My friends on the left hold two impossible-to-reconcile views about taxation.
- First, they say taxes don’t really have any effect on incentives to work, save and invest, and that governments can impose high tax rates and punitive double taxation without causing meaningful economic damage or loss of national competitiveness.
- Second, they say differences in taxes between jurisdictions will cause massive tax-avoidance behavior as jobs and investment migrate to places with lower taxes, and that national and international tax harmonization is required to prevent that ostensibly horrible outcome.
Huh?!? They’re basically asserting that taxes simultaneously have no effect on taxpayer behavior and lots of effect on taxpayer behavior.
Well, they’re half right.
Taxpayers do respond to incentives. And when tax rates are too high, both money and people will escape high-tax regimes.
In other words, people do “vote with their feet.”
And it seems pro athletes are not “dumb jocks” when contemplating the best places to sign contracts.
Looking at baseball, taxes presumably had an effect on Bryce Harper’s decision to play for the Phillies.
For Major League Baseball players, three teams are at the bottom of the standings on state taxes: the Los Angeles Dodgers, San Diego Padres and San Francisco Giants. That’s because California is in a league of its own on personal income taxes. We’ve got by far the highest state rate in the nation, topping out at 13.3%. By contrast, Pennsylvania has a low flat rate for every taxpayer regardless of income. It’s just 3.07%. That’s one reason why superstar slugger Bryce Harper signed an eye-popping 13-year, $330-million contract last week with the Philadelphia Phillies, spurning the Dodgers and Giants. …Harper will save tens of millions in taxes by signing with the Phillies instead of a California team. …“The Giants, Dodgers and Padres are in the worst state income tax jurisdiction in all of baseball,” Boras adds. “Players really get hit.” …To what extent do California’s sky-high taxes drive players away? “It’s a red light,” agent John Boggs says. “I’ve had players in the past say they don’t want to go to certain states because they’re going to get hammered by taxes. Obviously, that affects the bottom line.”
Another argument for states to join the flat tax club!
If we cross the Atlantic Ocean, we find lots of evidence that high tax rates in Europe create major headaches in the world of sports.
For example, I’ve previously written about how the absence of an income tax gives the Monaco team a significant advantage competing in the French soccer league.
And there are many other examples from Europe dealing with soccer and taxation.
According to a BBC report, we should highlight the impact on both players and management in Spain.
Ex-Manchester United boss José Mourinho has agreed a prison term in Spain for tax fraud but will not go to jail. A one-year prison sentence will instead be exchanged for a fine of €182,500 (£160,160). That will be added to a separate fine of €2m. …He was accused of owing €3.3m to Spanish tax authorities from his time managing Real Madrid in 2011-2012. Prosecutors said he had created offshore companies to manage his image rights and hide the earnings from tax officials. …In January, Cristiano Ronaldo accepted a fine of €18.8m and a suspended 23-month jail sentence, in a case which was also centred around tax owed on image rights. …Another former Real Madrid star, Xabi Alonso, is also facing charges over alleged tax fraud amounting to about €2m, though he denies any wrongdoing. Marcelo Vieira, who still plays for the club, accepted a four-month suspended jail sentence last September over his use of foreign firms to handle almost half a million euros in earnings. Barcelona’s Lionel Messi and Neymar have also found themselves embroiled in legal battles with the Spanish tax authorities.
Let’s cross the Atlantic again and look at the National Football League.
Consider Christian Wilkins, who was just drafted in the first round by the NFL’s Miami Dolphins. He’s very aware of how lucky he is to have been picked by a football team in a state with no income tax.
The Miami Dolphins picked Clemson defensive tackle Christian Wilkins with the 13th overall pick in Thursday night’s first round of the NFL draft. …He’ll be counted on to help usher in a new era of Miami football under first-year head coach Brian Flores. …Wilkins said he “knew they were interested” in him and is happy to be headed to Miami. He also joked that he’s happy he’ll be playing football in Florida, where there is no state income tax. “Pretty excited about them taxes,” he said. “A lot of guys who went before me, I might be making just a little bit more, but hey, it is what it is.”
As he noted, his contract may not be as big as some of the players drafted above him, but he may wind up with more take-home pay since Florida is a fiscally responsible state.
College players have no control over which team drafts them, so Wilkins truly is lucky.
Players in free agency, by contrast, can pick and choose their new team.
And if we travel up the Atlantic coast from Miami to Jacksonville, we can read about how the Jaguars – both players and management – understand how they’re net beneficiaries of being in a no-income tax state.
Hayden Hurst got excited after he received a phone call from someone he trusted who told him the Jaguars were targeting him with the No. 29 overall pick. …Though Hurst…was happy when the Baltimore Ravens took him four slots before the Jaguars, he also knew in advance of the financial consequences that most rookies don’t notice. Since Florida is one of four NFL states (Tennessee, Texas and Washington being the others) with no state income tax, Hurst, who played at South Carolina, understood he’d see a big chunk of his $6.1 million signing bonus disappear on the deduction line when he received his first bonus check. …“I thought about how much of my money was going to be impacted depending on which state I played in,” Hurst said. “I’m paying a pretty hefty percent up in Maryland. To see the amount get taken away right off the bat kind of hurt, it was pretty sickening.” With the NFL free agent market set to open Wednesday, Hurst’s situation illustrates a potential competitive advantage for the Jaguars of being in an income tax-free state when they court free agents.
Yes, the flat tax club is good, but the no-income-tax club is even better.
I’ll close with an observation. Way back in 2009, I speculated that high tax rates could actually hurt the performance of teams in high-tax states.
It turns out I was right, as you can see from academic research I cited in 2017 and 2018.
The bottom line is that teams in high-tax states can still sign big-name players, but they have to pay more to compensate for taxes. And this presumably means less money for other players, thus lowering overall quality (and also lowering average win totals).
P.S. I normally only cheer for NFL athletes who played for my beloved Georgia Bulldogs, but I now have a soft spot in my heart for Christian Wilkins (just like Evan Mathis).
P.P.S. I also have plenty of sympathy for Cam Newton, who paid a tax rate of almost 200 percent on the income he earned for playing in the 2016 Super Bowl.
P.P.P.S. Taxes also impact choices on how often to box and where to box.
P.P.P.P.S. And where to run track.
P.P.P.P.P.S. And where to play basketball.
P.P.P.P.P.P.S. While one can argue that there are no meaningful economic consequences if athletes avoid jurisdictions with bad tax law, can the same be said if we have evidence that high tax burdens deter superstar inventors and entrepreneurs?
Nancy Pelosi is deathly afraid of impeachment. No, it’s not because of a sudden magnanimous surge of camaraderie. It’s because she understands what her fellow Democrats do not: Impeaching President Trump would be an unmitigated disaster.
Rank-and-file Democrats clearly believe that initiating impeachment proceedings in the Democrat-controlled House would sufficiently weaken Trump ahead of the 2020 presidential election, but they need only look to the ill-fated recall of former Wisconsin Governor Scott Walker to realize the folly of this assumption.
In early 2012, Walker seemed like (politically speaking) a dead man walking. His opponents had secured more than 900,000 signatures on a petition to recall him following his Act 10 public sector union reforms, and opposition to them brought 100,000 protestors to the Wisconsin Capitol just a year earlier.
No governor had ever survived a recall attempt, and the most recent to face one–California’s Gray Davis in 2003–was defeated overwhelmingly.
Yet stunningly, the effort to recall Walker backfired. Just a year after 100,000 protesters showed up to oppose him, he gained 200,000 votes from his 2010 election victory over the exact same opponent.
How did this happen? How did a politician so weakened by intense opposition manage to increase his margin of victory so significantly? The answer is as simple as it is seemingly difficult for Democrats to grasp: The overwhelming unity Republicans experienced in the wake of that opposition.
In other words, the hysterical overreaction to Act 10 galvanized support for Walker from both conservatives and independents who saw the effort to remove Walker for what it was–a political power play masquerading as an appeal to morality.
Walker’s commonsense calculation that overspending on public sector union benefits was bankrupting the state might not have been shared by an overwhelming majority of Wisconsinites, but the belief that Democrats overreacted to it sure was.
Voters, quite simply, couldn’t stomach removing a governor because of a disagreement on policy. In other words, Walker had already been tried in the court of public opinion and exonerated. Democrats, on the other hand, were judged to be sore losers simply bitter over their defeat in the 2010 election and the subsequent implementation of Republican legislation.
It’s almost impossible not to see the similarities in 2019. After two years, millions of dollars, tens of thousands of pages of documents, and hundreds of witnesses, Special Counsel Robert Mueller’s report found no evidence that the Trump campaign engaged in a criminal conspiracy with Russia to swing the 2016 presidential election.
Trump had won it fair and square, just as Walker had six years earlier. Democrats, though, still haven’t accepted that and are still looking for something, anything that would essentially undo the results. It is impossible to see an impeachment movement through any other lens.
Pelosi understands this, and is trying desperately to tamp down her party’s rabid push for it. She recognizes that national Democrats face the same uphill battle that Wisconsin Democrats did in 2012 of convincing the voting public that policy and/or personal differences can justify removal from office.
Republicans learned their lesson 20 years ago, when their effort to impeach President Bill Clinton resulted in his public opinion polling hitting the highest point it did during his presidency at 73 percent. Did voters decide that they liked Clinton a lot better once it was revealed that he was a lying adulterer? Of course not. They decided that he was the victim of a Republican witch hunt.
Why do Democrats think that President Trump would fare any differently? He has been claiming for years that the investigations into him were politically motivated, and in drafting Articles of Impeachment against him, Democrats would prove him right.
For years, he has claimed that the national media was out to get him. In fanning the flames of impeachment and overtly pushing for it, they are and have been proving him right for months
Politics is, at its core, making one’s opponent as unsympathetic and unlikable as possible. President Trump is beloved by his supporters, sure, but is loathed by millions. Turning him into a victim by impeaching him with no rational grounds, would turn him–like Clinton and Walker before him–into a sympathetic and therefore far more likable figure.
Not only would he survive a Senate trial since the requisite two-thirds vote to convict is an all-but-impossible standard, but he would also likely win re-election next year in a landslide on a message that amounts to little more than “Make Democrats Sane Again.”
Pelosi, therefore, has ample reason to fear impeachment, as it would solidify conservative support for a President already backed by a record-high number of Republicans and convince fair-minded Democrat-leaning voters that the opposition to Trump simply hasn’t gotten over its 2016 loss.
This is a recipe for disaster in 2020–a suddenly sympathetic president presiding over a roaring economy facing an opponent whose message amounts to little more than “Don’t you hate this guy as much as I do?”
Nancy Pelosi sees it. Here’s hoping the rest of her party doesn’t.
A different pro-impeachment argument came from Gene Healy two years ago:
What’s really obscene is America’s record on presidential impeachments. We’ve made only three serious attempts in our entire constitutional history: Andrew Johnson in 1868, Bill Clinton in 1998—both of whom were impeached but escaped removal—and Richard Nixon, who quit in 1974 before the House could vote on the issue. Given how many bastards and clowns we’ve been saddled with over the years, shouldn’t we manage the feat more than once a century?
A ‘National Inquest Into the Conduct of Public Men’
Impeachments “will seldom fail to agitate the passions of the whole community, and to divide it into parties,” Alexander Hamilton predicted in the Federalist. That’s how it played out during our last national debate on the subject, during the Monica Lewinsky imbroglio of the late ’90s.
The specter of Bill Clinton’s removal from office for perjury and obstruction of justice drove legal academia to new heights of creativity. Scads of concerned law professors strained to come up with a definition of “high Crimes and Misdemeanors” narrow enough to let Bill slide. In a letter delivered to Congress as the impeachment debate began, over 430 of them warned that unless the House of Representatives wanted to “dangerously weaken the office of the presidency for the foreseeable future” (heaven forfend), the standard had to be “grossly heinous criminality or grossly derelict misuse of official power.”
Some of the academy’s leading lights, not previously known for devotion to original intent, proved themselves stricter than the strict constructionists and a good deal more original than the originalists. The impeachment remedy was so narrow, Cass Sunstein insisted, that if the president were to up and “murder someone simply because he does not like him,” it would make for a “hard case.” Quite so, echoed con-law superprof Laurence Tribe: An impeachable offense had to be “a grievous abuse of official power,” something that “severely threaten[s] the system of government.”
Just killing someone for sport might not count—after all, Tribe pointed out, when Vice President Aaron Burr left a gutshot Alexander Hamilton dying in Weehawken after their July 1804 duel, he got to serve the remaining months of his term without getting impeached. Still, Tribe generously allowed, in the modern era “there may well be room to argue” that a murdering president could be removed without grave damage to the Constitution.
In the unlikely event that Donald Trump orders one of his private bodyguards to whack Alec Baldwin, it’s a relief to know that Laurence Tribe will entertain the argument for impeachment. But does constitutional fidelity really require us to put up with anything short of “grievous,” “heinous,” existential threats to the body politic?
The Framers borrowed the mechanism from British practice, and there it wasn’t nearly so narrow. The first time the phrase appeared, apparently, was in the 1386 impeachment of the Earl of Suffolk, charged with misuse of public funds and negligence in “improvement of the realm.” The Nixon-era House Judiciary Committee staff report Constitutional Grounds for Presidential Impeachment described the English precedents as including “misapplication of funds, abuse of official power, neglect of duty, encroachment on Parliament’s prerogatives, [and] corruption and betrayal of trust.”
As Hamilton explained in the Federalist, “the true spirit of the institution” was “a method of national inquest into the conduct of public men,” the sort of inquiry that could “never be tied down by such strict rules…as in common cases serve to limit the discretion of courts.”
Among those testifying beside Sunstein and Tribe in 1998 was Northwestern’s John O. McGinnis, a genuine originalist, who argued that the Constitution’s impeachment provisions should be viewed in terms of the problem they were designed to address: “how to end the tenure of an officer whose conduct has seriously undermined his fitness for continued service and thus poses an unacceptable risk of injury to the republic.”
Contra Tribe, who’d compared impeachment to “capital punishment,” McGinnis pointed out that the constitutional penalties for unfitness—removal and possible disqualification from future office holding—went “just far enough,” and no further than necessary, “to remove the threat posed.” In light of the structure and purpose of impeachment, he argued, “high Crimes and Misdemeanors” should be understood, in modern lay language, roughly as “objective misconduct that seriously undermines the official’s fitness for office…measured by the risks, both practical and symbolic, that the officer poses to the republic.”
Today, even the president’s political enemies tend to set the bar far higher. Donald Trump has acted in a way that is “strategically incoherent,” “incompetent,” and “reckless,” Democratic leader Rep. Nancy Pelosi said in February, but “that is not grounds for impeachment.”
But incoherence, incompetence, and recklessness are evidence of unfitness, and when we’re talking about the nation’s most powerful office they can be as damaging as actual malice. It would be a pretty lousy constitutional architecture that only provided the means for ejecting the president if he’s a crook or a vegetable, but left us to muddle through anything in between.
Luckily, Pelosi is wrong: There is no constitutional barrier to impeaching a president who demonstrates gross incompetence or behavior that makes reasonable people worry about his proximity to nuclear weapons.
Impeachable Ineptitude
When Barack Obama was president, Trump once asked, “Are you allowed to impeach a president for gross incompetence?” Earlier this year, Daily Show viewers found that tweet funny enough to merit the “Greatest Trump Tweet of All Time” award. Still, it’s a valid question.
The conventional wisdom says no, largely on the basis of a snippet of legislative history from the Constitutional Convention. As James Madison’s notes recount, when Virginia’s George Mason moved to add “maladministration” to the Constitution’s impeachable offenses, Madison objected: “So vague a term will be equivalent to a tenure during pleasure of the Senate.” Mason yielded, substituting “other high crimes & misdemeanors.”
But the Convention debates were held in secret, and Madison’s notes weren’t published until half a century later. Furthermore, the language Mason substituted was understood from British practice to incorporate “maladministration.” Nor did Madison himself believe mismanagement and incompetence to be clearly off-limits, having described impeachment as the necessary remedy for “the incapacity, negligence, or perfidy of the chief Magistrate.” …
As the Comey story emerged, pundits and lawbloggers debated whether, on the known facts, the president’s behavior would support a federal felony charge for obstruction of justice. But that’s the wrong standard. As the Nixon Impeachment Inquiry staff report pointed out: “the purpose of impeachment is not personal punishment. Its purpose is primarily to maintain constitutional government.” Even if, to borrow a phrase from Comey, “no reasonable prosecutor” would bring a charge of obstruction on these facts, the House is free to look at the president’s entire course of conduct and decide whether it reveals unfitness justifying impeachment.
A Rhetorical Question?
The Nixon report identified three categories of misconduct held to be impeachable offenses in American constitutional history: “exceeding the constitutional bounds” of the office’s powers, using the office for “personal gain,” and, most important here, “behaving in a manner grossly incompatible with the proper function and purpose of the office.”
When Trump does something to spark cries of “this is not normal,” the behavior in question often involves his Twitter feed. The first calls to impeach Trump over a tweet came up in March, when the president charged, apparently without evidence, that Obama had his “wires tapped” in Trump Tower.
The tweet was an “abuse of power,” “harmful to democracy,” and potentially impeachable, Harvard Law’s Noah Feldman proclaimed: “He’s threatening somebody with the possibility of prosecution.” Laurence Tribe, of all people, agreed. Murder may have been a hard case, but slander? Easy call. Trump’s charge qualified “as an impeachable offense whether via tweet or not.”
I confess it wasn’t the utterly speculative threat to Barack Obama that disturbed me about Trump’s Twitter feed that day in March; it was that a mere two hours after lobbing that grenade, Trump turned to razzing Arnold Schwarzenegger for his “pathetic” ratings as host of Celebrity Apprentice. The Watergate tapes exposed much more than a simple abuse of power. They revealed a fragile, petty, paranoid personality of the sort you’d be loath to entrust with the vast authority of the presidency. And Nixon didn’t imagine that the whole world would be listening. Trump’s Twitter feed is like having the Nixon tapes running in real time over social media, with the president desperate for an even bigger audience.
As it happens, there’s precedent for impeaching a president for bizarre behavior and “conduct unbecoming” in his public communications. The impeachment of Andrew Johnson gets a bad rap, in part because most of the charges against him really were bogus. The bulk of the articles of impeachment rested on Johnson’s violation of the Tenure of Office Act, a measure of dubious constitutionality that barred the president from removing Cabinet officers without Senate approval.
But the 10th article of impeachment against Johnson, based on different grounds, has gotten less coverage. It charged the president with “a high misdemeanor in office” based on a series of “intemperate, inflammatory, and scandalous harangues” against Congress. In a series of speeches in the summer of 1866, Johnson had accused Congress of, among other things, “undertak[ing] to poison the minds of the American people” and having “substantially planned” a race riot in New Orleans that July. Such remarks, according to Article X, were “peculiarly indecent and unbecoming in the Chief Magistrate” and brought his office “into contempt, ridicule and disgrace.”
‘Peculiar Indecencies’
From a 21st century vantage point, the idea of impeaching the president for insulting Congress seems odd, to say the least. But as Jeffrey Tulis explained in his seminal work The Rhetorical Presidency, “Johnson’s popular rhetoric violated virtually all of the nineteenth-century norms” surrounding presidential oratory. Johnson stood “as the stark exception to general practice in that century, so demagogic in his appeals to the people” that he resembled “a parody of popular leadership.” The charge, approved by the House but not voted on in the Senate, was controversial at the time, but besides skepticism about whether it reached the level of a high misdemeanor, “the only other argument offered by congressmen in Johnson’s defense was that he was not drunk when giving the speeches.”
It’s impressive that Trump—a teetotaler—manages to pull off his “peculiar indecencies” while stone cold sober. Since his election, Trump has used Twitter to rail against restaurant reviews, Saturday Night Live skits, “so-called judges,” and America’s nuclear-armed rivals. The month before his inauguration, apropos of nothing, Trump announced via the social network that the U.S. “must greatly strengthen and expand its nuclear capability,” following up the next day on Morning Joe with “we will outmatch them at every pass and outlast them all.”
As Charles Fried, Reagan’s solicitor general, observed, “there are no lines for him…no notion of, this is inappropriate, this is indecent, this is unpresidential.” If the standard is “unacceptable risk of injury to the republic,” such behavior just may be impeachable. An impeachment on those grounds wouldn’t just remove a bad president from office; it would set a precedent that might keep future leaders in line.
Let’s sum up — Democrats most likely have the votes to impeach Trump, but not enough Senate votes to convict him. Impeaching Trump will anger Republicans to get them to show up at the polls next year. Impeaching Trump might make future presidents think twice about their bad conduct (too bad that can’t be retroactive in Obama’s case) and reduce the power of the presidency. Looks like a win–win–win–win to me.