Tuesday, March 11, 2014

The Great Wall of Canada

Unlike the United States, which often makes presidents of its governors, Canada has no tradition of elevating its provincial premiers to the office of prime minister. But, as the Romans used to say, Exceptio regulam probat (“The exception proves the rule”) – and Saskatchewan Premier Brad Wall might be that exception.

Last week, Premier Wall was in Washington, DC, to talk about a bevy of issues with congressional leaders. I spoke with him during his trip and asked, of the many topics he was in town to address – energy, the Keystone XL oil pipeline, country-of-origin meat labeling – which was most important?

Refreshingly, unlike many politicians, Wall gave a straight answer: the Boundary Dam and Saskatchewan’s revolutionary carbon capture project.

The $1.35 billion undertaking, which is set to go online this summer, will become the world’s first post-combustion, coal-fired carbon capture and storage facility. In converting the Boundary Dam Power Station near Estevan, Saskatchewan, the project integrates a rebuilt coal-fired generation unit with carbon capture technology to create low-emission power.

Coal is copious in Saskatchewan, and Wall is convinced Boundary Dam can make the best of that resource.

“Clean coal is not an oxymoron,” he avers, and he hopes to establish a model from which other economies, including the United States, can learn.

In this way, and not for the first time, tiny Saskatchewan, with a population of just over 1 million, is showing larger jurisdictions how to do things well.

The cradle of Canadian socialism, a place so flat you can watch your dog run away for days, Saskatchewan was for decades shunned and scorned, even by those who were born there.

“We used to give luggage as a graduation gift,” Wall recollects of provincial tradition. But in recent years, a burgeoning economy, fostered by a government with the good sense to get out of the way, has reversed that. “We have net in-migration from every province in Canada,” Wall reports, “with the occasional quarterly exception of Alberta.”

Speaking of Alberta, Wall is one of many voices, Canadian and American, advocating the approval of the Keystone XL oil pipeline from that province to Texas. After years of studies and reports, Keystone is the most scrutinized conveyance in the history of running liquid, yet its approval remains elusive.

Wall contends there is a window to get Keystone approved before the November congressional elections, for one reason: “Democrats don’t want to lose the Senate.” This reverses the rationale of many conservatives, including Charles Krauthammer, who think the Keystone’s approval is a fait accompli after the election, but not before, as Democrats’ opposition is a purely political stance, to motivate their voting base among the environmental left.

In either case, Keystone would be one of 75 oil pipelines criss-crossing the Canada-US border, and Wall is bemused that this particular project has become a cause celebre. During his DC trip, Wall speculated on concessions Canada might make in order to expedite the approval. His comments were misconstrued by the Canadian media to suggest he favors a carbon tax – which he most certainly does not – perhaps as an honest mistake, or wishful thinking by liberal-minded reporters, hoping to co-opt a popular politician to their cause.

The United States needs Keystone more than Canada does, and even the most verdant Democrat understands this. If there’s one metric that affects federal politicians, including presidents, it’s the price of gas, and a steady, affordable supply from a neighbor and ally will be beneficial in this regard.

As to being misquoted, Wall is not exactly angry (and honestly, what is an angry Saskatchewan Premier going to do – swat you with his curling broom?), though he does evince some frustration. For the benefit of American readers, a Canadian politician admitting to being “frustrated” is the rough equivalent of a president going to DEFCON 2.

Back home, Wall is having undeniable success in his second term. Saskatchewan unemployment is at 3.8% and as Premier, Wall enjoys an approval rating of 66%.

Even those of us who are not professional politicians, and who cannot count on 66% approval in our own living rooms, have to be impressed by such numbers.

As a pundit, one is privileged to interact with leaders in various fields, including and especially politics. Sometimes, one is grateful the conversation is at an end. That is, an interlocutor may be important, erudite and newsworthy, but something about them is irksome, and one gets the feeling of being played.

With Brad Wall, the opposite is true. While he is plainly intelligent, and discusses policy at a high level, he is at ease with himself, and a free trader in the marketplace of ideas. He is outcome-oriented, yet simultaneously and invariably pleasant.

This puts him in contrast to the prime minister many hope he will replace. Canada’s current leader, Stephen Harper, has something of a following among American conservatives but, as his critics point out, he has never been embraced by a majority of Canadians. This seems, at least in part, a function of Harper’s bloodless demeanor.

Harper’s attempts to seem genial, which are clearly unnatural to him, result in a discomfiting incongruity, like a nursery rhyme in a horror film.

During his DC sojourn, Wall noted numerous photos of Ronald Reagan in congressional offices. “Reagan was not interested in the whole left-right thing,” Wall notes, “but up and down.”

To Wall, an effective leader will defend his ideas or improve them, placing purpose ahead of ideology. Most of all, he understands that progress is achieved by the citizens he serves.

“Government is not going to take credit for the economy,” Wall says, speaking of Saskatchewan and of successful stewardship in general. It is a refreshing philosophy, from which a nation would benefit.

Theo Caldwell, an author and broadcaster, is a dual US-Canadian citizen. Contact him at theo@theocaldwell.com

Monday, March 3, 2014

Dave Camp's Tax Reform Shows Why We Should Abolish the IRS

As Congressman Dave Camp’s big line goes, the United States’ tax code is ten times the size of the Bible, but with none of the Good News.

When someone whose signature riff laments the length of tax laws attempts to remedy the situation, you’d expect his fix to be the soul of brevity.  The fact that Camp’s newly released proposal clocks in at nearly 1,000 pages makes one wonder if the right problem is being addressed.

As Chairman of the House Ways and Means Committee, Camp has undertaken a worthy task in issuing a new discussion draft on tax reform.

But in slogging through the document’s 979 pages (for those with lives to lead, a 32-page Executive Summary is also available), what becomes apparent is the ubiquitous, soul-crushing influence tax considerations have upon every aspect of American life.

From education to adoption to health care to religion – literally, from birth to death – there is a tax consequence to almost every action, no matter how intimate or picayune.

Camp’s ambition is to simplify the system and eliminate many of the politically driven incentives within the code.  This is laudable, but in finding offsets and attempting to help families or charities or other worthies, he ends up with slightly less of the same – a regime wherein almost anything you do is some of the taxman’s business.

Whether the tax implication is good or bad is beside the point.  What matters is that the conduct of civil society becomes influenced and distorted by tax considerations.

Camp has attempted to improve the system by working within it.  To see a dedicated and diligent public servant achieve such an underwhelming  result through this approach yields an inescapable conclusion: The system itself must be scrapped.

To his credit, Camp spends considerable energy attempting to reform the Internal Revenue Service, enumerating rights for targeted taxpayers and calling a halt to the agency’s lavish spending on itself.  But this merely addresses symptoms.

To wit, if you have to write a law saying agency employees should not squander money on conferences while abusing the taxpayers they purport to serve, the rot is already too deep.

As its recent, infamous conduct reveals, the IRS is a malignant outfit, for which America has no need.  The United States survived and thrived for the majority of its history before this absurdly titled “Service” was spawned barely 100 years ago.  Despite its arrogant, institutional insistence that it embodies  that necessity of civilized society spoken of by Oliver Wendell Holmes, the IRS has shown itself to be unscrupulous and unworthy to gather the nation’s financing.

It is an abiding challenge to make Americans understand things can be different, and this is not how taxes are handled in other parts of the world.

Officious though they may be, the tax authorities of other developed nations do not infest every aspect of private life, nor do they operate as political enforcers  for the party favored by the bureaucracy – and they most certainly do not treat their citizens abroad as tax subjects, requiring them to file and pay taxes regardless of where they reside (with the exception of Eritrea).

As columnist Mark Steyn often notes, Americans’ cringing fear of their tax department is a disgraceful anomaly among liberalized nations, and unbecoming supposedly free citizens.

If, then, we lance the boil that is the IRS, how do we fund the government?

You may choose one of the following options (but not both): a consumption tax on goods and services (Fair Tax), or a single, small rate of tax on income (Flat Tax).

There is ample support  for each of these in Congress and across the nation.  Administered by a new, small agency, with no other mandate and separate from the IRS (which would be permitted to melt like Margaret Hamilton), either approach would provide ample funding for the business of government, while minimizing the influence of taxes on Americans’ personal choices.

No one, not even Camp, expects there to be much movement on his proposal during this Congress, if ever.  This is partly a function of political reality, but also of the timidity of his plan, notwithstanding its intended comprehensiveness.  A truly comprehensive reform of America’s tax system would start by throwing the whole thing in the ocean.

Simply put, it is impossible to get excited about Camp’s plan, much less explain it in terms that are politically appealing.  For all its foofaraw about closing this loophole and eliminating that special interest incentive, we are still left with a tax policy that inserts itself into almost every area of human existence, and which starts at 1,000 pages.

Instead of an ever-present influence, make the tax code an afterthought.  To unleash America’s potential, to allow her citizens to pursue happiness and go boldly in the direction of their dreams, get the taxman out of the way.

Theo Caldwell, an investor and broadcaster, can be contacted at theo@theocaldwell.com