The New York Times has an article describing widespread tax evasion in Greece, along with an implication that the country’s fiscal crisis is largely the result of unpaid taxes and could be mostly solved if taxpayers were more obedient to the state. This is grossly inaccurate. A quick look at the budget numbers reveals that tax revenues have remained relatively constant in recent years, consuming nearly 40 percent of GDP. The burden of government spending, by contrast, has jumped significantly and now exceeds 50 percent of Greek economic output.

The article also is flawed in assuming that harsher enforcement is the key to compliance. As the video shows, even the economists at the Paris-based Organization for Economic Cooperation and Development admit that tax evasion is driven by high tax rates (which is remarkable since the OECD is the international bureaucracy pushing for global tax rules to undermine tax competition and reduce fiscal sovereignty).

Ironically, the New York Times article quotes Friedrich Schneider of Johannes Kepler University in Austria, but only to provide an estimate of Greece’s shadow economy. The reporter should have looked at an article that Schneider wrote for the International Monetary Fund, which found that:

Macroeconomic and microeconomic modeling studies based on data for several countries suggest that the major driving forces behind the size and growth of the shadow economy are an increasing burden of tax and social security payments… The bigger the difference between the total cost of labor in the official economy and the after-tax earnings from work, the greater the incentive for employers and employees to avoid this difference and participate in the shadow economy. …Several studies have found strong evidence that the tax regime influences the shadow economy. …In Austria, the burden of direct taxes (including social security payments) has been the biggest influence on the growth of the shadow economy… Other studies show similar results for the Scandinavian countries, Germany, and the United States. In the United States, analysis shows that as the marginal federal personal income tax rate increases by one percentage point, other things being equal, the shadow economy grows by 1.4 percentage points. …A study of Quebec City in Canada shows that people are highly mobile between the official and the shadow economy, and that as net wages in the official economy go up, they work less in the shadow economy. This study also emphasizes that where people perceive the tax rate as too high, an increase in the (marginal) tax rate will lead to a decrease in tax revenue.

It is worth noting the Schneider’s research also shows why Obama’s tax policy is very misguided. The President wants to boost the top tax rate by nearly five percentage points, and that’s on top of the big increase in the tax rate on saving and investment included in Obamacare. Based on Schneider’s research, we can expect America’s underground economy to expand.

(more…)

General Motors CEO Ed Whitacre has bragged in TV commercials and newspaper columns that GM has paid back its bailout “in full and ahead of schedule.”

As with the Pontiac Aztek, an ugly exterior masks an ever darker problem: Whitacre is being fanciful to the point of deceit. GM received $50 billion in TARP funds (never mind that TARP was only supposed to cover financial institutions). About $7 billion of that came in the form of a straight-up, low-interest loan. And about $13 billion came in the form of an escrow account.

So how has GM, which lost $38 billion in 2007 even as it sold 9.4 million cars, paid back its debt? It took money from the escrow account to pay back the $6.7 billion loan.

Do you remember when you were a kid and your parents gave you $20 to buy them a Christmas present? You bought them something worth $3 and pocketed the rest? That’s what GM has just done.

(more…)

One pen stroke from Arizona Governor Jan Brewer has given her state a no-nonsense immigration policy and given America yet another opportunity to see the full face of leftist hypocrisy.

First some key points of the policy-

As shown in the picture above (featuring MSNBC’s poster child of intelligence, Contessa Brewer) this bill essentially says illegal means illegal.  If you are in the state of Arizona illegally you are guilty of trespassing (page 2 line 44), and if you are caught trespassing you will be transferred immediately to the custody of the ICE (Immigration and Customs Enforcement).  I will address the profiling allegations later.

This bill has teeth, and it puts the screws to employers who knowingly hire illegal immigrants (page 6 line 7).  The burden of proof of work eligibility is now on the employer since this bill officially makes it illegal for an undocumented alien to “apply for work, solicit work in a public place, or perform work as an employee or independent contractor in this state.”

Complaints can now be filed with the Attorney General of Arizona or with a county attorney when a business is suspected of employing illegal aliens.  After an investigation, if a business is found to be employing illegal workers charges are brought upon the business, and expedited court status is given to the case.

(more…)

When Andy Stern announced his retirement as head of the Service Employees International Union (SEIU) and the “Change to Win” federation, he took a generous retirement package with him, and left his union $85 million in debt, having spent $61 million to elect President Obama and a Democratic Congress.

A good case can be made that he earned every penny of that package, and has left Big Labor stronger than ever.

Organized labor is engaged in its most audacious offensive since the New Deal. And Andy Stern has put it in an advantageous position because he learned the age-old lesson of American organized labor: politics pays. He’s not running off with an early inheritance. He’s returning to his movement’s first principles.

When Stern led five unions out of the AFL-CIO in 2005, he said that the old federation had become stodgy and complacent, too much a part of the political establishment and not zealous enough about grassroots “organizing,” especially the sort of unskilled workers who compose SEIU. Stern’s organization sought “Justice for Janitors,” and clamed to speak for the minority workers in service-sector jobs.

On paper, he had a point.

(more…)

An April 30th Press Release issued by Leading Authorities, Inc., announces Andy Stern’s latest move:

“Leading Authorities, Inc. has signed Andrew (Andy) L. Stern, the former president of the 2.2 million-member Service Employees International Union (SEIU), the fastest-growing union in North America. Stern turned SEIU into a powerful political force, and Stern and SEIU were widely credited for helping elect Barack Obama in 2008.

“We are extremely proud and privileged to be representing Andy Stern,” said Leading Authorities founder and CEO Mark French. “He is a major force in Washington politics. He transformed the labor movement, raised huge sums for President Obama’s election, and exerted monumental influence on the health care debate. Everyone at LAI is thrilled to be working with Andy.”   The release goes on to state,  “Stern will be addressing audiences about politics and issues such as fiscal policy, entitlements, immigration, healthcare, and the future of the labor movement.  He will speak independently, and also be matched with leading Republican thinkers.”

About the company:

“Leading Authorities, Inc. is one of the nation’s most progressive event design firms as well as a renowned lecture agency and production house. LAI represents thought leaders in business, politics and contemporary life as well as nationally-recognized entertainment acts. Our award-winning video and production departments provide professionally managed events and cutting-edge media products. Our experiential event design experts conduct workshops to improve attendance, engagement, and return on investment. With tools such as our Strategic Event Evaluation and our Event Design Workshops, Leading Authorities is setting the standard in customized, fully integrated event design.”

Aw, Andy’s got himself an agent.  Show him the money.

(more…)

Although I am a modern feminist, like most people, I stopped paying serious attention to the feminist movement right around the time the movement lost its voice to political correctness.  Unfortunately, there are no promising indicators that the current feminist establishment will be regaining that voice anytime soon.  The silence of the movement on critical issues gives the impression that all is well for the women of the world, when in fact, nothing could be further from the truth.

Last week, Evangelical Rev. Franklin Graham was disinvited from the National Day of Prayer event at the Pentagon because of his remarks about Islam which included, “When you look at what the religion [Islam] does to women and women alone, it is just horrid.”  Due to the level of media coverage surrounding this event, it was the perfect opportunity for some feminist group to seize the moment and speak out against the atrocities committed against women every day in the name of Islam, but the establishment chose to remain silent.

Feminists certainly could have come out in support of Franklin Graham’s truthful remarks and brought attention to some simple facts, like how women who live under Shariah Law are virtual prisoners and are not allowed to leave their home unless accompanied by an appropriate male guardian.  Or perhaps, start a discussion on the fact that over 90% of married women in supposedly “moderate Islamic” countries like Pakistan report being “kicked, slapped, beaten, or sexually abused” for crimes like failing to cook or clean to their husbands’ approval or for giving birth to a girl instead of a boy.  Maybe it would have been a good time to mention that now even here in the United States, fathers, brothers, and sons sometimes feel they have the right to viciously attack and murder their own female relatives in order to preserve their so-called “honor.”  At the very least, it would have been an appropriate moment for some feminist group to denounce the heinous practice of female genital mutilation or the stoning to death of women who are raped.  What about the Islamic tradition of forcing children to “marry” adult men who then take complete control over their little bodies — control enough to rape little girls to death as we saw in Yemen just weeks ago.

(more…)

Today, in 1998, the European Central Bank is founded in Brussels. The crisis in Greece will test how long we observe this anniversary.

The U.S. economy is on the mend and has been for some time. The reason is that, as Marx acknowledged in The Communist Manifesto, the capitalist system is an engine of powerful forces.

Market capitalism, true capitalism and not big government colluding with big business to engage in what Bastiat called “legalized plunder,” is the most efficient way of organizing resources. As a system it drives innovation, which is the source of our increased standard of living. In fact, this system is so powerful and efficient that our economy is doing well in terms of producing goods and services, not because of government intervention, but in spite of it. There is no question that the federal government has been engaged in activities that have suppressed and will continue to suppress economic growth and will leave millions of our person unemployed for lengthy periods. But the economy as a whole will be productive and our gross domestic product will continue to increase in the near future.

There is substantial empirical evidence that the economy is recovering. Fourth quarter real GDP grew at a 5.6% annual rate, the Federal Reserve Industrial Production Index was up in March for the 9th month in a row, the ISM manufacturing index was up in March to 59.6 and the employment index was at 55.1, the fourth straight month above 50, housing starts and existing home sales were up in March, the Conference Board’s Index of Leading Indicators increased 1.4% in March, and one can cite more data showing the upside of the business cycle is underway.

At issue is why is the economy recovering and is it likely to be a sustained recovery? We may also ask why unemployment remains stubbornly high while production is increasing. Normally, as the economy comes out of a recession productivity increases, part-time employment increases, and finally full-time employment increases. Why have we yet to see the last stage of this process?

(more…)

Click To Play

We’re all about the headlines this week as we’ve got Mark Steyn calling in from Arizona at the white hot center of the immigration debate, author John O’Hara discusses his new book “A New American Tea Party” and his recent appearance on “The Daily Show,” and we talk to Tim Burns the Republican candidate in the hotly contested race for Jack Murtha’s seat in Pennsylvania. Questions? Comments? Write us at podcast@ricochet.com or come join the discussion on or Facebook page.

The health care bill that Congress passed recently is now being challenged by 18 states to date. The constitutionality of the bill will be a close call, with strong arguments on both sides. As former staff director of the bipartisan Commission on the Bicentennial of the U. S. Constitution, I wish here to present – as impartially as possible – both sides of the case, believing along with John Stuart Mill that “he who knows only his own side of the case knows little of that.”

White House Press Secretary Robert Gibbs reported that its counsel opined that the individual mandate requiring all to purchase health insurance is constitutional under the commerce clause. True or wishful thinking? The nub of the controversy seems this: Will the Supreme Court, citing the commerce clause, permit Congress to regulate inactivity – that is, the absence of commerce – by forcing citizens to buy a certain private-sector service or product?

But to this argument, defenders of the bill will counter that the aim of the commerce clause is not to regulate economic inactivity but to regulate health insurance and health care – an altogether different focus.

In response, opponents of the bill will argue that health insurance is a 10^th Amendment states’ right, not a federal government right. States currently regulate health insurance.

As if matters aren’t confused enough, the Supreme Court has taken polar positions on the commerce clause. In Gonzalez v. Raich (2005), it ruled that the commerce clause can be used to regulate home-grown marijuana even if only for personal use. But in U. S. v. Lopez (1995), it ruled that the commerce clause does not authorize federal law banning guns in local school districts.

(more…)

After my article last week, Michael Steele and the Southern Strategy, now is time for some truth-telling about the Democratic Party.  The Democrats’ own southern strategy was far, far worse than even worst accusations aimed at the Republicans.

In his recent speech criticizing the GOP’s so-called southern strategy, RNC Chairman Michael Steele scored big points… for the other team.  Instead of criticizing his own party, he would do well to focus the public’s attention on the appalling heritage of the Democratic Party – the party of slavery and big government, socialism and the Ku Klux Klan.

“The Republican Party, on the contrary [to the Democrats], holds that this government was instituted to secure the blessings of freedom, and that slavery is an unqualified evil.  [Republicans] will oppose in all its length and breadth the modern Democratic idea that slavery is as good as freedom.”

In this classic speech, Abraham Lincoln condemned the pro-slavery policies of the Democratic Party.  The founders of our Grand Old Party knew to call Democrats ‘slave-ocrats.’  And another Republican, Robert Ingersoll, observed: “Every man that loved slavery more than liberty was a Democrat.”  One of Lincoln’s friends, Rep. Owen Lovejoy (R-IL), had this to say:

“The principle of enslaving human beings because they are inferior, is this: If a man is a cripple, trip him up; if he is old and weak, and bowed with the weight of years, strike him, for he cannot strike back; if idiotic, take advantage of him; and if a child, deceive him.  This, sir, this is the doctrine of Democrats and the doctrine of devils as well, and there is no place in the universe outside the five points of hell and the Democratic Party where the practice and prevalence of such doctrines would not be a disgrace.”

Very definitely, slavery was a southern strategy of the Democratic Party.

(more…)

Today is May Day, a day international lefties devote to agitating for lower living standards, fewer opportunities and greater levels of poverty. Consider making a totally unnecessary purchase of a wildly impractical product today.