Within days of taking office in January, the former Belgian prime minister will put his weight behind controversial proposals already floated by the commission’s head, José Manuel Barroso, for a new “Euro tax”.

He will add credence to Mr Barroso’s plans, to be formally tabled in the New Year, by arguing for a Euro-version of a “Tobin Tax” ”“ a levy on financial transactions already floated by Gordon Brown as a solution to the international banking crisis. It would result in a stream of income direct to Brussels coffers, funding budgets that critics say are already rife with waste and overspending.

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House Speaker Nancy Pelosi on Thursday played down the possibility of using a stock trade tax to fund jobs legislation, saying it should only be done in conjunction with other countries.

“It would have to be an international rule,” Pelosi (D-Calif.) said at her weekly news conference. She said that she did not want to see trading action move to other countries to avoid such a tax.

She noted, “Other nations have proposed this, and we have been the ones who resisted.” But global consensus would be difficult, if not impossible, to reach by Dec. 18, when House leaders want to finish their job-creation bill.

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Dr Rowan Williams said that taxation should not be seen as a way of stifling business or redistributing wealth but helping to make the world a better place in which to live.

He called for new levies to be introduced on financial transactions and carbon emissions, and an end to the idea that unlimited economic growth is desirable.

Ugh. Why am I not surprised that Dr. Williams, who is frustratingly unreliable in the area of moral theology, comes out for the very dumb transaction tax? Read it all.

President Barack Obama gave his sternest warning yet about the need to contain rising U.S. deficits, saying on Wednesday that if government debt were to pile up too much, it could lead to a double-dip recession.

With the U.S. unemployment rate at 10.2 percent, Obama told Fox News his administration faces a delicate balance of trying to boost the economy and spur job creation while putting the economy on a path toward long-term deficit reduction.

His administration was considering ways to accelerate economic growth, with tax measures among the options to give companies incentives to hire, Obama said in the interview with Fox conducted in Beijing during his nine-day trip to Asia.

Read it all.

The financial crisis has promoted some bad ideas about economic reform, European Central Bank Governing Council Member Yves Mersch said Tuesday.

Mersch, who is also governor of Luxembourg’s central bank, singled out the so-called Tobin Tax as a “scurrilous idea” during an economic conference in Brussels.

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Check it out–especially for your state if it applies to you.

Why the poor reception? For a tax that’s attracted high-profile backers like Brown and Sarkozy, its track record is thin. When Tobin first proposed the idea in 1972, it was seen as a way to stop currency speculators after the collapse of the Bretton Woods system of fixed exchange rates, but it was never imposed. Sweden enacted a tax on certain financial transactions in the 1980s but ditched it in 1991 after trading volumes sank.

Today, there are bigger obstacles to its implementation. First, there are the tax’s tricky practicalities: Which financial transactions and institutions do you target? And who pays, administers and regulates it? But possibly more importantly, every major financial center would need to be on board for the levy to be effective. Investment banks wouldn’t likely leave Britain for cheaper foreign currency”“trading in Macedonia, but they might well if that opportunity was in Manhattan. Advanced economies imposing the tax unilaterally “would see their financial markets decimated,” Howard Wheeldon, senior strategist at BGC Partners in London, wrote in a note to clients on Monday.

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In the department of bad ideas that won’t go away, Exhibit A is a global tax on financial transactions. British Prime Minister Gordon Brown mooted the tax last weekend before the G-20 finance ministers in St. Andrews, Scotland, where he was promptly rebuffed by Treasury Secretary Timothy Geithner. “That’s not something we’re prepared to support,” Mr. Geithner said.

But it’s easy to see why high-tax countries such as France and Germany relish the idea. Tax competition is a bête noire for the Western European countries whose governments eat up close to half of their economies. The U.K. is back in that club after the post-financial-panic recession lopped 6% off its GDP. Scrambling for revenue””and unwilling to hamstring London markets alone””Mr. Brown is suddenly promoting global tax coordination.

Read it all. I didnt like this editorial because the argument isn’t nearly strong enough. The two key points are not made

It is amazing to me that (2) is hardly ever discussed–KSH.

He comes out solidly against the dumb transaction tax idea. Well worth the time. Watch it all (about 6 1/3 minutes)–KSH.

The United States and Britain voiced disagreement Saturday over a proposal that would impose a new tax on financial transactions to support future bank rescues.

Prime Minister Gordon Brown of Britain, leading a meeting here of finance ministers from the Group of 20 rich and developing countries, said such a tax on banks should be considered as a way to take the burden off taxpayers during periods of financial crisis. His comments pre-empted the International Monetary Fund, which is set to present a range of options next spring to ensure financial stability.

But the proposal was met with little enthusiasm by the United States Treasury secretary, Timothy F. Geithner, who told Sky News in an interview that he would not support a tax on everyday financial transactions.

What a disappointment Gorden Brown is turning out to be. This is a very bad idea that he has come out behind, and his timing could not be worse. Fortunately, even the Russian finance minister spoke against it. In any event, read it all–KSH.

Starting Sunday, cash-strapped California will dig deeper into the pocketbooks of wage earners — holding back 10% more than it already does in state income taxes just as the biggest shopping season of the year kicks into gear.

Technically, it’s not a tax increase, even though it may feel like one when your next paycheck arrives. As part of a bundle of budget patches adopted in the summer, the state is taking more money now in withholding, even though workers’ annual tax bills won’t change.

Think of it as a forced, interest-free loan: You’ll be repaid any extra withholding in April. Those who would receive a refund anyway will receive a larger one, and those who owe taxes will owe less.

Read it all.

It makes doing your taxes look kind of easy. Dealing with your insurance forms when you’re sick is… it’s really hard.

—Karen Pollitz, a health policy researcher at Georgetown, as quoted on last night’s Marketplace

Check it out, especially the larger chart toward the bottom.

John Podesta compared the nation’s current budget crisis to the situation former President Bill Clinton faced in 1993 and said some form of a value-added tax is “more plausible today than it ever has been.”

“There’s going to have to be revenue in this budget,” said Podesta, Clinton’s former chief of staff and co-chairman of President Barack Obama’s transition team, said in an interview on Bloomberg Television’s “Political Capital with Al Hunt,” airing today.

A so-called consumption tax would “create a balance” with European and Japanese economies and “could potentially have a substantial effect on competitiveness,” said Podesta. Value- added taxes in Europe and Japan encourage savings by taxing consumption.

Podesta said such a tax may be regressive, but can be balanced by exempting some products and using “the money to support low-wage workers.”

Read the whole thing.

According to the energy economist Phil Verleger, a $1 tax on gasoline and diesel fuel would raise about $140 billion a year. If I had that money, I’d devote 45 cents of each dollar to pay down the deficit and satisfy the debt hawks, 45 cents to pay for new health care and 10 cents to cushion the burden of such a tax on the poor and on those who need to drive long distances.

Such a tax would make our economy healthier by reducing the deficit, by stimulating the renewable energy industry, by strengthening the dollar through shrinking oil imports and by helping to shift the burden of health care away from business to government so our companies can compete better globally. Such a tax would make our population healthier by expanding health care and reducing emissions. Such a tax would make our national-security healthier by shrinking our dependence on oil from countries that have drawn a bull’s-eye on our backs and by increasing our leverage over petro-dictators, like those in Iran, Russia and Venezuela, through shrinking their oil incomes.

In sum, we would be physically healthier, economically healthier and strategically healthier. And yet, amazingly, even talking about such a tax is “off the table” in Washington. You can’t mention it. But sending your neighbor’s son or daughter to risk their lives in Afghanistan? No problem. Talk away. Pound your chest.

I am not sure what the right troop number is for Afghanistan; I need to hear more. But I sure know this: There is something wrong when our country is willing to consider spending more lives and treasure in Afghanistan, where winning is highly uncertain, but can’t even talk about a gasoline tax, which is win, win, win, win, win ”” with no uncertainty at all.

Read it all.

Supposedly the Senate’s version of ObamaCare was written by Finance Chairman Max Baucus, but we’re beginning to wonder if the true authors were Abbott and Costello. The vaudeville logic of the plan is that Congress will tax health care to subsidize people to buy health care that new taxes and regulation make more expensive.

Look no further than the $40 billion “fee” that Mr. Baucus wants to impose on medical devices and diagnostic equipment. Device manufacturers would pay $4 billion a year in excise taxes, divvied up among them based on U.S. sales. This translates to an annual income tax surcharge anywhere from 10% to 30%, depending on the corporation….

This new tax will eventually be passed through to patients, increasing health-care costs. It will also harm innovation, taking a big bite out of the research and development that leads to medical advancements.

Read it all.

I couldn’t make this stuff up if I tried.

John P. Hoffmann, a professor of sociology at Brigham Young University, examined the harm caused by gambling. Gambling has generally been placed in the category of victimless crimes, but he argued this terminology is not correct.

Problems such as gambling have substantial negative effects on marital relations and family functioning. Many people gamble with no apparent problems, Hoffmann admitted, but studies point to about 9% of gamblers having some risks, with another 1.5% classified as problem gamblers, and 0.9% as pathological gamblers.

The percentages might seem low, but they translate into substantial numbers — millions of people, in fact — when you consider the total population of the United States, he commented.

When it comes to family life Hoffmann observed that pathological gambling is associated with mental health problems and divorce. When gambling reaches problem levels, children are also often acutely affected. Not only does it influence the time parents spend at home, but children also suffer from a sense of diminished personal attachment to their parents and a loss of trust in them.

In my mind, one of the colossal failures of the church in the last generation. Read it all

State government finances are a wreck. The drop in tax receipts is the worst in a half century. Fewer than 10 states ended the last fiscal year with significant reserves, and three-fourths have deficits exceeding 10% of their budgets. Only an emergency infusion of printed federal funny money is keeping most state boats afloat right now.

Most governors I’ve talked to are so busy bailing that they haven’t checked the long-range forecast. What the radar tells me is that we ain’t seen nothin’ yet. What we are being hit by isn’t a tropical storm that will come and go, with sunshine soon to follow. It’s much more likely that we’re facing a near permanent reduction in state tax revenues that will require us to reduce the size and scope of our state governments. And the time to prepare for this new reality is already at hand.

The coming state government reset will be particularly wrenching after the happy binge that preceded this recession. During the last decade, states increased their spending by an average of 6% per year, gusting to 8% during 2007-08. Much of the government institutions built up in those years will now have to be dismantled.

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“In a normal year, we might see 60,000 additional members,” says Tony Rodgers, director of the Arizona Health Care Cost Containment System (AHCCCS), the state’s Medicaid agency. “We’re probably going to see close to 300,000 additional members by the end of the year.”

The discussion in Washington over health care includes an expansion of Medicaid, but Arizona is having trouble paying for the program at its current level.

“This is kind of a financial tsunami for us,” says Rodgers. “And we’re just trying to hold onto any log that’s rolling along, and trying to save ourselves until the wave stops.”

Read it all.

While Californians are still feeling the sting of income and sales tax hikes signed into law earlier this year, now comes news that state tax authorities plan to take a little more from their pockets.

For only the second time in 30 years, the tax board is lowering the point where each tax bracket begins, bumping many people into a higher category. At the same time, officials are cutting back some deductions. Everyone will pay more, even people whose bracket or income doesn’t change.

The extra sums will total as much as $140 per family, on top of the increases previously enacted.

Read or listen to it all.

The United States economy is now out of the emergency room and appears to be on a slow path to recovery. But enormous dosages of monetary medicine continue to be administered and, before long, we will need to deal with their side effects. For now, most of those effects are invisible and could indeed remain latent for a long time. Still, their threat may be as ominous as that posed by the financial crisis itself.

To understand this threat, we need to look at where we stand historically. If we leave aside the war-impacted years of 1942 to 1946, the largest annual deficit the United States has incurred since 1920 was 6 percent of gross domestic product. This fiscal year, though, the deficit will rise to about 13 percent of G.D.P., more than twice the non-wartime record. In dollars, that equates to a staggering $1.8 trillion. Fiscally, we are in uncharted territory.

Because of this gigantic deficit, our country’s “net debt” (that is, the amount held publicly) is mushrooming. During this fiscal year, it will increase more than one percentage point per month, climbing to about 56 percent of G.D.P. from 41 percent. Admittedly, other countries, like Japan and Italy, have far higher ratios and no one can know the precise level of net debt to G.D.P. at which the United States will lose its reputation for financial integrity. But a few more years like this one and we will find out.

An increase in federal debt can be financed in three ways: borrowing from foreigners, borrowing from our own citizens or, through a roundabout process, printing money….

Read it all.

Check it out.

Update: You can find the AP story on this here. It begins as follows:

The recession is starving the government of tax revenue, just as the president and Congress are piling a major expansion of health care and other programs on the nation’s plate and struggling to find money to pay the tab.

The numbers could hardly be more stark: Tax receipts are on pace to drop 18 percent this year, the biggest single-year decline since the Great Depression, while the federal deficit balloons to a record $1.8 trillion.

Other figures in an Associated Press analysis underscore the recession’s impact: Individual income tax receipts are down 22 percent from a year ago. Corporate income taxes are down 57 percent. Social Security tax receipts could drop for only the second time since 1940, and Medicare taxes are on pace to drop for only the third time ever.

The last time the government’s revenues were this bleak, the year was 1932 in the midst of the Depression.

President Barack Obama’s treasury secretary said Sunday he cannot rule out higher taxes to help tame an exploding budget deficit, and his chief economic adviser would not dismiss raising them on middle-class Americans as part of a health care overhaul.

As the White House sought to balance campaign rhetoric with governing, officials appeared willing to extend unemployment benefits. With former Federal Reserve Chairman Alan Greenspan saying he is “pretty sure we’ve already seen the bottom” of the recession, Obama aides sought to defend the economic stimulus and calm a jittery public.

Treasury Secretary Timothy Geithner and National Economic Council Director Larry Summers both sidestepped questions on Obama’s intentions about taxes. Geithner said the White House was not ready to rule out a tax hike to lower the federal deficit; Summers said Obama’s proposed health care overhaul needs funding from somewhere.

“There is a lot that can happen over time,” Summers said, adding that the administration believes “it is never a good idea to absolutely rule things out, no matter what.”

Read it all.

Only five months after Inauguration Day, the focus of Washington’s economic and domestic policy is already shifting. This reflects the emergence of much larger budget deficits than anyone expected. Indeed, federal deficits may average a stunning $1 trillion annually over the next 10 years. This worsened outlook is stirring unease on Main Street and beginning to reorder priorities for President Barack Obama and the Democratic congressional leadership. By 2010, reducing the deficit will become their primary focus.

Why has the deficit outlook changed? Two main reasons: The burst of spending in recent years and the growing likelihood of a weak economic recovery. The latter would mean considerably lower federal revenues, the compiling of more interest on our growing debt, and thus higher deficits. Yes, the President’s Council of Economic Advisors is still forecasting a traditional cyclical recovery — i.e., real growth of 3.2% next year and 4% in 2011. But the latest data suggests that we’re on a much slower path. Probably along the lines of the most recent Goldman Sachs and International Monetary Fund forecasts, whose growth rates average about 2% for 2010-2011.

A speedy recovery is highly unlikely given the financial condition of American households, whose spending represents 70% of GDP.

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President Obama has bet the economy on his program to grow the government and finance it with a more progressive tax system. It’s hard to miss the irony that he’s pitching this change in Washington even as the same governance model is imploding in three of the largest American states where it has been dominant for years — California, New Jersey and New York.

A decade ago all three states were among America’s most prosperous. California was the unrivaled technology center of the globe. New York was its financial capital. New Jersey is the third wealthiest state in the nation after Connecticut and Massachusetts. All three are now suffering from devastating budget deficits as the bills for years of tax-and-spend governance come due.

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The Fuzzy math behind the Massachusetts universal healthcare law is starting to add up – just as Washington studies the law as a possible model for the nation.

Because of a recession-related drop in state revenues and a surge in enrollment by the recently unemployed, the truth is emerging at an inconvenient time. Massachusetts doesn’t have enough money to pay for the coverage envisioned by the law.

In June, state officials announced they are cutting $100 million from Commonwealth Care, which subsidizes premiums for needy residents. The poorest residents, along with the newest – legal immigrants – will take the hit.

This outcome is not surprising, but it is instructive as President Obama pushes for a national healthcare plan.

The figure then being projected for this year was above the $1,000bn mark for the first time. But in the few short months since, the number has rocketed much further ”“ to $1,800bn (£1,106bn, €1,291bn) or 13 per cent of gross domestic product.

The Congressional Budget Office, a nonpartisan watchdog, forecasts that the US will post deficits in excess of a trillion dollars in each of the next 10 years. Even on its relatively optimistic assumptions for economic growth, moreover, the CBO predicts national debt will double to 82 per cent of GDP in the next decade ”“ a level not seen since the second world war.

This would push the US close to the chronic debt levels seen in Japan and Italy. “People used to talk about America’s long-term fiscal crisis,” says Douglas Elmendorf, head of the CBO. “That crisis is now.”

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California’s controller said on Wednesday that he would have to issue IOUs in a week if lawmakers can’t quickly solve a $24 billion budget deficit, and the state’s treasurer plans to tap a reserve fund to meet debt service costs.

The measures came as a budget crisis deepened in the most populous U.S. state and the gridlocked legislature failed to pass a proposed $11 billion in cuts.

“Next Wednesday we start a fiscal year with a massively unbalanced spending plan and a cash shortfall not seen since the Great Depression,” Controller John Chiang said in a statement announcing that he would be forced to use IOUs to pay the state’s bills beginning on July 2.

Read it all.

Lots of good food for thought here. I especially like #2, tax simplification, and #8 on becoming healthier.