URLs du Jour

2022-03-30

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  • Good advice. From Alan Jacobs:

    I decided not to read the article about the takes about the memes about the exhaustion about the memes about the takes about the Thing That Happened.

    Go, and do thou likewise.


  • Bad idea. The NR editors take apart Biden’s Latest Tax Folly

    Faced with real economic pain, President Biden proposes to tax imaginary income.

    Biden has had some very, very stupid ideas in his 50 years in public life. We won’t say that his latest “billionaire” tax proposal is the dumbest of them, but it’s on the top-ten list.

    Biden’s proposed “Billionaire Minimum Income Tax” — which, of course, is not actually limited to billionaires — is an economically illiterate and very likely unconstitutional proposal that purports to make the very wealthy pay their “fair share,” in the conventional language of Democratic demagoguery. It would do so in part by taxing some high-income people on money they haven’t made yet, combining the worst features of the IRS with the worst features of Minority Report.

    Obligatory Don Surber counterpoint:

    NR relies on the charity of others so it sides with its rich benefactors who donate to NR. Opposing higher taxes on the rich makes sense for them. NR writers have convinced themselves that we must protect the wealth of billionaires because eventually the confiscation trickles down to the rest of us.

    Or, shorter: "I can't make a real argument against what NR is saying, so I'll just claim it's arguing in bad faith for its own financial interests."


  • Just one? Allison Schrager pinpoints The Problem with Biden's Billionaire Minimum Income Tax.

    If you thought the White House was done devising bad economic policies, think again. First was the idea to pass a stimulus package that many economists agreed was too large and worsened inflation; then came the plan to shrink the domestic oil and gas industry; next, a push to remake and enlarge the welfare state that never had popular support and, mercifully, faltered in Congress; and now, tucked away in President Biden’s budget proposal, comes a provision for a de facto wealth tax. In some ways, this is the worst idea of them all, though it would be so hard to enforce that its damage would be limited, even if it passed.

    Textbook economics argues that wealth taxes are the most distortionary and least efficient of all taxes. Governments need to raise revenue somehow, ideally via taxes that are relatively easy to collect and don’t alter behavior too much by, for example, discouraging people from working or investing. It follows that consumption taxes are efficient, since consumption (spending) is easy to observe, and people need to do it. Income taxes have become relatively easy to collect information on, since most employers need to share pay data with the IRS, and they don’t discourage work at low to moderate income levels. But it’s hard to observe wealth: the IRS does not collect information on it, many assets held by rich people are tricky to value (such as fine art), and the value of wealth can be volatile (consider the Bitcoin millionaire). Taxing wealth also encourages people to shift their assets abroad or into difficult-to-value assets, or simply to understate what their wealth is worth. Many European countries have given up taxing wealth, and those that do impose wealth taxes derive only a small share of revenue from them.

    Schrager notes that the effect on the targeted rich (in the unlikely event this becomes law and dodges constitutional issues) would be for them to shrug their shoulders and move into private equity. Probably crashing the public stock market as a result, right?


  • I blew out my flip-flop. Peter Suderman describes it as Biden’s Desperate Wealth Tax Flip-Flop. He observes that Biden won his party's nomination in 2020 because he was perceived the "moderate" in the race. And one of the bits of evidence for that? His opposition to a Sanders/Warren-style wealth tax. But:

    Yet now, as president, Biden has embraced a wealth tax of his own. In his latest budget plan, Biden proposed something the White House has dubbed the "Billionaire Minimum Income Tax," which applies to all income, realized and unrealized, for households worth more than $100 million. The Biden administration is framing this as a form of "prepayment" on future capital gains—which is to say it's a form of taxation on money that someone has not actually seen, based on the value of their holdings. It's not exactly the same as the wealth taxes proposed by Warren and Sanders, but it's designed around the same fundamental idea: the taxation of personal wealth, rather than of cash income, which often takes the form of difficult-to-value assets.

    Most of the same criticisms that applied to the Warren and Sanders plans still apply: Biden's plan probably wouldn't raise nearly as much money as the administration assumes: Wealth taxes are exceptionally difficult and resource-intensive to administer, which is why most OECD countries that have implemented wealth taxes eventually dropped them. It's also quite likely to be unconstitutional. At minimum, if it passed, it would be tied up in court.

    Suderman guesses that it's not only unlikely to pass, but that it's designed not to pass. And if you're a fan of phoniness:

    Biden is willing to make an obvious phony of himself, embracing a policy he knows is punitive, divisive, unworkable, and virtually certain not to pass—and he's willing to do so simply to get attention. Not only is Biden not a moderate, he is evidently not trustworthy either.


  • What's wrong with the 1619 Project? Well, where do we start? Because, as Phil Magness notes The 1619 Project Unrepentantly Pushes Junk History. It's a review of the book version of Nikole Hannah-Jones's "project"; in this excerpt, he concentrates on Princeton sociologist Matthew Desmond's essay on "Capitalism."

    Hannah-Jones' prescriptive call for slavery reparations flows seamlessly from Desmond's argument, as does her own expanded historical narrative—most recently displayed in a lecture series for MasterClass in which she attempted to explain the causes of the 2008 financial crisis by faulting slavery. "The tendrils of [slavery] can still be seen in modern capitalism," she declared, where banking companies "were repackaging risky bonds and risky notes…in ways [that] none of us really understood." The causal mechanism connecting the two events remained imprecise, save for allusions to "risky slave bonds" and a redesignation of the cotton industry as "too big to fail."

    Making what appears to be a muddled reference to the Panic of 1837, she confidently declared that "what happened in 1830 is what happened in 2008." The claimed connection aimed to prove that the "American capitalist system is defined today by the long legacy and shadow of slavery." This racist, brutal system "offers the least protections for workers of all races," she said, and it thus warrants a sweeping overhaul through the political instruments of the state. To this end, Hannah-Jones appends an expanded essay to The 1619 Project book, endorsing a Duke University study's call for a "vast social transformation produced by the adoption of bold national policies."

    It's garbage, but it's garbage that appears first on the list of UNH Paul College's Community, Diversity and Inclusion Resources. (Which is uniformly leftist and anti-capitalist, an odd choice for a business school.)


  • "Betteridge's Law of Headlines Confirmed" Department. Drew Cline wonders: Should N.H. pay people to move here?

    House Bill 1524 would create a state National Service Alumni Attraction and Retention Fund. 

    The money would finance “grants to New Hampshire-based employers and institutions of higher education for the purpose of providing financial assistance, workforce development, and education to AmeriCorps alumni and returned Peace Corps volunteers” interested in pursuing post-graduate education or work in the state.

    The plan differs from an existing program in Vermont in scope, but not concept.

    There are a number of practical reasons to oppose this gimmick, but the fundamental problem with it, as Drew Cline notes, is that it sets the precedent of "creating favored classes of citizens by bestowing tax money on politically preferred groups."