Saturday, July 03, 2010
Poland: A Shot of Free Market Capitalism Proves the Best Remedy
People emigrating TO Poland for job opportunities? Dell Computer shifting production to Poland? Positive GDP growth in 2009 -- at the height of a worldwide recession and financial crisis?
For most of the world, 2009 was a year to forget. Not for Poland. It was the only country in the European Union not to fall into a recession during the global economic crisis. Poland's GDP increased in 2009: no other European country was above water. By comparison, GDP fell in the US (-2.4%), in Germany (-5%), in the United Kingdom (-4.3%), in Italy (-6.5%). . . . well, you get the picture. The year 2010 promises to be similarly outstanding for Poland as it is expected to realize the fastest growth in Europe.
During this period, Poland's unemployment rate edged up only slightly, as did its budget deficit and total government debt. In the meantime, the US unemployment rate nearly doubled, while its government racked up record deficits and debt as far as the eye can see.
Why was Poland's experience different?
Simple. Poland's leaders, in particular, Finance Minister Rostowski and Prime Minister Donald Tusk, have an unyielding belief in the free markets, having been trained in Austrian economics as espoused by Mises and Hayek, a school of economic theory barely taught at most US universities and not ever mentioned at the high school level. And, therefore, it is unfortunately a school of thought completely foreign to the current U.S. Administration and so many in its government.
So what was their spot-on prescription to the global economic crisis?
When the financial crisis struck in September 2008, Poland's government immediately held emergency meetings. First, they suspended all new planned regulations. This worked so well that Poland is now in the midst of a multi-year program of deregulation that has been a boon for small businesses and entrepreneurs, somewhat similar to the experience of the US in the 1980s.
Next they cut taxes. The three-tiered income tax rate of 19%, 30%, and 40%, was reduced to two tiers: 18% and 32%. And they continued to privatize industry. In October 2009, an IPO for the state-owned power utility, Polska Grupa Energetyczna, raised over two billion dollars which the government has used to fund its budget and keep taxes in check.
What has the United States done in response to the economic crisis?
We greatly increased regulations and government control over our health care, automobile, mortgage, financial, energy, and insurance industries. We increased government spending to record levels and are planning tax increases to pay for stimulus packages and health reform.
It is not surprising that our results have been different.
QUESTION: Is it possible to learn from the lessons of Poland if the media doesn't report it, our leaders do not inform themselves of it, AND IT IS NOT TAUGHT IN OUR SCHOOLS?
Poland is transforming itself into a laissez-faire paradise. Free markets and the Austrian economic theories of Mises and Hayek have wide support in the government and the general population. They are intimately familiar with the hazards of central economic planning and are understandably reluctant to travel that road again.
"Obama is a menace to Israel, to Western Europe, . . . and to the whole of the Western World."
An interview at the New English Review with Dr. Richard L. Rubinstein, Yale fellow, "Distinguished Professor of the Year", and Harvard Ph.D.
"Obama is really a revolutionary. That doesn't mean he's looking to stir up violent trouble but I believe he is trying to transform both the American political system and economic system and America's relationship to the world. I also believe that he has decided that America must make its peace with Iran. I believe that he is a man who is highly intelligent, knows what he's doing and in spite of the fact that he has attracted liberal Jewish supporters, some with great wealth. His intention is to correct the historical mistake of the creation of the state of Israel.
Given Obama's background, the fact that his family was, on his father's side was Muslim, that his sister is a Muslim, that his half brother is a Muslim, there is no doubt that he heard a great deal about Islam and Israel from them before he took office and though he was not candid about it at first, he has by his decisions and his symbolic actions made it clear where his sympathies are.
... In addition to that, he has a hostility towards Western Europe, especially to England as characterized by the symbolic action of returning the bust of Winston Churchill to the English, one of his first acts.
And he has made some interesting symbolic moves with, for example, bowing to King Abdullah of Saudi Arabia since King Abdullah is the keeper of the two holiest shrines of Islam, Mecca and Medina, one wonders why he did this.
But when a head of state, which is what Obama is, makes a symbolic statement like that you know he is trying to convey a message, and it’s not one which we in western civilization are willing to accept.
Finally, he has talked of a nuclear-free Middle East and a nuclear-free world, and what he intends to do, of course, if he can, is to disarm Israel’s great equalizer. It has been able to defend itself against the far more numerous Arabs by virtue of the fact that it has nuclear weapons and Obama will, and he’s indicated he will apply every pressure to Israel to take that equalizer away from them.
So the way I see it, is that this man is a menace to Israel, to Western Europe, and I might add that Western Europe is beginning to have sanctions against Iran that are far greater and more effective than anything Obama was willing to tolerate, and to the whole of the Western World. He aims for a radical transformation, he is the most radical president that America has ever had!"
Six Months to Go Until The Largest Tax Hikes in American History
In just six months, the largest tax hikes in the history of America will take effect. They will hit families and small businesses in three great waves on January 1, 2011:
First Wave: Expiration of 2001 and 2003 Tax Relief
In 2001 and 2003, the GOP Congress enacted several tax cuts for investors, small business owners, and families. These will all expire on January 1, 2011:
Personal income tax rates will rise. The top income tax rate will rise from 35 to 39.6 percent (this is also the rate at which two-thirds of small business profits are taxed). The lowest rate will rise from 10 to 15 percent. All the rates in between will also rise. Itemized deductions and personal exemptions will again phase out, which has the same mathematical effect as higher marginal tax rates. The full list of marginal rate hikes is below:
- The 10% bracket rises to an expanded 15%
- The 25% bracket rises to 28%
- The 28% bracket rises to 31%
- The 33% bracket rises to 36%
- The 35% bracket rises to 39.6%
Higher taxes on marriage and family. The “marriage penalty” (narrower tax brackets for married couples) will return from the first dollar of income. The child tax credit will be cut in half from $1000 to $500 per child. The standard deduction will no longer be doubled for married couples relative to the single level. The dependent care and adoption tax credits will be cut.
The return of the Death Tax. This year, there is no death tax. For those dying on or after January 1 2011, there is a 55 percent top death tax rate on estates over $1 million. A person leaving behind two homes and a retirement account could easily pass along a death tax bill to their loved ones.
Higher tax rates on savers and investors. The capital gains tax will rise from 15 percent this year to 20 percent in 2011. The dividends tax will rise from 15 percent this year to 39.6 percent in 2011. These rates will rise another 3.8 percent in 2013.
Second Wave: Obamacare
There are over twenty new or higher taxes in Obamacare. Several will first go into effect on January 1, 2011. They include:
The “Medicine Cabinet Tax” Thanks to Obamacare, Americans will no longer be able to use health savings account (HSA), flexible spending account (FSA), or health reimbursement (HRA) pre-tax dollars to purchase non-prescription, over-the-counter medicines (except insulin).
The “Special Needs Kids Tax” This provision of Obamacare imposes a cap on flexible spending accounts (FSAs) of $2500 (Currently, there is no federal government limit). There is one group of FSA owners for whom this new cap will be particularly cruel and onerous: parents of special needs children. There are thousands of families with special needs children in the United States, and many of them use FSAs to pay for special needs education. Tuition rates at one leading school that teaches special needs children in Washington, D.C. (National Child Research Center) can easily exceed $14,000 per year. Under tax rules, FSA dollars can be used to pay for this type of special needs education.
The HSA Withdrawal Tax Hike. This provision of Obamacare increases the additional tax on non-medical early withdrawals from an HSA from 10 to 20 percent, disadvantaging them relative to IRAs and other tax-advantaged accounts, which remain at 10 percent.
Third Wave: The Alternative Minimum Tax and Employer Tax Hikes
When Americans prepare to file their tax returns in January of 2011, they’ll be in for a nasty surprise—the AMT won’t be held harmless, and many tax relief provisions will have expired. The major items include:
The AMT will ensnare over 28 million families, up from 4 million last year. According to the left-leaning Tax Policy Center, Congress’ failure to index the AMT will lead to an explosion of AMT taxpaying families—rising from 4 million last year to 28.5 million. These families will have to calculate their tax burdens twice, and pay taxes at the higher level. The AMT was created in 1969 to ensnare a handful of taxpayers.
Small business expensing will be slashed and 50% expensing will disappear. Small businesses can normally expense (rather than slowly-deduct, or “depreciate”) equipment purchases up to $250,000. This will be cut all the way down to $25,000. Larger businesses can expense half of their purchases of equipment. In January of 2011, all of it will have to be “depreciated.”
Taxes will be raised on all types of businesses. There are literally scores of tax hikes on business that will take place. The biggest is the loss of the “research and experimentation tax credit,” but there are many, many others. Combining high marginal tax rates with the loss of this tax relief will cost jobs.
Tax Benefits for Education and Teaching Reduced. The deduction for tuition and fees will not be available. Tax credits for education will be limited. Teachers will no longer be able to deduct classroom expenses. Coverdell Education Savings Accounts will be cut. Employer-provided educational assistance is curtailed. The student loan interest deduction will be disallowed for hundreds of thousands of families.
Charitable Contributions from IRAs no longer allowed. Under current law, a retired person with an IRA can contribute up to $100,000 per year directly to a charity from their IRA. This contribution also counts toward an annual “required minimum distribution.” This ability will no longer be there.
Sad to see that Wendy McElroy's sites are "down" -- apparently due to a DDOS attack. Both http://www.wendymcelroy.com and http://www.ifeminists.com/ are affected. She is a fierce libertarian so some Leftists must have decided that she is to be silenced. She is a old campaigner, however, so will survive. She appears on other sites at times -- Liberty & Power and Lew Rockwell, for instance -- so her thoughts will still be circulated. I would advise her to set up a blogspot blog. Attacking a blogspot blog means you are attacking Google and they are big boys.
Daily Presidential Tracking Poll, Friday, July 02, 2010: "The Rasmussen Reports daily Presidential Tracking Poll for Friday shows that 24% of the nation's voters Strongly Approve of the way that Barack Obama is performing his role as president. Forty-four percent (44%) Strongly Disapprove, giving Obama a Presidential Approval Index rating of -20. Just 29% believe the president’s economic stimulus package has helped the economy while 43% believe it has hurt. Voters say that decisions made by business owners following their own self-interest will create more jobs than decisions made by government officials."
My Twitter.com identity: jonjayray. My Facebook page is also accessible as jonjayray (In full: http://www.facebook.com/jonjayray). For more blog postings from me, see TONGUE-TIED, EDUCATION WATCH INTERNATIONAL, GREENIE WATCH, POLITICAL CORRECTNESS WATCH, GUN WATCH, FOOD & HEALTH SKEPTIC, AUSTRALIAN POLITICS, IMMIGRATION WATCH INTERNATIONAL, EYE ON BRITAIN and Paralipomena
List of backup or "mirror" sites here or here -- for readers in China or for everyone when blogspot is "down" or failing to update. Email me here (Hotmail address). My Home Pages are here (Academic) or here (Pictorial) or here (Personal)
The Big Lie of the late 20th century was that Nazism was Rightist. It was in fact typical of the Leftism of its day. It was only to the Right of Stalin's Communism. The very word "Nazi" is a German abbreviation for "National Socialist" (Nationalsozialist) and the full name of Hitler's political party (translated) was "The National Socialist German Workers' Party" (In German: Nationalsozialistische Deutsche Arbeiterpartei)
Posted by JR at 11:25 PM