Tag Archives: Taxation

CEI Podcast for March 8, 2012: IRS Moves to Fund Foreign Dictators


Have a listen here.

A new IRS regulation hits the trifecta of enriching foreign dictators, helping them crush dissent, and would raise no revenue for the U.S. government. Vice President for Strategy Iain Murray explains. Unlike most other countries, the U.S. taxes income its citizens earn abroad. So, to encourage foreign banks to cooperate with the IRS, it is requiring U.S. banks to report to foreign countries, even dictatorships, on their citizens’ U.S. holdings. Governments can then use this information to find and punish dissenters.

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What “International Tax Harmonization” Means

“There is no art which one government sooner learns of another, than that of draining money from the pockets of the people.”

-Adam Smith, The Wealth of Nations, p. 929.

The Correct Capital Gains Tax Rate Is Zero

Cato’s Dan Mitchell gives a quick primer on the capital gains tax in the latest short video from the Center for Freedom and Prosperity.

President Obama wants to raise the rate from 15 percent to 20 percent. Dan gives six reasons why he should lower it to zero:

-Taxing saving and investment more means there will be less of it.

-Entrepreneurs will take fewer risks since higher capital gains taxes lower their return on investment. Why bother to innovate?

-America’s high capital gains tax rate makes us less competitive than other countries that have a lower tax rate – or no tax at all.

-IRS busybodies nosing around in our investment portfolios is hardly conducive to protecting privacy.

-Investment creates jobs. The capital gains tax lowers investment, and therefore job creation.

-A capital gains tax is inherently unfair. Tax laws should not penalize people based on how they earn, spend, or save their income. Taxes should be as neutral as possible.

Precisely Backwards

People buy less of something when it becomes more expensive. That’s what economists call the law of demand. It is one of the key drivers of every facet of human behavior. And it’s a simple concept. Easy to understand. Easy to apply.

Or maybe it only seems that way. 366 members of Congress just voted to attract tourists to the U.S. by taxing them $10 when they enter the country.

That noise you hear may well be Adam Smith rolling over in his grave.

Few things are more taxing than our elected officials’ economic illiteracy. How sad that visiting a wonderful country like America may soon be one of them.

The Tax Code

According to CNN, the federal tax code stands at nearly 100,000 pages, “with a word length that is about 10 times the size of the standard English version of the Bible.”

Wow.

Surely we can do better than that. Both parties complain about the complexity of our tax code, so why not do something about it?

Turns out they are, just in the wrong direction. Reps. Dreier and Berman are proposing a targeted tax break for filmmakers, and President Bush is proposing a tax break for casinos in the Gulf region.

I’m all for lower taxes, but this is ridiculous. Instead of a cut for a few people here and a few there, why not do away with all exemptions and special treatment and just charge everyone the same rate?

Tax avoidance would be almost impossible. The entire tax code could fit on one page. Imagine that, being able to do your own taxes. Tax rates would almost certainly go down due to popular pressure since everyone would have to pay.

The only downside is that H&R Block would probably go out of business.

Well, that and it probably wouldn’t do a thing about the real problem, which is spending. I noted some of the difficulties with that yesterday.