Argentina adds 15% Tax on all Out of Country Credit Purchases

Posted by PITHOCRATES - September 2nd, 2012

Week in Review

Argentina has a problem.  They have depreciated their currency so much that no one wants to hold on to it.  And they are taking aggressive measures to that end (see Argentine tax agents to track all credit card buys by MICHAEL WARREN, Associated Press, posted 8/31/2012 on Yahoo! News).

Argentina just made it more expensive for its people to use credit cards outside the country, and more dangerous for cardholders who aren’t paying all the taxes they should.

One measure published in Friday’s official bulletin adds a 15 percent tax every time people make a purchase outside the country using a card issued by an Argentine bank. Another requires the banks to report every credit card purchase, home or abroad, to the tax agency.

The moves target Argentines who have discovered that by using credit cards outside the country, they can get around increasingly tight currency controls and shelter their money from soaring inflation. Purchases outside Argentina using peso-denominated cards soared 48 percent in June compared to the year before, obligating the central bank to send $289 million out of the country in just one month. Overall capital flight soared to $23 billion in 2011.

Argentina likes to print money.  Which means Argentine pesos don’t hold their value.  If you don’t spend them this week they will buy less next week.  So Argentines don’t want to hold on to them for long.  They’d rather buy stuff while the buying is good (before their pesos loose too much of their purchasing power).  Or quickly exchange their pesos for a currency that holds its value longer.  Like U.S. dollars.  And out of country credit purchases help Argentines minimize the effects of runaway inflation on their earnings.   But when Argentine banks have to settle these international accounts it takes a lot of a depreciated currency to do that.  Hence the soaring capital flight.

If printing so much money causes so many problems why do they print so much money?  Because Argentina governments like to use class warfare.  They like to tax the rich.  And give to the poor.  As well as pay for a lot of big government projects to employ highly compensated union workers.  All to help their shirtless.  Their descamisados.  The poor laborers who work so hard that they must remove their shirts.  But they have so little because of the evil rich people running companies.  And their foreign investors.  So the Argentines gear their whole economic system to favor the unions. And the descamisados.

Argentines don’t have to declare their income unless they are salaried and make more than $20,000 a year or are self-employed and make more than $30,000, so many register with the tax authorities as if they make less than the limit, dealing in cash and trying to keep their income and purchases off the books.

But Argentina also taxes accumulated wealth, giving the government license to scrutinize people’s private property to an extent that foreigners are ill-accustomed to. People whose incomes don’t match their lifestyles can find themselves closed out of the financial system until they come clean.

Since November 2011, Argentina’s government has sought to stem capital flight by closing down nearly every avenue people have to legally trade their inflationary pesos for U.S. dollars. The black-market peso price has spiked as a result, trading now at 6.37 pesos to the dollar, compared to the official rate of 4.65. That 37 percent gap represents what people with undeclared pesos have to lose in order to convert their cash to dollars inside Argentina.

Credit cards, meanwhile, are paid at the official rate, and many cardholders have figured out ways to use them to avoid this loss. The 15 percent tax raises the effective cost of purchases to 5.35, reducing the gap by nearly half.

Of course if you try to implement massive transfers of wealth those with wealth will do everything within their power to keep what is theirs.  So the government has to do everything within their power to let as few as possible to escape their wealth-destroying policies.  Hence the clampdown on out of country credit card purchases.  While the government clamps down it’s the simple workers who ultimate suffer.  The descamisados.  For it is their savings that are made worthless over time.  Making their retirement more difficult.  And less enjoyable.

Argentina has pursued the same polices since Juan Peron in the Forties and Fifties.  And little has changed over time.  Other than a great debt default.  Meanwhile their neighbor, Chile, is doing quite well.  Thanks to a different set of economic policies implemented by a dictator.  Who had help from a great economist.  Milton Friedman.  Who worked with the brilliant Chilean economists known as the Chicago Boys.  Who did things very un-Argentina-like.  And how did that work out for their retirees?  Suffice it to say their pension plan is a better model than the U.S. Social Security program.

Argentina is a great country.  Filled with people just waiting to exploit their human capital.  And the only thing in their way are the bad policies of their government.  Which must be so frustrating for Argentineans.  Because they could explode their economy if only they were allowed to.  And the only thing preventing them are the class warfare policies of their government.  As the class warfare polices of so many previous governments have denied previous generations lives of comfort and plenty.  Lives that were just out of reach.  Of the middle class.  And the descamisados.


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With Falling Tax Revenue on Incomes Britain proposes Taxing Wealth that was already Taxed as Income

Posted by PITHOCRATES - September 2nd, 2012

Week in Review

Taxing the rich doesn’t raise tax revenues.  At least it hasn’t yet.  Because what taxing officials don’t understand, or refuse to understand, is that it takes two things to make tax revenue.  A tax rate.  And economic activity.  If you raise the tax rate too high you will reduce economic activity.  So those higher tax rates will tax lower amounts of income.  Thus reducing overall tax revenue.

Perhaps the British taxing officials do understand that.  So they are proposing to tax not income but wealth.  To seize a little of what the wealth creators created.  And already paid taxes on it as past income (see ‘Emergency’ Tax on the Rich Roils Britain by Robert Frank, CNBC, posted 8/30/2012 on Yahoo! Finance).

Deputy Prime Minster Nick Clegg, leader of the Liberal-Democrat Party, has proposed a one-time tax on the wealth (rather than the incomes) of high-net-worth Britons. The details aren’t clear, but Clegg says the country is facing an economic war caused by a prolonged recession, and needs to tax the rich in order to avoid social unrest…

Baroness Susan Kramer, a member of Clegg’s party in the House of Lords, said that a wealth tax could be more effective than an income tax, and that the wealthy won’t move away…

Britain’s tax distribution is less progressive than America’s, with the top 1 percent paying about 24 percent of the total income taxes in the U.K. In the United States, the same group pays more than 35 percent. The top 10 percent in Britain pays 55 percent of income taxes, while in America the top 10 percent pays 59 percent.

You would think that 1% of the people should pay 1% of the taxes.  That would be fair.  But in progressive tax systems ‘fair’ means redistributing wealth from those who’ve earned it to those who did not earn it.  Which is why 1% pays 24% of total income taxes in Britain.  And that same 1% in the United States pays 35% in total taxes.  The top 10% pay over half of all income taxes in both countries.  Yet the left in both countries insist the rich aren’t paying their fair share.  If not then what, pray tell, is fair?  Having this 1% pay 50%?  75%?  95%?  If you did make them pay this much you’d have a problem.  They would no longer be part of the 1%.

The wealthy won’t move away?  Has she never heard of tax exiles?  Like the Rolling Stones?  The Beatles?  Sting?  Led Zeppelin?  Freddie Mercury of Queen?  Phil Collins?  Pink Floyd?  David Bowie?  The Spice Girls?  Michael Caine?  Sean Connery?  Rod Stewart?  Ozzy Osbourne?  U2?  A lot of their music was played during the recent 2012 Olympic Games.  A rich treasure trove of British talent.  Chased away by high taxes.

Wealthy people move away.  Yes, some have come back when their home country reduced their confiscatory tax rates.  But high taxes make wealthy people look for sunnier climes.  And it’s the wealthiest of people that can do this.  These aren’t immigrants getting off the boat at Ellis Island with loose change in their pockets.  These are people that probably already own real estate in other countries.  And live part of their lives in these other countries.  So making the final move to these other countries is more of a matter of logistics than any deep soul searching.

What’s better?  Having, say, 30% of rich people’s income?  Or having 0%?  It doesn’t take an advanced mathematical degree to know that 30% is greater than 0%.  If you try to take more than what is fair—fair as decided by the wealth creator—the wealth creator may take all of his or her money and leave.  Following the notable train of tax exiles that went before them.  And when they do it will only make the budget crisis worse.  Because it won’t take many of the 1% to leave to cause a dangerous fall in tax revenue.

And when you think about it what do these rich people owe their governments?  Their government wasn’t with them on tour sleeping in hotels.  It wasn’t their government writing music and lyrics that enough people loved to fill stadiums during concerts.  It was something these few 1% could do.  Did.  And they did it themselves.  So when the government came around to take up to 80% or more of what they created away they said “nice knowing you but it’s time for me to go.”  And they did.  To sunnier climes around the world to places with a friendly tax policy.  Where they could keep what they earned.

And it will happen again.  Unless you arrest the wealthy and force them to be creative so you can tax them.  But under those circumstances they may withhold their creativity.  Then what?  What do you do when you take that 24% of income taxes paid by the 1% to 0%?  If you think there’s social unrest now just wait until 24% of all government spending disappears.


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To Cut Costs the NHS encourages Women to just Take the Pain of Natural Childbirth

Posted by PITHOCRATES - September 2nd, 2012

Week in Review

The American Left says the Republicans hate women.  The so-called war on women.  They want to force women back into dangerous back-alleys for abortions.  And take away their birth control.  But imagine the tune the Left will be singing when Obamacare catches up to the NHS.  And scrambles to find cost savings via rationing.  And asks women to ‘man-up’ and just take the pain of natural childbirth.  When their liberal Democrat-passed Obamacare has no choice but to do what the NHS is doing (see Caesareans and pain relief for mothers giving birth ‘should be cut to save the NHS money’ by Sophie Borland posted 8/30/2012 on the Daily Mail).

Family doctors are being told to try to talk women out of having Caesareans and very strong painkillers during birth to save the NHS money.

New guidelines drawn up for GPs urge them to encourage women to have natural labours with as little medical help as possible…

The guidelines also remind doctors to tell women to consider having their babies outside hospital in midwife-run units or in their own homes.

Caesareans cost the NHS around £1,200 a time while epidurals – anaesthetic injections into the spine – are around £200.

Giving birth is the most painful thing a human body can endure.  While being one of the most natural things as well.  For millennia women gave birth without Caesarean sections or epidurals.  So on the one hand you can see the cost-accounting logic of the NHS.  While on the other hand about half of the world’s population doesn’t give birth.  Making it easy for them to say, “Gee, honey.  It’s just childbirth.  What’s the big deal?  Just suck it up and take the pain.”  Of course those who say something like this aloud may experience some physical pain themselves.  And may end up walking funny for awhile.

Just to show you how bad it is in the NHS lets crunch some numbers.  The UK has about 800,000 births per year as of late.  Approximately 25% of these births are by Caesareans section.  So if you crunch the numbers using current exchange rates the savings come out to approximately $379 million annually for Caesareans.  And about $253 million for epidurals.  Bringing the approximate annual savings to $632 million total.  Considering the annual NHS budget is roughly $166.6 billion these savings come to approximately 0.38% of total NHS annual expenditures.  Less than one half of one percent.  Small.  But when you add a lot of these up (and there are a lot of them because the NHS pays for everything for everyone) it makes a significant savings in the aggregate.  Which is why they’re asking British women to take the pain.

Now some can make the argument that making a woman give birth naturally is actually more painful that requiring a woman to buy her own birth control.  Or pay for her own abortion.  But the Left attacks Republicans on these issues as if the affect on women is as traumatic as live childbirth without any pain medication.  Makes one wonder what the attacks will be like when they urge women to endure more pain to help balance the Obamacare budget.  Especially considering that based on population there will be five times as many US women giving birth than in the UK.  So there will be larger cost savings available.  And probably a louder screaming will be heard.  Both figuratively.  And literally.


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Obese Girls in the UK add to the Budget Problems of the already Cash-Strapped NHS

Posted by PITHOCRATES - September 2nd, 2012

Week in Review

I’m sure they hear the same arguments in the UK as they hear in the US.  That we have to increase government spending on nutritional programs for the poor.  Especially poor children.  Because no child should go to bed hungry.  Yet at the same time the Mayor of New York City wants to limit the size of pop you can buy in a theater or from a street vendor because our kids are too fat.  And the First Lady of the United States wants kids to eat vegetables instead of food that tastes good because our kids are too fat.  So some in government are arguing both sides of the same issue to generate more government control and more government revenue.

In the UK they have even another metric to measure childhood obesity by.  And it’s a really sad one (see As obesity soars, girls of 11 are being given breast reduction surgery on NHS by Daniel Martin posted 8/27/2012 on the Daily Mail).

Girls as young as 11 are having breast reduction operations on the Health Service, figures show.

More than 100 girls aged 16 and under have had the surgery in the past five years after suffering severe back pain.

Health experts say some cases could be because children now tend to be significantly heavier than a few years ago, putting more pressure on their backs…

The surgery will cost the taxpayer some £5,000 a time, and critics will argue that the cash-strapped NHS should not be paying for such procedures when those with cancer and other serious conditions are not getting the drugs they need…

Over the past five years, 21,328 women of all ages have had breast reduction operations on the NHS. In the latest year for which figures are available, 2010/11, the total was 4,212 – almost 12 every day.

Clearly in advanced countries many of our kids are not going to bed hungry.  It is a sad benefit of an advanced country.  We can make food so plentiful, inexpensive and tasty that our poor have obesity problems.  I’m not sure what the economic circumstances are with the girls in the linked article but if they live in the UK chances are their families are paying a lot of taxes to support their welfare state so the odds are good they are not from a rich family.  Besides, if they were rich they’d probably pay top-dollar to treat their daughters in a private facility.  But that’s neither here nor there.  What’s particularly interesting in this story is the economics of it.

At current exchange rates £5,000 is about $7,935 US.  So those 4,212 surgeries in 2011 cost the taxpayers $33.4 million dollars.  Sounds like a lot until you realize the NHS annual budget is approximately $166.6 billion (see Figure A.1: Department of Health CSR settlement 2007 – announced opening position).  So these surgeries are only 0.02% of the NHS budget.  Which just staggers the mind.  But this to be expected when a national health care service pays for everything for everyone.  It’s incredibly expensive.

When the US passed their own version of national health care, Obamacare, the Democrats sent misleading budgetary information to the Congressional Budget Office.  Such as including tax revenue for ten years while including benefits for only six years.  Transferred some $716 billion out of Medicare.  And other accounting shenanigans.  So when the CBO scored Obamacare it came in at $940 billion over ten years.  Which was less than $1 trillion.  The magic number.  Because it would make Obamacare less costly than the wars in Iraq and Afghanistan.  But when you look at the budget of the NHS you just know they’re playing fast and loose with their numbers.

The US has approximately 5 times the population of the UK.  So they would have approximately 5 times the patients in Obamacare than they have in the NHS.  And approximately five times the cost of the NHS.  So if you multiply the NHS annual budget by five you get a likely cost of Obamacare for one year.  $833.1 billion.  Only slightly less than the original CBO scoring of Obamacare for a ten year period.  Multiplying this out over ten years brings it up to $8.3 trillion.  Making the original CBO score light by 886,256%.  An enormous mistake.  Or misrepresentation.  Of what it will cost to give everything to everyone.

If they don’t repeal Obamacare there won’t be any money left to prevent children from going to bed hungry.  But there should be a corresponding reduction in other health care expenses.  As hungry children won’t have an obesity problem.


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The NHS rations In Vitro Fertilization (IVF) with Long Waiting Times while Abortions are Readily Available

Posted by PITHOCRATES - September 2nd, 2012

Week in Review

There may be no waiting list for abortions.  But there is a waiting list for In Vitro Fertilization (IVF).  Even though both come with obvious time limits on these treatments.  Wait too long and you’ll either have a baby.  Or it may be too late for you to have a baby (see Third of women with right to IVF rejected by GPs who don’t know enough about fertility treatment by Sophie Borland posted 8/27/2012 on the Daily Mail).

One in three women are being refused IVF on the NHS even though they have the right to treatment, a report has found.

Health trusts are routinely denying treatment for women despite the fact they are eligible under official guidelines from health watchdog NICE.

Even if women are referred for IVF, many are forced to wait more than two years for it to start during which time the chance of success dwindles as their bodies age…

Recently a major study ranked Britain near the bottom of a European league table on spending for fertility treatment with even Serbia, Montenegro and Slovakia paying more to help childless couples…

The NHS also pays for abortions.  If the NHS wanted to improve their long-term financial outlook they’d transfer more of their current abortion funding to In Vitro Fertilization (IVF) funding.  Because there is only one thing that will solve budget woes in countries with aging populations.  More babies.  Because babies are future taxpayers.

On a side note it is interesting how the NHS works on both sides of the birth/abortion issue.  They administer medical treatment to restore a normal biological function.  And they administer medical treatment to terminate a normal biological function.  (Though there appears to be less waiting times for an abortion.)  Making the birth/abortion issues a complex issue indeed.  And one we’ll probably never see resolved to everyone’s satisfaction.  Apart from the moral issues the economics of the issue are interesting.  Those who favor abortion also favor large government spending.  And it is their most sacred cause, abortion, which is preventing the continued growth in that government spending.  Because it eliminates future taxpayers.

All right, back to topic.  So why are they making it so difficult to get IVF in the NHS?  Well, you probably figured that out based on the previous two paragraphs.  Money.

Susan Seenan, of the charity Infertility Network UK, said: ‘It’s shocking and blatantly wrong. Primary care trusts are just trying to ration treatment…

‘We know the NHS has limited resources but all couples want is to be treated fairly…’

In fact, 45 per cent of couples who responded ended up paying for the treatment privately as the waiting lists were too long.

IVF normally costs between £3,000 and £4,000 but nearly a quarter of those who went private paid more than £10,000 for the treatment, according to the survey.

It’s that aging population and a generous welfare state set up during a time before widespread use of birth control and abortion.  They built a pyramid scheme.  Where the people at the top, those drawing the majority of benefits, grew at a lesser rate than those at the bottom.  The young and healthy workers entering the workforce.  Based on these assumptions there would always have been an increasing amount of money coming into the government (even without raising tax rates) to pay for the few drawing generous state benefits (in particular pensions and health care for the retirees).  But that all changed when women stopped having the babies the state planners assumed they would have.  So with a baby-bust generation following the baby-boom generation you get an aging population.  And large budget deficits.

Whose fault is it?  It certainly isn’t the seniors.  Or the women who stopped having babies.  It’s the state planners who created an unsustainable welfare state.  Because they are the ones who created the great Ponzi scheme to pass the costs for one generation to another generation.  This is wrong.  Even if it worked when there was a growing population growth rate.  Because the future is uncertain.  Things change.  Like family sizes.  And life-spans.  Another thing the state planners never saw coming.  None of this would have been a problem if government allowed each generation to take care of themselves.  Because a family bases their decisions on their economic circumstances.  So they live within their means.  They save their money and exercise frugality in their spending.  But when you pass your costs on to a later generation you don’t save as much or exercise as much frugality.  Because you don’t have to.

As time passes and the number of new taxpayers gets smaller the government raises tax rates.  Leaving taxpayers with less.  Making it harder to support themselves.  Which leaves them little choice but to demand more from government.  Which only makes the problem worse.  Making some couples wait years for IVF.  Because with their tax rates they can’t afford to go outside of the welfare state for treatment.


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Woman waits over 12 Months for Colonoscopy in Australia

Posted by PITHOCRATES - September 2nd, 2012

Week in Review

Health care in Australia is a hybrid of public and private service providers.  It is mostly a public universal health care system with a private system layered on top for those who wish to pay for it.  The federal government subsidizes private insurance to encourage some to use it and leave the federal system.  For Australia, like most developed nations, has an aging population.  Thus a growing rate of people leaving the workforce and becoming high consumers of health care services while there are fewer people entering the workforce to pay for this large rise in health care consumption results in a doctor and nurse shortage.  Which leads to, of course, longer waiting times (see Still on hospital waiting list by Richard Bruinsma posted 9/3/2012 on the Sunshine Coast Daily).

A MAROOCHYDORE woman who requires a simple exploratory colonoscopy every five years has “celebrated” 12 months on the Nambour General Hospital waiting list.

The woman, who did not want to be named, has a family history of bowel cancer and requires the regular check-ups as a precaution…

“Five years ago, I got in within three months, so I couldn’t believe a whole year has passed since I’ve been referred by my doctor…”

“If I’m waiting for 12 months for a simple colonoscopy, then what’s the rest of the health system like?”

A Nambour hospital spokesman was restricted from speaking specifically about the woman’s case but said the opening of new procedural suites at the hospital in April meant patient through-put had increased…

“All referrals to the service are reviewed and categorised according to clinical urgency and need by a medical officer. Those deemed more urgent are given priority.

“The Sunshine Coast Hospital and Health Service is working hard to assess and treat all patients on the waiting list.”

Most Australians are satisfied with their health care.  It’s one of the better universal health care systems.  Thanks to the hybrid structure of it.  And a relatively small population.  Though as baby boomers are retiring and leaving the workforce it is making an impact on their health care services.  As time goes on the Australians may love their health care system.  But they may complain about it more.  Such as in the UK.  And Canada.  Even in the United States.  Which before Obamacare they didn’t complain about the same kind of things.  The rationing of services.  And longer waiting times.  But that will come.  Because it’s happened in the UK, Canada and Australia.  And they’ve been practicing universal care for a long time.

Australia’s population is less than 10% of the United States’ population.  And it’s about a third of the UK’s.  So they don’t need a very large health care system by comparison.  But as Obamacare takes off the bureaucracy running it will be enormous.  As will the costs.  The bill itself had over 2,000 pages of new rules, regulations, fees and fines.  A lot of which were fill-in-the-blanks.  Things left noted ‘as to be determined’ by some government bureaucrat.  Meaning they will be making a lot of it up as they go.

So while the UK, Canada and Australia have universal systems with some problems with rationing and waiting times the Americans will see under Obamacare an explosion in rationing and waiting times simply because they will have so many more patients in their system than the British, the Canadians or the Australians.  Resulting in their own doctor and nurse shortage.  And if they are having problems after doing universal health care for such a long time you know some newcomer to the game will have even more problems.  Especially considering the US will have about five times the number of patients the British have.  And about thirteen and a half times the number of patients the Australians have.


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