One year ago, I wrote about how the French government was getting unexpected additional revenues following the implementation of lower tax rates.

This is the Laffer Curve in action, and it’s happening again in France, only this time because the government reduced the wealth tax.

Here’s part of the story at Tax-news.com.

France’s solidarity tax on wealth (l’impôt de solidarité sur la fortune – ISF), which was radically reformed by the government in June last year, has served to yield much greater fiscal revenues for the state than initially predicted. …the government agreed that the solidarity tax on wealth would in future comprise of only two tax brackets: a 0.25% tax rate imposed on individuals with net taxable wealth in excess of EUR1.3m (USD1.7m), and a 0.5% tax rate levied on individuals with net taxable assets above EUR3m. Previously, the entry threshold at which wealth tax was applied was EUR800,000, with the rates varying between 0.55% and 1.8%. To alleviate any threshold effects, a discount mechanism was also instated applicable to wealth of between EUR1.3m and EUR1.4m, as well as to wealth of between EUR3m and EUR3.2m. Although the new provisions provide for lower tax rates and for the abolition of the first tax bracket, effectively exempting around 300,000 taxpayers from the tax, according to latest government figures, the tax yielded around EUR4.3bn in 2011, almost EUR60m more than originally forecast in the collective budget.

This is not to say that France is an example to follow. There shouldn’t be any wealth tax, and income tax rates are still far too high.

And it’s also worth remembering that tax policy is just one of many factors that determine economic performance.

That being said, nations that shift from terrible tax policy to bad tax policy will enjoy better economic performance, just as nations that go from good policy to great policy also will reap benefits.

In other words, incremental changes make a difference. That’s even the case when the politicians impose a “Snooki tax” on indoor tanning services.

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Tim Scott (R-South Carolina)

Earlier this week, Congressmen Allen West and Tim Scott, former congressman J. C. Watts, congressional hopeful Star Parker, and other prominent black conservatives held the Black Conservative Forum to discuss blacks and the Republican Party. The forum, broadcast by C-Span, was well attended, though neither Republican Senatorial Committee and the Republican National Committee bothered to show up. Rep. Jim Jordan of the Republican Study Committee showed up with only a few minutes to spare and Rep. Emanuel Cleaver, chairman of the Congressional Black Caucus, showed up late.

It’s a shame that the talent scouts in our party didn’t bother showing up. Had they, they would have noticed this exchange in which Tim Scott demolished the latest lie about school choice: that racist prep schools, are not intransigent prep schools, are the impediment to educational progress in the black community.

“There are still those schools that would deny access to African-Americans. They are fewer than when I was there, but they are still there.”

Scott quickly showed the silliness of Cleaver’s question by pointing out that waiting for mythical racist schools to become non-racist would mean waiting forever because they don’t exist.

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Following President Barack Obama’s self-congratulatory State of the Union address, Rep. Dave Camp (R-MI), chair of the House Ways and Means Committee, produced a simple chart that tells the real story of the Obama administration:

America Before President Obama Took Office and Now

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In a recent op-ed by Rep. Sean Duffy (R-WI), the freshman congressman said that while efforts such as the STOCK (Stop Trading On Congressional Knowledge) Act designed to stop members of Congress were commendable, ultimately, they will not work as intended.

Writing in the Wisconsin Rapids Tribune, Rep. Duffy said:

A few months ago, Breitbart News editor and author Peter Schweizer published a book titled Throw Them All Out which suggested that members of Congress were using their influence and access in the legislative process to fatten their investment portfolios.

A 60 Minutes piece followed which brought the issue to national attention and rightly caused Americans to wonder: “Is my representative using the power I’ve entrusted in him for personal gains in the stock market?”

As one of the 87 freshman legislators sent to Washington to clean up the mess, I think we owe it to the American people to do just that: clean up the mess. And that includes the reputation and perception that members of Congress operate above the law. Congress ought to hold itself to a higher standard.

Rep. Duffy says that while he personally has not seen any of his congressional colleagues engage in insider trading, he considers it the better part of reason to remove the possibility for the practice to occur. To accomplish that, writes Rep. Duffy, Congress must pass the bill he recently introduced, the RESTRICT (Restoring Ethical Standards, Transparency and Responsibility in Congressional Trading) Act:

The RESTRICT Act is the only way to stop any real or perceived insider trading by members of Congress.

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This past weekend marked the two-year anniversary of the U.S. Supreme Court’s ruling in Citizens United.  Protesters, dubbed Occupy the Courts, gathered at the Court to voice their disapproval of the decision:

As Institute for Justice campaign finance expert Paul Sherman explains in the video above:

The irony of those protests is that you had groups of people getting together to speak out against a Supreme Court decision that protected the right of people to get together and speak out.

Indeed, people should not lose their right to free speech simply by exercising their right to freely associate.   And when people group together—be it on the steps of a courthouse, in the form of a trade union or as a corporation—they don’t lose their freedom to speak out.

Occupy the Courts protesters also mistakenly believed that the Citizens United ruling held that “money is speech.”  In fact, the Court never said that.  Rather, it ruled correctly that money facilitates speech.  And if the government has the power to control how much money you can spend speaking, then it effectively can control your speech.

Importantly, the law in question in the Citizens United case empowered the government to fine and even imprison ordinary people for engaging in certain types of speech.   The government argued in court that it had the power to ban videos and books.  I don’t believe that many Americans, including the Occupy the Courts protesters, think the government should be in the business of banning books.

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Contrary to what some may believe, the Tea Party, aka main-stream America, did not evaporate after their big victory in the 2010 mid-term elections. This year, members of Tea Party groups across the nation are focusing on other activities that are necessary to grass roots organizations: training future activists, working to support the election of more conservatives to Congress and state legislatures, and assisting in teaching young Americans about their Constitution and why they need to defend it.

In addition, Tea Party Patriots has its own response to President Obama’s State of the Union Address:

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Media Matters for America (MMfA) sent an email yesterday, likely in error, to the office of Sen. James Inhofe (R-OK)–hardly a regular recipient of MMfA spam–attempting to coordinate Democratic opposition to the Keystone XL pipeline that was recently blocked by the Obama administration.

Photo: National Post (Canada) / Andrew Harrer / Bloomberg

The email apparently targeted staff from the Senate’s Committee on Environment and Public Works, and recipients included staff working for Sen. Inhofe as Ranking Member, apparently in error. (Sen. Inhofe is an ardent supporter of the Keystone pipeline and has objected vehemently to President Barack Obama’s decision to prevent it from moving forward.)

The fact that MMfA’s email was, atypically, sent to Republican staffers might suggest a gesture at bipartisan outreach–except that the email was explicitly addressed to congressional “allies” on an issue where Republicans have shown unusually strong unity, and the opposition, such as it is, has come from Democrats and the White House. (Last year, the House of Representatives passed a bill supporting the Keystone pipeline with Republicans favoring the project 232-3, and Democrats opposing it 144-47.)

The email announces that Media Matters aims to assist fellow opponents of the Keystone XL pipeline (i.e. congressional Democrats) based on the premise that the media has focused on the jobs the project could create, and not on the potential downsides of the pipeline:

From: [redacted]
Sent: Wednesday, January 25, 2012 09:11 PM
To: [redacted]
Subject: Heads up – MMFA study on media coverage of KXL out tomorrow

[Redacted],

I wanted to flag that MMFA will be putting out a major, quantitative report on media coverage of KXL tomorrow morning.

The study will be similar to our EPA counting study (http://mediamatters.org/research/201106070010) — and will drill home the point the media bought right into Big Oil’s desired frame on KXL, focusing largely on the (inflated) number of jobs that could be created, without paying due attention to the many other important issues at stake. (Ranchers’ land, spills, climate change, etc.)

We are hoping for a big media splash,  but – more importantly – we’re hoping that allies will be able to leverage it to gain favorable coverage.

I’ve pasted a very brief summary below – and will be sure to send along the final study as soon as it’s up.  If you have any questions, please let me know.

All the best,

[Redacted] (more…)

President Obama’s plea to ban Congressional insider trading may poll well and have bipartisan support, but it’s already facing stiff resistance from lawmakers the morning after his State of the Union address.

On Tuesday night, the president spoke in no uncertain terms: “Send me a bill that bans insider trading by Members of Congress, and I will sign it tomorrow,” he said. “Let’s limit any elected official from owning stock in industries they impact.” The remarks were cause for celebration for Breitbart editor Peter Schweizer, who authored a 2011 book exposing Congressional insider trading, and 60 Minutes, which ran a widely-viewed segment based on his book (CBS quicklyuploaded the portion of the speech last night). But early reactions from Congress (Republicans and Democrats) shouldn’t encourage much optimism.

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I’ve already bragged that the Cato Institute is America’s best think tank, highlighting the fact that we took the lead in battling against Obama’s faux stimulus at a time when many were dispirited and reluctant to fight big government.

I’m biased, of course, so I’ll understand if you discount what I say. But I hope you’ll agree that my colleagues have put together an excellent video response to the President’s state-of-the-union speech.

As part of my contribution to the video, beginning around 6:35, I debunk the President’s class-warfare tax agenda by citing IRS data from the 1980s to explain that higher tax rates don’t necessarily mean higher tax revenue.

After a night’s sleep, here are a few additional observations on the President’s remarks.

• I was disappointed, but not surprised, that he repeated the economically foolish assertion that Warren Buffett pays a lower tax rate than his secretary.
• I also was not surprised that he didn’t say much about jobs and the economy. These four charts show he doesn’t have much to brag about.
• It was also noteworthy that he didn’t spend much time talking about Obamacare, which suggests that White House pollsters understand that government-run healthcare isn’t very popular.
• It was equally revealing that he didn’t spend much time on the so-called income inequality issue. Redistribution was implicit in what he said, to be sure, but the Occupy-Wall-Street crowd is probably disappointed that he didn’t explicitly embrace their agenda. More evidence that the pollsters played a big role in this speech.
• I’m definitely not surprised that he talked about eliminating Osama bin Laden. Kudos to the Commander-in-Chief.
• I was amazed that he had the gall to say “no bailouts,” particularly given his support for TARP, the Dodd-Frank bailout bill, and the giveaway to GM and the auto unions. And if the GM bailout is supposed to be a success, I’d hate to see his definition of failure.
• And I was stunned that he could talk about the housing meltdown and mortgage crisis without mentioning the Federal Reserve, Fannie Mae, or Freddie Mac. Sort of like analyzing World War II and pretending Germany and Japan didn’t exist.

Since most of the previous observation are critical, I want to stress that I’m not being partisan. I also was disappointed in the Republican response. Was the GOP smart to showcase a governor who was part of the big-spending Bush Administration? Especially one who has said nice things about the value-added tax?

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Long ago, Jefferson warned, “The natural progress of things is for liberty to yield, and government to gain ground.”  The exceptions to that rule have been few and far between recently, and ought to be celebrated when they occur.

One did this past week with the announcement that supporters of the so-called “Stop On-Line Piracy Act” and the “Protect Intellectual Property Act” have indefinitely postponed their measures after an unprecedented protest across the Internet.

SOPA and PIPA pose a crippling danger to the Internet because they use the legitimate concern over copy-right infringement as an excuse for government to intrude upon and regulate the very essence of the Internet – the unrestricted and absolutely free association that links site to site, providing infinite pathways for commerce, discourse and learning.

It is not the Internet per se that has set the stage for the next quantum leap in human knowledge and advancement – but rather the free association at the core of the Internet.  And this is precisely what SOPA and PIPA directly threaten.

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This morning, Rep. Jan Schakowsky appeared on the Don Wade and Roma show on WLS-AM Chicago to comment on President Barack Obama’s State of the Union address. Schakowsky praised the president’s green energy initiatives, claiming that the (recalled) Chevy Volt “is doing pretty well” and defending Obama’s failed investment in Solyndra.

When the hosts asked her to defend President Obama’s decision to block the development of the Keystone pipeline, Schakowsky did not dispute that the project would create jobs, but denied that these jobs were significant:

Twenty thousand jobs is really not that many jobs and investing in green technologies will produce that and more. But I’ll tell you what, you know it seems to me that the Republicans would rather have an issue than a pipeline.

When the hosts pointed out that Schakowsky’s union allies support the pipeline, she was speechless. (The full audio from the interview is available here.) (more…)

In a State of the Union speech devoid of clarity or specifics, President Barack Obama offered but one shining exception: a direct call for members of Congress to send him a bill to ban congressional insider trading.

“Send me a bill that bans insider trading by members of Congress and I will sign it tomorrow,” President Obama said to applause. “Let’s limit any elected official from owning stock in industries they impact.”

Since the release of “Throw Them All Out,” Breitbart editor Peter Schweizer has been a one-man battalion fighting for members of Congress to abide by the same insider trading laws that apply to all Americans.   President Obama’s speech Tuesday night is evidence that Schweizer’s battle against congressional insider trading and cronyism has scored a critical victory.

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Tonight, President Barack Obama will deliver his third State of the Union Address–and his sixth address to a joint session of Congress. That’s more than either President Bush or President Clinton had addressed in any single term.

Despite his purported skill as an orator, none of Obama’s addresses to Congress has been particularly successful. They are typically remembered more for the rancor they caused than for any positive effects.

Obama is expected to make inequality the focus of his address. That’s an important campaign theme, as well as a refrain of the Occupy Wall Street movement that Obama supported in the fall of 2011.

Yet it is not a significant departure from the tone of previous addresses, in which Obama bullied opponents and Supreme Court justices; fabricated health insurance horror stories; and called upon “millionaires and billionaires” to pay.

For reference purposes as you watch tonight’s State of the Union, here is a concise summary of Obama’s five previous speeches to Congress, and how they were received:

Obama's first address: February 24, 2009

***

Address to Joint Session of Congress, February 24, 2009

In his first speech as the 44th President, Obama wanted to put his stamp on the presidency and introduce his ambitious policy agenda–one “that begins with jobs,” he said. The highlight of his address was the American Recovery and Reinvestment Act–i.e. the stimulus–which he promised would receive “tough, unprecedented oversight” under Vice President Joe Biden.

Obama also announced a government lending program to ease credit, a new housing plan to prevent foreclosures, and assistance to struggling banks. He asked for “long-term investments” in green energy; for a commitment to health care reform; and for new funding for schools, along with education reforms. And he promised to cut the deficit in half by the end of his first term, partly by letting “tax breaks” for the wealthy expire.

In addition, Obama touched on national security, reiterating his promise to close the detention facilities at Guantánamo Bay, hinting that he would press for civilian trials for terrorists, and promising to “defeat al Qaeda and combat extremism.” On foreign policy, Obama declared “a new era of engagement” through negotiations with hostile powers, and announced the appointment of a new envoy to help end the Arab-Israeli conflict.

The reaction to Obama’s speech was somewhat negative: he apparently intended to govern from the left, not from the center (as some had hoped). Stock prices fell sharply the next morning, recovering by the afternoon but ending firmly in the red. In retrospect, though Obama kept his promises on assisting banks and fighting al Qaeda, he broke many other pledges, and saw many of his policies–especially the stimulus–fail badly. (more…)

I’ve written a couple of times about the Food Stamp program, citing ridiculous examples of waste, fraud, and abuse. These include:

• Using food stamps to buy luxury coffee at Starbucks.
• Buying steaks and lobster with food stamps.
• The Obama Administration rewarding states that sign up more food stamp recipients.
• Proposals to make it easier to use food stamps at fast food restaurants.
• College kids scamming the program for handouts.
• New York City giving food stamps to newly released prisoners and running foreign-language ads encouraging more people to sign up for the program.

As a taxpayer, I get upset about these examples. But as a public policy economist, I’m much more worried about the fiscal and economic impact of the program.

As a human being, though, my primary concern is the way redistribution saps the spirit of self reliance and traps people into lives of dependency. That’s the very first point I make in this debate on CNBC.

By the way, my opponent in the debate is Jared Bernstein, who is infamous for being the co-author of the Obama Administration claim that enacting the s0-called stimulus would keep the unemployment rate from rising above 8 percent.

I’ve had lots of fun mocking that claim. Every couple of months I post Jared’s predictions and compare them to the real-world results.

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President Barack Obama will deliver his fourth State of the Union address on Tuesday, January 24th–the very day that marks the 1,000th day since the Democrat-controlled United States Senate last bothered to pass a budget.

On Monday, the Ranking Republican of the Senate Budget Committee Sen. Jeff Sessions (R-AL) and the Chairman of the House Budget Committee Rep. Paul Ryan (R-WI) released a joint statement blasting Democrats for their budgetary inaction and contrasting it with Republican efforts:

Senate Democrats abandoned their official duty to prioritize Americans’ hard-earned tax dollars and tackle our nation’s most pressing economic challenges—dealing a painful blow to fiscal progress that may be felt for some time.  This contrasts sharply with the record of the House Republicans. Last spring, the new House Majority publicly produced a budget plan before the nation, brought it forward in committee, and passed it on the floor. The budget’s principled solutions honestly confront our nation’s most difficult challenges, putting the budget on a path to balance and the country on a path to prosperity.

To mark the inauspicious 1,000-day anniversary, the Heritage Foundation released a series of budget facts and urged the Senate to meet its Constitution requirements for fiscal stewardship:

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Call it life imitating art. Call it a cynical election year ploy for campaign cash. Call it a desperate Hollywood remake. But don’t call it over. Sources on Capitol Hill claim that, although last week saw the timely and bloody death of two bills whose interference with individual liberty was unparalleled in the digital age – SOPA and PIPA – the fight may not be over.

Many key journalists in the tech industry have already pointed out that SOPA and PIPA were, until the industry and American consumers got a hold of the bills, a “sure thing” set to pass without much, if any opposition from members of Congress. The indefinite delay, prompted by massive outrage and widespread protests last week, prompted a total reconsideration of the bill, with Marco Rubio and Congressional Republicans leading a firestorm of criticism and a mass exodus from the bill. Its worth noting, however, that one of the bill’s key sponsors, Democratic Senator Harry Reid, was quick to note that we haven’t seen the last of the bills.

“We live in a country where people rightfully expect to be fairly compensated for a day’s work, whether that person is a miner in the high desert of Nevada, an independent band in New York City, or a union worker on the back lots of a California movie studio,” he said in a statement posted by Games Industry (requires free account sign up.)

He went on to encourage other key senators to look into the proposed amendments to the bills, rehashing SOPA to make it more likely to pass if pushed through again.

Its worth noting that the bill’s backers – the MPAA, RIAA and a host of union thugs – are known for their persistence, whether its prosecuting unwitting grandmothers for Internet music “theft” or protesting Wisconsin governors who are trying to rescue their state’s financial well-being, and Americans should not expect them to back down any time soon. And with the amount of money and the future of Democratic party rule at stake in this next election, the MPAA’s, RIAA’s and unions’ deep pockets and ability to write huge campaign checks probably won’t be put at risk for something as silly as the rights of the American people.

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As President Barack Obama prepares for his State of the Union address in Congress, where he will no doubt claim credit for signs of economic recovery, new analyses by economists suggest that growth will slow and unemployment will remain virtually unchanged by year’s end.

According to economists surveyed by USA Today, much of the excitement around December retail sales was “hype,” and the fourth-quarter bounce was largely driven by post-earthquake/tsunami activity in Japan, not domestic policy. (When the economy suffers, the President blamed the earthquake; when it recovers, curiously, no earthquakes merit mention).

No longer buying Obama - in China or at home (Photo: CNN)

There is continued uncertainty in Europe, and even new uncertainty about slower Chinese growth. But the great drag on the economy remains the American housing market, according to economists, even though many of them expect prices to stop falling this year. Government interventions and bailouts under Obama and his predecessor may have deferred some pain but have prevented markets from full correction and recovery, reinforcing deep uncertainty. (more…)

The German Chancellor and French President have put together a plan to boost growth. Sounds like a good goal, but what specifically are they proposing?

Some of the obvious ideas include:

• Lowering tax rates to boost incentives for productive behavior.
• Reducing the burden of government spending to allow more efficient allocation of labor and capital.
• Cutting back regulation and red tape to boost market efficiency.

But those are only obvious ideas if you want a growth plan that actually leads to…(drum roll, please)…more growth.

Merkel and Sarkozy must have some other objective in mind, because they’ve proposed a plan comprised of new taxes, higher taxes, and tax harmonization.

This is beyond satire. Even if I was trying to make fun of the French and Germans (perish the thought), I wouldn’t be able to make up something this absurd.

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Rep. Gabrielle Giffords (D-Ariz.) announced on her facebook page Sunday that she will resign from Congress this upcoming week.  On January 8, 2010, Giffords was shot in the head in a Tucson grocery store parking lot while meeting with constituents. Six people were killed and 13 others, including Giffords, were wounded. The man charged in the shooting, Jared Lee Loughner, has pleaded not guilty to 49 charges.

According to officials in Washington, her resignation is expected to take effect on Monday.

Giffords returned to Congress in August of last year to cheers from her colleagues.

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President’s appointment of liberal former Ohio Attorney General Richard Cordray to head the powerful Consumer Financial Protection Bureau (CFPB) was a direct assault on the Constitution and the law causing constitutional scholar Jonathan Turley to remark that President Obama has surpassed Richard Nixon in “the development of an imperial presidency of unchecked executive powers.”

Cordray is well aware that the Constitution provides the president with the power of appointment when the Congress is not in session.  But the Congress was not in recess when the President appointed Cordray.  Adding insult to injury, the 2010 law that created the CFPB included a section that says many of the bureau’s new powers are to be held by the secretary of the Treasury “until the Director of the Bureau is confirmed by the Senate.”  The Senate, obviously, never confirmed Cordray.

Despite these constitutional and legal roadblocks, Cordray has assumed the full power of the office and has started the process of regulating the economy in earnest.

In Birmingham, Alabama, Cordray held a field hearing laying the groundwork for a regulatory assault on the short-term lending industry, as well as, the mortgage and student loan industry.  Cordray seems unconcerned of the constitutional and legal challenges ahead.  He told the Hill newspaper, “I’m going to leave that to others … lawyers are digging into it,” when asked if his appointment would survive a legal challenge.  But he added that “the position was long overdue to be filled.” “We’ve got a lot of work to do for the public to make these markets function effectively,” he said.

Cordray, in a few sentences was able to articulate the president’s view of the Constitution and the economy.

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