This bill would prohibit federal funding for student loans and grants to colleges and universities that adopt “sanctuary campus” policies and refuse to cooperate with federal immigration authorities. Specifically, funding from Title IV of the Higher Education Act would be cut off, which funds the Direct Loan, Federal Perkins Loan, and Pell Grant programs among others.
In response to President-elect Donald Trump’s pledge to deny federal law enforcement funding to sanctuary cities that don’t comply with federal immigration law, numerous colleges and universities across the country have declared themselves sanctuaries as well. At least 28 higher education institutions have declared themselves to be sanctuary campuses so far.
A “sanctuary campus” would be defined as any college or university that:
An institution of higher education wouldn’t be considered a sanctuary campus solely based on having a policy that prohibits its staff from reporting an unauthorized immigrant who comes forward as a crime victim or witness.
If this bill is enacted, it wouldn’t take effect for 90 days, so colleges and universities would have time to potentially change their campus policies to comply with this legislation.
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It is theft to allow anyone in the world access to US taxpayer money. When an illegal immigrant comes into the U.S. and gets taxpayer funds in order to go to college, the taxpayer suffers unjustly.
Government is responsible in the protection of life, liberty, and property. Taxpayer money is property.
The "Argument Opposed" is written with an emotional appeal fallacy. Because, of course, voting yay would be "spiteful". It also claims that it would affect colleges just 'because the school doesn’t want to help deport unauthorized immigrants'.
In fact, nowhere does it say the college will assist in deporting illegal immigrants. This bill intends to negatively incentivized those colleges that are going out of there way to get funding from the IS taxpayer for their illegal immigrant students.
Why would a University want to be a sanctuary college? Because it expands their market (student population). And with an expanded market comes greater profits and a better bottom line. And where does this taxpayer money go? Why, it's spent THERE AT THE UNIVERSITY thus lining their own pockets.
And they say greed is a unique trait of the Right...
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Now that Donald Trump has been elected, one of my main goals will be to convince him and his team that it would be wrong to leave government spending on autopilot (and it would be even worse to spend more money and increase the burden of government!).
But we have a very powerful weapon in this battle. It’s called evidence.
And now there’s even more data on our side. The Institute for Economic Affairs in London has just published an excellent new book on fiscal policy. Edited by Philip Booth, Taxation, Government Spending, & Economic Growth is must reading for those who want to understand the deleterious impact of the modern welfare state.
The IEA’s Director General, Mark Littlewood, explains the goal in the book’s foreword.
The most depressing part of the book is contained in Chapter 3. As you can see from Table 7, the burden of government used to be rather modest in western nations. Indeed, I’ve made the point that it was during the era of small government that the western world became rich.
But let’s not cry about unfortunate historical developments.
It will be more productive if we measure the harm so we can educate policy makers about the need for spending restraint.
And the book is filled with lots of useful information in that quest. In Chapter 4, David Smith explains the interaction between fiscal policy and economic performance, noting that excessive government not only reduces the level of economic output, but also the future growth rate.
He provides a micro-economic explanation for why various government activities hinder growth (I offer eight reasons in this video, by the way).
In other words, he’s saying that not only is government too big. He’s also pointing out that much of the spending is seemingly designed to impose economic damage by discouraging the productive use and allocation of labor and capital.
He then reviews some of the research on the “Rahn Curve.”
Incidentally, I like and dislike what he wrote in this section.
I like it because the obvious conclusion is that the burden of government is excessive in both the United States (37.9 percent of GDP according to OECD fiscal data) and the United Kingdom (43.3 percent of GDP). And we can use this data to argue for much-needed spending restraint.
But I don’t like the above passage because I think the growth-maximizing size of government is well below 20 percent of GDP. As I’ve previously explained, academic researchers are constrained by the lack of data for small-government economies. So when they crunch numbers (relying in all cases on post-WWII data, and in most cases on much more recent figures), they basically find that Hong Kong and Singapore grow the fastest and they think that implies the public sector should consume 20 percent of economic output.
But that implies, if you recall the data in Table 7 from above, that nations would have enjoyed more growth in 1870 if they doubled the burden of government spending. I think that’s nonsensical. What’s really happening is that researchers are simply measuring the downward-sloping portion of the Rahn Curve.
But just because Hong Kong and Singapore are the first two jurisdictions that can be plotted, that doesn’t mean the Rahn Curve peaks at that point.
But I realize I’m nit-picking, so let’s go back to the book.
In the following chapter, Professor Patrick Miniford shares some additional research on the link between government spending and economic performance. I especially like how he shares a very useful table looking at some scholarly findings on the relationship between the overall fiscal burden and national prosperity.
He also shares the conclusions from additional research.
And he discusses some new statistical findings, along with the potential implications for the United Kingdom.
I’m sure the data and conclusions also apply to the United States.
Which brings me back to where I started. I fretted yesterday that Trump’s election will be a challenge to advocates of economic liberty. Indeed, he explicitly called for more infrastructure spending and implicitly called for more VA spending in his acceptance speech. Combined with his apparent rejection of entitlement reform, this doesn’t instill much confidence.
But that’s all the more reason to disseminate this new research on the bad consequences of letting America become more like France.
Republished from Dan Mitchell's blog.
Daniel J. Mitchell is a senior fellow at the Cato Institute who specializes in fiscal policy, particularly tax reform, international tax competition, and the economic burden of government spending. He also serves on the editorial board of the Cayman Financial Review.
This article was originally published on FEE.org. Read the original article.
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Since the first Presidential Debate, there has been a lot of hue and cry because Donald Trump had the temerity to declare that he paid no income taxes. More specifically Hillary Clinton said, about his refusal to make his income tax statements public:
Trump retorted, "That makes me smart," more or less declaring he didn't pay any income taxes and he's proud of it.
And so he should be.
To be sure, he is vulnerable to the charge of hypocrisy, not paying tax, on one hand, and advocating what could turn out to be the largest infrastructure project in American history on the other, in addition to kvetching about crumbling infrastructure and declining military spending.
Yet, on the matter of taxes alone, he is right.
Judge Learned Hand stated that "anyone may arrange his affairs so that his taxes shall be as low as possible; he is not bound to choose that pattern which best pays the treasury. There is not even a patriotic duty to increase one's taxes. Over and over again the Courts have said that there is nothing sinister in so arranging affairs as to keep taxes as low as possible. Everyone does it, rich and poor alike and all do right, for nobody owes any public duty to pay more than the law demands." (Gregory v. Helvering 69 F.2d 809 - 1935)
Ironically, that judgment went against the taxpayer, something not often noted by those who quote it. The issue is known as the doctrine of substance over form. In that particular case, a businesswoman named Evelyn Gregory had swapped assets between two corporations, then dissolved one of them which distributed the assets to her as owner. She then claimed a lower tax liability as a result.
In an analysis of Hand's contribution to tax law, Yale law professor Marvin Chirelstein notes that the courts "follow no single and consistent set of rules in deciding when to accept and when to disregard the taxpayer's choice of form" and that when the courts reject the citizen's chosen form of organization, they "commonly assert as a matter of principle that the incidence of taxation depends upon the substance of a transaction and that mere form is not controlling." But if the form is accepted, Hand's maxim reigns - "There is nothing sinister in so arranging affairs as to keep taxes as low as possible."
That is why many businesses hire tax attorneys to advise them of the best options available to them.This results in a contradictory position. "In practice the first principle means simply that the range of effective choice is limited in the situation under review, or indeed that the only route to the taxpayer's destination is the one that bears the highest tax. By contrast the second principle, when applicable, confirms that the availability of alternative legal procedures also gives the taxpayer a right of election with respect to the tax consequences."
What this means is that tax law is inconclusive and vague, but there's no harm in trying to keep taxes low. That is why many businesses hire tax attorneys to advise them of the best options available to them.
Everyone Should Do It
This is not just a privilege of the rich, though they might have more options available and the means to hire skilled tax lawyers. Every citizen has options available so as to limit or lower her taxes. These include such things as the various Individual Retirement Plans (IRAs) which confer certain tax advantages. Additionally, interest paid on a loan for business purposes is tax deductible. Many people run small businesses from their homes in order to deduct some of their living expenses.
A recent article in the New York Times looking at the Trump tax imbroglio notes that tax write-offs for start-up business ventures are generous. "There was a point when even ruinous projects like an unfinished, unleased office tower could end up producing a profit for some investors, thanks to ample tax write-offs."
Such loopholes, the article notes, were largely closed off for outside investors when the Reagan administration overhauled the tax act in 1986. "But active real estate investors and developers were allowed to keep that tax break."
The article notes that when Trump had to disclose his tax filings to get a casino license back in the 80s, there were two years, 1978 and 1979, in which Trump paid no income taxes at all. "By taking advantage of deductions available to real estate developers and claiming losses from partnerships, Mr. Trump reported a “negative income” of $406,379 in 1978 and $3.4 million in 1979 — thus avoiding any tax liability for those two years, a time when he claimed to be worth hundreds of millions of dollars."
The article notes further that Trump paid no income taxes in 1984, 1991 and 1993. The Donald was losing money on his Atlantic City casinos in those latter years which would have put him under water. But that is what entrepreneurship is all about. You take risks, including the risk of loss. And during the losing years, you pay no taxes. That is not, despite the agitations of the professional teeth gnashers, a bad thing. Nor is it shady or underhanded or in any way blameworthy.
The Widespread Demand to Pay as Little as Possible
We recently visited friends who live in a gated community on Vancouver Island. It's a fairly wealthy strata community and our host told us about one neighbor who boasts that he pays no income tax. I was amazed as I pay some tax even on my pension income. I wondered how he did it. But thinking about it, I can think of many ways in which a retired person with substantial assets can have a decent income and pay no income tax at all. These are options open to all my fellow Canadians who have accumulated some wealth during their working lives.
If they have a beef, it should be with the governments making those tax laws, not with people and businesses making reasonable business decisions.These include Tax Free Savings Accounts (similar to Roth IRAs in the United States), reverse mortgages, remortgaging properties and so on. There is no capital gains tax in Canada on your principal residence. So if you bought a house in Vancouver for under $50,000 forty years ago which is worth over a million today, you can sell it and pocket that million bucks tax free. It's all above board and legal.
Corporations often use differences in jurisdictional tax laws to avoid taxes by having subsidiaries in other countries. Ireland, for example, has some of the lowest corporate tax rates in the world and some companies use Irish subsidiaries to avoid paying American taxes.
The professional crying in their soupers, of course, think this is a dastardly thing. But again, these companies are making use of existing legislation to minimize their tax liabilities. What's wrong with that? If they have a beef, it should be with the governments making those tax laws, not with people and businesses making reasonable business decisions.
Indeed, Ireland gives generous tax benefits to creative artists. You can earn up to fifty thousand euros tax free if you live there if you are a cultural worker – a writer, a composer or a sculptor. No one seems to object to that but they cry a river when corporations use advantageous tax laws in other jurisdictions.
Tax avoidance is as American as apple pie.Like Clinton in the debate, the professional whinging class like to spout off all the things that the taxes would buy if only Trump or businesses or you and me were sacrificially minded enough. Clinton said, "So if he's paid zero, that means zero for troops, zero for vets, zero for schools or health."
A site denouncing the Irish tax haven says America's three largest tech giants have avoided $8 billion over the years, money that could have paid for health insurance for 4 million kids, salaries for 200,000 teachers or pay for the California highway patrol for four years. A recent meme from Occupy Democrats says not paying taxes makes Trump, not smart, but "a selfish unpatriotic crook".
Even the Clintons use trusts and charities that they control to minimize taxes. And what's wrong with that? Nothing.
Remember that America was founded to a large extent on a tax revolt - the Boston tea party. Tax avoidance is as American as apple pie.
The holier than thou types should consider again Judge Hand's words. "There is (no) patriotic duty to increase one's taxes. Over and over again the Courts have said that there is nothing sinister in so arranging affairs as to keep taxes as low as possible. Everyone does it, rich and poor alike and all do right, for nobody owes any public duty to pay more than the law demands."
Amen to that!
Marco den Ouden writes at The Jolly Libertarian.
This article was originally published on FEE.org. Read the original article.
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12NOV EDIT: David Stockman's book is COMPLETE!
David Stockman was working on a new book and was releasing snippets in his blog over at http://davidstockmanscontracorner.com/
It delves into the good and bad of the Trump campaign and platform and outlines a more consistent way forward based on free markets, fiscal rectitude, sound money, constitutional liberty, non-intervention abroad, minimalist government at home and decentralized political rule.
Here's a great list of actual deals that the next President, whoever it is, should immediately negotiate:
Ten Great Deals For The Donald
If Donald Trump is elected, eschews a law and order crusade and does not capitulate to the destructive policies of the Wall Street/Washington/bicoastal establishment, there is a way forward. The political outlaw who considers himself to be the world’s greatest deal-maker would need to do just that.
To wit, a President Trump determined to rid the nation of its mutant regime of Bubble Finance at home and failed interventionism abroad would need to make Ten Great Deals.
A Peace Deal with Putin for dismantlement of NATO, cooperation in the middle east, strangulation of ISIS by the Shiite Crescent and a comprehensive worldwide agreement to end the arms trade and pave the way for general disarmament.
A Jobs Deal based on slashing taxes on business and workers and replacing them with taxes on consumption and imports.
A Sound Money Deal to repeal Humphrey-Hawkins, end the Fed’s war on savers and cash, abolish the FOMC and limit the Fed’s remit to passively providing liquidity at a penalty spread over market interest rates based on sound commercial collateral.
A Glass-Steagall Deal to break up the giant financial conglomerates, limit the Fed’s liquidity window to “narrow banks” which only take deposits and make loans and deny deposit insurance to any banking institution involved in Wall Street trading, derivatives and other forms of financial gambling.
A Federalist Deal to turn back most of Washington’s domestic grant and welfare programs to the states and localities in return for a mega-block grant with a 30-year phase-out.
A Regulatory Deal based on an absolute 4-year freeze on every single pending regulation, and then subjecting every existing statute to strict cost-benefit rules thereafter.
A Liberty Deal to get Washington out of the war on drugs, criminal law enforcement and regulation of private conduct and morality.
A Health Care Deal based on the repeal of Obamacare and tax preferences for employer insurance plans and their replacement with wide-open provider competition, consumer choice and individual health tax credits.
A Fiscal Deal to slash post-disarmament defense spending, devolve education and other domestic programs to local government and to clawback unearned social security/medicare entitlements benefits from the affluent elderly.
And a Governance Deal to amend the constitution to rescind Citizens United, impose term limits and establish public finance of all Federal elections.
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Associates Degree utilizing FREE MOOC Structure - An Open Letter to the Secretary of Education
To all of my friends who have already begun dividing themselves from their family and friends due to politicians, please allow me to provide clarification regarding Obama's Free Associates program. And heck, even a solution.
First, this idea was never supposed to pass. His intent was never to give you free college. If that was the President's intent, he'd have done it when he had control of both sides of congress.
No, he proposed this because he knows that the Republicans will oppose it. And he hopes this forces the youth vote to go to the Democrats in 2016 (It didn't). If for some reason the Rs don't take the bait and a version of the idea passes, he wins because he's once again increased the size of government in our lives and created more wealth spreading.
ACTUAL SOLUTION: If Obama actually wanted to give a free education he'd have a professional educator within the Dept of Education (assuming there is one) develop an Associates of Arts and Associates of Science curriculum completely consisting of ALREADY FREE courses that you can take online.
People completing the curriculum are awarded an Obama Associates Degree.
It took me about 45 minutes yesterday to find 60 hours of English, math, history, arts, physical science and elective courses taught by Ivy League schools such as MIT, George Washington Univ, Harvard, Univ Texas, Rice, Stanford, Brown...
For more info on these free courses start at www.coursera.org, www.mooc-list.com, www.edx.org, www.oeconsortium.org, heck even iTunes U!
If you're a politician and actual education of the population is your goal, there's no excuse. Do it now. These courses are online with little to no overhead.
Don't let politicians sweet talk you into stealing money from all in order to send more people toward an ever-decreasingly valuable college degree!
Here is my open letter to the Secretary of Education:
Honorable Secretary of Education Betsy DeVos,
According to College Board, since 1990 college tuition and fees have ballooned nearly 160% (after adjusting for inflation) and have doubled yet again since 2007, amassing more than $1 trillion in debt  . The average college graduate now completes a Bachelor’s Degree encumbered with $26,000 in student debt. Additionally, U.S. is experiencing a swelling of student loan defaults, wage garnishments, credit score impairments and higher fees associated with failure to repay loans.
Higher costs are the culmination of three primary conditions. Firstly, the recent economic downturn has squeezed funding to colleges creating budget shortfalls. These shortfalls have been mitigated by shifting the burden onto the students, thus resulting in tuition rates increasing at 8% per year and doubling every nine!  Figure’s 1-4 reveal the decrease in federal funding during post-recessionary years compared with the increases in tuition costs. Figure 5 reveals how recessionary pressures force governments to reduce their spending and increasingly shift the burden to students.
Furthermore, colleges have experienced the ‘Third-Party Payer Problem’ where users of a service aren’t directly paying the bills. Since guaranteed federal student loans and grants are not capped at logical rates, but instead, based on any price set by universities, the institutions have little incentive to cut costs or curb excessive spending. Aware that students will just borrow more, colleges solve budgetary issues by increasing tuition perpetually. Demonstrating a similar abuse is the example where a university was incentivized to pay homeless individuals a small $2,000 stipend in order to receive a guaranteed $20,000 from government coffers.
Finally, the higher education sector suffers from ‘administrative bloat’. As budgets expanded in prosperous times, universities invested in greater infrastructure and expansive services to attract new students. Equally, the pace of associated administrators and non-professorial staff has exponentially outpaced actual educators, and in some cases, educators having actually diminished. This administrative expansion creates greater bureaucratic complexity and requires more funding spent on wages, benefits and pensions. 
President Obama outlined a plan in his 2016 Budget to provide matching federal grants to states that waive the cost of tuition for students seeking an Associate’s Degree. This renewed national focus on the increased cost of postsecondary education and associated political will to curb costs has created an environment ripe for policy change.
A Massively Open Online Course (MOOC) is a model seeking to augment educational institutions by using simple widespread-technology such as smartphones. These courses consist of lectures that have been prerecorded for convenient offline viewing along with forum discussions, assignments and quizzes taking place online. There are currently over 4,000 courses from hundreds of prestigious universities (even University of Dayton!) that offer free MOOC classes. In 2013, the University of Maryland was among the first wave of schools to begin accepting these transferrable credits toward a degree. With companies like Udacity and StraighterLine already producing accredited courses, high scalability has been proven as costs of course development are quickly returned by iterating the courseware to class sizes of upwards to 225,000 registrants. 
DOE has the unique ability to solve this issue. This policy recommendation simply advances that DOE reprogram a small cadre of educators with the mission of aggregating and accrediting the full spectrum of free and near-free courses which comprise a standard Associate of Arts/Science degree. Students are then provided variety of which ENGL 1302 or which HIST 1301 they enroll in and therefore bypass the monopolistic relationship that befalls a student enrolling in a traditional university. Additionally, free-market principles would force universities and course providers to keep costs low while also demanding greater innovation in delivery and content. At a time when more students than ever must maintain full-time employment while attending school, this added flexibility is exceedingly valuable.
Costs associated with this policy would be offset by federal Pell Grant savings not being paid out during the student’s first two educational years. Pell money was initially created to ensure poorer citizens had equal opportunity to afford higher education, however it has ballooned into much, much more. The Congressional Pell expansion of 2007 “expanded eligibility and funding for the program, which resulted in a doubling of the number of Pell recipients since 2008.” Consequently, Pell spending now eclipses $33 billion amongst all undergraduates, easily the largest share of DOE’s budget. Significant savings can be achieved when two of a student’s four-to-five years of undergraduate education require no subsidization at all. Shifting Pell funding from mandatory to discretionary would furthermore allow greater Congressional oversight on a year-to-year basis.
We are currently in a unique “education pre-bubble” phase where decisive action can provide the flexibility the higher education industry and its budgets need. Millions of Americans can complete their Associate's Degree without the ill redistributive effects of taxes, subsidies or increased bureaucracies.
"Get the equivalent of a Ph.D. in libertarian thought and free-market economics online for just 24 cents a day."
1. Donna M. Desrochers and Rita Kirshstein, “Labor Intensive or Labor Expensive? Changing Staffing and Compensation Patterns in Higher Education,” Delta Cost Project, February 2014.
2. Judah Bellin, “Tuition Will Keep Increasing as Long as Washington Bases Loans on College Costs,” Washington Examiner, August 23, 2013.
3. Naked Law, “Eight Reasons College Tuition is the Next Bubble to Burst,” National Center for Policy Analysis, June 08, 2010.
4. Phil Oliff, Vincent Palacios, Ingrid Johnson and Michael Leachman, “Recent Deep State Higher Education Cuts May Harm Students and the Economy for Years to Come,” Center on Budget and Policy Priorities, March 19, 2013.
5. Jon Marcus, “New Analysis shows Problematic Boom in Higher Ed Administrators,” New England Center for Investigative Reporting, February 6, 2014.
6. Anne Ryman, “GOLDWATER INSTITUTE: Nation’s Universities Suffer from Administrative Bloat,” The Arizona Republic, August 17, 2010.
7. Kathryn Pandes, “Online Course Advances Understanding of Retirement Planning and Pension Policy,” Stanford Graduate School of Business, February 3, 2014.
8. Lindsey Burke, “4 Key Reforms That Could Make Colleges More Affordable,” The Heritage Foundation, September 15, 2014.
9. Angelica Gonzalez, Courtney O’Sullivan, “Why is College so Expensive?” National Center for Policy Analysis, No. 726, September 30, 2010.
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