International

Conservatives Must Reject the “Poor Are Parasites” Narrative

by David Bier on May 7, 2013 · 8 comments

in Features, Immigration, International

Post image for Conservatives Must Reject the “Poor Are Parasites” Narrative

When Mitt Romney made his comments about the 47 percent of Americans who don’t pay taxes and were supposedly “dependent on government,” many conservatives rightly condemned the remark, and Romney apologized. Now, a major conservative think tank is repeating his error, denouncing lower-skilled workers as a fiscal drain on the economy.

This week, the Heritage Foundation, the largest conservative D.C. non-profit organization, released a study intended to demonstrate that allowing the 11.5 million mostly lower-income immigrants who are currently in the country illegally to stay will harm America’s economy. The study focuses on immigrants, but its logic applies to millions of working Americans, almost half of whom had no income tax liability in 2011, according to the Tax Policy Center.

Indeed, Heritage makes quite clear that its conclusion that immigrants are economically superfluous applies equally to most Americans. If an individual does not have a college degree, they are a net fiscal drain on the economy, and in the Heritage methodology, that means that America’s economy would be better off without them. Thus, about 70 percent of Americans would be “deportable.”

Heritage is absolutely correct to point out that entitlements are unsustainable, but this is true with or without immigration reform—that is an argument for fixing entitlements, not stopping immigration reform. At current deficits, the federal government will spend $67 trillion more than it will bring in taxes over the next 50 years. By Heritage’s logic, that means America should be emptied.

As should be obvious, America would not gain from removing between 50 and 70 percent of its workforce. This fact exposes the fatal flaw in the Heritage study—it ignores the economic benefits that low-skilled workers bring. Under progressive taxation, the majority of taxes are paid by the highest income levels, but low-wage workers still form a critical base without which the top earners would suffer and tax revenues would fall.

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The Doctor Is In, America: Get With the Estonian Program

by Matthew Melchiorre on May 7, 2013 · 0 comments

in Economy, Employment, International, Stimulus to Nowhere

Don’t let the optimism surrounding last month’s job numbers fool you. The unemployment rate’s decline from 7.6 percent in March to 7.5 percent in April is more statistical artifact than progress.  Like that of our Western European neighbors—and the U.K. in particular—the U.S. economy is stuck in a rut. Why? The answer is simple. Government profligacy overburdens the economy while propping up private inefficiencies, as I explain in Investors Business Daily.

Since 2008, Washington policymakers have been pacing around the doctor’s office too afraid to take the bitter but effective pill America needs: slash federal spending and end the U.S. Fed’s life support for zombie banks.

Economically stagnant Britain shows us where this continued procrastination leads. Instead of dashing after our tea-drinking transatlantic neighbors, American policymakers should look to Estonia, which took its austerity meds and quickly returned to prosperity.

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How Online “Marketplace Fairness Act” Could Tax Your 401(k)

by John Berlau on May 6, 2013 · 9 comments

in Economy, Legal, Nanny State, Personal Liberty, Regulation, Trade

Today, the Senate likely will pass the Marketplace Fairness Act, which would force online retailers to collect sales taxes for states in which purchasers reside. Most have heard how this will hit us when we purchase goods over the Internet. But a lesser-known problem is the legislation also would enable states to levy new taxes on 401(k) and other savings vehicles.

How? The bill authorizes states to “require all sellers not qualifying for the small seller exception [$1 million in sales or less] to collect and remit sales and use taxes with respect to remote sales sourced to that Member State.” Yet “sellers” and “sales” are never specifically defined, and there are no specific exemptions for certain types of products or services.

Financial experts say this means states tax “sales” such as stock trades in a mutual fund or brokerage account, or even contributions to pension plans such as 401(k)s that were designed to be tax-free until retirement.

The American Society of Pension Professionals and Actuaries, a group of more than 11,000 retirement plan and benefits professionals, warns the bill “would allow states to impose a financial transaction tax that would apply to American workers’ 401(k) contributions and other transactions within worker’s accounts.” The group notes that “over 70 million workers could be affected” by such taxes, which “could significantly reduce workers savings over time, threatening their retirement security.” The group calls for “a clear exception” for transactions within a 401(k) account.

Yet this is not the only financial service the bill could enable states to tax, experts say. Grover Norquist of Americans for Tax Reform asks in a letter to Sen. Mike Enzi, R-Wyo., a chief GOP proponent of the legislation, “Will financial products that are sold over the Internet, such as portfolio management services, credit reporting service apps, or insurance service, fall under MFA taxation authority?”

The Securities Industry and Financial Markets Association (SIFMA), representing securities firms and asset managers,  issued a statement urging hearings  on the MFA’s impact on financial services. As written, “the bill could lead to unexpected costs being passed on to consumers of financial services, including sales taxes on services or state-level stock transaction taxes,” the group said.

Similarly, the Financial Services Roundtable, which represents banks, insurance companies and brokerage firms, states these concerns: “A transaction tax on financial services products will hurt retail investors, retired Americans, and small businesses, effectively making it more expensive for them to invest and plan for the long-term. Without hearings, these implications and others will not be properly addressed.”

These potential scenarios, taken seriously by financial policy experts, illustrate the inherent problem of the bill. Forcing a business without any physical presence in a state to tax that state’s consumers is taxation without representation. As my colleague Jessica Melugin, an adjunct fellow at the Competitive Enterprise Institute, has written, “This bill would undermine that federalist principle by allowing one state to reach into the borders of another and tax businesses that have no political voice in the taxing state.”

As Melugin concludes in a Washington Times op-ed, state sovereignty does not just mean protection from the interference of the federal government. It also means freedom from encroachment of other states. “The legislation does away with the crucial notion that one state’s sovereignty stops where another state’s begins,” she writes. ”Under this cartel, state tax laws extend everywhere commerce happens on the Internet.”

And as we are just now finding out, that “everywhere” could include your 401(k) account, individual retirement account, and mutual fund. So to borrow a phrase from investing, the House needs to undertake some much-needed due diligence on this bill, rather than rusbhing it through as the s0-called upper chamber likely will do.

What Are the National ID Implications of the Senate Immigration Bill?

by David Bier on May 3, 2013 · 0 comments

in Features, Immigration, Nanny State, Personal Liberty

Post image for What Are the National ID Implications of the Senate Immigration Bill?

1. ID standards: The bill requires all employers to check photo IDs of all employees they hire—any employee who fails to present a photo ID must be fired. Employees who attempt to use ID from states that have not implemented the Real ID Act would need a second form of identification to be hired. The Real ID Act was an unfunded mandate on states to remake their state IDs to fit federal guidelines. The states rebelled and refused to do so. This law would make it more burdensome for employees in those states to get a job—thus, this stick is being used to conform states to the federal ID standards. (The bill also creates “tamper-proof Social Security cards, which all workers will need to get a job in America).

3. Mandatory E-Verify: E-Verify compares form I-9 information—names, addresses, Social Security Numbers (SSNs), document ID numbers, immigrant ID numbers, etc.—submitted by employers to a federal database on all employees, a combination of Department of Homeland Security (DHS), State Dept. and Social Security Administration (SSA) databases. E-Verify’s creation was never the subject of any specific legislation, but rather was the spawn of a verification “pilot program” that was authorized under the 1996 Illegal Immigration Reform and Immigrant Responsibility Act. This bill would mandate the system be used by all employers within four years of implementation.

4. Biometric E-Verify: E-Verify has already expanded to include all passport photos, but this bill will essentially create a database on all citizens that includes photos on each person. It’s called the “photo tool” in the bill. It allocates $250 million to pay states to hand over their state ID photos and numbers, vastly expanding the database and making photo identification essentially mandatory.

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Transatlantic Speakers Express Strong Support Of U.S.-EU Trade Pact

by Fran Smith on May 1, 2013 · 0 comments

in Agenda for Congress, International, Trade

A high-level panel of experts yesterday pointed out the mutual economic benefits of a broad transatlantic trade pact between the United States and the European Union. At the event, co-sponsored by Meridian International Center, the U.S. Chamber of Commerce, the Spanish think tank Foundation for Analysis and Social Studies (FAES), the Center for the Study of Presidency and Congress, and the Ronald Reagan Building and Trade Center, the speakers emphasized the significant contributions to jobs and growth a trade agreement between the two parties would bring. They noted that the title of the proposed agreement endorsed by both the U.S. and the EU  is  “The Transatlantic Trade and Investment Partnership.”

Leading off the program was the former president of Spain, José María Aznar, who spoke of the need to bring the U.S. and the EU together in a trade partnership to formalize the strong economic and cultural ties that already exist and to remove still existing trade barriers. He noted that such an agreement would not only enhance the competitiveness of these developed countries, but also could help promote the free exchange of goods and services throughout the world.  Aznar pointed to the just-published report by FAES, “TAFTA: The Case for an Open Transatlantic Free Trade Area,” which provides a roadmap for removing tariff and non-tariff barriers.

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U.S. Government Bans French Cheese Based On Food Prejudices

by Hans Bader on April 30, 2013 · 0 comments

in Features, Health and Illness, International, Nanny State, Personal Liberty, Precaution & Risk, Regulation, Trade

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The U.S. government is banning a standard, normal-smelling French cheese based on its own squeamishness. The cheese in question is Mimolette, a commonplace, orange French cheese so mild in flavor that I once confused it with cheddar when I visited my French relatives and ate it for the first time. The ban has triggered protests in New York City, reports the Global Post:

Around 40 protesters took to the streets of New York on Saturday to demonstrate against a US ban on mimolette that has angered lovers of the distinctive French cheese.

Since March, several hundred pounds of the bright orange cheese have been held up by US customs because of a warning by the Food and Drug Administration that it contained microscopic cheese mites.

The mites are a critical part of the process to produce mimolette, giving it its distinctive grayish crust.

The US decision has angered importers and consumers, who have even set up a Facebook page titled “Save the Mimolette.”

Benoit de Vitton, an importer of the cheese. . . said he was baffled by the recent blockade, noting he has imported mimolette for two decades without a problem.”They are afraid of allergies,” he said. “But we’ve been doing this for 20 years without any problem.”

Who cares if it has tiny, invisible mites in it? Cheese is the product of bacteria. Good yogurt has live cultures of bacteria in it, and that is beneficial for your health. Food that is alive can be good for you. The human body is full of living, friendly microbes that keep us alive. The cheese mites in Mimolette are there to enhance its flavor: as Wikipedia notes, the “crust of aged Mimolette is the result of cheese mites intentionally introduced to add flavor by their action on the surface of the cheese.”

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Gang Of 8’s Euphemism For National ID System: “Identity Authentication Mechanism”

by David Bier on April 29, 2013 · 0 comments

in Features, Immigration, Nanny State, Personal Liberty

Post image for Gang Of 8’s Euphemism For National ID System: “Identity Authentication Mechanism”

Our new euphemism for a national identification system is “identity authentication mechanism.” The Gang of 8, the leaders of which are proponents of biometric national ID cards, included a provision in the electronic employment verification portion of the immigration bill that calls for such a “mechanism” to identify every American at the click of a mouse.

E-Verify, the verification system used voluntarily by about 7.5 percent of employers, is currently national ID-lite. Right now, E-Verify only compares identifiers, such as your name and Social Security number, to the Department of Homeland Security database. This means the system cannot know whether the person submitting the identifiers (SSN, name, etc.) is the individual those identifiers refer to, which would be true identification.

True identification, as the Cato Institute’s Jim Harper explains in his book, “Identity Crisis,” must compare biometric identifying information — pictures, fingerprints, retina scans, DNA, etc. — to the actual individual. The Gang of 8 bill does this. It allocates $250 million to DHS to include all passport, DMV and state ID photos and ID numbers into the system. Employers would then compare the database picture to the new hire.

This is a true national identification system — the exact thing Americans have resisted for the past 80 years, ever since the Social Security card was first proposed. Nonetheless, the Gang of 8 bill contains the obligatory “Nothing in this section may be construed to directly or indirectly authorize the issuance, use, or establishment of a national identification card.” Of course it creates “tamper-proof, fraud resistant” Social Security cards required for work, but presumably those don’t count. In any case, it creates something far more odious to privacy — a national ID system accessible anywhere at any time to identify anyone, or at least any U.S. citizen.

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Will EU “Cultural Diversity” Exception Undermine U.S.-EU Trade Talks?

by Fran Smith on April 25, 2013 · 0 comments

in International, Trade

A possible bump in the road  toward  a U.S.-EU trade agreement emerged  today as a parliamentary committee of the European Commission voted to begin trade talks with the U.S. but to allow a “cultural exception” for film and audio-visual subsidies. That means that the EU would be carving out this exception early on, possibly creating an obstacle to real progress on eliminating non-tariff trade barriers between the two parties.

The amendment to allow this exception was pushed by France, which wants to continue to receive substantial subsidies for its film industry and to limit the amount of foreign programs shown in France. German film subsidy bodies also endorsed the need for EU countries — in the name of “cultural diversity” — to subsidize their domestic film industries. The European Commission  in its assessment of state aid to the industry endorses the cultural significance of the industry:

Audiovisual works, particularly films, play an important role in shaping European identities. They reflect the cultural diversity of the different traditions and histories of the EU Member States and regions. Audiovisual works are both economic goods, offering important opportunities for the creation of wealth and employment, and cultural goods which mirror and shape our societies.

If the EU includes this exception in its negotiating mandate, which the trade ministers will vote on in June, it could undermine the talks going forward. The U.S., for example, could try to carve out its own so-called sensitive products, and  the negotiations could falter in tearing down barriers that limit the free flow of goods and services.

The chairman of the EU trade ministers has already expressed his concern about setting out exceptions in the trade talks. Vital Moreira of Portugal was quoted as saying:

If we start to exclude chapters from the negotiations, of course the other side will do the same. Room for negotiations is already very limited and I am convinced this is not helpful.

It doesn’t seem like an encouraging start to what is being heralded as one of the most significant trade and investment agreements to be negotiated.

Lawsuits Over “Customary International Law”: A Menace To Free Speech, Our Liberties, Our Companies, And Our Economy

by Hans Bader on April 24, 2013 · 0 comments

in Economy, International, Legal, Personal Liberty

Earlier, I wrote about how it was a good thing that the Supreme Court blocked foreigners from suing in the U.S. over putative violations of “customary international law” by corporations and other defendants with deep pockets. My conviction has grown stronger, since I learned that the U.N. Committee on the Elimination of Racial Discrimination has ruled that Germany violated international law by not prosecuting a former German legislator for an interview with a cultural journal in which he said negative things about immigration and the alleged dependence on welfare of Turkish immigrants to his country. That ruling illustrates that international-law norms can be inimical to American civil-liberties such as freedom of speech, making it inappropriate for U.S. courts to enforce such foreign norms.

German prosecutors had concluded that the former legislator’s remarks were protected by Germany’s (limited) free-speech guarantees because, while offensive, they were part of a “discussion” of “problems of economic and social nature,” and did not rise to the level of hate speech. (Germany generally bans hate speech; by contrast in the U.S., the Supreme Court voided a hate-speech ordinance in 1992 on First Amendment grounds. A federal appeals court has also ruled that a professor’s racially-charged anti-immigration diatribes were protected speech in the Rodriguez case.) Law professor Eugene Volokh reprints the speech that, “according to the Committee, must lead to a criminal prosecution in countries that have ratified the International Convention on the Elimination of All Forms of Racial Discrimination.” (The U.S. has ratified that convention, but, as Professor Volokh notes, “I am pleased to say that the U.S. has not recognized the competence of the Committee to enforce the Convention, though most European countries have; the U.S. has also ratified subject to a specific reservation in favor of the freedom of speech.”)

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CEI Study: Cost Of Keeping One Unauthorized Immigrant From Getting A Job — $13,000

by David Bier on April 23, 2013 · 0 comments

in Deregulate to Stimulate, Features, Immigration, Personal Liberty

Post image for CEI Study: Cost Of Keeping One Unauthorized Immigrant From Getting A Job — $13,000

If Americans truly want to ensure no unauthorized immigrants work in the United States, they better get ready to pay top dollar. E-Verify, the electronic national identification system contained in the Gang of Eight’s immigration bill, will cost government, businesses and workers at least $8.5 billion per year, according to my new study on E-Verify released yesterday. That’s $13,000 per unauthorized immigrant denied a job.

E-Verify requires employers to submit Form I-9 information for comparison with information in databases held by the Social Security Administration and the Department of Homeland Security. People who advocate E-Verify as a cheap solution to illegal immigration need to understand this requirement is the most extensive regulation possible—it imposes requirements not just on every single business in America, but every single American citizen. Even small expenses distributed among such a large population will produce major costs.

This study basically accepted all federal data about E-Verify at face value and attempted to estimate its impact on the entire economy using the government’s own assumptions. First, as for government, the Congressional Budget Office estimated a national E-Verify mandate would cost, on average, $1.22 billion annually, not including DHS personnel costs. Add $227 million for the 5,000 new DHS enforcement agents called for in this bill, and the cost jumps to $1.45 billion.

But the big costs come from the impact on employers. Based on the estimates in the DHS’s Regulatory Impact Analysis for its 2008 E-Verify mandate for federal contractors, employers nationwide would spend $4.1 billion setting up, training and implementing the new system. That’s nearly $2.4 billion more than the estimated cost to businesses under the White House draft legislation, which exempted small businesses. Annually, employers will spend $2.55 billion operating system checks, based on DHS assumptions alone. This estimate is close to a 2011 Bloomberg Government report that found a national E-Verify mandate would cost businesses $2.6 billion annually (a number that actually ignored costs to 76 percent of businesses).

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