy through REAL ID.

The Do-Overs school is epitomized by consultant Janice Kephart, a terror profiteer of sorts, who is cashing in on having been a 9/11 Commission staffer. The Do-Overs school at least argues that REAL ID provides security, but somewhat fantastically.

Among their arguments: If we just had REAL ID back in 2001, maybe the fact that one or two of the 9/11 terrorists had overstayed their visas would have prevented them using a driver’s license at the airport, and they would have had to use a passport, and this would have created suspicion that there was an attack of some kind underway, and the plot would have been broken up.

Evidently, hindsight isn’t always 20/20. Had REAL ID been in place, the 9/11 attackers would have figured out that they should stay current on their visas. Had they not, using Saudi passports at the airport, they would have created no suspicion. Remember - this was before 9/11.

Another chance has passed for REAL ID proponents to make the case for its security benefit.

Presidents Say the Darnedest Things

Just when you think things can’t get any weirder, the White House has announced, per Reuters, that President Bush would like to see a US military presence in Iraq modeled on the one in South Korea. Take it away, Tony Snow:

“The Korean model is one in which the United States provides a security presence, but you’ve had the development of a successful democracy in South Korea over a period of years, and, therefore, the United States is there as a force of stability.”

Readers may object that the US military has maintaned a robust presence on the Korean peninsula for half a century, and worry that such a position may not be tenable in Iraq. Not to worry, says the White House, since these bases won’t be permanent. Tony?

Snow said U.S. bases in Iraq would not necessarily be permanent because they would be there at the invitation of the host government and “the person who has done the invitation has the right to withdraw the invitation.”

As I recall, “permanence” relates to a thing or process’s enduring nature through time, not the volition of any agents contributing to its existence. Reality and The Onion creep ever closer together.

Rumors that the UK Will Abandon National ID

Via SecureID News, politics.co.uk reports on speculation that incoming Prime Minister Gordon Brown will abandon the UK’s national identification card scheme.

Back-handed encouragement for that has come in an open letter to Brown from Conservative shadow home secretary David Davis:

As chancellor you already bear responsibility for the £58 million of taxpayers money wasted on this expensive white elephant… .Experts in the field warn that, far from making us more secure, ID cards risk making us less safe. By clustering a mass of personal information in one place, ID cards will make us a prize target for hackers, fraudsters and terrorists.

Almost a year ago, the Sunday Times reported on leaked emails showing that the UK national ID scheme is in collapse. Much like the U.S. scheme is now.