Politics

Tax Breaks For Gold Medals

Samuel HooperLeave a comment

Though neither of them have any intention of doing anything about it, in the run-up to the November elections both main political parties in America are at least making noises about the need to reform and simplify the massively complicated tax code in the United States. This is urgently needed – a thick, impenetrable layer of deductions and tax credits doled out by previous Congresses to the favoured special interests or wavering voting blocs of the day have led to an almost incomprehensible system, one which means higher marginal rates overall for everyone and one which benefits almost no one apart from the well-connected and their tax accountants.

So when “rising star” Republican Senator from Florida, Marco Rubio, proposed a tax break for US Olympic medal winners on the cash bonuses that they receive from the US Olympic Committee, you would think that the “first do no harm” rule might apply, and President Obama and others would shoot down the idea. Right?

No. President Obama actually supports this opportunistic piece of pandering, according to Matthew Yglesias, writing at Slate:

If they gave out awards for dumb new policy ideas, President Obama and Republican rising star Sen. Marco Rubio would both be medaling this week. Their achievements? Rubio’s completely pointless bill offering a tax break to recipients of Olympic medals and—even worse—the president’s decision to hop on the bandwagon rather than show the country he has a firmer grasp on the issues than his adversaries do. In the scheme of things, of course, winning Olympic prizes is not an important sector of economic activity, and the medals’ tax status doesn’t really matter. But the overall shape of the tax code does matter a great deal, and the speed with which a bipartisan consensus emerged around making it worse bodes quite poorly for efforts to make it better.

Yglesias goes on to provide some essential background that some early supporters of this harebrained scheme appear to have missed:

In this particular case, the issue is that the U.S. Olympic Committee—the nonprofit group that organizes Team USA for the games—rewards athletes with cash bounties for medals won. Gold medalists receive $25,000, silver medalists get $15,000, and bronze medalists receive $10,000. That’s income, so come spring of 2013 when medalists are filling out their tax forms, it’ll be reported and taxed like any other income. Their after-tax income will be higher if they do win a medal than if they don’t. There’s no “extra tax bill” waiting for anyone. There’s simply extra income, and the income would be taxed. (Some people have confused this with the idea that the medals themselves come with a hefty tax bill, but the real tax issue is about the cash prizes.)

Precisely. This is not about suddenly being landed with an unexpected tax bill just because you worked hard and won an Olympic medal. This is about the IRS treating the prize money that the winning athletes receive as an incentive from the US Olympic Committee as income, which it is, and taxing it at the appropriate marginal rate.

Of course, the number of London 2012 Olympic medal winners as a percentage of the US population is miniscule, so the policy, if enacted, would do no real harm to tax returns or anything else. But the blatant favouritism of rewarding Olympic athletes alone with this tax break, while making other “worthy” types pay normal rates of tax, would set yet another ridiculous and rather alarming precedent:

In terms of fairness, it seems like a strange slight to winners of other kinds of prizes. Are Olympic medalists worthier than winners of the Nobel or Pulitzer prizes? And of course exempting all prize income from income tax could merely encourage all kinds of people to restructure their income as prizes. The J.P. Morgan Memorial Prize for Achievement in Investment Banking, anyone?

And then the money quote:

The underlying issue is that taxes aren’t supposed to be a cosmic judgment on the underlying worthiness of people’s activities. The earnings of a great artist and a reality TV show producer are taxed the same. That can seem a bit perverse at times, but having Congress try to assess which professions are important and which are bad would be much worse.

Republicans always talk about how the government should stop trying to “pick winners”, accusing President Obama of doing this with his subsidies for various forms of green energy (and apparently turning a blind eye toward their own efforts to help their own favoured industries). Well, I would submit to Senator Rubio and President Obama that the successful US Olympic athletes have already picked themselves as winners through their achievements in London. They are to be congratulated and afforded all the respect due to a champion, but their accomplishments do not entitle them to a tax break, particularly at a time when the tax code is crying out for simplification.

Fox News Reaches A New Low

Samuel Hooper2 Comments

Eagerly snatching another opportunity to paint American conservatives as more patriotic than their liberal brethren, Fox News decided to jump on American Gymnastics gold medallist Gabby Douglas for showing insufficient national pride by wearing a pink leotard whilst competing:

 

Because, of course, the best way to demonstrate pride in and commitment to one’s country at the Olympic Games is not to compete to the best of your ability and bring home a gold medal, but rather to display the colours of your flag over a sufficient percentage of the surface area of your body.

I just can’t with this nonsense. I know it’s a personality trait in a lot of conservative-leaning people that I should perhaps try to understand (though as a conservative-leaning person myself I don’t think I have this tendency), that they place a great deal of value in reverence for institutions and symbols. There is certainly a time and a place for that. However, this need for all aspiring American politicians to wear a US flag lapel pin, and now this snide attack on Gabby Douglas for failing to show enough of the red, white and blue, is just ridiculous.

You don’t need to wear the modern day equivalent of an Uncle Sam costume to prove that you love America, and are proud of your great nation’s astonishing heritage and unrivaled accomplishments.

You don’t need to chant “USA, USA!” all the time if you don’t want to.

America became the great land that it is precisely because the people who made it great didn’t feel the need to talk about it all the time. They quietly got on and did it.

When nationalistic bombast is all you have left to display, then your country is in a bad place. America is not in that bad place, and God willing, it never will be. Fox News should focus on who will win the next Olympic gold medal for Team USA, not the clothing choice of their most recent champion.

Lords Reform – Actions Have Consequences

Samuel Hooper4 Comments

Not so fast. First we need to preserve democracy by translating the referendum question into Cornish.

 

Tim Montgomerie, writing at Conservative Home, believes that the decision by the Liberal Democrats to renege on their support for electoral constituency boundary reform in retaliation for Prime Minister David Cameron’s inability to win Conservative backbench support for House of Lords reform represents the Conservative’s “worst single electoral setback since Black Wednesday”, when Britain was forced to quit the ERM, torpedoeing the Torie’s reputation for economic competence:

When the Parliamentary and Voting Constituencies Bill was passed I celebrated the moment, noting that the introduction of fair-sized seats of equal population could boost the number of Tory MPs at the next election by up to twenty. That was certainly Conservative HQ’s view. This morning the hope of boundaries fairness** is close to death, if not dead. After having explicitly said there that there was no connection between Lords reform and equal-sized seats Nick Clegg has u-turned and claimed there needs to be a connection.

…

** Boundaries “unfairness” is one of the explanations for why Labour get a majority with a 3% lead in the popular vote while Conservatives need an 11% lead for the same result. Or to put it another way John Major got a majority of 21 in 1992 with an 8% lead and a 42% share of the vote while, in 2005, Tony Blair got a 66 majority with just 36% of the vote and a 3% lead.

There has been much outrage from Conservative MPs and political commentators about the decision, but most of it seems to be directed toward the Liberal Democrats – “how dare they do this to us?!” – than inward at their own political strategy and leadership.

If, indeed, boundary review is so crucial to the Conservative Party’s hopes of winning an outright majority at the next general election (and if this is the case, when Conservatives have managed to win elections under similar circumstances in the past, it is a pretty damning indictment of the current party’s policy positions and campaigning ability), perhaps David Cameron should not have played chicken with Nick Clegg on such an important matter.

Tim Montgomerie pretty much agrees in his article:

The only advantage of the likely defeat of boundary changes is that a central plank of the Cameron/Osborne battleplan has gone. Any residual complacency must have gone. They can’t carry on as they were. They need a game changer and, preferably, soon.

And perhaps, instead of venting their anger at Nick Clegg when said strategy blows up in their faces, Conservatives with an eye on the next election would do well to remember that because they sadly, miraculously failed to win the 2010 election outright, as a consequence they govern in partnership with the Liberal Democrats, and that if they screw over their coalition partners on a policy point close to their heart, they are quite likely to get screwed in return.

I don’t care what Nick Clegg said about whether Lords Reform and Electoral Boundary Changes were linked or not back in April of this year, as Guido Fawkes appears to do:

The Boundary Review had nothing to do with House of Lords reform. It was linked to the AV referendum which the LibDems secured.

Clegg accusing others of breaking promises beggars belief. The LibDems are desperately trying to spin this, but in reality the backbench Tories are the ones to sacrifice political gain for sticking to their principles – however wrong they are to defend the current upper chamber.

Waah waah waah. The Conservatives are supposed to be the more mature, politically experienced political party and they got played by the LibDems. Now people like me have lost two policy proposals that were dear to our hearts – democratic reform of the House of Lords, and reform of the UK’s constituency sizes and boundaries to make them more equal. I have no sympathy for them.

The Conservatives are the senior party in the coalition government. They should try acting like it.

More Advice For CNN

Samuel HooperLeave a comment

Apparently I’m not the only one with words of advice for CNN today.

Ramesh Ponnuru, writing at Bloomberg.com, believes that cable news “talking head” shows are getting a disproportionate share of the blame for the decline in the intellectual standard and civility of American political discourse, and that one way to redress the balance might be…to bring back “Crossfire”.

“Crossfire” is, of course, the show that Jon Stewart memorably mocked for “hurting America” with its adversarial, Left vs. Right format:

 

Ponnuru, however, makes a reasoned argument in favour of resurrecting the format:

By the time Stewart appeared on it to promote his book, the show had degenerated. At its height, though, it did a good job of sharpening political arguments. And the original format, to my mind, has never been bettered.

The show ran for half an hour and examined one question. There were two hosts: one liberal, one conservative, both opinion journalists rather than operatives for a political party. In the early 1990s, Michael Kinsley (now a Bloomberg View columnist) and Patrick Buchanan did the job. There were two guests, usually politicians or public-policy experts on each side of the debate. There was no studio audience.

Each of these features made “Crossfire” better. The one-subject rule made it impossible for the politicians to make it through the show on sound bites alone. That both hosts were journalists made for a fairer debate than the usual practice of today’s political shows, which put journalists up against political operatives.

This idea in its purest form would make a great format for actually getting to the rub of important issues. Spending a full thirty minutes debating an issue means that even the most cookie-cutter, by-the-book politician or political operative will soon run out of approved talking points and eventually have to speak freely based on their underlying core beliefs, better educating the public in the process.

The danger always comes, of course, when new gimmicks are included in an attempt to broaden the appeal of the show – in the case of “Crossfire”, the addition of a live studio audience significantly harmed the show, as hosts and guests alike started pursuing the soundbite that had previously been so successfully kept at bay in the show, in order to win a positive reaction from the audience:

It got worse, as well, when it added a studio audience. Hosts and guests alike now played to the crowd, which itself could add nothing more intelligent to the conversation than hoots and hollers.

Ponnuru concludes:

“Crossfire” was balanced by design, and I bet there would be an audience for it once again. Of course, I’m not a professional TV executive. Then again, the professional executives at CNN sank millions into “Parker Spitzer.” Maybe it’s worth listening to someone else.

If CNN is determined to maintain and consolidate the non-ideologically biased middle ground so thoroughly, depressingly vacated by Fox News and MSNBC, there could be worse ways to go about staging a comeback.

Over-Entitled Graduate Gets Smacked Down

Samuel Hooper1 Comment

If you were out of work for a length of time and were told that you had to participate in a mandatory work experience placement as a requirement for receiving your unemployment benefits, would you:

1. Be grateful for the safety net that exists to support you, and comply with the programme, or

2. Take the government to court for enslaving you, citing the European Convention on Human Rights?

Cait Reilly and Jamieson Wilson both decided to opt for choice 2. According to The Telegraph:

Ms Reilly’s barrister told the High Court that the geology graduate’s stint at the Poundland near her home in Kings Heath, Birmingham, involved her carrying out “unpaid menial work”.

This consisted of very basic tasks such as sweeping and shelf-stacking “without training, supervision or remuneration”.

If indeed this is all that the work involved, this is disappointing as it breaches the terms by which the companies participate in the back-to-work schemes. In exchange for receiving free labour, the participating firms should ensure that they fulfil their obligations by providing a suitable induction, training and supervision. However, this is a reason to update and modify the scheme, not to abolish it altogether. The secondary benefits (keeping people in the habit of work during a period of unemployment, and providing additional labour to British companies so that they can generate further profits and employ more people) remain intact, even if the primary benefit was not realised in this case.

And it is hardly slavery.

Fortunately, the presiding judge agreed. The Telegraph gors on to report:

Mr Justice Foskett criticised the DWP for the lack of clarity over the potential loss of benefits to claimants who fail to take part in the schemes without good reason.

But addressing the issue of article four of the European Convention on Human Rights, which bans forced labour and slavery, he said the schemes were “are a very long way removed from the kind of colonial exploitation of labour that led to the formulation of Article 4. “

“The Convention is, of course, a living instrument, capable of development to meet modern conditions, and views may reasonably differ about the merits of a scheme that requires individuals to ‘work for their benefits’ as a means of assisting them back into the workplace,” he added.

If the Department for Work and Pensions has not been crystal clear on the conditions for receiving benefits and the potential ways in which they could be forfeited, this needs to be remedied immediately.

However, the broader ruling, upholding the government’s back-to-work schemes, is very satisfactory indeed. Crying “slavery” and running to the European Convention on Human Rights because you dislike the “menial” work you are asked to do is overdramatic in the extreme, and does a disservice to the many people around the world who are in actual bondage, the victims of sex trafficking or any other kind of real slavery.

Not being able to watch Jeremy Kyle on television every morning while you balance a work placement with job searching ≠ modern day slavery.

It just doesn’t.