Actor Depardieu Says “Au Revoir” to Native France Over Taxes

Like it or not, Ayn Rand and her famous novel "Atlas Shrugged" will always be critical elements of American literary lore. I’ve read most of the book and have watched the first segment of the film series via Netflix. It’s intriguing and makes you think about public policy, that’s for sure. While I find it to be a bit heavy-handed and dismissive of the working class (at least in what I’ve consumed thus far), I think its underlying message is useful: Don’t punish success.

At any rate, famous French actor Gerard Depardieu is said to be "going Galt" by relocating to Belgium due to France’s 75% income tax on top earners — an egregious amount by any standard. The Cato Institute’s blog relays:

Few Frenchmen are more recognizable at home and abroad than the movie star Gerard Depardieu. Last week, Depardieu caused a great controversy in his native land by moving to Belgium – partly to avoid the 75 percent income tax on the wealthy that was introduced by the socialist President of France, Francois Hollande. Depardieu’s move was condemned by the French political establishment, including the Prime Minister Jean-Marc Ayrault who called the actor’s action “pathetic.”

Depardieu shot back and, in an open letter to Monsieur Ayrault, wrote, “I’m leaving because you think success, creation, talent and anything different should be punished. I am sending you back my passport and social security, which I have never used.” The French actor claims to have “paid 85 percent taxes on his revenues this year [2012] and estimated that he had paid €145m ($189m) in total since he started work as a printer at the age of 14.”

The lessons from Monsieur Hollande’s debacle should be obvious. The rich are a mobile lot and there are plenty of countries that will welcome them with open arms. The British Prime Minister David Cameron, for example, has promised to “roll out a red carpet” for the French tax refuges. Moreover, as my colleague Alan Reynolds reminds us, high tax rates on income may discourage many wealthy people from remaining in the labor force, since, to use economic jargon, their elasticity of taxable income is much higher than that of low and middle income earners. Translated into English, people like me have to work even if our tax rates go up, because we have to come up with money to pay our mortgages, student loans, etc. The rich people don’t.

The French government was warned of the negative consequences of tax increases. It chose to ignore those warnings. Instead, the French socialists assumed that they could go on plucking the golden goose indefinitely. (Then again, the socialist grasp on reality has never been very good.) Of course, when idiotic policies backfire, politicians feign surprise and then shift the blame onto others. Thus, French Labor Minister Michel Sapin asked in a radio interview “What is more normal than those who earn enormous amounts of money paying lots of tax?” The French Culture and Communication Minister Aurelie Filippetti bemoaned Depardieu’s action by stating that “We shouldn’t be receiving moral lessons from people who abandon the battlefield when we need everyone to be mobilized.”

So, there you have it. A great actor who started with nothing and built a spectacular career that revived the French movie industry and filled the coffers of the French state is condemned for finally standing up for himself by a member of parasitic political elite that has brought a great country to the edge of fiscal ruin. Straight out of Ayn Rand’s novel.

Classroom Competition a Good Thing

Contrary to the rhetoric that education choice proponents are out to harm traditional public schools, one of the clearly stated goals is for additional options to spark improvement in the public system. Whether the competition is public or private, the prospect of losing students should be an incentive to change — and improve.

The Cato Institute looks at Ohio’s EdChoice program and whether it has had that desired effect. The Fordham Institute, active in Ohio as a charter school organizer, reviews the Cato report below. The lengthy report from Cato focuses on data.

Rigorous school-voucher studies abound, with most research measuring the achievement effects of vouchers for students who use them. This study by CATO’s Matthew Carr — the first of its kind to investigate Ohio’s EdChoice Scholarship program — takes a different tack. It examines whether traditional public schools are spurred to improve in the face of a threat of losing students to private schools—if competition itself “creates incentives for systemic improvements.”

To test this, Carr analyzed fourth- and sixth-grade reading and math achievement data on low-performing EdChoice-eligible schools over three academic years (2005-06, 2006-07, and 2007-08). The results were mixed. While fourth-grade math and sixth-grade math and reading scores remained the same, Carr found the voucher threat correlated with significant achievement gains in fourth-grade reading (the equivalent of 2,200 extra students reaching proficiency). What’s most significant about this finding is that Carr’s analysis controls for (among other things) the “scarlet letter” effect—i.e., did schools improve not because of the voucher threat but rather because of the stigma associated with receiving a highly publicized poor rating from the state? 

Further, while fourth-grade reading gains were significant, they didn’t come from the “bubble kids” — those just below the proficiency cut-off; rather, students in the lowest and highest performing categories made gains. Though its findings don’t constitute a grand slam for voucher proponents, the report is welcome — especially as EdChoice adds another 15,000 students to its eligible roster. 

Cato Scholar: Price Controls Didn’t Work for Rome, Won’t Work for U.S.

On February 22, President Obama suggested the federal government should be able to regulate health insurance premiums. Michael Tanner of the Cato Institute claims that idea is hardly new, and hardly primed for success:

In 301 AD, the Roman emperor Diocletian imposed price controls on most commodities and professions in the empire. The penalty for raising prices was death. Yet the controls failed utterly, leading to shortages, more inflation and the near collapse of the imperial economy.

Now, nearly two millennia later, President Obama seems determined to demonstrate how little we’ve learned.

Yesterday, the president proposed giving the federal government the power to regulate insurance premiums. Undoubtedly, this will be politically popular — at least, in the short term. Insurance companies aren’t exactly America’s most loveable industry. Recent premium hikes will result in real hardship for many Americans.

There is, of course, a certain arrogance in the assumption that Obama, Nancy Pelosi and a bevy of government bureaucrats know exactly what something should cost. No doubt, as soon as they finish setting insurance prices, they’ll move on to negotiating Tracy McGrady’s contract renewal…

Insurers unable to charge more for an increasingly expensive product can be expected to trim costs in one of two ways:

  • They can drop their most expensive customers — in this case, the sickest, who consume the most health care. Many companies are already doing this, a major source of dissatisfaction with the health-care system. In fact, the president wants to prohibit companies from doing this.

  • They can cut back on their reimbursement rates to hospitals and physicians. But neither doctors nor hospitals, any more than insurance companies, are willing to operate at a loss. If payments fall below their costs, they’ll simply stop taking patients. One only has to look at government programs like Medicare and Medicaid to see how this works.

     

This health care situation is regretably complex. How do you think we should improve health care costs for Americans?

Health Care: Fix What’s Broken, Don’t Break What’s Working

Reason.TV recently sat down with Cal State University – Northridge economist Glen Whitman, coauthor of the Cato Institute’s policy analysis paper, "Bending the Productivity Curve: Why America Leads the World in Innovation." Take a few minutes to hear his take on why the United States still sets the standard on medical research, even though health care in the country is far from ideal.

Cato Scholars: Stimulus Could Lead to Scams to Make Madoff Blush

Here’s an uplifting gem from the folks at the Cato Institute. They assert President Obama’s stimulus package (and health care plan) could end up leading to major scams to seize money from the federal government — scams in which we’d all be investing. They speculate:

Government fraud has been in the news lately because analysts are expecting major abuses of the Obama administration’s $787 billion stimulus plan. One Deloitte expert argued that "swindlers, con men, and thieves could siphon off as much as $50 billion" of stimulus funds, which are vulnerable because policymakers are under pressure to shovel it out the door quickly.

Even more troubling is the potential for fraud and abuse created by President Obama’s other big spending proposals — particularly his giant health-care plan. Obama wants to inject hundreds of billions more tax dollars into federal health care instead of fundamentally reforming Medicare and Medicaid — broken programs that are already subject to Madoff-sized larceny. That is incredibly unfair to those of us paying the bills.

Take Medicare. The Government Accountability Office reports that the program makes about $17 billion in improper payments each year. And that doesn’t include problems in the new $60-billion-per-year prescription-drug plan, which is a juicy target for criminals. Harvard University’s Malcolm Sparrow, a specialist in health-care fraud, recently testified to Congress that official estimates are "lacking in rigor," are "comfortingly low and quite misleading," and exclude many kinds of fraud and abuse. He thinks that as much as 20 percent of the federal health-care budget is consumed by fraud, which would be $85 billion a year for Medicare.

Medicare makes a staggering 1.2 billion electronic payments each year, making it highly vulnerable to cheating by health-care providers and organized-crime rings. Criminals need only fill out the government forms carefully and the "claims will be paid in full and on time, without a hiccup, by a computer, and with no human involvement at all," according to Sparrow. A perfect example is the recent case of a high-school dropout in Miami who was able to single-handedly bilk Medicare out of $105 million from her laptop by submitting 140,000 separate claims for equipment and services.

So what do you think? Do you expect this to happen or do we all need to stop worrying so much?

Cato: Beware of Government Employee Burden on Taxpayers

A blog post by the Cato Institute raises an interesting question: What happens when taxpayers can’t afford to pay the salaries and benefits of the expanding government workforce? The obvious answer is, "Taxpayers can always afford it." We’ll just likely end up debating the meaning of the word "afford" as much as President Clinton debated the meaning of the word "is." At any rate, the post from Tad DeHaven (former deputy director of the Indiana OMB, btw) is worthwhile:

Dennis Cauchon of USA Today and Stephane Fitch of Forbes recently penned articles on the excessive nature of state and local government employee benefits and the threat taxpayers face as a result.

First, Cauchon reports that “State and local governments have set aside virtually no money to pay $1 trillion or more in medical benefits for retired civil servants…With bills coming due as Baby Boomers start to retire, states, cities, school districts and other governments may be forced to raise taxes, cut benefits or both — a task made especially difficult in an economic downturn.”

I would add that the task of cutting benefits for government employees is especially difficult because state and local politicians are generally beholden to the government employee unions. Even those policymakers not predisposed to carry water for the unions are hesitant to ruffle the feathers of a sizable voting block, not to mention a vocal one that still has a lot of regular citizens conned into believing government employees are underpaid, selfless, public “servants.”  Trust me, I’ve witnessed this game first hand.

Cauchon also spotlights the big picture problem: “These medical costs are part of a larger burden taxpayers face in providing health care for an aging population. The federal government has a $1.2 trillion unfunded obligation to pay medical costs for retired federal workers and military personnel. Medicare and Social Security push the nation’s unfunded promises above $50 trillion.”  He also notes that the same private sector employees who pay for these benefits via taxes are not so lucky: “Unlike private companies, most governments subsidize health insurance for retired employees.”

Medical Tourism on the Rise for Americans

Free markets have a funny way of benefiting the consumer. The Heartland Institute is taking a look at how medical tourism is helping American patients receive quality medical care outside of the U.S. for less — and how it’s forcing lawmakers to rethink paradigms:

Approximately 750,000 Americans traveled abroad for medical care in 2007, and as many as six million will have received health care outside the United States by 2010, the study reports…

“U.S. hospitals have very high cost structures,” said John R. Graham (director of health care policy at the Pacific Research Institute), “largely caused by government regulation that inhibits competition and specialization, requiring general hospitals to be all things to all people. In the long run, as their ‘profitable’ operations disappear overseas, American hospitals will face a crisis that will require policymakers to rethink how they organize the health care safety net.”

“Quality and patient protections vary widely in other countries, just like they do within the United States,” said Michael Cannon, a senior fellow at the Cato Institute. ”What we don’t get in the United States is price competition, but that can’t last forever, particularly with foreign providers offering comparable quality at a lower cost.

“Medical tourism can only grow,” Cannon added. ”And that’s a good thing.”