"The Fact Is, It Is Tax"

Years ago, back in the 1960s, veteran British journalist William Rees-Mogg had lunch with a young Irish businessman, Tony O’Reilly.

The young lad was selling Irish butter at the time and he managed to persuade the cranky journalist that Ireland made the finest butter in the world

coming fresh from cows that had personally kissed the Blarney stone, that Ireland had just entered on an economic renaissance that would spread far beyond the dairy industry, and that one of the leaders of the renaissance would be my young interlocutor, Tony O’Reilly.

Well, today Anthony O’Reilly is Ireland’s first billionaire. His Ireland has a per-capita income higher that Britain.

O’Reilly’s view is that the main reason for the Irish economic “miracle” has been the low level of corporate tax in Ireland... He comments that the Irish miracle is not “because the pubs are great, the golf is great and the climate is, well . . . the fact is, its tax.”

Do you mind if I repeat that last bit?

The fact is, it is tax.

Thank you. Let us continue.

Obviously, a 30 per cent [corporate] tax rate [in Britain] is less attractive to international business than 12.5 per cent [in Ireland]. London has therefore become less attractive than Dublin. Like water running downhill, companies will move from London to Dublin, or to other low-tax countries.

Like e-Stonia, for instance. Yes. As the Democrats here in the United States vote against the Death Tax and sensible reductions in taxes on capital other countries are taking unilateral action. They are lowering their tax rates because they know that the marginal tax rate is important for economic growth and international competitiveness.

Did I mention that marginal economics was invented 135 years ago simultaneously in Britain and Germany? Did I mention that you very seldom get the feeling that many politicians understand this little bit of science 135 years later? You think that maybe we have a problem?

The latest information is that the outflow of international companies from Britain is accelerating. There are at least 40 major companies in the pipeline to move; the sums involved run into hundreds of billions of pounds... They are looking at Holland, Ireland... Estonia even.

In the United States corporate income tax is higher even than in Britain... I wonder what Hank Paulson thinks about that.

GOP Not Dead Yet

This weekend Matthew Parris is wishing for British Conservative leader David Cameron to win, but not too soon. New Labour, he writes, needs a few more years to crash and burn completely before Cameron should face the people in a decisive election. Just like in the US, where the forward foreign policy of

neoconservatism [has] to be given its head, and crash, and burn, before a new president could persuade the nation to turn its back on the idea.

Of course this is equating the folly of government-monopoly provision of health care, education, and social services with an aggressive foreign policy to attack the “gang of ruthless men” wherever they may be found. Voters are not quite the experts on foreign policy that they are on education and health care.

But still, James Carville and Stanley Greenberg have done some polling and have found that

We are on the verge of a change election that can produce major Democratic gains. Indeed, this new national Democracy Corps survey suggests that voters are prepared for an upheaval and change of party control, if the challengers define this election, run as outsiders and show voters where they would take the country.

Well, it is true that George W. Bush has had to deal with one nasty problem after another, and the Democrats and the media have done a fantastic job of running up President Bush’s negatives.

But just how do the champions of the welfare state propose to present themselves as outsiders ready to take the country in a new direction? E.J. Dionne has already looked at the failure of the Meathead’s government-monopoly pre-school proposal in California and decided that progressives need to come up with something better. But what? Progressives just seem incapable of proposing ideas without government programs and spending attached.

Political scientist Jay Cost has taken a look at the CA 50 special election and decided that there really isn’t any grounds for expecting a Democratic surge this fall. Not yet, anyway. From his perspective, the voters in CA 50 voted “normally.”

There is no doubt that the national conditions are decidedly in the Democrats' favor - nor is there any doubt that these conditions will cause the Republicans to lose a not insubstantial number of seats. At the same time, though, Tuesday night's results imply that the Democrats' path to 15 - always a narrow one - is narrower than many have thought.

Of course, a continued fall in the stock market, real pain in the real estate market, and really bad news from Iraq could change all that.

Meanwhile, in case you haven’t noticed, the U.S. Senate has been scheduling votes on issues that Democrats would like to avoid, like the death tax and gay marriage. Expect more of that as the season progresses.

Cal Voters Don't Want More Programs

Never mind about Cal-50, the special election that Republicans won in California last Tuesday. Look at what California Democrats voted down on the rest of the ballot, writes liberal pundit E.J. Dionne.

There were 500,000 more Democratic votes than Republicans in the election because the main event was a contested Democratic primary for Governor, and yet good solid liberal issues went down to defeat.

California voters voted against Rob Reiner’s universal pre-school initiative and even a library building initiative. What gives?

The wealthy rebelled against the big income tax increase -- the top rate would have gone from 9.3 percent to 11 percent -- and bankrolled the opposition. Private preschool providers worried that the public provision of preschool would threaten their businesses.

Yes. Let’s hear it for the private pre-school providers. What does rich Rob Reiner care about them? Small businesspeople making an honest living, yet Rob Reiner is going to pull them up by the roots and substitute a bureaucratic model. Real smart, Rob.

Progressives have a lot to think about. For one thing, there remains a deep skepticism about government spending, even for the best purposes. On the same day that the two propositions went down, voters in five California counties rejected sales tax increases, mostly to fund transportation projects. Attacks on tax and spend sound old and tired, but they still have force.

You know, I should hope so, after a century of surging government spending. The point is, E.J., that is it one thing to say that something is desirable, even necessary, and another thing to say that it should be provided by tax-supported bureaucracies. That is a complicated way of talking about “tax and spend,” but you would have to be an imbecile not to see that most government programs are not about the clients they serve but about the clients who get paid: the teachers in education, the bus drivers in mass transit, and the government workers who provide social services.

Why not think about how progressive ideals can be served without the cruelty and the injustice of government programs? That would be really progressive.

And it could be a big vote-winner.

Strategery After Zarqawi

With Zarqawi dead the pundits are all looking ahead, divining the future from the ruins of the terrorist’s hideout.

Our lefty friends are not impressed. According to Ben Johnson they see his death as

A “transparent psychological operations campaign run out of the Pentagon”; “a double tragedy”; “part of a larger and tragic story of miscalculation”; a possible fraud; a conspiracy; not “moral”; an “obscene spectacle”; no “big deal”; and good cause to beat a hasty retreat.

Hmm. That certainly is a point of view, but I’d advise our Democratic friends not to get too carried away by such talk.

Blogger Austin Bay ties the victory back to President Bush’s “forward strategy of freedom” and the year 1950 when President Truman had set up the strategy of containment for fighting the Cold War. Truman did not win the Cold War, but he set the strategic direction for the United States that subsequent presidents all more or less followed, beginning with President Eisenhower.

In April 1950, the "unpopular" Truman administration produced NSC-68, a strategic study that shaped U.S. foreign policy for five decades. In 1953, the Eisenhower administration "tested" NSC-68 with a secret analysis commissioned by President Eisenhower (the Solarium project). The Eisenhower group ratified NSC-68's basic containment strategy.

And “faster please” Michael Ledeen ties everything back to Iran. After praising the operation that involved the “great performance of our Special Forces and the active cooperation of Sunni tribal leaders in the Anbar Province, plus the Jordanians, plus the various party leaders in Baghdad” he goes on to identify Zarqawi, the man who fanned conflict between Shia and Sunni, as a tool of the Iranian mullahcracy.

Despite his intonations against the Shiites, and his manifest efforts to promote civil war in Iraq, Zarqawi was happy to work with the radical Shiite regime in Tehran, and they were happy to work with him. It is quite wrong to view him as a leader of one faction in a religious war; his promotion of religious conflict was simply a tactic designed to destabilize Iraq and drive out the Coalition.

This ties back to the basic strategic proposition for invading Iraq: to have a platform for operations against Iran, the real strategic problem in the Middle East. However much of a mess Iraq may be it is still a strategic block against Iranian expansionism.

There is another side to the Middle East conflict. It is described by Jay Nordlinger at the World Economic Forum in Sharm El Sheikh. Says Prime Minister Aziz of Pakistan: “Globalization is a tidal wave: You can either ride it, and go far; or resist it, and be swept away.” Or there is Prime Minister Nazif of Egypt, who

is presiding over what everyone sees as Egypt’s economic opening: Tariffs, taxes, regulations, and other barriers are falling. Foreign investment is pouring in, and the economy is growing at 6 percent.

The Middle East is not all terrorism and beheadings. It is a climactic war between the western civilized team, the realm of trust, exchange, and transparency, and the “eternal gang of ruthless men.”

Cry God for England, Harry, and St. George!

The result of giving the Scots and the Welsh their own assemblies is that the English are feeling left out. So they have responded by flying the red cross flag of St. George to show their English, rather than British, patriotism.

The Labour government and their many minions in the vast British state sector disapprove of this mild rebelliousness. They look down upon nation states and patriotism. Just like our liberals in the US.

And anyway, flying the flag of St. George instead of the Union Jack is considered, well, sort of a “chav” thing.

But with England playing against Paraguay in the World Cup this weekend the flags of St. George, the patron saint of England, are all over London.

And New Labour is caving in to the spirit of Englishness, as Boris Johnson is delighted to celebrate.

Surrender! At last! For you, Blair, the culture war is over. Downing Street yesterday ran up the white flag - the one with the red cross on it. For the period of the World Cup, said a cowed Labour spokesman, the emblem of St George would fly from No 10 [Downing Street].

See what I mean. The Little Englanders are out celebrating. Of course, there are some who have not got the message.

Across England yesterday there were still Leftist forces that were keeping up resistance, oblivious to the Hirohito-like capitulation of the high command. In the country's Labour-controlled urban jungles, the culture warriors fought on with the pointlessness of Japanese privates lost in Burma in 1945.



In Salford City Council there was still a bonkers cell of Marxists, who insisted that the England flag be banned from all vehicles in its control.

So why not go over the top and declare that things will never be the same?

It is the cultural equivalent of the storming of the Bastille or the Winter Palace. It is a revolution that was born among the scaffolders and the taxi drivers and the pub owners, and then spread to the bourgeoisie to the point where the Labour elite knew they could no longer contain it; they had to co-opt it.

All that, just by flying the red cross flag of St. George?

Well, why not? England is meeting Paraguay in the World Cup on Saturday and every good Englishman wants them to win.

Senate Fails to Kill Death Tax

On a procedural vote today the United States Senate failed to repeal the federal estate tax. There were 41 voting against repeal, according to Reuters, three votes short of the number needed to head off a filibuster.

The estate tax is intended to be a tax on the rich, but as Wall Street Journal edit page observed today it actually falls more squarely on the owners of farms and private businesses.

The superrich or their kin--such as Bill Gates Sr. and Warren Buffett--are some of the loudest voices opposing repeal. Yet they are able to shelter their own vast wealth by creating foundations or via other crafty estate planning. Edward McCaffery, an estate tax expert at USC Law School, argues that "if breaking up large concentrations of wealth is the intention of the death tax, then it is a miserable failure."

And, of course, the most notable victims are family-owned newspapers that do not generate the revenue to be able to pay Uncle Sam 50 percent of the value of the business every generation.

There is talk of a compromise in the air: to raise the exemption and to lower the rate from 55 percent to 25 percent or even 15 percent.

Here’s my suggestion. Let’s charge 5 percent on all estates over $1 million. It would probably snag a good deal of revenue but it wouldn’t force heirs to liquidate family businesses. And it would be low enough that it wouldn’t be worth doing expensive estate planning.

Zarqawi Dead, Fight Goes On

Abu Musab al-Zarqawi was killed today in a precision F-16 strike. The coup was, as it must be, executed on the tip of an informant.

So the man whose strategy was to foment religious war between Sunni and Shia in Iraq is dead. Someone else from Lee Harris’s “eternal gang of ruthless men” must step forward to continue the fight against civilization, that is, to destroy the realm of trust and exchange and performance of promises in the city. For that is the power agenda of the gang of ruthless men who harass the city from their redoubts and their hideaways in the hinterland.

It is, of course, deeply symbolic that today the fight between the western team and the eternal gang of ruthless men should be taking place in the birthplace of the city, the Land Between the Rivers, where the city first emerged out of the surplus of food and wealth afforded by the abundance of agriculture based on domesticated wild grasses.

It tells us that the fight will never be won, for the fight in Iraq is symbolic of the basic divide in the soul of man, between cooperation and competition. For centuries, the threat to civilized, settled life in the great riverine plains came from the fierce nomads of the Asian steppe who would sweep out of the mountains onto the farmers of the two rivers of China, the Gangetic plain, or the two rivers of Mesopotamia.

A century ago a new threat emerged. It came not from the Asian steppe but from communist, anarchist, western nihilists, the bomb-throwers of Europe, whipped into bloodthirsty frenzy by Romantic scribblers. Now it is the educated, disaffected youth of Islam, whipped into a bloodthirsty frenzy by angry old men in the mosques. A century hence it will be another gang of ruthless men.

So the fight goes on.