The Left’s Iron Curtain

…is getting a bit taller. I wrote earlier about the Democratic-Progressive Party’s wish to erect an Iron Curtain to keep American companies from leaving for more economically (read: tax) sound environments. Now, Democratic-Progressive Party Presidential candidate and proud Progressive Hillary Clinton is enlarging her Iron curtain. Clinton now is proposing this:

Companies that move jobs and production out of the US would lose previous years’ tax breaks under a proposal Democratic presidential candidate Hillary Clinton released Friday during a speech in Detroit.

The US would seek to “claw back” previous tax incentives for research and development and for domestic manufacturing associated with facilities or jobs that move abroad.

On top of that,

The Clinton campaign didn’t have an estimate of how much money its tax plan would generate for the government.

Of course not. The purpose isn’t to recover monies foregone as incentives to do this or that, it’s strictly to imprison private enterprises within the US, Soviet-style—because private enterprises aren’t jobs factories, rather they are, according to this candidate, jobs welfare programs.

Remember this in the fall.

Can’t Have That

The European Commission, the bloc’s antitrust watchdog, in January ordered Belgium to recoup about €700 million ($765 million) from some 35 companies after concluding that a Belgian tax-discount plan for multinationals was distorting competition within the EU’s single market.

Distorting, sure. Because competition existed in a manner that didn’t suit the Know Betters who are the Commission. The “scheme” in question, alleged to be an excess profits scheme, was marketed by Belgium as Only in Belgium. This was another terrible affront to the Commission, which doesn’t like market differentiation that it hasn’t approved. Worse, it

allowed certain corporations to reduce their tax base by between 50% and 90%, the EU said.

Because leaving money in the hands of those who earned it means Know Betters can’t control the money’s disposition according to their own august whims.

Competition is bad. It puts customers—individuals—rather than Know Betters in charge of their affairs.

Democrat Extortion, State Level

Louisiana Democratic Gov John Bel Edwards is suggesting the legendary Louisiana State University football team’s 2016 season might be canceled—and other doomsday consequences—unless the GOP-legislature swiftly passes a package of tax increases to help close a looming $940 million budget shortfall.

The budget deficit is projected to reach $2 billion by the start of the next fiscal year. The Republicans should call him out on his naked extortion threats. And then pass a budget with $2.5 billion in spending cuts and $500 million in tax cuts. Does Edwards want to balance the budget, or is his precious spending and taxing all he cares about?

After all, the state’s economy runs over $250 billion as of 2015. Surely, they can find $2.5 billion just by shaking the state government’s couch cushions.

Business Taxes

Richard Rubin, of The Wall Street Journal, thinks reforming these is not a straightforward proposition. To an extent, he’s right, as business and personal income taxes have become increasingly intertwined with each successive tax reform since Reagan.

The links between corporate and individual taxation inevitably lock policy makers in intractable disputes about popular deductions and the question that divides the parties most bitterly: is the US collecting enough money from wealthy individuals?

But this entangling, or more correctly, the concern about the entangling, simply overcomplexifies the problem.

It’s an easy thing to do conceptually, if political will is lacking, to reform business taxes. Keep in mind a single, core fact: businesses don’t pay very much of their tax bills already. Business taxes are just another cost center, whose value in large part is paid by the business’ customers in the form of higher prices that are set to recover, at the least, a significant fraction of that cost. Customers pay much of those business taxes.

The framing provides the answer. Cut through the Gordian business/personal income tax knot by eliminating the business tax altogether. This, aside from eliminating the tax pass-along to already taxed individuals, also eliminates disputes about popular deductions, credits, and so on: they go away with the taxes.

This also removes the non sequitur of whether business taxes are hitting the wealthy sufficiently. That question becomes focused on the personal taxes where it belongs and thereby brought into sharper relief.

Budgets

President Barack Obama (D) sent up his budget proposal Tuesday, carefully timed to be buried under the news coverage of the New Hampshire primaries. $4 trillion worth of proposals. It’s replete with the Left’s dreams of tax increases—including a one-third tax on oil (at current prices: a $10/barrel tax with oil now going for $30) and an acceleration of the Left’s tax war on successful Americans—and associated spending claptrap (gotta spend those taxes, after all) like more spending on college subsidies such as Pell Grants, incentives for States to expand Medicaid programs, increased subsidies for the Left’s goals, expanding budgets for the Department of Education, Department of Energy, Department of Labor, and on and on. This Obama Budget expands the current half-trillion dollar deficit, because gotta spend more than tax revenue, too.

Oh, yeah: that oil tax is intended, in part, to subsidize “energy sources of the future.” Read that as increased subsidies for “green” energy sources, subsidies the Left thinks are necessary because “green” energy sources can’t compete in a free market, and that’s just not fair. Along those lines, though, here’s a “subsidy” that would pay off in spades and produce potsful of green energy: drastically reduce regulatory and permitting restrictions, and so the associated costs, on building nuclear power plants. We even have a spent fuel storage facility built and ready to go in Nevada; we just have to get government out of the way of that, too. Fat chance on either one, though, under this administration.

No, what Congress needs to do, what Congress has both the sole authority to do—to pass a budget and then pass the several appropriations bills to give effect to the budget—and the power to do with Republican majorities in both houses, is ignore Obama’s budgeting nonsense. A proper step in that direction is this:

Congressional Republicans last week announced they wouldn’t invite the White House’s budget chief to testify on the administration’s proposals, breaking with longstanding protocol.

Instead, Congress simply should pass a proper budget, and it should take the one passed last fall and pass the appropriations bills that properly reduce tax rates, expand defense spending, and reduce spending everywhere else so as to produce a net surplus within those lowered tax rates. And within those bills, specify that the surplus must go first to paying down the debt.

Keep in mind, too, two things. One is the meaning of the budget passed last fall. Nothing in it prevents Congress from passing the appropriation bills outlined just above. Budget bills set outer bounds of spending; they do not set required minimum levels of spending.

The other is so-called “discretionary spending.” “Discretionary spending” is carefully defined to be spending that Congress is authorized to manage year by year; the definition is designed to exclude spending on things like welfare, Social Security, Medicare; and these exclusions amount to roughly two-thirds of Federal spending. This is a cynically perpetuated fiction. It’s all discretionary spending. It’s all fully within Congress’ spending authority to manage on a year by year basis. Every single dollar of it.

The more dollars left in Americans’ hands through lower tax rates, the less government competes with the private economy for goods and services through spending, the better off Americans will be through the resulting economic activity and rising prosperity. And the faster our nation will be able to pay down—and off—its national debt.