“Offshore tax havens and tax shelters let corporations and executives evade an estimated $20 to $40 billion each year-taxes that must be made up by other taxpayers or by government borrowing. And these offshore tax havens rob us of more than tax dollars, for they are where renegade corporations flee from all responsibility to shareholders, employees, rules of fair play, and their own country.” – John Kerry, 2003
If you’re scratching your head as to exactly who “John Kerry” is, it turns out he was the Democratic nominee for the presidency back in 2004. During the campaign, he made the above statement, lashing out at corporations who hide money in tax shelters to improve profit margins. Or, more to the point, he lashed out at corporations who (i) followed the law and (ii) maximized profits because they “flee from all responsibility to shareholders, employees, rules of fair play, and their own country.”
Kerry has hardly been heard from since losing to George W. Bush in that election. That is, until recently when he bought a $7 million yacht (did we mention that his wife is quite wealthy owing to money she inherited from her first husband – Republican senator John Heinz of Pennsylvania?). Anyhow, Kerry made waves by buying and docking his boat in Rhode Island rather than his home state of Massachusetts. Why would he do such a thing? Well, he saves $500,000 off the bat in sales taxes, and another $70,000 a year in excise taxes.
Personally, I think he did the right thing. If you can save that kind of cabbage by parking your boat one state over, then please do so. We have long known that progressive policies only survive in the absence of competition. If people can save this much money by moving their boats to Rhode Island, then Rhode Island will be a boaters haven (it is) and Massachusetts will lose a ton of tax revenue owing to onerous policies
The galling part of it is that John Kerry is perfectly willing to act rationally in his own best interest (which I think he should) and yet castigate the rest of America if they do the same. Talk of “responsibility” and “rules of fair play” – or another liberal canard “paying their fair share” – are easily applied to Kerry’s situation here.
A friend once asked my why I thought free-market capitalism was the best economic model. I noted that it had nothing to do with justice, mercy, or compassion. As a cold, calculating mathematician, I was able to say that it is the best model because it most accurately reflects human behavior – and uses that behavior as its driving force. People will act rationally in their best interest. Capitalism recognizes it and leverages it for economic efficiency.
Progressives are forever harping about how society, economy, and humanity are an extremely complex system (and they are). And yet, for all this complexity, humans are not always that difficult to understand … most of them anyway. When certain behaviors are incentivized you can bet that you will see an increase in those behaviors. Let’s consider a few examples.
During the housing bubble, Alan Greenspan and the fed incentivized reckless lending through easy money policies – and reckless lending is what happened (including some reckless, predatory lending).
The federal government has for some time incentivized being a single parent versus a married parent if you’re poor – they give you much more money if you’re single. Guess what that has produced – a dramatic rise in single motherhood and kids with no father in the house.
When you tax the most productive members of society and give the overage to the least productive, you are incentivizing non-productivity … and that’s exactly what you get. Now, progressives will retort “have you no compassion for people in need?” I do indeed. But compassion isn’t justice and harming the economy for the economic benefit of a few is hardly a good policy in the long run. (It reminds me of when George W. Bush claimed that he had to sacrifice his free-market principles to save the free market via TARP … thanks for playing George.)
People are at times like water. We will find the lowest point and achieve equilibrium. If you shift the rules so that we have to move to improve our standing, then move we shall. Punitive tax policies will draw avoidance. (Laffer was at least right about that.) Progressives are forever penalizing productivity and rewarding inefficiency. This has always failed at producing an efficient economy, and it will continue to do so.
But, I suppose economic efficiency may not be the only thing these guys care about. Progressives have an incredible knack for inducing envy and jealousy in the masses during their self-congratulatory rants against [insert people group that never had it as bad as the rest of us here]. Policies that keep the downtrodden as downtrodden will also keep a fairly stable voting bloc in the hands of progressives. Wisdom is justified of her children.