Tax Competition Is a Powerful Mechanism to Restrain the Greed of the Political Class
by Dan MitchellHere’s a new mini-documentary from the Center for Freedom and Prosperity, narrated by Natasha Montague of Americans for Tax Reform, that explains why the process of tax competition is a critical constraint on the propensity of governments to over-tax and over-spend.
The issue is very simple. When labor and capital have the ability to escape bad policy by moving across borders, politicians are more likely to realize that it is foolish to impose high tax rates. And they oftentimes compete for jobs and investment by lowering tax rates. This virtuous form of rivalry helps explain why so many nations in recent years have lowered tax rates and adopted simple and fair flat tax systems.
Another great feature of the video is the series of quotes from winners of the Nobel Prize. These economists all recognize competition between governments is just as desirable as competition between banks, pet stores, and supermarkets.
The video also discusses how politicians are attacking tax competition. It mentions a privacy-eroding scheme concocted by governors to tax out-of-state purchases (how dare consumers buy online and avoid state sales tax!).
And it also discusses a very destructive tax harmonization effort by a Paris-based bureaucracy (the Organization for Economic Cooperation and Development, subsidized with American tax dollars!), which would undermine fiscal sovereignty by punishing jurisdictions that adopt pro-growth tax systems that attract labor and capital.
The issues discussed in this video generally don’t get a lot of attention, but they are critical for the long-run battle to restrain government. Please share widely.
P.S. This speech by Florida’s new Governor is a good example of how tax competition encourages policy makers to do the right thing.
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50 Comments
Property taxes need to go…forever. Freedom needs to stay…forever.
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Eliminate property taxes and you create an opportunity that,…..
has the potential of eliminating many of society's problems.
Competition nearly always brings about improvement , so it's only logical tax competition would improve government.
Most definitely get rid of property taxes. What is the single biggest portion of the accessed tax?
Wait for it……..
Schools!
Schools get funds from:
Property Taxes.
Sales Tax Referendums.
State Budgets
Federal Government
other Federal Grants
Charitable Organizations
and on and on and on……..
Where is all this &$^#$^#*$@^* money going?
Meanwhile, Johnny still can't read. He is clueless on sentence structure; with poor grammar, a seventh grade vocabulary and insufficient math skills to make change while he's makin' em my way at Burger King.
However, you can be absolutely sure that he knows all about
global warmingClimate Change, the Howard Zinn version of U.S. History and is thoroughly proficient in the progressive narrative and liberal guilt.Yaaaaay, Teachers!!
Milton Friedman is possibly my all time hero. He's the man they should be studying in universities.
Rip out the entire tax code in America, repeal the 16th Amendment, and replace it with the “Fair Tax.” If you leave any part of the tax code it will grow back, as it did when we went to an essential “Flat Tax” in ’86. Remove the play toy of all Washington politicians, and capture the underground economy (illegal invaders), completely remove the poor through the rebate program. This would also force Washington to live within it’s means…check it out!
At the risk of being coy, who keeps score? The children do. Competition is the fuel for all improvement. Even the briefest journey through history indicates that healthy competition is fundamentally good for mankind. The Space Race is a good example as new technology and industry sprung forth like a fountain of knowledge.
I have studied recently some tax alternatives such as the “Fair Tax” and a Flat Tax. On a federal level the Fair Tax would require fiscal prudence on behalf of the Federal Government. States that do not have a state income tax and rely on sales taxes for the lion’s share of revenue have done so with success. There is only one way to fix our system and that is to reduce the class warfare arguments to dust and remove the entitlement mentality of others. Perhaps the later can be done through shame.
Lower or eliminate corporate taxes, eliminate property taxes, institute either a flat tax or the Fair Tax. Stand back and watch America grow so fast it'll make your head spin. Do these things and you put the power in the country back where it rightly belongs – in the people's hands. And that is why the political class will never do it unless we force them to.
The unemployment number just came out,……8.9%,……
OK Republicans,……….It was the Bush tax cut extension,…….
now go out and sell this before,…….
we are given the MSM / Obama version.
He actually means The Elite Ruling Criminal Class instead of political class.
By the way. Tax is theft.
Sic Semper Tyrannis!
UGH! Our property taxes doubled last year, and now our BROKE school district wants to spend 6.5 million on repairing an old building from the 20's! WHILE closing and consolidating other gradeschools! UGH. Think our taxes are going up? Do we flee the state? Our state is broke and that's part of the problem they are behind paying the schools. I am fighting my hubby to homeschool!
A government big enough to give you everything you want, is big enough to take everything you have.
Power is not alluring to pure minds.
I predict future happiness for Americans if they can prevent the government from wasting the labors of the people under the pretense of taking care of them.
Delay is preferable to error.
Experience hath shewn, that even under the best forms of government those entrusted with power have, in time, and by slow operations, perverted it into tyranny.
I own that I am not a friend to a very energetic government. It is always oppressive.
I predict future happiness for Americans if they can prevent the government from wasting the labors of the people under the pretense of taking care of them.
My reading of history convinces me that most bad government results from too much government.
……Thomas Jefferson
A tax zone? OPEC for politicians sounds about right. We need to boycott this concept, officially as a govt and with our industry. Bring 'em all back home without the high tax rates and burdensome Union trappings.
Milton Friedman is good, but even better is Friedrich August Hayek. F.A. Hayak worked with Friedman at University of Chicago, and helped to formulate the Chicago school of economics, though Hayek was/is usually considered a proponent of the Austrian school of economics.
The left has no shame. It is incompatible with leftist dishonesty. If they had shame they would bathe once in a while and so they would not have that stench that precedes them wherever they go.
Sic Semper Tyrannis!
Ludwig Von Mises might be a better choice.
Friedman gave us a very practical approach to economics. "Economics for Dummies" if you will. His logic and complete understanding of the competitive market is a model easy success. It does however limit the ability of government control and a certain party dialogue to have any real effect.
There is so much evidence of lowering the tax burden for individuals and corporations that show all prosper, even government.
One law for all! Treat every American the same – no one better or worse just the same = one tax code! God only wants 10% what makes government think it deserves more?
"The left has no shame."
Then the time has come for some lessons in humility.
This is exactly what I meant. " Economics for Dummies" or made easy is all most people need to know. An understanding of just the principles Friedman outlined would go a long way in WI. Also we would need an edition of "Economics For The Dumbest Dummies" for progressive politicians.
Here in MN, there has been a concerted effort by the state of South Dakota for many years, luring businesses away from Minnesota with the promise of lower taxes.
It's a valid tactic, and it works. Tax competition is a good thing. It allows families and businesses to vote with their feet as a last resort.
Join conservatives at "It's About Liberty" for interesting forum discussion. http://www.itsaboutliberty.com
Another great feature of the video is the series of quotes from winners of the Nobel Prize.
I take what Nobel Prize winners say with a large grain of salt.
http://www.youtube.com/watch?v=d0nERTFo-Sk
Property taxes prove that the government owns your property, not yourself. You are renting your property from the government. You either pay your property taxes (rent) to the government, or the government will take your property away. So who is the ultimate owner?
There is no question that without tax competition among States, Democrats would tax us into serfdom.
Bottom line is that free enterprise will always beat socialism. The very essence of our Socialist Democratic party is to reduce free enterprise and expand the State and crony capitalism.
It has been said that there is nothing new under the sun. From fashion to societal morality, history keeps on repeating itself. Who ever thought skinny jeans would come back in style? What’s next, stirrup pants and scrunchies?
Atlas Shrugged: Part 1 is an excellent reminder of the dangers of socialism in our current age of entitlement. The parallels between the story and our current political and cultural state are uncanny and more than a little bit unsettling. As a witness to the Bolshevik Revolution in Russia, author Ayn Rand was well aware of the tragedies of statism, and her most famous work of literature depicts what happens when the wealth is spread around in the name of fairness.
The movie adaptation of Atlas Shrugged remains faithful to Rand’s themes of capitalism and the evils of collectivism. One major change from the pages to the screen was the decision to change the setting from a future fictional country to America in 2016. It was a good decision, in this writer’s opinion, as it illustrates the slippery slope of socialism our nation is teetering on.
It opens with America in decline. Fuel prices are through the roof, making air travel impossibly unaffordable and bringing back trains as the major mode of transportation for people and goods. Airplanes and buildings are in disrepair, businesses shut down, and successful citizens disappear after being sought out by a shadowy character calling himself John Galt.
Atlas Shrugged Movie Clip
http://www.youtube.com/watch?v=5PK5Sq3bIHY&fe...
"Perhaps the fact that we have seen millions voting themselves into complete dependence on a tyrant has made our generation understand that to choose one's government is not necessarily to secure freedom."
Friedrich August von Hayek
And it is that very competition between states that the current administration wants to KILL, forever…….by getting their 2300 page healthcare law sitting in the "room of laws" like an 800 pound gorilla, it literally sets a "US Consitution bypass route" precedent that makes borders of states literally, and legally, nonexistent……..
Oh, and I forgot another one– that little ol' 17th Amendment that came from the demonic bowels of Woodrow Wilson, which went a long way to destroying all sorts of competition (not just economic) between states– it eliminated each state legislature's ability to choose who becomes a United States Senator and RECALL them as well, if deemed necessary……..
I like this sentence "series of quotes from winners of the Nobel Prize" . You mean people like Obama. I am impressed.
My local businesses' pay an eight percent tax on goods they sell. If business outside of my state can sell the same goods with out paying that tax they have a huge advantage over the local businesses. Local business will go away, jobs will go away, the tax base will go away.
If you sell a product in my state you need to pay state taxes.
I'm for a flat tax of 15% on individuals, all businesses, and industry. However, at this much lower tax rate there would be no exemption or exceptions. This flat tax would also allow everyone to pay their fair share based on gross income.
I also am against all subsidies. If a business can not survive on it's own, it should not be supported with taxpayer dollars. Thar is free enterprise in action. Rather let innovation and sound business policy keep the company or industry afloat.
Right now, until we are climbing out of the money pit, I am also against all foreign aid, grants, and "gifts" to any country, group, and individual, both foreign and domestic, unfriendly to the US.
Obama's intended plan to thwart tax competition among states was to simply bail out any high tax states that couldn't pay their bills and throw the resulting debt onto the debt mountain. Luckily, the Repubs took control of the House before the marxist wonder was able to do much of that. Let's just hope the Repubs stick to their guns and don't wimp out like they are so prone to do.
I agree with the proposals to collect sales tax on out-of-state purchases in those states with sales tax (and I live in a state with a high sales tax). This does not erode tax competition because the tax is on the consumer and the consumer can either move to a state with a lower tax of vote to lower the tax. In fact, legally, the consumer is required to pay the tax now (but usually evades it). "Tax competition" does not mean "what taxes can you evade", it means moving yourself and/or your business to a state with taxes and government policies that match your choices.
Also I believe most of us believe consumption taxes are fairer and saner than either income or wealth taxes. I don't think it does our arguments any good to then champion evasion of those consumption taxes.
The flat tax isn't bad, if you are willing to take second best. The FairTax, with its taxation of consumption rather than income, is a much better method of getting the money needed to run the Federal government.
The flat tax keeps all the deficiencies of the current system, such as the IRS, the recordkeeping and paperwork, the import/export penalty on American businesses, and the corruption of the tax system by lobbyists. And we've had the flat tax before. It always turns into massive mountain of incomprehensible rules and regulations such as we have now.
Get rid of a 100 year mistake and replace the failed Progressive-Marxist monstrosity of our income tax system with the simple, fair, and efficient FairTax.
The FED is addicted…and no longer trustworthy with its current inhabitants…PURGE!
Sometimes a picture helps folks GET why encouraging a FREE market is a good thing, and why NOT having a thriving private sector is a bad thing.
*
http://www.youtube.com/watch?v=t43VgJ4U9_Q&fe...
*
and stands by the UNION LABEL.
Well, most people don't like tax they have to pay. Makes sense. But, we will be taxed. You want government services, schools, roads, defense, whatever, someone is going to have to pay for it. I've listened and discussed tax policies over the years and the surest way to determine if someone is against a tax is to determine if they have to pay it. Just too bad people but taxes are not going away. I believe that taxing everyone at the same rate is stupid, the rich get a free ride. Now, I want the government to live within its means. I am a foe of deficit spending. But if we run deficits I am in favor of taxes to pay for them. Oh, btw, I am very low income so it is not my money I am willing to tax. See how it works.
Competition good. Obama bad. Nuff said.
We have 'tax competition' between states. You can see the effect that high tax on business affects states already. Look at California. You can see the effect that low taxes have on states. Look at Texas. We have examples of all sorts of competitive government ideas right here in the states. Massachusetts practiced Single Payer Health Care – and failed. Why we want to repeat that on a federal scale is beyond me. But people seem uninterested in learning from other people's mistakes, which would be fine if they weren't also using other people's money.
i like stirrup pants…
I ignore it completely. There is more wisdom from Daffy Duck.
That number doesn't take into account the numbers of underemployed and discouraged workers who have simply given up. Those numbers are up over 60%. Don't be too eager to take credit for this. These numbers include thousands of government jobs that were paid for by the stimulus… which will have to be cut soon (like in Wisconson, Texas, etc). When budgets have to be balanced, those numbers will skyrocket again.
You forgot State Lotteries. Remember they were created for the benefit of education. Add those millions to the pot and you really do have to ask yourself.
"Where is all this &$^#$^#*$@^* money going? "
Our current progressive tax system is nothing more than a control mechanism for the Statist, making sure you are dead broke by the end of your lifetime, even taxing behaviour has even become the new normal. A flat consumer tax is the only way to go while bringing DC back in line with it's limited Constitutional authority. Property taxes are unconstitutional in that they go against our rights to own property.
Boy, we sure do have our work cut out for us! When this puppy implodes (and it will) we need to make sure we have to right people in place who will reform our system back to it's true intent.
The Flat Income Tax and the FairTax Consumption Tax
A Comparison of Federal Taxation Proposals
http://www.pafairtax.org/resrcs/FlatTaxFairTaxCom...
impose high tax rates. And they oftentimes compete for jobs and investment by lowering tax rates. This virtuous form http://www.2.elesya.com
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