Category Archives: Economics

Miscellaneous economy stuff

Tax Incentives and Taxes

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New York City is offering almost $10 million in tax breaks to get Aetna Inc to move from Connecticut to Manhattan, and this is in addition to $24 million the state is offering.

It’s a good deal, for Aetna, but it’s not a good deal for the people of New York City, or for the citizens of New York State or for the citizens of the United States.  The reason is hinted at by Anthony Hogrebe, Senior Vice President of Public Affairs for the New York City Economic Development Corporation:

It’s actually the kind of investment that we want to make in the larger healthcare and life sciences ecosystem[.]

It’s about government picking winners.  It’s also about using the tax code to influence business decisions and otherwise to execute social engineering.

Hogrebe actually has illustrated the crying need we have for serious tax reform, which must include eliminating loopholes, subsidies, credits, whathaveyou in our tax code as well as moving to a low, flat income tax for individual citizens and a similarly low, flat tax (if not eliminating it altogether) for corporations.

One beneficial outcome of such reform is that businesses, including Aetna, could locate or relocate to this or that locale based on the business usefulness of being there rather than on how much money taxpayers could be dragooned into paying the business for locating there.

Imagine that: businesses making actual business decisions, rather than decisions that Government wants them to make.

False Premise

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Budget mavens, politicians, and the NLMSM have one regarding our national tax code.  The Senate is considering a budget that sets an outer bound on the size of Federal tax cuts.

A budget with a tax plan that is revenue-neutral would effectively pay for itself, meaning any reduction in tax rates would be offset by reducing breaks or other revenue-raising measures.

No.  “Revenue neutral” must also consider what’s done with the revenue collected.  Revenue neutrality can be achieved, also, with sufficient spending cuts so that revenue collected meets or exceeds spending outflows.

Additionally, there is an underlying assumption that is carefully ignored by the politicians, budget mavens, and the NLMSM.  That is that the Federal government needs the revenue collected.  None of these worthies deign establish that need.

The PRC and Bitcoin

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The behavior of the People’s Republic of China regarding bitcoin has purpose far beyond controlling bitcoin.  As background, The Wall Street Journal had this assessment of the PRC’s financial industry:

China has digitized its financial sector faster than any other nation.

The reason for their rapid pace is this according to Li Lihui, a spokesman for the National Internet Finance Association of China, and it has nothing at all to do with a sovereign nation’s legitimate desire to control its own currency and money supply:

A goal of China’s monetary regulation is to ensure that “the source and destination of every piece of money can be tracked[.]”

That end-to-end tracking, to the extent it can be done, guarantees that the PRC will know who is spending and for what.

And that means that the PRC, a nation that rules by “law” (rather than operates under rule of law) and that brooks no dissent from the pronouncements of the Communist Party of China, can control whether any given individual or organization will be permitted to spend for any particular purpose—or even whether that person or individual will be allowed access to his money at all.

Huzzah

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Regular order—it lives, sort of, at least on spending measures, in the House.

The House on Thursday voted to send 12 appropriations bills to the Senate. The chamber approved four of these 2018 spending measures prior to its August recess, and the remaining eight were debated and passed as part of the broader Thursday vote. They had previously passed out of committee. This is the first time since 2004 that a House Republican majority has passed all of its individual spending bills….

Now all we need is for the Senate to figure out how to do its job and pass these bills.  However, with unreliable Republicans in the Senate like John McCain (R, AZ), Rand Paul (R, KY), and Lisa Murkowski (R, AK), The Wall Street Journal is almost as skeptical about that as I am.

Eat the Easter Bunny

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Peter Rabbit, too.  Because that’s better than having actual food in the stores, in the pantry, and on the table, like a free market would produce in abundance.  At least according to Venezuelan strong man Nicolas Maduro, who caused the food shortage.

Venezuelan President Nicolas Maduro has introduced a “Rabbit Plan” that encourages people to start eating rabbits rather than keep them as pets in a bid to tackle the country’s food shortages.

Heads up, Bambi.