I already shared my thoughts about the value-added tax when discussing fiscal policy with an economist at the Confederation of Swedish Enterprise. Here’s some of what I said about tax progressivity and the welfare state. The bottom line is that the American tax system targets the rich. But that’s not the case in Sweden. If you don’t believe me, let’s see what some left-of-center sources say. Here’s a chart from a study for the World Inequality Lab by three economists at the Paris School of Economics. As you can see, the United States is an outlier. The rich pay a much bigger share of the tax ..read more

Class-warfare tax policy is bad news. Last year, I warned that, “rich people are not sheep, patiently waiting to be sheared. If their fiscal torture is too extreme, they will leave.” Norway is a powerful example. Here’s a chart showing the rate at which Norwegians are moving to Switzerland. You may be wondering what caused the sudden change after 2022. The above chart comes from a Bloomberg report by Ott Ummelas, and he explains what happened after Norway “increased the wealth tax burden by 55%.” Steep increases in wealth and dividend taxes by Norway’s left-leaning government have prompted d ..read more

It’s only April, but I suspect Senator Elizabeth Warren, a doctrinaire statist from Massachusetts, is going to win Politician of the Year for 2024. Which is noteworthy because she’ll be the first multi-year winner of the award, having previously won the prize in 2021 (and she deserved to win it in 2017 and 2019). What did she do this time? Well, like many of our friends on the left, she only believes global warming is a problem if it means other ordinary people have to curtail their carbon footprints and suffer from lower living standards. Elizabeth Warren falsely claims "life on Earth it at ..read more

When Joe Biden began his push for a global corporate tax cartel back in 2021, I explained why the idea was very bad news for the world’s workers, consumers, and shareholders. And I pointed out it was specifically bad news for developing nations since they would be prevented from using good tax policy to encourage rapid growth. Most important, at least for purposes of today’s column, I also told the BBC that a corporate tax cartel would be very dangerous since politicians would quickly try to apply the same approach to other types of taxes. Well, I was right. As reported in Barron‘s, some of th ..read more

There’s going to be a big tax fight in Washington next year, regardless of who wins the House, the Senate, and/or the presidency. That’s because major portions of Trump’s 2017 Tax Cuts and Jobs Act will expire on December 31, 2025. Will those tax cuts be extended? Will they be expanded? Will they be curtailed? Politicians will be forced to choose. In general, I’m rather pessimistic about the outcome for the simple reason that there’s been a huge increase in the burden of government spending. I wrote about that problem two days ago and highlighted how politicians used the pandemic as an excuse ..read more

There was a lot of wasteful spending during the pandemic. That was bad news, but what’s far more worrisome is that politicians used the pandemic as an excuse to permanently increase the spending trendline. Here’s a chart based on CBO’s historical data and future projections. I added a yellow line to show the trend line based on spending growth from 2000 to 2019. As you can see, spending soared above the trend line during the pandemic, came down slightly in 2022 and 2023, but now is projected to stay way above pre-pandemic levels. At the risk of understatement, this added spending burden is th ..read more

To show that living standards are much higher in the United States than they are in Europe, I periodically share OECD data on average individual consumption (2012, 2014, 2017, 2019, and 2022). All of which implies that European economies should be growing faster than the U.S. economy. But that’s not the case. In fact, the opposite is true. There’s anti-convergence. Today, let’s look at another example, courtesy of a tweet by Jeff Weniger. For what it’s worth, I think the chart overstates the American advantage (unless I’m misreading, I don’t think the numbers are adjusted for purchasing power ..read more

Three years ago, I wrote about the erosion of economic liberty in Western Europe (specifically, the 15 nations that comprised the European Union between 1995-2004). Sadly, here’s a more up-to-date chart showing that the loss of economic freedom is a problem for the entire western world (the advanced nations of North America, Western Europe, and the Pacific Rim). As you can see, a big increase in economic liberty during the era of the “Washington Consensus” followed by a decline since the turn of the century. Sadly, only three nations – Israel, South Korea, and Taiwan – improved their economic ..read more

I’ve periodically tried to explain that even small differences in long-run growth can lead to immense benefits, including huge reductions in poverty. To illustrate the importance of higher growth rates, I sometimes inform audiences that the United States today would be as poor as Mexico if the American economy had grown 1-percentage point slower over the past 130 years. Needless to say, I then point out that we avoided that fate because we were fortunate enough to have decent economic policy. But I also ask people to imagine how much richer we could be if we had great economic policy (sort of ..read more

While in Sweden last week, I wrote several columns (here, here, and here) about that nation’s fiscal policy. But I also had a discussion about American fiscal policy with one of the tax experts at the Confederation of Swedish Enterprise. That included a discussion of the value-added tax (VAT). If you don’t want to spend a few minutes watching the video, I made two theoretical observations and two practical observations. Here are my theoretical points. VATs tend to be less destructive than income taxes, largely because they don’t have “progressive” tax rates and also don’t exacerbate the tax ..read more