If you live in a developed country, your taxes are probably much lower today than they were 30 years ago, thanks in part to tax havens. In 1980, top personal income tax rates in developed countries averaged more than 67 percent, and corporate rates that year averaged nearly 50 percent. To compound the damage, countries routinely imposed extra layers of tax on capital, including dividend taxes, capital gains taxes, inheritance taxes, and wealth taxes. These policies discouraged saving and investment, stifling economic growth and causing significant economic hardship.

Beginning with Reagan and Thatcher, governments have been racing to cut tax rates and reform tax regimes. Top personal tax rates now average only about 40 percent, and corporate rates have been reduced to an average of about 27 percent.

It is largely globalization—not ideology—that has driven this virtuous "race to the bottom." Governments are cutting taxes because they fear that jobs and investment will flee across national borders. Tax havens, by providing a safe refuge for people seeking to dodge confiscatory tax rates, have played a critical role in these positive developments. Better to get some revenue with modest tax rates, lawmakers have concluded, than impose high tax rates and lose out.

European duchies and Caribbean isles aren't the only places that welcome tax refugees. The United States, for instance, could be considered the world's largest tax haven. The U.S. government generally does not tax interest and capital gains received by foreigners who invest in America. And since the IRS does not collect data on those payments, there is rarely any information to share with foreign tax collectors. Moreover, U.S. corporate structures, such as Delaware and Nevada companies, are excellent vehicles for foreigners to manage their investments. Thanks in part to these attractive policies, foreigners today have more than $12 trillion invested in the United States.

But President Obama is determined to unravel all of those benefits. His proposals would put American corporations at a great disadvantage, which is a very foolish policy in a competitive global marketplace. And despite the administration's make-believe figure, this plan would produce virtually no new tax revenue at all.

This is mostly a debate about Keynesian economics, which is the theory that the economy can be boosted if the government borrows money and then gives it to people so they will spend it. This supposedly "primes the pump" as the money circulates through the economy. Keynesian theory sounds good, but it has a rather glaring logical fallacy: It overlooks the fact that, in the real world, government can't inject money into the economy without first taking money out of the economy. The economic theory that President Obama has followed during his first 100 days doesn't boost national income, it merely redistributes it. The pie is sliced differently, but it's not any bigger.

Both Hoover and Roosevelt dramatically increased spending, and neither showed any aversion to running up big deficits, yet the economy was terrible all through the 1930s. To be fair, the argument that government can create jobs is not dependent on Keynesian economics. Politicians from both parties, for instance, argued in favor of pork-filled transportation bills earlier this decade when the economy was enjoying strong growth — and job creation generally was their primary talking point.

Unfortunately, no matter how the issue is analyzed, there is virtually no support for the notion that government spending creates jobs. Indeed, the more relevant consideration is the degree to which bigger government destroys jobs. Both the theoretical and empirical evidence argues against the notion that big government boosts job creation. Theory and evidence lead to two unavoidable conclusions:

1. The theory of government-instigated job creation overlooks the loss of resources available to the productive sector of the economy. If the government decides to build a "Bridge to Nowhere," it is very easy to see the workers who are employed on that project. What is less obvious is that the resources to build that bridge are taken from the private sector and thus are no longer available for other uses.
2. So-called stimulus packages have little bang for the buck. Even if one assumes that money floats down from Heaven, government is never an efficient way to achieve an objective. Based on the amount of money the president and Congress included in the "stimulus" package and their claims of how many jobs will be created, Harvard Professor Greg Mankiw filled in the blanks and calculated that each new job (assuming they actually materialize) will cost $280,000. But since money doesn't come from Heaven, this calculation is only a partial measure of cost. In reality, the cost of each government job should reflect how that $280,000 would have been spent more productively in the private sector.

The best "stimulus" government can offer is simply to stop interfering with the market and the economy overall.

But in the case of executives who came begging to the feds after mismanaging their companies: Sorry, guys, you asked for it.

President Obama's proposal gets me nervous since it may lead to further meddling by government, but there is a silver lining. Bailouts are a major threat to the economy's long-run dynamism, so I want to discourage companies from sticking their snouts in the public trough. Restricting pay for incompetent corporate executives is not a proper role of government (by definition, successful corporate executives do not try to loot taxpayers). But propping up poorly-run companies is so misguided that second-best (or even 50th-best) options may be palatable. Corporate chieftains who run their companies into the ground should not be allowed to simultaneously shift the burden of their mistakes to taxpayers and expect multi-million dollar pay packages.

In past years, Money magazine asked professional tax preparers to estimate the tax liability for a hypothetical family. Almost without fail, every single answer the magazine received was different and every single answer was wrong. If people trying to come up with the right answers have this much trouble, imagine the opportunities for mischief by those who want to scam the system — especially now that the tax code is even more complex?

From a personal perspective, it is well nigh impossible to rationalize Mr. Daschle's dodgy behavior as a series of honest oversights. If he had a friend who lent him a car and driver periodically, that would be a gray area and a failure to report in-kind income would be understandable. The failure to report the full-time provision of a luxury automobile and chauffeur, by contrast, stretches credulity to the breaking point. Failure to report more than $80,000 of consulting income also does not pass the smell test.

But perhaps the most instructive element of Mr. Daschle's tax dodging is that it reveals how the political culture in Washington is fundamentally corrupt. As a senator, he constantly voted to expand the size and scope of government, and he expected the rest of us to pay the bills, stating in 1998 that, "the I.R.S. should enforce our laws to the letter." Yet like Treasury Secretary Geithner and Charles Rangel, chairman of the House Ways and Means Committee, Mr. Daschle viewed compliance as optional.

Unlike ordinary Americans, Mr. Daschle and other members of the political class will not have to worry about being harassed by the I.R.S. Washington insiders have a get-out-of-jail-free card that enables them to feign embarrassment, pay the back taxes and interest, but avoid any penalties or legal consequences. Best of all, they also can generate campaign contributions while in office and become rich out of office by making the tax code even more onerous for the rest of us.

Nice work if you can get it.