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One-Third Of Obamacare CO-OPs Are Now Officially Dead

One-Third Of Obamacare CO-OPs Are Now Officially Dead published on

One-Third Of Obamacare CO-OPs Are Now Officially Dead – Freedom Force
One-Third Of Obamacare CO-OPs Are Now Officially DeadOne-Third Of Obamacare CO-OPs Are Now Officially Dead

Posted onOctober 16, 2015Richard PollockOne-third of the Obamacare health insurance co-ops have now failed, causing about 400,000 policyholders in 10 states to scramble for new coverage for 2016.

Seven of the 23 co-ops created by the Affordable Care Act in 2011 at a cost of $2.4 billion — including many launched by passionate but inexperienced health reform activists —  have since closed their doors. An eighth, the Colorado Health Insurance Cooperative, appears on the brink of defaultas well.

The failing Obamacare co-ops have canceled health insurance for largely poor and low-income customers in Iowa, Nebraska, Kentucky, West Virginia, Louisiana, Nevada, Tennessee, Vermont, New York and Colorado.

The co-op’s are falling like dominoes.  In the last two months, the public has seen co-ops fail in Nevada, Louisiana, Tennessee, Kentucky and New York.

Including Colorado, taxpayers have lost $876 million in loan moneythat was supposed to last for 15 years.  The failed co-op’s existed for only two years before suddenly closing their doors.

More co-op failures are expected.  “There will be more closures,” said American Enterprise Institute resident fellow Thomas Miller, a health care expert. “The only question is when rather than whether.”

The Center for Medicare and Medicaid Services, which funded the co-ops, said this summer that six co-ops were under “enhanced oversight” because of poor financial reports.  The Daily Caller reportedin August that federal officials refused to identify the six that are in trouble.

The Inspector General of the U.S. Department of Health and Human Services reported in Julythat 21 of 23 operating co-ops faced staggering losses, some greater than the loans that were expected to last 15 years.

New York’s Health Republic, the largest of the co-ops, announced it was closing its doors last month, leaving 155,000 customers in the lurch.

The New York failure was not only the largest, but was the flagship of the co-op movement. It was created by liberal political activist Sarah Horowitz, who had previously worked with then-state Sen. Barack Obama.

The New York Department of Finance Services last month reported that Health Republic had the worst 2014 consumer recordof all insurance companies operating in the state.

Horowitz was the only individual to be given federal loans to run three co-ops at the same time.  Her other two co-ops are in New Jersey and Oregon.

Miller said there is growing apprehension among state insurance commissioners about the solvency of many of the other co-ops still hanging on.

Nov. 1 is the new date for open enrollment for the co-ops.  The deadline is forcing state insurance commissioners to take a closer look at the co-0p’s prospects over the next year.

Miller said many state commissioners are asking, “do you cut your losses now or do it later? There’s a lot of apprehension among state regulators in terms of signing up for another year in light of results that have happened.”

Sally Pipes, president of the Pacific Research Institute think tank, said, “everything is coming to pass.  It was inevitable, given their inexperience.”

Kelly Crowe, CEO of the trade association that represents all of the co-ops has now turned against the Obama administration, which set up the programs.

She blamed “regulatory obstacles,” and said Obamacare — is “not working.”


Public Sector Unions’ $9 Billion, Two-Stage Attack on Prop 13

Public Sector Unions’ $9 Billion, Two-Stage Attack on Prop 13 published on

by Chriss W. Street 2 Jun 2015 Newport Beach, CA
Public Sector Unions’ $9 Billion, Two-Stage Attack on Prop 13
Sandy Huffaker / Getty
It was only a matter of time until California’s powerful public sector unions geared
up for a two-step approach to overturn the 1978 Proposition 13 ballot measure that
has saved California property owners about $550 billion in property taxes.
Rather than taking on homeowners directly, unions are preparing a $9 billion “split roll ballot initiative” that will initially
jack-up rates on non-residential owners. If successful, unions can later file an off-year initiative to raise residential
property taxes in a low-turnout off-year election.
Until Prop 13, outrageous government-sponsored inflation caused property tax bills to skyrocket, taxing seniors out of
their homes in the 1960s and 1970s. After Jerry Brown became governor in 1975 and threatened to raise the property
tax rate dramatically, Californians became the tip-of-the-spear in a national taxpayer revolt by passing Prop 13. The
measure limited taxes to 1% of original assessed value and a 2% maximum growth.
Prop 13 passed because it created a virtuous coalition of apartment owners willing to contribute lots of cash and
individual home owners enthusiastic to organize their neighborhoods into soldiers to fight property tax increases.
The measure has saved California taxpayers about $550 billion since 1978, according to Jon Coupal, President of the
Howard Jarvis Taxpayers’ Association. For almost 40 years, it has been the “third rail” of California politics: “Mess with
it, and die.”
But a public sector union coalition led by the California Teachers Association, California Federation of Teachers, the
SEIU and their fellow travelers under the slogan “Make It Fair” is proposing a $9 billion a year “split roll” property tax
rate increase on commercial, industrial, agricultural and rental property owners, while exempting home owners.
If the unions pass this year’s split roll tax increase, they know apartment owners who have written the big checks to
protect Prop 13 in the past will not fund a battle to just protect individuals from residential property tax increases.
The average American today essentially works for the government until April 21 each year to pay for approximately $3
trillion in federal and $1.5 trillion in state taxes. That equals the first 111 days of the year and 30.2 percent of the
nation’s entire income.
One of the most contentious slurps at the public trough is property tax rates, which vary from less than 1 percent to as
high as 4.6 percent. Many towns and counties also levy addition real estate taxes. The average property tax payment
in the U.S. is about $2,089 per parcel per year, but it varies from a few hundred dollars in the South to a whopping
$6,579 in New Jersey, according to WalletHub.
About $15 billion worth of homes are foreclosed on each year because of property tax delinquencies, according to a
2012 study by the National Tax Lien Association.
Comparing politically “blue” Democrat states to “red” Republican states, property tax rates in Democrat states
averages at the 62nd percentile of all states, and Republican states average at the bottom 40th percentile level for all
states, according to WalletHub. But Democrat states would have averaged 20 percent higher, if Prop 13 had not
restricted the growth of property taxes in California to the 17th-lowest state in the nation.
Despite already having the highest total tax burden of any state, Gov. Jerry Brown in 2012 convinced voters to pass
Proposition 30, which raised the top income and sales tax rates in California to far higher than any other state in the
nation. Since that tax increase, hundreds of large companies have left California, including Waste Connection,
Comcast and Campbell’s Soup.
California’s budget has been rescued by the stock market capital gains taxes generated from new initial public
offerings in Silicon Valley’s social media and high tech boom. But when Intel decided to spend $8 billion on a new
semiconductor plant, the company built it in Oregon.
The negative economic by-product of the Democrat-controlled California legislature’s tax-and-spend policies is that
23.4 percent, or 8.9 million, of the state’s 38 million residents now live in poverty, according to a new Census Bureau
The good political news for unions is that this economic failure has created a built-in coalition to support taxing
businesses and the supposedly rich. The unions hope that coalition consigns Proposition 13 to what Karl Marx called
“The Dustbin of History.

New Laws to Increase Poverty in CA

New Laws to Increase Poverty in CA published on

Electric Tiered Pricing to Change

Electric Tiered Pricing to Change published on 1 Comment on Electric Tiered Pricing to Change




Redlands Passenger Rail Project aka The Crazy Train

Redlands Passenger Rail Project aka The Crazy Train published on 2 Comments on Redlands Passenger Rail Project aka The Crazy Train

Whats Your Opinion, Take the “Crazy Train” Poll Here

California Sales Taxes Going Higher

California Sales Taxes Going Higher published on

Congress Wants Higher Gas Taxes and New Toll Roads!

Congress Wants Higher Gas Taxes and New Toll Roads! published on

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IRS Seeks 9,000 New Employees as It Prepares to Enforce Obamacare

IRS Seeks 9,000 New Employees as It Prepares to Enforce Obamacare published on

IRS Seeks 9,000 New Employees as It Prepares to Enforce Obamacare
Melissa Quinn

February 05, 2015
As millions of Americans brace for tax season, the Internal Revenue Service is requesting a $2 billion boost to its budget and 9,000 new employees as it prepares to enforce Obamacare’s tax provisions.

President Obama released his $4 trillion budget proposal for fiscal year 2016 this week, which includes $13.9 billion for the Internal Revenue Service. The agency asked Congress for close to $2 billion more for operations than last year—a 16 percent increase.
The billions of dollars will help the agency bolster its staff by adding more than 9,280 full-time employees. The proposed jump in employment at the IRS is an 11 percent increase from 2015.
To enforce the 46 new tax provisions of the Affordable Care Act specifically, the IRS asked for $67 million. That will cover 483 new employees related to Obamacare’s implementation.

“As the tax law changes, the IRS must implement programs to ensure that taxpayers understand the new laws, and that the IRS can address noncompliance,” the agency’s budget proposal states.
In addition, the agency requested $301.5 million to hire close to 3,000 additional staff to assist taxpayers calling into the agency with questions. The IRS said it needs to staff to address the “increased demand” for assistance resulting from Obamacare’s implementation and managing taxpayer submissions relating to the health care law.

Though Obamacare went into effect in October 2013, this tax filing season is the first in which consumers are required to report whether they had health insurance in 2014. Those who did not have coverage—close to 6 million Americans, according to the government’s own projections—are required to pay a penalty of either $95 or 1 percent of their income.
Meanwhile, consumers who received subsidies available under the Affordable Care Act may have to “reconcile” their tax credits. Those who received a subsidy last year will be forced to return some money, as any increase in income could mean they received more in tax credits than they were entitled to.
A man holds his envelopes as he waits in line to mail his family’s income tax returns at a mobile post office near the Internal Revenue Service building in downtown Washington, DC.
Ed Haislmaier, a health policy expert at The Heritage Foundation, told The Daily Signal the rules for calculating tax credits available under Obamacare are a major design flaw of the law.
Haislmaier noted that any tax credit payment made during the year by the IRS to an insurer must be reconciled on the enrollee’s tax form, which is two pages and 36 lines. That form, he said, is included with the consumers’ federal income tax return.
To remedy potential changes to and the delivery of tax credits, the IRS requested more than $305.6 million, or 818 new employees, to implement technology changes.
Meanwhile, the Department of Health and Human Services announced a partnership with close to a dozen nonprofits and tax-preparation companies, including H&R Block and Jackson Hewitt, to assist with those who are confused about how Obamacare impacts their tax filings.
According to HHS, the government’s collaboration with the private sector aims to “ensure that the public understands how health care and their taxes intersect.”

Local San Francisco Bookstore Dies of Minimum Wage Hikes

Local San Francisco Bookstore Dies of Minimum Wage Hikes published on

Local San Francisco Bookstore Dies of Minimum Wage Hikes
By Michael Minkoff

We’ve said it over and over again. Minimum wage hikes will not do a thing to help anyone. They result in either higher prices or layoffs, but they hurt small, local businesses the most. It seems the first casualty confirming our fears has been tallied in über-liberal San Francisco. Borderlands Bookstore will be closing its doors, thanks to the minimum wage increase:

In November, San Francisco voters overwhelmingly passed a measure that will increase the minimum wage within the city to $15 per hour by 2018. Although all of us at Borderlands support the concept of a living wage in principal and we believe that it’s possible that the new law will be good for San Francisco — Borderlands Books as it exists is not a financially viable business if subject to that minimum wage. Consequently we will be closing our doors no later than March 31st.

There is so much wrong with this. For one, small businesses often operate at a very narrow profit margin. Fluctuations in rent and competitors’ prices can have a devastating effect on whether or not a small business will stay open. They don’t need minimum wage hikes, on top of all the other variables, making it impossible for them to stay in business. It should be obvious that closing a business, and thus having no jobs available, would be worse than having jobs available with a slightly lower wage.

And furthermore, there is no real indication that minimum wage hikes actually help anyone. Businesses that stay in business after the hikes generally survive by raising prices, shrinking services (or portions), or laying off employees. If they raise prices, then the employee with a “higher” wage just spends more to get the same things. Which results in no net gain. Because it is all about buying power. The money you receive in wages is only as good as what you can buy with it.

Which brings up the most important issue here: monetary policy. If the civil government really cared about benefitting people who don’t make much, they should just fix the dollar. The minimum wage in 1964 was $1.25. But our money was still connected to silver until 1965. If you took the five circulated silver quarters ($1.25) you had been paid in 1964, and you sold them today, each of them would be worth between $3.25 and $6.50, depending on their year. That’s between $16.25 and $32.50 an hour! Even at the bottom end, that’s better than the minimum wage hike that just devastated Borderlands bookstore.

So how about all these living wage, minimum wage hiking, liberals start crying about our monetary policy and tell the civil government to fix our currency. Now that’s something I could get behind.

Road user fee drives California Assembly speaker’s transportation plan ☑

Road user fee drives California Assembly speaker’s transportation plan ☑ published on

Road user fee drives California Assembly speaker’s transportation plan

By Jeremy B. White
Drivers would fund repairs to California’s roads with a new user charge under a proposal unveiled Wednesday by California Assembly Speaker Toni Atkins, D-San Diego.

“California cannot have a strong middle class or a thriving economy if our roadways are congested and people and goods cannot move efficiently,” Atkins said in a speech to the California Transportation Foundation.
California’s deteriorating highways and bridges have become a perpetual reason for local governments to seek more money. A 2014 report estimated the statewide infrastructure need in the billions of dollars annually, and the state has deferred $59 billion worth of maintenance work on roads. Revenue from the gas excise tax that funds transportation infrastructure has dwindled as cars become more fuel-efficient, in part thanks to state and federal rules intended to improve air quality and combat climate change.
“While it’s great our air is cleaner as cars have become more efficient and less dependent on gasoline, it’s clear we must now move forward to the next generation of transportation funding,” Atkins said in her speech.
Opinion: California’s roads need costly repair

More than 50,000 undocumented California immigrants get driver’s licenses
Fill ’er up: Gas prices spike 4 cents in Sacramento, statewide

An extra $2 billion annually over five years would help fill the gap under Atkins’ plan, with about $1.8 billion of it flowing from a new fee on all drivers. Atkins said she has not yet determined how the fee would be assessed but estimated it would amount to roughly a dollar a week.
“It could take any number of forms,” Atkins told reporters after her speech. “You’ve heard vehicle mileage, you’ve heard vehicle license fee, there’s a way you could attach it to insurance – people pay insurance on a regular basis. Either way, it’s a fee that we have to figure out how best and the easiest way to collect it.”
When Gov. Jerry Brown spotlighted the need for more infrastructure spending in his State of the State speech earlier this year, both Democratic and Republican lawmakers lauded the idea, though Republicans argued that money should be redirected from the high-speed rail project Brown has championed. The governor did not offer any specific proposals.
Republican backing would be necessary for the proposal to break the needed two-thirds vote margin. “In light of recent findings of taxpayer money wasted at Cal Trans and higher than expected revenues, there are funding options for our critical road improvements other than looking deeper into the pockets of Californians,” Assembly Minority Leader Kristin Olsen, R-Modesto, said in an emailed statement.

Editor’s Note: This post was corrected from print and online versions to put the estimated cost of the user fee at $1 a week instead of $1 a day. Corrected at 10:15 a.m. Feb. 5, 2015.

Call Jeremy B. White, Bee Capitol Bureau, (916) 326-5543.

Video – Regulations Cost 23% of Household Incomes

Video – Regulations Cost 23% of Household Incomes published on

Video Regulations Cost 23% of Household Incomes

Steve FoleyJan 23, 2015
New Posts

A former U.S.Marine, he is the Creator of The Minority Report Network. He is also the Founder and Managing Editor of the Network’s flagship site,, Former Director of New Media for, Former Director of New Media for Liberty First PAC, and the Former Chief Managing Editor of Steve is a well respected national conservative blogger who’s dedicated the past several years of his life advancing conservatism online. Recently Steve was instrumental in the development of, Liberty First PAC, The Patriot Caucus, the national campaign trail and grassroots news

Regulations were intended to make America safer, better, and greater, but in recent years government regulation has only hindered the economy and taken more dollars out of Americans pockets. With little to no debate the Obama administration has increasingly targeted Americans pocketbooks, not only through annual taxes but year-round regulations especially ones focused on green energy. The Competitive Enterprise Institute found that in 2013 the cost of regulation compliance for the average U.S. household came close to $15,000. In other words consumers spent close to to 23% of their annual household income prior to taxes on embedded federal regulation.

27 Economic Facts Obama Should Avoid

27 Economic Facts Obama Should Avoid published on


27 Economic Facts Obama Should Avoid Mentioning

If President Obama follows script in his State of the Union tonight, he will once again paint a rosy picture of America’s “recovering” economy, only noting struggles of Americans as rationale for his tax hike proposals supposedly designed to redistribute the wealth of the One Percenters to the middle class. While this might force him to admit indirectly the middle class is struggling somewhat, he will certainly not reveal just how dramatically the situation for both the middle class and lower class has darkened under his presidency.

Some alarming facts: for the first time ever the total number of small businesses closing has exceeded the number opening; Americans living in the middle 20% on the income scale say they now earn less money and have a lower net worth than six years ago; 52% of Americans cannot afford their current home; a third of Americans currently have a debt in collections; and the median household income is 8% lower than before the recession.

The Economic Collapse Blog’s Michael Snyder provides the following 27 facts that reveal the true state of the middle class in America under Obama:

#1 American families in the middle 20 percent of the income scale now earn less money than they did on the day when Barack Obama first entered the White House.

#2 American families in the middle 20 percent of the income scale have a lower net worth than they did on the day when Barack Obama first entered the White House.

#3 According to a Washington Post article published just a few days ago, more than 50 percent of the children in U.S. public schools now come from low income homes. This is the first time that this has happened in at least 50 years.

#4 According to a Census Bureau report that was recently released, 65 percent of all children in the United States are living in a home that receives some form of aid from the federal government.

#5 In 2008, the total number of business closures exceeded the total number of businesses being created for the first time ever, and that has continued to happen every single yearsince then.

#6 In 2008, 53 percent of all Americans considered themselves to be “middle class”. But by 2014, only 44 percent of all Americans still considered themselves to be “middle class”.

#7 In 2008, 25 percent of all Americans in the 18 to 29-year-old age bracket considered themselves to be “lower class”. But in 2014, an astounding 49 percent of all Americans in that age range considered themselves to be “lower class”.

#8 Traditionally, owning a home has been one of the key indicators that you belong to the middle class. So what does the fact that the rate of homeownership in America has been falling for seven years in a row say about the Obama years?

#9 According to a survey that was conducted last year, 52 percent of all Americans cannot even afford the house that they are living in right now.

#10 After accounting for inflation, median household income in the United States is 8 percent lower than it was when the last recession started in 2007.

#11 According to one recent survey, 62 percent of all Americans are currently living paycheck to paycheck.

#12 At this point, one out of every three adults in the United States has an unpaid debt that is “in collections“.

#13 When Barack Obama first set foot in the Oval Office, 60.6 percent of all working age Americans had a job. Today, that number is sitting at only 59.2 percent…

#14 While Barack Obama has been in the White House, the average duration of unemployment in the United States has risen from 19.8 weeks to 32.8 weeks.

#15 It is hard to believe, but an astounding 53 percent of all American workers make less than $30,000 a year.

#16 At the end of Barack Obama’s first year in office, our yearly trade deficit with China was 226 billion dollars. Last year, it was more than 314 billion dollars.

#17 When Barack Obama was first elected, the U.S. debt to GDP ratio was under 70 percent. Today, it is over 101 percent.

#18 The U.S. national debt is on pace to approximately double during the eight years of the Obama administration. In other words, under Barack Obama the U.S. government will accumulate about as much debt as it did under all of the other presidents in U.S. history combined.

#19 According to the New York Times, the “typical American household” is now worth 36 percent less than it was worth a decade ago.

#20 The poverty rate in the United States has been at 15 percent or above for 3 consecutive years. This is the first time that has happened since 1965.

#21 From 2009 through 2013, the U.S. government spent a whopping 3.7 trillion dollars on welfare programs.

#22 While Barack Obama has been in the White House, the number of Americans on food stamps has gone from 32 million to 46 million.

#23 Ten years ago, the number of women in the U.S. that had full-time jobs outnumbered the number of women in the U.S. on food stamps by more than a 2 to 1 margin. But now the number of women in the U.S. on food stamps actually exceeds the number of women that have full-time jobs.

#24 One recent survey discovered that about 22 percent of all Americans have had to turn to a church food panty for assistance.

#25 An astounding 45 percent of all African-American children in the United States live in areas of “concentrated poverty”.

#26 40.9 percent of all children in the United States that are living with only one parent are living in poverty.

#27 According to a report that was released late last year by the National Center on Family Homelessness, the number of homeless children in the United States has reached a new all-time record high of 2.5 million.

Voters Want Congress To Tackle Taxes, Spending First

Voters Want Congress To Tackle Taxes, Spending First published on

Voters Want Congress To Tackle Taxes, Spending First

Friday, January 09, 2015

Taxes, spending, Obamacare and immigration top Congress’ to-do list as far as voters are concerned, but they also fully expect partisan politics to get in the way.

President Obama and Republicans in Congress oppose each other on most major issues facing the nation, and the latest Rasmussen Reports national telephone survey finds that only 14% of Likely U.S. Voters think this opposition is due mostly to honest differences of opinion. Seventy-seven percent (77%) believe instead that the opposition is mostly due to partisan politics, up from 69% last July when we first asked this question. (To see survey question wording, click here.)

Sizable majorities of Democrats, Republicans and unaffiliated voters think partisan politics is to blame, although voters in the president’s party are the most critical.

So what should the new Congress tackle first? Thirty-five percent (35%) of all voters say taxes and spending. After all, most voters have said in surveys for years that they favor across-the-board spending cuts. Most also think cutting taxes and reducing spending are the best things the government can do for the economy, and the economy has long been seen as the most important political issue.

Twenty percent (20%) believe the new national health care law should be first on Congress’ agenda, but separate polling finds that most voters now want that law fixed on a piece by piece basis rather than repealed entirely.

Immigration is the priority for 17% of voters. Forty-eight percent (48%) think Congress should try to find ways to stop the president’s plan to allow several million illegal immigrants to stay in this country legally and apply for jobs. Forty-three percent (43%) believe Congress should allow this decision to stand.

Voters put a little more emphasis on immigration just after Election Day when Obama announced he was cutting back on the deportation of illegal immigrants. Just 24% were even somewhat confident at that time that the president and the new GOP-led Congress can work together.

(Want a free daily e-mail update? If it’s in the news, it’s in our polls). Rasmussen Reports updates are also available on Twitter or Facebook.

The survey of 800 Likely Voters was conducted on January 7-8, 2015 by Rasmussen Reports. The margin of sampling error is +/- 3.5 percentage points with a 95% level of confidence. Field work for all Rasmussen Reports surveys is conducted by Pulse Opinion Research, LLC. See methodology.

Seventy-five percent (75%) of voters say they have been following recent news reports about the new Congress, with 37% who are following Very Closely.

Voters have long favored the building of the Keystone XL pipeline from western Canada to Texas, and Congress is expected to approve that project any day now in the face of a threatened presidential veto. But only eight percent (8%) of voters think the pipeline is the first thing the new Congress should deal with.

Eight percent (8%) say Congress should deal first with the War on Terror. The number of voters who think the United States is winning the War on Terror continues to fall to new lows, and more than ever they see a terrorist attack as the biggest threat to the nation.

Voters rank climate change as last on the list of six major issues, with six percent (6%) who say it should be Congress’ priority. Just three percent (3%) would opt for something else.

Most voters continue to consider global warming a serious problem, but when asked how much more they are willing to pay each year in higher taxes and utility costs to generate cleaner energy and fight global warming, 48% say nothing at all. Another 23% are only willing to spend $100 more a year.

Democrats and voters not affiliated with either major party put taxes and spending at the top of their list, but among Republicans, Obamacare ranks slightly higher. GOP voters and unaffiliateds are more concerned about the Keystone pipeline, while Democrats put more emphasis on climate change.

Voters are evenly divided when asked whether the president or Congress should take the lead on issues important to the nation. But 82% think it is more important for them to work together than to stand for what they believe in.

Fewer voters than ever think either major political party has a plan for the nation’s future, with most still convinced that neither represents the American people.

Additional information from this survey and a full demographic breakdown are available to Platinum Members only.

Please sign up for the Rasmussen Reports daily e-mail update (it’s free) or follow us on Twitter or Facebook. Let us keep you up to date with the latest public opinion news.

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The survey of 800 Likely Voters was conducted on January 7-8, 2015 by Rasmussen Reports. The margin of sampling error is +/- 3.5 percentage points with a 95% level of confidence. Field work for all Rasmussen Reports surveys is conducted by Pulse Opinion Research, LLC. See methodology.

Rasmussen Reports is a media company specializing in the collection, publication and distribution of public opinion information.

France’s mistake shows taxing wealth doesn’t work

France’s mistake shows taxing wealth doesn’t work published on

France’s mistake shows taxing wealth doesn’t work

Dan HannanJanuary 5, 2015 | 5:00 am
Photo – French President François Hollande speaks during a joint news conference with President Obama, as part of an official state visit in the East Room of the White House. (AP/ J. Scott Applewhite)
French President François Hollande speaks during a joint news conference with President Obama, as…
I was living in Brussels when François Hollande, the President of France, introduced his 75 percent top rate tax in 2012. Immediately, my quartier began to fill with French exiles, who could commute to Paris in just over an hour. One of the few Belgians left in my street, a stern local matriarch, stopped me as I left the house one morning. “You’re in politics, Monsieur le Député, maybe you can tell me something. What kind of hell must these poor souls be fleeing if they see Belgium as a tax haven?”

Three years on, President Hollande is shame-facedly scrapping the 75 percent rate, having forcibly re-learned an ancient truth: Wealth taxes don’t redistribute wealth; they redistribute people. Thousands of well-off Frenchmen made the easy journey north, including the country’s richest man, Bernard Arnault.
Others decided that if you’re going to flee punitive taxation, you can do better than the land of moules frites and speculoos biscuits. Gérard Depardieu, France’s greatest actor — in every sense — went to Russia, where, whatever their other problems, they have a flat rate tax on income of 13 percent (9 percent for dividends).
Hollande’s tax, levied on incomes above one million euros, has been a miserable failure. Over its lifespan, it raised around $500 million, a tiny fraction of the original projections. Why? Well, the Paris bureaucrats who made those projections overlooked something rather important. Rich people don’t sit around waiting to be taxed. They have all sorts of ways of beating the system, not necessarily involving accountants. The two most straightforward forms of legal tax avoidance are earlier retirement and emigration, and wealthy Frenchmen have made ample use of both.

Parts of Kensington, an expensive district of West London, are now largely Francophone. London is, on some measures, the sixth-largest French city in the world. It pullulates with French financiers and French footballers and French management consultants and French pastry chefs. They have just two things in common. First, all had the get-up-and-go needed to start a career in a new language and a new country. Second, all are paying their taxes to the British Exchequer instead of the French treasury. Merci, mes amis.
Not since the expulsion of France’s Protestants in 1685 has there been such an exodus of entrepreneurs to the Anglosphere; and this wave, like that one, has been a transfusion of talent, leaving the English-speaking world more energetic and France more anemic. Nicolas Sarkozy, well understanding where the relatively small free-market-minded section of his population could be found, launched his presidential election campaign in London.
When rich people emigrate, they leave others to pick up their share of the tax bill. Even in 1685, the loss of revenue hit the French state badly, setting it up for a series of defeats in the wars with the English-speaking peoples that were to follow over the next century. These days, friendlier tax jurisdictions are a Gulfstream flight away, and financiers can often open their businesses abroad simply by opening their laptops.

A lot of politicians don’t want to hear this. Instead of accepting international competition, they legislate against it — by, for example, imposing international rules on tax harmonization. The new president of the European Commission, Jean-Claude Juncker, has campaigned all his life for European fiscal integration, including financial transaction taxes, debt pooling and a common EU finance ministry. Amusingly, though, it now emerges that while he was mouthing these platitudes, he was, as prime minister of Luxembourg, wooing multi-nationals with secret tax exemptions.
The best way to maximize your tax revenue, though, involves neither harmonization nor secrecy. On the contrary, it involves lower, flatter, simpler taxes.

The complexity of a tax system is every bit as damaging to competitiveness as the overall tax rate, yet we take it almost for granted. If there is an American who understands the tax code in its entirety, I have yet to meet him.
The super-rich, who can afford ingenious tax advisers and high upfront fees, turn complexity to their advantage, sheltering their assets in various pockets unintentionally created by government schemes. Again, the rest of us then have to cough up to cover their portion.
One way to think of the tax system is as a massive Swiss cheese. Each hole is an exemption created by a legislator in pursuit of good headlines — a hole waiting to be filled by the clever accountants.

If we were to compress the cheese, collapsing all the holes, its overall height would fall substantially. In other words, scrap all the special incentives, rebates and waivers, and you can cut the basic rate. Time spent on legal avoidance would instead be spent productively. Revenues would increase. It works every time.
Between 1980 and 2007, the US cut taxes at all income levels. Result? The wealthiest one percent — those chaps that the Occupy crowd keeps banging on about — went from paying 19.5 percent of all taxes to 40 percent. In Britain, after the top rate of income tax was lowered in stages from an eye-watering 98 percent in the late 1970s to 40 percent by 1988, the share of income tax collected from the wealthiest percentile rose from 14 to 27 percent.

In other words, flat taxes don’t just make avoidance pointless; they don’t just boost the economy; they also ensure that the rich pay more. If President Hollande were to embrace them, he might edge even France out of its nosedive.
Dan Hannan is a British Conservative member of the European Parliament.
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