Wednesday, April 5, 2017

There's Good News About Civil Asset Forfeiture

Some types of theft are legal in America.
But there’s a catch. You can only legally steal if you work for the government. It’s a process called “civil asset forfeiture” and it enables government officials to confiscate your property even if you have not been convicted of a crime. Or even charged with a crime.

I’m not joking. This isn’t a snarky reference to the tax system. Nor am I implying that bureaucrats can figuratively steal your property. We’re talking about literal theft by the state.
And it can happen if some government official decides – without any legal proceeding – that the property somehow may have been involved in criminal activity. Or maybe just because you have the wrong skin color.
What Happened to Due Process?
A column in the Wall Street Journal explains this grotesque injustice.


The Capital Gains Tax Is Risky Business

There are many powerful arguments for junking the internal revenue code and replacing it with a simple and fair flat tax.
  1. It is good to have lower tax rates in order to encourage more productive behavior.
  2. It is good to get rid of double taxation in order to enable saving and investment.
  3. It is good to end distorting preferences in order to reduce economically irrational decisions.
Today, let’s review a feature of good tax reform that involves the second and third bullet points.
Under current law, there is double taxation of corporate income. This means that companies must pay a tax on income, but that the income is then taxed a second time when distributed to the owners of the company (i.e., shareholders).
This means that the effective tax rate is a combination of the corporate income tax rate and the tax rate imposed on dividends. And this higher tax rate is an example of why double taxation discourages capital formation and thus leads to lower wages.
But this double taxation of dividends also creates a distortion because there isn’t double taxation of corporate income that is distributed to bondholders. This means companies have a significant tax-driven incentive to rely on debt, which is risky for them and the overall economy.
Curtis Dubay has a very straightforward explanation of the problem.


Unpopular Policies Can Be Good Politics

For three decades, I’ve been trying to convince politicians to adopt good policy. I give them theoretical reasons why it’s a good idea to have limited government. I share with them empirical evidence demonstrating the superiority of free markets over statism. And I’m probably annoyingly relentless about disseminating examples of good and bad policy from around the world (my version of “teachable moments”).
But if you want to get a politician to do the right thing, you need more than theory, data, and real-world case studies. You need to convince them – notwithstanding my Second Theorem of Government – that good policy won’t threaten their reelection.
My usual approach is to remind them that Ronald Reagan adopted a bunch of supposedly unpopular policies, yet he got reelected in a landslide because reducing the burden of government allowed the private sector to grow much faster. George H.W. Bush, by contrast, became a one-term blunder because his tax increase and other statist policies undermined the economy’s performance.


After Studying Basic Economics, Mayor Vetoes Minimum Wage Increase

There can be no denying that legislatively speaking, the Fight for Fifteen movement garnered huge wins during the last election cycle both on city and state levels.
Unfortunately, no matter how much success or popularity an initiative manages to earn at the ballot box, there are economic laws that cannot be avoided, even when good intentions are accounted for—something some politicians are starting to figure out.
Instead of signing the legislation, Mayor Pugh used her power to veto it!


Mnuchin Wants to Feed the Slimiest Creature in the Entire Swamp

Tax Day is only a few weeks away, which means it’s that time of the year when the country actually stands united in its hatred of governmental theft for a few weeks, before retreating back to their ideological corners to commence political warfare as usual.
Loathing the Internal Revenue Service (IRS) is not an exclusive to libertarians and limited government activists. In fact, the IRS is probably the most hated government agency of them all. And given the long list of disreputable options to choose from, garnering that title is extremely impressive.
For Mnuchin, making America great again means making the IRS even bigger.
Unfortunately for the prospects of tax relief, President Donald Trump, the newly elected “man of the people” who vowed to drain the proverbial swamp of all corruption upon taking up residence at 1600 Pennsylvania Avenue, nominated a Treasury Secretary who wants to make that swamp a little wider.


Peter Navarro Responds to His Trade Critics (Sort of)

White House National Trade Council Director Peter Navarro’s views have been roundly criticized by economists and policy professionals from across the political and ideological spectra. There seems to be an emerging consensus that the more Navarro speaks and writes, the more he marginalizes his influence within the administration. It is with that cause and (positive) effect in mind that I continue pulling on this thread.
A couple of weeks ago, Navarro wrote an op-ed in the Wall Street Journal, offering some really unconventional perspectives about trade policy and revealing a profoundly unique understanding of economics. I replied (in long form) on the Cato blog and (in shorter form) with a letter to the editor of the WSJ.
This afternoon, the WSJ published a response from Navarro to me and the authors of the two other letters published in response to Navarro’s original op-ed. And in response to Navarro’s response, Cafe Hayek’s/Mercatus’s/GMU’s Don Boudreaux wrote this letter to the WSJ editor:


Don't Raise Uncle Sam's Credit Limit

Once again, the United States government is rapidly approaching a fiscal debt ceiling. After March 16, 2017, Uncle Sam will not be legally allowed to borrow any more money to cover its budget deficits, unless Congress votes to raise the debt limit, once again, like it has every time in the past.
The per capita burden of the national debt for those submitting and paying federal taxes is almost $123,500 per taxpayer.
Uncle Sam’s debt has been growing at a frightening rate over the last several decades. It took almost two hundred years, from around 1790, when the government of the United States was established, to 1980 for the federal government to accumulate $1 trillion of debt through deficit spending.
In the twenty-year period, 1980 to 2000, that national debt grew to $5 trillion. Then during the eight years of George W. Bush’s Republican Administration from 2001 to 2009, the debt doubled to around $10 trillion. And over the eight years of Barack Obama’s Democratic Administration, the national debt doubled, once more, to just short of $20 trillion.


Trade Wars Make Casualties of Us All

Military warfare is not the only kind of warfare that causes injury to innocent bystanders. The same inescapably happens in the economic wars waged by governments. But in economic warfare, the apparent victims of “collateral damage” are often, in fact, targeted victims themselves.
On March 29, 2017, The Wall Street Journal ran a story highlighting the Trump Administration’s likely intention of getting tough in trade talks about American beef sales to the European Union.  Being more concerned with the "natural” than with the United States, the European Union long ago imposed trade restrictions on imports of American beef that had been raised using artificial hormones.
“America” and “Europe” do not exist as living, breathing entities.


How the Market Is Already Repealing Obamacare

There’s a common misconception that if you’re opposed to government services, programs and/or departments, then you’re opposed to building roads, education, people getting affordable health care and even people taking care of the sick and elderly. These misconceptions are becoming more apparent as the free market offers solutions and options using innovation and technology, as the government continues to fall in on itself.
Six months into the pregnancy, we received a letter explaining that due to the changes in the law, our policy would no longer cover maternity services.
I continue to be amazed at the ingenuity of people and individuals working toward solutions in the marketplace, in spite of government. Over time government has assumed more and more control over medical decisions that individuals make everyday.


Why Is Trump Waging War on the Freedom Caucus?

Why is Trump attacking the House Freedom Caucus? He has tweeted that “we must fight them.”
My first thought: this is inevitable. Destiny is unfolding before our eyes!
There is the obvious fact that the Freedom Caucus was the reason the GOP’s so-called replacement for Obamacare went down to defeat. They fought it for a solid reason: it would not have reduced premiums or deductibles, and it would not have increased access to a greater degree of choice in the health-insurance market.
At minimum, any reform must unfreeze the market.
These people knew this. How? Because there was not one word of that bill that enabled the health care industry to become more competitive. Competition is the standard by which reform must be judged. The core problem of Obamacare (among many) was that it froze the market in an artificial form and insulated it from competitive forces. At minimum, any reform must unfreeze the market. The proposed reform did not do that. 


Open Your Eyes: Social Democracy is Collapsing

A sign of strange times: 1984 by George Orwell has become a bestseller yet again. Here is a book distinguished for its dark view of the state, together with a genuine despair about what to do about it. 
Strangely, this view is held today by the Right, the Left, and even people who don’t think of themselves as loyal to either way. The whole fiasco happening in D.C. seems insoluble, and the inevitable is already taking place today as it did under the presidents who preceded Trump: the realization that the new guy in town is not going to solve the problem.
Now arrives the genuine crisis of social democracy. True, it’s been building for decades but with the rise of extremist parties in Europe, and the first signs of entrenched and sometimes violent political confrontations in the United States, the reality is ever more part of our lives. The times cry out for some new chapter in public life, and a complete rethinking of the relationship between the individual and the state and between society and its governing institutions.