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Tax Loopholes Are Good

August 13, 2014 in Economics

By Ryan McMaken

Laffer_Curve

Two recent Mises Daily articles have touched on the issue of tax credits and tax advantages for certain industries, such as the film industry and other industries seeking tax credits and tax advantages at the local level as part of a local “economic development” strategy.

Many left liberals refer to tax credits and available tax deductions as “subsidies,” usually with the intent of having these tax “loopholes” eliminated and tax revenue increased. For this reason, I avoid running articles that refer to these sorts of tax credits and deductions as “subsidies” because they confuse something that reduces government revenue with out-and-out government spending. One can debate the semantics of the matter, but subsidies in my view are actual tax outlays for a specific group or industry. Tax credits and tax deductions, on the other hand, are essentially tax cuts that are good for two reasons: (1) They reduce tax revenue, and (2) they reduce the tax burden on at least some people.

Now a reduction on the tax burden for, say, homeowners through the home interest deduction, provides an arguably unfair advantage to homeowners and people involved in the business of building and selling homes. On the other hand, the elimination of this deduction would mean an enormous increase in tax revenue for the state and a huge increase in the tax burden for millions of people. It is indeed true that tax loopholes of this sort to cause malinvestment, they distort the economy (although it was already distorted by the tax in the first place), and are a case of the state choosing winners and losers. The answer to this, however, is to not reward the government with more revenue by eliminating the loophole. The answer to these tax loopholes, then, is not to eliminate them, but to create similar loopholes for others. In this case, rental housing should enjoy similar loopholes through which renters can see tax reductions as well and not be incentivized to buy homes. In other words, the free-market answer to tax loopholes is to create even more tax loopholes.

The opposite position leads to all sorts of mischief, as discussed by Bob Murphy here, Tom Dilorenzo here, and Murray Rothbard here. In the Rothbard article, he provides  a short history of the tax-credit-as-subsidy line that conservatives bought into after 1986:

Since voicing the idea that perhaps it is not the government’s place …read more

Source: MISES INSTITUTE

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Stop the “Public Policy” Nonsense

August 13, 2014 in Economics

By Jeff Deist

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News of this hilarious study by two professors from Princeton and Northwestern is sure to excite the booboisie.  It turns out– gasp– that John Q and Sarah Public have zero influence over government policy. We can only wish Mencken was alive to comment. What’s the next great revelation, your vote doesn’t count?

Just for the record, there is not supposed to be a “policy” for society, the economy, or you as an individual. We’re supposed to be free.

Our humble advice: Ignore any individual or organization who casually uses the expression “public policy.” It’s a terrible example of statist language, and it necessarily implies the speaker’s acceptance of a host of evil assumptions. Libertarians especially have no business employing the phrase.  Worrying about public policy is like worrying about whether a Mafia hitman uses a garrote or a bullet.

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Source: MISES INSTITUTE

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Paul Cantor’s Lecture Series on the Economics of Art and Culture

August 13, 2014 in Economics

By Ryan McMaken

In his Mises Daily article today, Matt McCaffrey mentions Paul Cantor’s 10-lecture series on Commerce and Culture. The full series can be found here. (The links at the Commerce and Culture page look like they’re broken, but they’re not.) I’ve run two Mises Daily articles in the past week (here and here) about literary criticism from a free-market perspective, and Cantor’s lecture series really lays out the whole foundation for this sort of analysis.  I might also note, by the way, that Paul Cantor wrote the foreword to my little book on the Western genre in film, now available in a variety of digital formats as well as paperback.  I just thought I’d throw that in there.

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Source: MISES INSTITUTE

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George Reisman to Discuss Critique of Piketty’s ‘Capital’ tonight at 6 EST

August 13, 2014 in Economics

By Ryan McMaken

George Reisman is scheduled to be on Power Trading Radio this evening at 6 PM EST. He will be discussing his newly published critique of Thomas Piketty’s book.

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Source: MISES INSTITUTE

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Insanonomics Failing in Japan

August 13, 2014 in Economics

By Mark Thornton

Bush_Abe,_Camp_David

Abenomics–the “new economic policy” in Japan is failing badly. It is a policy of inflation targeting, quantitative easing, government spending and higher taxes. Initially, it seemed to work in that the Japanese stock market rose significantly. However more recent reports find the real economy still stagnating and shrinking. The latest reports indicating the impact of the recent increase in the sales tax reducing production, consumption, and investment.

Japan is facing a crucial period as the government presses ahead with its much-ballyhooed Abenomics revival strategy.

The country has been mired in a malaise brought on by falling prices and a strong yen for years. But the economy’s prospects have brightened since Prime Minister Shinzo Abe announced fresh spending by the government and encouraged the central bank to unleash a wave of asset purchases.

Under his leadership, the yen has fallen sharply and stocks have risen dramatically. The IMF has endorsed the plan and Japan has largely avoided charges of currency manipulation.

Related: Japan debt tops 1 quadrillion yen

But the third pillar of the Abenomics plan — structural reforms — has been tougher to implement.

Abe’s government has proposed reforms that would make the labor market more flexible, encourage immigration, bring nuclear power plants back online and draw more Japanese women into the workforce.

Many of those proposals have foundered, or have been slow to develop.

Look for a new Mises Weekends show this Friday, with our guest Mark Abela in Tokyo discussing failed Abenomics and Japanese monetary policy- ed.  

HT: Mish’s GETA

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Source: MISES INSTITUTE

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Where in Constitution Is CIA Absolved of Its Multitude of Crimes?

August 13, 2014 in Economics

By Nat Hentoff

Nat Hentoff

At long last, after all these years, we have a defining question to We The People on our rule of law from libertarian Jacob G. Hornberger, founder and president of The Future of Freedom Foundation: “Why Not Simply Abolish the CIA?” (fff.org, Aug. 1).

He asks: “Did any CIA agent get indicted for torturing people? No.

“Did any CIA agent get indicted for destroying the videotapes that showed the torture? No.

“Did any CIA agent get indicted for murdering prisoners in Abu Ghraib prison in Iraq? No.”

As I’ve often reported, the list of the agency’s wrongdoings is long, continuous and deeply documented in such books as “Legacy of Ashes: The History of the CIA” by Tim Weiner, and “Globalizing Torture: CIA Secret Detention And Extraordinary Rendition” by Amrit Singh and published by The Open Society Foundations.

And right now, many Americans are waiting for the public release of an extensive, carefully validated four-year report from the Senate Intelligence Committee on the history of CIA torture and its other crimes against our rule of law and the international rule of law.

But I was not surprised to see that the release of this report had been delayed indefinitely. How come? Susan Crabtree of the Washington Examiner explains:

“Senate Democrats engaged in a tug-of-war with the White House over heavy redactions to its long-delayed torture report remain furious that President Obama allowed the CIA to censor the document” (“Democrats steamed that White House let the CIA censor a torture report,” Crabtree, Washington Examiner, Aug. 7).

Who asked the most secretive president in our history to exercise that authority?

Crabtree writes: “In a letter dated April 7, Sen. Dianne Feinstein, chairwoman of the Senate Intelligence Committee, asked Obama to allow the White House to ‘take the lead’ in determining what would be redacted from a declassified study it planned to publicly release.”

The champion of the Senate’s torture report expected sudden candor from Obama of all people? Feinstein got a curveball.

“We tortured some folks,” the president said in an Aug. 1 White House press conference.

But, according to The Guardian, “he believed intelligence officials responsible for torturing detainees were working during a period of extraordinary stress and fear” (“Obama admits CIA ‘tortured some folks’ but stands by Brennan over spying,” Paul Lewis, The Guardian, Aug. 1).

Have pity on the CIA?

Feinstein finally realized that allowing the White House and the CIA to look over the report before it reached the public had caused …read more

Source: OP-EDS

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British-American Translation

August 13, 2014 in Blogs

By Robin Koerner

Everyone knows the old saw, attributed to George Bernard Shaw, “Britain and America are two countries, divided by a common language.”

Fortunately, there is a simple formula for translating between them: the British understate, while the Americans overstate. (The word, “Everyone” in the preceding paragraph is a nice example of the latter.)

If a Briton finds something to be good, he will declare it “not bad”. An American will declare it to be “awesome”. A translation table between the two cultures could therefore include,

“Good (Actual) = Not Bad (Brit.) = Awesome (Amer.)”

It’s an easy enough formula to grasp, but sometimes it’s not an easy difference to bear.

My first experience of corporate America was a month of staff training in Palo Alto for a consulting company that I joined as my first job out of university. Some time into the month, one of the company’s partners was giving a speech to the new staff, and, during the question and answer session, someone indicated that it was lunch time. A little later, the speaking partner suggested “let’s go and get some food”.

Another partner, standing across the room, declared this “a great idea”.

After a couple of weeks of exposure to such overstatements, my English ears had taken just about as much of this abuse of the language as they could take and, risking getting fired before I had begun my first day on the job, I foolhardily blurted, “That isn’t a great idea. General relativity was a great idea. Heisenberg’s uncertainty principle — also a great idea. Having lunch: not great and probably not even an idea”.

I lasted a couple of years in the job. Considering how I started, that wasn’t bad going. (And there is an example of British understatement.)

About four years later, I was back in the States, and found myself visiting someone in an apartment complex. Upon arrival, I drove around the parking lot, looking for guest parking. They had none. I ended up putting my vehicle in a “future resident parking” space.

I told my friend what I had done and asked to where I should move the vehicle. And from his confused response — that I should leave it exactly where it is — I learned that in the USA, it’s ok to …read more

Source: ROBIN KOERNER BLOG