Free Markets, Free People

Monthly Archives: August 2012


Democratic Senator Ron Wyden tries to delink himself from Ryan Medicare plan

To date it’s been an attempt that mostly gets fussy about word usage, but my guess is it will get more pointed:

Gov. Romney is talking nonsense. Bipartisanship requires that you not make up the facts. I did not ‘co-lead a piece of legislation.’ I wrote a policy paper on options for Medicare. Several months after the paper came out I spoke and voted against the Medicare provisions in the Ryan budget. Governor Romney needs to learn you don’t protect seniors by makings things up, and his comments today sure won’t help promote real bipartisanship.

That’s obviously in reaction to a statement by Romney in which he talked about legislation, not a policy paper.

So Wyden is right, the quote is incorrect.

But Wyden is being a bit disingenuous too.  You don’t vote for parts of a budget so claiming you voted “against the Medicare provisions” of a budget are a bit of nonsense as well.  Democrats voted against the entire Ryan budget, the Medicare provisions being only  a part of that.

Even Think Progress has some problems with the attempted delinking driven by the inconvenient politics of having a Democratic Senator’s name on a plan that Democrats have chosen to mischaracterize and demonize:

The plan Sen. Wyden co-authored with Ryan does bear a striking resemblance to the proposed Medicare changes in Ryan’s latest budget for the House GOP. Both keep traditional Medicare as a kind of public option, in an exchange where it would compete with private plans offering insurance to seniors. The government would give seniors support for purchasing these plans, and that support would be benchmarked to the cost of the second-least expensive plan. The plans would also be prohibited from discriminating based on pre-existing conditions.

Where they begin to differ is Paul supports more market based solutions while Wyden wants government based solutions.

But this sort of linkage is inconvenient when you’re claiming the GOP ticket is “trying to end Medicare as we know it” (even though it is ObamaCare which is pulling $700+ billion out of Medicare).  Avik Roy has the “bottom line” on that meme:

The bottom line: if Romney and Ryan leave you the option to remain in the 1965-vintage, fee-for-service, traditional Medicare program, and you claim that Medicare has “ended as we know it,” what you’ve really ended is the English language as we know it.

Pretty much. 

The point?  Ron Wyden did indeed “co-author” a Medicare plan with Paul Ryan.  There’s no question about that.  And it was indeed a bipartisan plan, by definition.  In fact the paper is entitled “Bipartisan Options for the Future” and lists both Wyden and Ryan as the authors.

Finally, their plan contains this paragraph:

We are a Democrat and Republican; a Senator and a Representative; senior members of our respective Budget Committees; and members of the committees that have jurisdiction over Medicare and health care costs. As budgeteers, we understand the difficulty presented by demographic changes over the next several decades. As members with policy oversight, we recognize and encourage the potential for innovation to improve care and hold down costs. And most important, as representatives of hardworking Americans in Oregon and Southern Wisconsin, we realize our absolute responsibility to preserve the Medicare guarantee of affordable, accessible health care for every one of the nation’s seniors for decades to come.

Sounds like a pretty bipartisan effort to me.

Here’s the problem for the Democrats.  They need badly to demonize Paul Ryan as an extremist who is out to push granny over the Medicare cliff and end Medicare as we know it.  That’s because “Medicscaring” seniors is a tried and true method of gaining votes, and Democrats know it.  They’ve deployed it many times in the past.

And bipartisan cooperation?  No way, no how, can’t let that sort of thing become public knowledge when you have an active campaign beginning to label Ryan as an extremist ideologue.

But the facts don’t support that sort of branding campaign.  Not only has Ryan not attempted in any form or fashion to end Medicare, he’s teamed up with a liberal Senator to put forward a plan to actually save it (even while the loudest critic is pulling that $700+ billion from the program via ObamaCare) and make it sustainable.

How inconvenient. 

That is why Wyden is trying his best to delink from Ryan. And you can imagine from whence the pressure to do so is coming.  But it’s a hard sale to make when his name is clearly associated with Ryan’s on a plan he claimed will “preserve the Medicare guarantee of affordable, accessible health care for every one of the nation’s seniors for decades to come”, isn’t it?

Not that it will stop them from trying.

~McQ

Twitter: @McQandO

Facebook: QandO


Finally … QandO has a Facebook page

I finally got around to setting up a QandO Facebook page (as you’ll see I actually started to do it in January and then, for whatever reason – life? – dropped the project).   There’s no question that Facebook, despite those that would deride it, is a big player in social media.  And it’s a way to both expand the reach of QandO and to expand what we talk about as well.   We’ve never been able to put up everything we’d like to talk about on QandO, but the Facebook format allows us to link to things we’ve seen in passing that are interesting and discuss them.  To me that’s a plus.

On August 29th, QandO will be 9 years old.  That’s very old in blog years.  This addition to the QandO format is, to me,  a vital part of the on-line evolution that’s taking place and necessary to keep QandO fresh and get it in front of more people.  Blogs aren’t going away, but there are other platforms that are becoming a part of the mix. This adds, it doesn’t detract, to the QandO brand.  We most likely should have done it sooner.

Anyway, go, like it, share it, get more folks to read it.

~McQ

Twitter: @McQandO

Facebook: QandO


Paul Ryan and what his nomination means

It means the Democrats are facing a strong ticket with the announcement of Ryan as the VP nominee.  It also finally focuses the ticket where most Americans want it focused – the budget, the size of government, the economy and jobs.

For Mitt Romney the selection of Paul Ryan is about as strong a choice as he could have made.  Ryan has an intricate knowledge of the budget and budget process in Congress.  That will be a critical skill in the next four years for an administration to have.   In effect, Ryan will become the defacto administration budget expert (dare we say “czar”) for the Romney administration and give that administration a level of expertise unknown to most past administrations.

Romney is a “turn around” guy.  He knows how to turn ailing businesses and the like around.  The combination of Ryan and Romney is and should be compelling to most Americans.

For critics of Romney’s “conservatism”, the addition of Ryan should cool their angst and shore up the conservative base.  Ryan is more of a Tea Party conservative (i.e. fixed on fiscal conservatism rather than social conservatism) but that is the sort of conservatism which is going to attract the most non affiliated voters. 

Our fiscal house is broken and in bad need of repair.  This is a team with all the credentials to do that, or at least begin a positive effort to do that (I doubt that it can be fixed in 4 years, but a lot of progress can be made in that time).

And, of course, that means trouble for the Obama administration, whose record is anything but compelling and whose leadership has been anything but inspiring.  Ryan, therefore, must be “destroyed” in a political sense.   So in the name of “vetting” – something that was never really done for our present president  — we will see all sorts of wild stories and opinions flying around concerning the new VP pick.

I’m not sure any of that will matter much though.  Why?

Well, there are indicators seem to be pointing out a momentum shift that  polls aren’t showing yet (we discuss that on the podcast).  A half-full fundraiser for Obama in his home town of Chicago vs an enthusiastic crowd who packed a Romney/Ryan rally at a furniture store in North Carolina.  Or the turnout at this event:

Earlier in the day, Romney and Ryan campaigned at the NASCAR Technical Institute in Mooresville, N.C. The Hickory Daily Record reported that the two were “greeted by thousands.” A Romney campaign official told TheDC that an estimated 4,700 people showed up, with 1,700 people inside the event and 3,000 outside.

If the Obama campaign isn’t worried, then they are even more insulated from reality than I thought.

Fundraising is another indicator that all is not well in Obamaland.  Romney, even without Ryan as the VP pick, has been consistently bringing in more campaign donations.  And not by a little.  He’s been crushing the Obama effort.  That may be the truest indication to this point of how far the Obama brand has fallen. Donors don’t like to back losers.  Indications are that the choice of Ryan will only exacerbate that problem for Obama.

So Paul Ryan means even more trouble for an already troubled Obama campaign.

What should we expect, then?  A full-court press by the left and as dirty a campaign as you’ve ever witnessed.  The Obama campaign and its media surrogates and pundits are going to be in attack mode from now on.  In fact, just peruse some of the stuff already out there today.  Expect it to get worse.  The “Palin treatment” is called for because … because it worked the last time.  I would guess, however, that Ryan may be equal to the task ahead and perhaps turn that treatment back on those who attempt to apply it.

In the meantime, we have the opportunity over the next few months to actually discuss the most important and compelling issues facing us as a nation – if the media will let us.  Unfortunately, they usually focus on the horse race after picking sides.  And we all know whose side they were shamelessly on last go-round.

So I expect stories like this vs. stories about budget, spending and employment.  I expect, given the abysmal Obama record to see continued attempts by media surrogates to distract rather than inform or discuss relevant and important topics.

But then, that seems to be American politics today.  What’s surprising is how the left has managed, since the 2010 election, to pretend they never happened and that they’re back in the happy days of 2008 again.  I see a lot of “whistling past the graveyard” among them.  I see them and the media ignoring some pretty bold indicators that they’re in deep trouble.  And I hope they continue to do so.

Look, an economy that’s banging along the bottom of a recessionary dip and an unemployment rate seemingly stuck at about the 8% mark (or 14% if you’re looking at the U6) are not something any president wants to run on and, they’re certainly not something I’d assume he’d be keen about discussing.  

If Romney/Ryan will focus and force the debate about those issues without letting the Obama campaign successfully distract and divert that debate, I think they win.  And I think Paul Ryan is a strong enough personality to make that happen. 

That is what his nomination means.  And that means big trouble for Obama.

~McQ

Twitter: @McQandO


Observations: The QandO Podcast for 12 Aug 12

This week, Bruce, Michael, and Dale talk about the Paul Ryan VP pick.

The direct link to the podcast can be found here.

Observations

As a reminder, if you are an iTunes user, don’t forget to subscribe to the QandO podcast, Observations, through iTunes. For those of you who don’t have iTunes, you can subscribe at Podcast Alley. And, of course, for you newsreader subscriber types, our podcast RSS Feed is here. For podcasts from 2005 to 2010, they can be accessed through the RSS Archive Feed.


Pizza? This is about slow suffocation by government (update)

Rob Port brings attention to the Papa John’s story:

At Slate, Matthew Yglesias scoffs at Papa Johns’ founder John Schnatter saying the Affordable Care Act, Obamacare, will drive up costs for his company by roughly $0.20 per order, something his company will be passing along to customers.

“Stipulating for a moment that this is true, doesn’t it seem like a rather small price to pay?” asks Yglesias.

No, it’s not small at all.

Rob then covers just the Papa John’s part of this formulation:

Papa John’s operates 3,973 restaurants. I can’t figure out how many orders the company processes daily, but let’s assume a very conservative 100 orders per store. That’s 397,300 orders every day. Adding $0.20 to ever order in additional labor costs translates into just over $29 million in additional costs for Papa Johns customers annually.

But, of course, as you’ve already figured out, if that’s true for Papa John’s, it is probably true for most other companies in the US as well.

So as Rob says, “no, it’s not small at all”.  In fact, it is potentially a huge increase in the price people will pay for all goods and services.

Papa John’s isn’t alone in seeing a price increase in their futures. As the magazine relates, in its most recent earnings call, McDonald’s said the health care plan will cost their stores an extra $10,000 to $30,000. While the vast expansion of government power involved in the bill will result in more federal expenditures, the pizza magnate’s comment highlights the fact that it will create an across-the-board surtax on virtually all expenditures by families and individuals. This will mean an increase in the cost of living that will hit the poor a lot harder than the rich the president claims to want to tax.

In fact, as pointed out, it has the same effect as a tax on the poor.

Yet the left simply seems unable to wrap their heads around that.  Here’s a commenter to the article I took the paragraph above from:

It is shocking that the CEO of Papa John’s and this magazine commentator would begrudge the near-poor workers of that company health insurance — and better healthcare for a few cents per pie!! Our country is based on the premise that we all pay a little more to help those less fortunate — the key here is “a little more.” Does anyone really object to that??

Yes. Strenuously.  And by the way, this country was not founded on the premise “that we all pay a little more to help those less fortunate” and claiming that to be so is an attempt to rewrite history.  It was about providing everyone an equal opportunity under the law to succeed while protecting their basic rights to life, liberty and property.

So we have the probability that prices will increase in the future as companies charge more for their products to cover health care.  And that brings us to a pretty basic point, here made by Bethany Mandel at Commentary Magazine:

What this person and other liberals have wrong is this: It’s not about the price of pizza. If it were actually possible to improve healthcare for millions of Americans and insure millions more, conservatives would be on board. The basis of conservative opposition to ObamaCare is this: We do not think it will help the majority of Americans. The bill is titled the “Affordable Care Act,” but does nothing to make healthcare more affordable, nor will it improve health care. In reality, it provides a worse standard of care at a higher cost.

Under ObamaCare, 17 million Americans will be added to Medicaid’s rolls in order to move some Americans from the uninsured to the insured column. Are they actually better off?

I, of course, wouldn’t be “on board” if it had to do with government intervention, however I understand the point she’s trying to make.  What has been passed won’t a) reduce costs and make health care more affordable or b) improve health care. 

It is the “big lie” writ large.  The parameters defining health care delivery are finite, not infinite.  You have 24 hours in a day and x number of providers.  Is adding 17 million to the welfare portion of government health care (the one most providers refuse to take because of the supreme hassle and low reimbursement rate) really going to improve their lives?

As Avik Roy notes, even though we’ll be paying more across the board to make it possible, probably not:

In July 2010, at National Review Online’s Critical Condition blog, I wrote about a University of Virginia study, published in Annals of Surgery, finding that surgical patients on Medicaid endured a 97 percent higher likelihood of in-hospital death than patients with private insurance, and a 13 percent greater chance of death than those with no insurance at all. I noted several other clinical studies that showed similar results.

And that’s before the 17 million are added.  This is the mess we find ourselves in when agenda driven politicians pass laws they haven’t even read over and above the objections of the majority of the people.

It’s hard to call that a “representative democracy” isn’t it?

And, no, this still isn’t about pizza.

UPDATE: Morning Bell (Heritage Foundation) weighs in:

At least 60 percent of firms are estimating Obamacare will raise their health care costs, according to a new study released Wednesday by Mercer, a human resources consulting firm. One-third of those expect a cost increase of 5 percent or more.

The study states:

The employers that will be hit hardest are those with large part-time populations—employers in retail and hospitality services. Nearly half of these employers (46%) expect PPACA will push up cost by at least 3% in 2014—and another third don’t yet know what the impact will be.

An example of the impact from the CEO of CKE Restaurants:

The money to comply with the [Affordable Care Act] must come from somewhere. We use our revenue to pay our bills and expenses, to pay down our debt, and we reinvest what’s left in our business. That’s how we create jobs. There’s no corporate pot of gold we can go to, to cover increased health care costs. New unit construction will cease if we have to allocate moneys for that construction to the ACA. And building new restaurants is how we create jobs.

As we’ve said many times before, this isn’t rocket science and they’re called “economic laws” for a reason.  Unfortunately the left continues to ignore them (or pretend they don’t exist) with predictable results.

~McQ

Twitter: @McQandO


Perspective: Are firearm murders a significant statistic?

We’ve been told for some time that violent crime in America is actually at its lowest point since the 1970s.

But we’re also being told by a certain element that gun deaths are out of hand and we need to reconsider tightening our gun laws.

So lets take one of those “perspective” looks shall we? 

First a chart that takes us through 2004 showing murders by firearms:

 

500px-Ushomicidesbyweapon.svg

 

As an aside, the Assault Weapons ban was in effect from 1994 to 2004.  Assault weapons would be found under “other guns”.   You’ll note that “other methods” and knives, for the most part, were involved in more murders than “assault weapons” (further note that not all “other guns” were “Assault Weapons”, but may have been hunting rifles or shotguns).  Rifles of any sort just aren’t the usual weapon of choice for murders.

Also note that murders of all types have been trending down over the  years.  If you hit the link in the first sentence, it will show you that in 2004 the number of violent crimes per 100,000 was 463.2 and in 2010 it had fallen to 403.6.

If you add handguns and “other guns” from the chart in 2004, you see approximately 10,500 to 11,000 murders by firearms.

The latest stat available?

The most recent FBI figures show just 358 of the 8,775 murders by firearm in 2010 involved rifles of any type.

By the way, the article that was pulled from noted that in 2010, more people were beaten to death by fists (758) than were killed by “other guns”, aka rifles of any sort.

Michael Wade does the math:

So, based on these two sites (http://wiki.answers.com/Q/How_many_households_are_in_the_US)(http://www.gallup.com/poll/150353/self-reported-gun-ownership-highest-1993.aspx) there were approximately 115 million households in 2010, and between 41% and 49% (depending on how you do the numbers) had firearms in them.

That’s a minimum of 57.5 million arms (if we assume one firearm per household, which we know isn’t even close to the right number).

If we then assume that each of the 8,775 murders was committed by a separate firearm from a different household each time (again, an assumption we know is wrong but increases the number of households involved), then approximately 0.015% of American households who owned guns were involved with murder by firearm in 2010.

Again, these assumptions make that percentage much higher than it actually is since (a) undoubtedly more households have firearms but don’t report them, (b) households with firearms will typically have more than just one, and may have several, (c) one firearm likely accounted for more than one of the 8,775 murders, and (d) the vast majority of the murders were likely committed with firearms that were illegally possessed!

Even so, slightly more than one one-thousandth of one percent of gun owners is the highest amount you are going to be able to implicate in murder by firearm, despite all the generous assumptions made in favor of the gun control side.

That does not speak to a winning argument IMHO.

No it sure doesn’t, not that they won’t try anyway.  Additionally, when you do the math about chances of being a victim of firearm murder, the figure 312.8 million is what you need to divide into the 8,775 yielding a terrifying 0.000028% chance of being a victim of a firearm murder in 2010 (if you’re a gambler, though, move to Chicago and you can quickly reduce the odds). 

In fact, you’re much more likely to die from one of these causes than a gunshot murder:

Chance of dying from any kind of injury during the next year: 1 in 1,820
Chance of dying from intentional self-harm: 1 in 9,380
Chance of dying from an assault: 1 in 16,421
Chance of dying from a car accident: 1 in 18,585
Chance of dying from any kind of fall: 1 in 20,666
Chance of dying from accidental drowning: 1 in 79,065
Chance of dying from exposure to smoke, fire, and flames: 1 in 81,524
Chance of dying in an explosion: 1 in 107,787

Life is perilous, but for the most part, not because of guns.

As someone recently said, we don’t need gun control, we need idiot control.  Not sure how we control the idiots, but I’m sympathetic to the idea.  Statistically though, the number of firearm murders per year simply doesn’t justify any renewed call for banning or restricting the sale or possession of firearms.

~McQ

Twitter: @McQandO


Famous dumb ideas: Let’s have a maximum wage, shall we?

Sometimes the mask slips a little on the left and you get a peek at the real collectivist agenda at work there.  Other times a leftist will just take the mask off completely and show you the collectivist behind it.

It is one of the reasons I find the left to be the most potentially totalitarian side of the spectrum … because their basic premise, the premise that spawns all others, is indeed collectivism.

For instance, this Gawker screed by some nimrod named Hamilton Nolan:

Let’s have a maximum annual income of, oh, $5 million, pegged to inflation. All income above that would be taxed at 99 percent. Our precious national sports stars, celebrities, and corporate executives could still be fabulously wealthy. The daydreaming poor could still have a nice big number about which to hopelessly dream. Five million dollars a year. Five million! Anyone with $5 million can invest it conservatively enough to earn 5 percent a year and still be making $250K per year without lifting a finger. In other words, $5 million provides you with the means to live as a member of the one percent without ever touching the principal. It’s everything that any reasonable person could ask for, financially speaking.

A million and a quarter per year? Far more than anyone should be earning, in a world with so much poverty and want, but not so much that someone could consider themselves set for life. It’s a number at which the go-getting rich person is still aspirational. They hope to double or triple that salary before their earning days are done. So a hefty 75 percent tax, though completely just, will not only spook them enough to flee, but allow them to retain a modicum of dignity while doing so, at least among the more affluent segments of their peer group.

But $5 million? I defy the slickest PR firm in America to explain to a nation of struggling, underemployed working class people with a median household income of just over $50,000 why an already-wealthy person felt the need to leave the country—taking money out of the taxpayers’ pockets in a very literal sense—rather than donate, to the common good, earnings over one hundred times the nation’s median household income. This requires an already-wealthy person who is, by definition, being paid a wage that far outstrips any measure of fairness or good sense, to stand up in front of a nation (to which he has no doubt paid ample lip service during his rise to the top) of people far, far less fortunate than he and declare: "I have far more than I need. But I would rather abandon you all than help you."

If someone is willing to do that, let them take their shame and go. Good riddance.

You have to read the whole thing to ensure its not a spoof. It’s not.  This knucklehead is serious. 

Note how blithely he decides what is proper for you to have.  “It’s everything that any reasonable person could ask for, financially speaking”.

Is it?  What if you’re trying to build a business that requires, oh, I don’t know, 10 million?

Well, you can’t have that.  Because Hamilton Nolan has arbitrarily decided that 5 mil is it.  It’s a bit like the crowd that decides that at a minimum, labor is worth, oh I don’t know, how about $7.25 an hour?

Sound good?  Let’s go with it and prosecute anyone that tries pay below that.  What do you mean that causes unemployment because wage payers aren’t willing to pay more than what the labor on a job is worth?  Why would some of them rather automate than pay that wage to a real person?   How does a minimum wage kick up the price of a product?

See it’s these little niggling questions that are never entertained by economic rubes like Nolan that blow their little collectivist theories all to blazes.

Things like “well if I can only earn 5 mil in the US but I can earn 10 mil in Russia, I’ll just move to Russia”, also known as human nature, simply don’t register. 

Dingbat’s reaction to such a move?  “Good riddance”.

Really?  Good riddance? 

Someone ought to ask this economic idiot if he got his job at Gawker from a poor person?   And when he got that job did he believe he got it because:

America has provided all of the opportunity necessary for these people to earn their fortunes. That opportunity is paid for with tax dollars.

Because that’s what he wrote.  Seriously Mr. Nolan, did “America” provide all the opportunity necessary, paid for by the taxpayers, for you to land at Gawker?  Or did your work and effort perhaps ‘earn’ you the job (although reading this hash one might be led to believe that Gawker has very low standards of employment)?

How does our collectivist plan on “rewarding” the high earners who remain and government coercively fleeces, taking most of what they’ve produced (note that the word “produced” never is used in Nolan’s rant)?

Newspaper articles.  No.  Seriously.

The wealthy could still earn as much as they want. It’s not that they don’t get anything for their earnings above $5 million; they get the distinct privilege of making a huge and helpful contribution to their fellow countrymen. Give them awards. Lavish them with praise. Publish the names of the highest taxpayers in laudatory newspaper columns. Allow them to bask in civic pride. But take their money. They have plenty.

Because Mr. Nolan and the mob, er collective, believe they have first claim on the money anyone earns.  They just have to vote for it (“hey, that’s democracy!”).  And that my friends is the basic difference between the left and right in this country.  They believe it is“their” money or the government’s money.   They have no idea of how wealth is produced.  They have no idea of the concept of what it takes to earn something.  Instead, it’s real simple:  you get to keep what they deem appropriate, because wealth doesn’t belong to the producer, in their world it belongs to the collective.

Why?

This is not primarily about raising our total national tax revenue. That’s a far broader issue. This is about inequality. It’s about what type of nation we want to be—what level of inequality we are willing to tolerate in order to protect a vague and twisted notion of "freedom" that most people cannot even fully articulate, and that was created by the rich to serve themselves. This is a baby step. But it’s one that would make us, fundamentally, a better and more just country.

And if the rich people don’t like it, fine.

It’s not at all about “raising our total national tax revenue”.

It’s about nascent totalitarianism masquerading as “fairness”.  Fairness is one of those code words on the left that is used to rationalize removing choice, using coercion and claiming their actions are justified because otherwise the status quo is “unfair”.

There is no worse of a sin in the collective than being ‘unfair’.

And screw you if you don’t like it.

~McQ

Twitter: @McQandO


Economic Statistics for 9 Aug 12

The following statistics were released today on the state of the US economy:

The U.S. international trade gap in June narrowed to $42.9 billion from $48.7 billion, mainly from lower fuel prices and imports.

The Bloomberg Consumer Comfort Index fell to -41.9 in the latest period, the lowest reading in two months.

Wholesale sales fell -1.4% in June, while inventories declined only -0.2%, a mismatch that increases the inventory-to-sales ratio to 1.20.

Initial jobless claims fell 6,000 to 361,000 last week. The 4-week average rose 2,250 to 367,000. Continuing claims rose 53,000 to 3.32M.

~
Dale Franks
Google+ Profile
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France to impose a 75% tax on "the rich"

The “you didn’t build that” gang’s attempt to get the “rich” to pay what they characterize as their “fair share” in taxes (when in fact in almost every western country they pay more than their fair share) is about to get tested in France:

The call to Vincent Grandil’s Paris law firm began like many others that have rolled in recently. On the line was the well-paid chief executive of one of France’s most profitable companies, and he was feeling nervous.

President François Hollande is vowing to impose a 75 percent tax on the portion of anyone’s income above a million euros ($1.24 million) a year. “Should I be preparing to leave the country?” the executive asked Mr. Grandil.

The question asked by the client is typical of what will happen if such a tax is imposed … anywhere.  If you believe “the rich” are going to lay back and take it, you’re crazy.  They will do what is in their best interest and paying 75% taxes on what they earn isn’t in their best interest.  We’ve often talked about the Laffer curve and how it applies to taxes.  How at some percentage of taxation, revenues will drop and in some cases drop dramatically.

That’s precisely what that client’s question indicates will happen in France with a 75% “rich” tax.

France has a history of punitive taxation which is one reason it no longer is considered much of a economic power:

[T]he proposal is the latest red flag in a country that has long labored under the image of being a difficult place to do business. France has a 33 percent corporate tax rate — the euro zone’s second-highest, after Malta’s 35 percent. That contrasts with the 12.5 percent rate in Ireland, which has deliberately kept a lid on corporate taxes as a lure to businesses.

Businesses don’t have to stay and take France’s coercive tax rates anymore.  There are countries more than happy to accept their businesses and the boost to the economy they bring. 

And, that goes for “le rich” as well.  ‘Leaving the country’, in the case of France, doesn’t necessarily mean moving too far:

“It is a ridiculous proposal, but it’s great for us,” said Jean Dekerchove, the manager of Immobilièr Le Lion, a high-end real estate agency based in Brussels. Calls to his office have picked up in recent months, he said, as wealthy French citizens look to invest or simply move across the border amid worries about the latest tax.

“It’s a huge loss for France because people and businesses come to Belgium and bring their wealth with them,” Mr. Dekerchove said. “But we’re thrilled because they create jobs, they buy houses and spend money — and it’s our economy that profits.”

You’d think, for anyone with an ounce of common sense, this outcome would be obvious.  Apparently not.  And so France will drive off its rich, see revenues in that income bracket drop even while the tax percentage is increased to 75% and attack those who’ve avoided those taxes as “greedy”.  Just watch.

Of course I agree with the words of Dr. Thomas Sowell in that regard:

“I’ve never understood why it is “greed” to keep money you’ve earned, but not greed to take somebody else’s money”.

Yeah … me neither.  Right now, the greediest entities on earth are governments.

~McQ

Twitter: @McQandO