Saturday, January 11, 2003

Gloria, Gloria, in Excelsis Deo

This afternoon, I was privileged to be in attendance when, in perhaps the single greatest act of political courage in my 40 (plus a teensy bit) years on this planet, George H. Ryan, Governor of the State of Illinois, emptied the state's condemned unit. In a sure that sign that he was acting in God's name, the incoming governor, the State's Attorney for Cook County , and other bloodthirsty, power hungry, small-minded men have already pounced on him. I'll have more to say (with links) on this subject in the days to come, but this evening my fiancee and I are going to watch Jack with a comb-over and Kathy Bates in her birthday suit, while my client, though still in jail, for the first time since June 1982 no longer faces the possibility of his own state sanctioned murder.

Thursday, January 09, 2003

More Evidence of Europe's Disease

Worth a thousand words. (The link, to a Yahoo! news photo, will expire within a couple weeks. It shows Gretta Duisenberg, wife of the head of the European Central Bank, with one arm around Arafat and her other hand grasping his, in a show not just, I think of political solidarity -- grotesque enough -- but of personal warmth). Well, at least Fallaci still lives, so perhaps Europe may yet be redeemed. (Note: the link is to an article written by Fallaci in the Corriere in April of last year condemning European anti-semitism. Perhaps self-consciously written with Zola in mind, "Io trovo vergognoso" will one day take its place in history alongside "J'accuse." The link is to the original Italian. I am aware of an excellent translation by another blogger, but he has taken it down due to copyright concerns). UPDATE: The translation is apparently still available here.

UPDATE: See Sullivan's post about Frau Duisenberg's views here

Suffer the Children

Who would proudly send his child to near certain death or grievous bodily harm? What to make of the society that institutionalizes this practice? What to make of the overlap between those ultra-lefties, in our society, who rightly say that a civilization is best judged by how it treats its most vulnerable -- including its elderly and its young -- and at the same time lionize the purveyors of this perverse culture of death? Sceptics might note that the link above is to a website of the IDF. But the article itself is based on, and links to, to Arabic sources. So all you scpetics who are fluent in Arabic can check out whether the report is accurate.

Wednesday, January 08, 2003

In the Highest Degree Odious

The United States Court of Appeals for the Fourth Circuit today decided that American citizens captured and detained by the American military in a foreign war zone may be detained indefinitely by the government, without charges or access to counsel. Here's Churchill's view of such power, whence comes the title for this post (and for the excellent book by my teacher Brian Simpson, where I first read it):

The power of the executive to cast a man into prison without formulating any charge known to the law, and particularly to deny him judgment by his peers for an indefinite period, is in the highest degree odious, and is the foundation of all totalitarian governments.

The Fourth Circuit today paid lip service to that principle, while giving the government virtual carte blanche to detain -- without access to counsel or hope for a trial -- American citizens whom it does not like. Volokh has a pretty straightforward summary of the Court's holdings.

To my mind, the best reading that one can give to the court's opinion is that the goverment may detain an American citizen indefinitely only if (1) it captures him in a foreign theater of war; (2) during active hostilities; and (3) it determines him to be "indeed allied" with hsotile forces. (see pp. 52-53 of the opinion). It sounds almost reasonable. Here's the catch: all three prongs of this test are sufficiently proved, in the court's view, by a two-page affidavit written by an unelected, unaccountable government bureaucrat. Those two pages might be a work of fiction, but the court believes no judicial inquiry into the truth of what's stated there is warranted.

I was in favor of the Afghanistan invasion (although I'm sceptical about its success), and I'm all for dealing harshly -- even savagely -- with terrorists (as some of my posts below make plain). I don't even quarrel with the notion that an American citizen can be classified as an enemy combatant. But then charge him with treason, give him counsel, and be done with him. Don't use such a one to establish broad powers of incommunicado detention for the government, trusting that they'll only be used for good.

UPDATE: See this excellent observation on Volokh's site about the Padilla case, where the administration wants to see the Hamdi logic carried to the extreme: a right to detain indefinitely and incommunicado an Americna citizen arrested on American soil.

More Palestinian Doublespeak

Meryl Yourish brings this beaut: Apparently, Abu Abbas, hijacker of the Achille Lauro and murderer of Leon Klinghofer, feels he should be lauded for not murdering everyone else aboard. Meryl does a great service in highlighting the terrorists' depravity. Pity her misguided views on bread.

Tuesday, January 07, 2003

A Whisper in the Madding Crowd

Andrew Sullivan and Meryl Yourish (among others, I'm sure) have done yeoman's work these past two years documenting Europeans' weakening inhibitions in expressing their undiminished hatred for Jews. Every once in a while, though, a glimmer of reason shines through. The London Times' lead this morning criticizes Israel's decision not to let Palestinian delegates attend a planned London conference this weekend. In doing so, the Times states: "With some reason, Mr Netanyahu believes that Britain, and most of Europe, is culpably naive in dealing with the Palestinian Authority . . ." The Times' view is, however, that the London conference, rather than buttressing Mr. Arafat and his culture of permanent jihad, could lay the foundations for moving the Palestinians beyond that culture. On this view, Mr. Netanyahu's travel ban plays right into Arafat's hands.

I think the Times too demonstrates some naivete -- the culture of permanent jihad runs deep among Palestinian Arabs (and Arabs generally), and Mr. Arafat is not the problem. Still, their recognition that Mr. Netanyahu has a point is encouraging, even if it is drowned out still by the hate-filled vitriol of Europe's chattering classes.

Compassion for (wealthy) Conservatives

Wiser heads than I have chimed in on the Bush tax cut. Paul Krugman hits the nail on the head in the New York Times. The Washington Post cites the views of two economists that the plan will do little to stimulate the economy. (Sullivan points out, for what it's worth, that both economists cited by the Post are democrats, one even having contributed to the DNC). The Christian Science Monitor (which blissfully does not require registration on its website) begs to differ. In the CSM's view, making dividends tax-free will have a transformative effect on shareholder-management relations: investors will clamor for "bird-in-hand" dividends, rather than long-term capital gains, once the relative tax benefits of the two types of return on investment are reversed (capital gains are currently taxed at a lower rate than "ordinary income," which is how dividends are classed). As a result, the incentive for companies to boost their stock prices by "such tricks as mergers" will be replaced by an incentive for them to boost productivity and hand over a greater portion of their profits.

It seems to me this is a speculative benefit at best. Billed as a way to stimulate investment and grow jobs, it could as easily have the opposite effect: Feeling pressured to pay a dividend (and to maintain it at a constant level or increase it over time), companies may forego the very type of long-term investment opportunities that lead to job growth. The fact is, sound management -- including decisions on how to finance the entity and whether to retain profits for investment or return them to investors -- should be based on broader considerations than the relative tax benefits of various alternatives. Want to encourage sound management? How about addressing the tax consequences of financing the entity? Right now (and historically), the tax code is biased in favor of debt finance: interest payments are tax deductible to the entity, while dividend payments are not. Seems to me, the Bush plan heightens the effect. Faced with pressure to pay dividends when they believe it's not sound to do so, management might simply alter the debt/equity mix of the company's financing. There are constraints on the company's ability to do so of course, but my intent is not to offer a prediction -- just to show that the predictions on which President Bush and his supporters rest so much of their argument are not so obviously accurate as they would have us believe.

Monday, January 06, 2003

There He Goes Again

President Bush wants to eliminate income tax on dividends, at a cost to the fisc of $300 billion over 10 years. Guess what this is, folks: that's right, a sop to the wealthy. Most working stiffs don't have much in the way of dividend income,and most of what they do have in the way of dividends accumulates tax-free in IRAs, 401(k)s, and other tax-deferred savings plans. On the other hand, the members of the Ford and Bush families, for example, use dividend income as a primary source of spending money (hey, it beats working for a living).

Conservatives have claimed for years that taxing shareholders on dividends taxes corporate earnings twice: once when the corporatin pays income taxes on them, and again when they distribute what's left to shareholders as a dividend. In most European countries, this notion long ago took hold in tax policy, and those countries, the UK and France chief among them, have devised wonderfully complex systems for guarding against this double taxation (fertile ground for expensive tax advisers. Full disclosure: in a previous life, I was an expensive tax adviser).

But let's examine three assumptions underlying this so-called double taxation. First and foremost, the notion of "double taxation" rests on the presumption that the corporation paying dividends has in fact paid income tax on its income. As a former expensive tax adviser, I can say, verily it is not so. Or at least not always so. That's why God gave the world expensive tax advisers.

Second, the notion of double taxation rests on the assumption that the recipient of the dividend is a tax paying entity. For example, I own a few shares of IBM, and I earn dividends on them. I own the shares, however, in my IRA. Guess what: I don't pay tax on the dividends until that time, thirty odd years distant, when I retire and withdraw the funds. The present value of those taxes (assuming I'm around to pay them and the income tax is still on the books) is negligible.

Third, the notion of double taxation rests on what my very first tax professor called the "Heroic Assumption" -- that corporations do not pass their tax burden on to customers in the prices they charge.

Now one could argue all day about whether and to what extent these assumptions are valid. And converting a tax bill into a price increase doesn't eliminate a tax burden -- it merely redistributes it from the corporation and its shareholders to the consuming public (just as a national sales tax, a favorite tool of Republican enemies of the income tax, would do).

Reasonable people can differ about what the correct policy choice is here. Last I checked, this one wasn't answered conclusively at Mt. Sinai or at any time since.

But reasonable people cannot differ about the implications of President Bush's policy choice -- he has put himself firmly and decisively in the camp of the wealthy. The Rovian spin to come on how this will help all Americans is mere cant. Let's see if the media let BushRover off the hook or not.