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Open thread (4/2/01)

Liberty Unyielding - Fri, 04/02/2021 - 8:00am

Joe Biden was treated to a glimpse of harsh reality this week when a delegation of Republicans touring the border shared photographs of the conditions inside one of his “humane” border processing facilities. Among the more memorable pictures beamed back was this one taken by Sen. Ted Cruz: The picture is of a border agent […]

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Biden’s $2.5 trillion infrastructure plan will drive jobs overseas, harm economy

Liberty Unyielding - Thu, 04/01/2021 - 1:00pm

On Wednesday, President Biden announced a massive $2.5 trillion “infrastructure” package. But calling it an “infrastructure” package is misleading, because a lot of the money won’t be spent on infrastructure. For example, it will spend money on “the care economy to aid health workers,” notes The Hill.  And it will “allocate $400 billion for expanded […]

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Five Visuals that Explain Why Higher Corporate Income Tax Rates Are Bad for America

Center for Freedom and Prosperity (CF&P) - Thu, 04/01/2021 - 12:44pm

I have a four-part series (hereherehere, and here) about the conceptual downsides of Joe Biden’s class-warfare approach to tax policy.

Now it’s time to focus on the component parts of his agenda. Today’s column will review his plan for a big increase in the corporate tax rate. But since I’ve written about corporate tax rates over and over and over again, we’re going to approach this issue is a new way.

I’m going to share five visuals that (hopefully) make a compelling case why higher tax rates on companies would be a big mistake.

Visual #1

One thing every student should learn from an introductory economics class is that corporations don’t actually pay tax. Instead, businesses collect taxes that are actually borne by workers, consumers, and investors.

There’s lots of debate in the profession, of course, about which group bears what share of the tax. But there’s universal agreement that higher taxes lead to less investment, which leads to less productivity, which leads to lower pay.

Here’s a depiction of the relationship of corporate taxes and worker pay.

Visual #2

The previous image explains the theory. Now it’s time for some evidence.

Here’s a look at how much faster wages have grown in countries with low corporate tax rates compared to nations with high corporate tax rates.

Biden, for reasons beyond my comprehension, wants America on the red line.

And his staff economists apparently don’t understand (or don’t care about) the link between investment and wages.

Visual #3

Here’s some more evidence.

And it comes from an unexpected source, the pro-tax Organization for Economic Cooperation and Development (OECD).

Even economists at that Paris-based bureaucracy have produced studies confirming that lower tax rates lead to higher disposable income for people.

Needless to say, if lower tax rates lead to more disposable income, then higher tax rates will lead to less disposable income.

We should have learned during the Obama years that ordinary people pay the price when politicians practice class warfare.

Visual #4

It’s very bad news that Biden wants a big increase in the corporate tax rate, but let’s not forget that the IRS double-taxes corporate income (i.e., that same income is subject to a second layer of tax when shareholders receive dividends).

The combined effect, as shown in this visual, is that the United States will have the dubious honor of having the highest effective corporate tax rate in the entire developed world.

Call me crazy, but I don’t think that’s a recipe for jobs and investment in America.

Visual #5

The economic damage of higher corporate tax rates means that there is less taxable income (i.e., we need to remember the Laffer Curve).

Will the damage be so extensive, causing taxable income to fall so much, that the IRS collects less revenue with a higher tax rate?

We’ll learn the answer to that question over time, but we have some very strong evidence from the IMF that lower corporate tax rates don’t lead to less revenue. As you can see from this chart, revenues held steady as tax rates plummeted over the past few decades.

In other words, lower rates led to enough additional economic activity that governments have collected just as much money with lower tax rates. But now Biden wants to run this experiment in reverse.

It’s possible the government will collect more revenue, of course, but only at a very high cost to workers, consumers, and shareholders.

By the way, there’s OECD data showing the exact same thing.

Those pictures probably tell you everything you need to know about this issue.

But let’s add some more analysis. The Wall Street Journal opined today on Biden’s class-warfare agenda. Here are some of the key passages from the editorial.

The bill for President Biden’s agenda is coming due, starting with Wednesday’s proposal for the largest corporate tax increase in decades. …Mr. Biden’s corporate increase amounts to the restoration of the Obama-era corporate tax burden, only much more so. …Mr. Biden wants to raise the corporate rate back up to 28%, but that’s the least of his proposals. He also wants to add penalties that would make inversions punitive, and he’d impose a global minimum corporate tax of 21%. This would shoot the tax burden on U.S. companies back toward the top of the developed world list. …The larger Biden goal is to end global tax competition… “The United States can lead the world to end the race to the bottom on corporate tax rates,” says the White House fact sheet. Mr. Biden says he wants “other countries to adopt strong minimum taxes on corporations” so nations like Ireland can no longer compete for capital with lower tax rates. This has long been the dream of the French and Germans, working through the Organization for Economic Cooperation and Development. …All of this is in addition to the looming Biden tax increases on dividends, capital gains and other investment income. …Mr. Biden’s corporate tax increases will hit the middle class hard—in the value of their 401(k)s, the size of their pay packets, and what they pay for goods and services.

Amen.

Let’s conclude with some gallows humor.

This meme shows how some of our leftist friends will celebrate if the tax increase is imposed.

P.S. Here’s a depressing final observation. Decades of experience have led me to conclude that many folks on the left support class-warfare tax policy because they are primarily motivated by a spiteful desire to punish success rather than provide upward mobility for the poor.

———
Image credit: geralt | Pixabay License.

Groups of illegals wait on side of road overnight for border agents to take them into custody

Liberty Unyielding - Thu, 04/01/2021 - 12:06pm

By Kaylee Greenlee A group of at least 100 migrants who crossed into the U.S. illegally said they were held on the side of a public road in La Joya, Texas, overnight as Customs and Border Protection (CBP) officials worked to process them Saturday morning. The illegal migrants arrived near a baseball field in La […]

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Joe Biden, the speechifier, delivers his infrastructure proposal

Liberty Unyielding - Thu, 04/01/2021 - 11:26am

In any case, for as long as Biden does remain president, get used to these speeches. They may be the only form of communication you can expect from the president directly. Considering the realities of the presser he delivered on March 25 — read: his reliance on crib sheets and prepared scripts -- it is one of few he is likely to deliver.

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April fool, history repeats

Liberty Unyielding - Thu, 04/01/2021 - 10:25am

The post April fool, history repeats appeared first on Liberty Unyielding.

Biden dog bites another federal employee. Who should they send back to Delaware this time?

Liberty Unyielding - Thu, 04/01/2021 - 9:32am

That's the same excuse they gave last month, after Major bit a White House security agent. A report by CNN at the time, noted that both dogs had been displaying aggressive behavior including jumping, barking, and charging at White House staff and security. As a result, the dogs back to the family home in Delaware. 

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Levinson link in Matt Gaetz drama turns up cast of Russiagate/Spygate characters

Liberty Unyielding - Thu, 04/01/2021 - 2:17am

It's like nothing happens in Washington that isn't connected to these people.

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School Choice on the March!

Center for Freedom and Prosperity (CF&P) - Wed, 03/31/2021 - 12:46pm

I wrote one week ago about a big victory for education in West Virginia. The Mountain State arguably now has the most extensive system of school choice in the country.

This will be great for parents and children.

There’s a lot of research showing better educational outcomes when families have options other than low-performingmonopoly-based government schools.

Now we have some additional good news.

Kentucky legislators have just overridden the governor’s veto, meaning that students in the state will now have expanded educational opportunities. Eric Boehm of Reason has some of the details.

The new law, originally House Bill 563, allows students in Kentucky public schools to switch school districts, and it creates a new tax-advantaged education savings program for families to use for private school tuition, to pay for tutoring, or to cover other educational expenses. The most controversial part of the proposal was the creation of a $25 million scholarship fund—to be filled by donations from private businesses, for which they would receive state tax credits—that students in Kentucky’s largest counties can tap to help pay for private school tuition. …With the passage of the first school choice bill in state history, Kentucky is now the 28th state with some form of school choice.

Speaking of other states, the Wall Street Journal editorialized about the beginning of a very good trend.

The pandemic has been a revelation for many Americans about union control of public schools… That awakening is helping to spur some welcome reform progress as several state legislatures are moving to expand school choice. One breakthrough is in West Virginia, where the Legislature passed a bill creating the state’s first education savings account (ESA) program. …Meanwhile in Georgia, the House passed a bill last week that would expand eligibility for the state’s voucher program for special-education students. The Senate, which had already passed the legislation, voted to approve House amendments on Monday and the bill is headed to Republican Gov. Brian Kemp’s desk. In South Dakota this month, Republican Gov. Kristi Noem signed a bill that expands eligibility for the state’s tax-credit scholarship program to students already enrolled in private schools. …in Kentucky, where Democratic Gov. Andy Beshear vetoed a bill last week that would establish a new tax-credit scholarship program. But the state legislature voted late Monday to override the veto… Nearly 50 school-choice bills have been introduced this year in 30 states. It’s a testament to how school shutdowns have made the advantage of education choice more evident, and its need more urgent.

By the way, school choice has existed for a long time in Vermont. Yes, the state that regularly reelects Crazy Bernie has dozens of small towns that give vouchers to students. Laura Williams explains in an article for the Foundation for Economic Education.

Vermont’s “tuition towns”…distribute government education funds to parents, who choose the educational experience that is best suited to their family’s needs. If the school doesn’t perform up to parents’ expectations, they can take their children, and the tuition dollars they control, elsewhere. …Ninety-three Vermont towns (36 percent of its 255 municipalities) have no government-run school at all. …the funds local governments expect to spend per pupil are instead given directly to the parents of school-age children. This method gives lower- and middle-income parents the same superpower wealthy families have always had: school choice. …parents have the ability to put their kids in school anywhere, to buy the educational experience best suited to each child. …A variety of schools has arisen to compete for these tuition dollars. …Eligibility for tuition vouchers actually increased home values in towns that closed their public schools. Outsiders were eager to move to these areas… Having watched these models develop nearby, two more Vermont towns voted in 2013 to close their government-run schools and become “tuition towns” instead.

Rhode Island is another unexpected example. That deep-blue state recently expanded charter schools in Providence.

That’s not as good a genuine school choice, but it gives parents some ability to escape traditional government schools. The Wall Street Journal opined last year on this development.

…this particular hell may have frozen over, as last week the state’s education council voted to expand and open more charter schools to rescue students in the district. About 13% of Providence’s 30,000 students attend 28 charter schools, some in other districts. But demand far exceeds supply. Only 18% of the 5,000 or so charter school applicants were offered a seat this school year, according to the state education department. …The state education council last week gave preliminary approval for more than 5,700 new charter seats in Providence and other districts. Three of four new charters that applied got a green-light to open, pending final approval in the spring, and three existing charters (two of which serve Providence) are expanding. …The teachers union isn’t happy. In a letter to Gov. Gina Raimondo, three union leaders including American Federation of Teachers President Randi Weingarten complained… This is the usual rhetorical union trick. Charters are public schools, albeit without the barnacles and costs of union control.

Let’s now add to our collection of evidence about the benefits of school choice.

In an article for National Review, James Piereson and Noami Schaefer Riley discuss the track record of the Children’s Scholarship Fund.

Children’s Scholarship Fund enables low-income children to attend private schools — and thrive. …parents who receive financial aid from the organization…send their children to inner-city private (mostly Catholic) schools. …When it came to how satisfied they were with their children’s education, almost 90 percent graded their school a 4 or 5 out of 5. …Since its inception in 1998, the fund has helped more than 180,000 children attend private schools. CSF’s high-school graduation and college matriculation rates far surpass those of the urban public schools that surround them. In Philadelphia, for instance, 96 percent of CSF eighth-graders graduated from high school on schedule — compared with Philadelphia’s public-school graduation rate of only 62 percent. A study of CSF in Baltimore found that 84 percent of scholarship recipients were enrolled in college five to ten years after completing eighth grade, compared with fewer than half of students from local public schools. Nor are these high-priced private schools. The average tuition at these schools is about $5,300 per year, and the average scholarship award is $2,200.

Why do even low-cost private schools out-perform expensive government schools?

Because they have to deliver a good product. Either that, or parents will take their money elsewhere.

It’s a simple question of incentives, as illustrated by this meme about why private schools have been much better than government schools during the pandemic.

While the obvious argument for school choice is that it delivers better educational outcomes (and at lower cost), it’s worth noting that there are all sorts of secondary benefits.

As explained by W. Bradford Wilcox in an article for the American Enterprise Institute, private schools produce better families.

The public debate surrounding the efficacy of private versus public schools tends to revolve around their relative success in boosting test scores, graduation rates, and college admissions. …But there is more to life than excelling at school and work. For instance, there is the opportunity to be formed into a woman or man of good character, a good citizen, or a good partner and parent. …Until now, however, we have known little about how different types of schools are linked to students’ family life as adults. …In this report, we examine how enrollment in American Catholic, Protestant, secular private, and public schools is associated with different family outcomes later in life. …Adults who attended Protestant schools are more than twice as likely to be in an intact marriage as those who attended public schools. They are also about 50% less likely than public-school attendees to have a child out of wedlock. …Compared with public-school attendees, ever-married adults who attended a secular private school are about 60% less likely to have ever divorced. Catholic-school attendees are about 30% less likely to have had a child out of wedlock than those who attended public schools.

And Corey CeAngelis notes in this tweet that school choice reduces segregation.

The research generally suggests private school choice leads to more integration. pic.twitter.com/TBRmY7uVBI

— Corey A. DeAngelis (@DeAngelisCorey) September 15, 2020

And the Wall Street Journal editorialized last December about school choice improving mental health.

Teachers unions have pushed to shut down schools during the pandemic no matter the clear harm to children, just as they oppose charters and vouchers. Now comes a timely study suggesting school choice improves student mental health. Several studies have found that school choice reduces arrests and that private-school students experience less bullying. One reason is that charter and private schools enforce stricter discipline than traditional public schools. …The new study in the journal “School Effectiveness and School Improvement” is the first to…analyze the correlation between adolescent suicide rates and the enactment of private-school voucher and charter programs over the last several decades. They find that states that enacted charter school laws witnessed a 10% decrease in suicide rates among 15- to 19-year-olds. Private-school voucher laws were also associated with fewer suicides, though the change was not statistically significant. The effect would likely be larger if more students received vouchers. …The researchers also looked for any correlation between students who attended private school as teenagers and their mental health as adults. …individuals who attended private schools were two percentage-points less likely to report a mental health condition when they were roughly 30 years old.

Let’s conclude with some excerpts from a strong editorial from National Review. The magazine points out that teacher unions wield power in blue parts of the nation and schools are run for their benefit rather than for the best interests of children.

…the interests of children and their families take a distant second place to the desires of the public-sector unions that dominate Democratic politics around the country and run the show practically unopposed in California. …unionized teachers…have turned up their noses at the children they are supposed to be serving and looked instead to their own two-point agenda: (1) not going to work; (2) getting paid. Randi Weingarten exercises more real practical political power than any senator or cabinet secretary, and her power is exercised exclusively in the interest of public-sector workers and the Democratic Party, which they effectively control. Perhaps it is time for Americans to take back some of that power.

And what’s the way to take back power?

It’s possible to reform labor laws so teachers don’t have out-sized influence. That sort of happened in Wisconsin under Governor Scott Walker.

But that’s difficult to achieve and difficult to maintain.

The best long-run answer is to have school choice so parents are in charge rather than union bosses.

Cartoon of the Day: Bad hand

Liberty Unyielding - Wed, 03/31/2021 - 10:17am

Stamp act

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