Nick Gillespie:

So now college should be free in the same way K–12 education is. That’s what most (though not all) of the Democratic presidential candidates are saying, with Massachusetts Sen. Elizabeth Warren offering the most-detailed plan to make tuition at public universities free, forgiving “95 percent” of existing student debt, and increasing the amount of money for Pell grants and historically black colleges and universities. Ironically, the push for “free” college is coming at a time when a historically high percentage—about 70 percent—of recent high-school graduates are already enrolling in college. College has somehow become so unaffordable and remote that more and more people are attending.

“This is the kind of big, structural change we need to make sure our kids have opportunity in this country,” says Warren in a video she posted at Twitter. But just like Bernie Sanders’s routine and misleading invocation of “people with $300,000 in student debt,” Warren’s plan doesn’t just misrepresent the impact of student loans on the individual level and the historically high availability of access to higher education; it’s one more step toward an America where the people who benefit from something get somebody else to pay for it. Above and beyond any financial considerations, that’s a bad attitude to inculcate.

Warren would pay for her plan with an “Ultra-Millionaire Tax” on the 75,000 richest households in America, which she says would raise $2.75 trillion over a decade. As Peter Suderman has noted, “European countries that have imposed wealth taxes have largely given up on them; of the dozen OECD nations that had wealth taxes in 1990, just four still have the tax on the books.” Warren also keeps promising to spend her new revenue on all sorts of things, to a degree that there isn’t enough money to cover her growing list of giveaways.

Warren’s plan is of a piece with progressive Democrats pushing for more and more goods and services to be provided by the government regardless of citizens’ ability to cover their own costs. From a financial perspective, this sort of reflex is flatly unsustainable in a country that has already run up a $22 trillion tab and whose rising debt service will cost more than Medicaid next year and more than military spending in 2023. But there’s also a moral argument to be made here: Why shouldn’t we expect people who can pay for their own education, health care, and retirement to do so? And why shouldn’t we expect people who benefit from something to fund all or most of their activity?

When it comes to college, high-school grads are enrolling at historically high rates, a sign that they have access to higher education. Using three-year moving averages (which smooth out minor fluctuations) the National Center for Education Statistics (NCES) reports that a record-high level 69.5 percent of “recent high-school completers” are enrolled in college. In 1975, the first year for which data is presented, the figure was 49.1 percent. In 1980, it was 50.8 percent. Warren can rhapsodize about how much cheaper college tuition used to be, but the reality is that far higher percentages of people are attending college than ever before. In fact, according to NCES, a record high level of students from low-income households are attending college right out of a high school. The three-year moving average for low-income students in 2016, the latest year for which data is presented, was an unprecedented 67.1 percent—more than double the figure in 1980.

And despite claims that “we’re crushing an entire generation with student-loan debt,” the typical undergrad borrower is doing fine. About 70 percent of the Class of 2018 graduated with some debt, and their median monthly payment is $222. The overall amount of student debt is gigantic—about $1.5 trillion—but when you break it down to what the typical borrower is actually on the hook for, the picture changes dramatically.

If college students have skin in their own game, they’ll think more seriously about going to college in the first place and be more motivated to be serious and to finish. Also, one reason why tuition hikes have outpaced the general rate of inflation is that government-guaranteed student loans have helped to goose the costs. Meanwhile, the returns to a college degree remain immense even if they have flattened a bit in recent years. In a 2016 paper for the Federal Reserve Bank of San Francisco, Robert G. Valletta found that in 1980, the average worker with a high school degree made $16.33 per hour while the average worker with a college degree made $22.85. In 2015, the high school grad made $17.98 per hour while the college grad averaged $30.93. (All those figures are in 2015 dollars.) While studies of the effect of college on take-home pay vary, all show large gains and lower unemployment rates. If you’re going to make as much as a million extra dollars over your working lifetime by getting a B.A., you should be the one footing the bill.

There’s nothing wrong with asking people who benefit from something to shoulder all or part of the costs. Our national finances are falling apart largely because we keep insisting that all benefits be universal and that nobody pay their own way when it comes to big-ticket items such as health care, education, and retirement. One result in those areas are markets that don’t function as efficiently as they would otherwise. Another is a pervasive belief that we can always pass the costs of our choices onto other people. Our government is trying to be all things to all people It would be better to let it focus on helping people who can’t help themselves, and let the rest of us get on our with our own lives.

I am still waiting to hear why (1) people who didn’t and won’t go to college and (2) people who went to college and paid their own way (including paying off their own college debt) should pay for college students to go to college. If you believe that college graduates make more money than those who didn’t finish, or didn’t start, college, then college students should be able to pay for college themselves.

Dan Mitchell:

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?

Rich Galen:

The Lad (@ReedGalen) called the other day and we discussed whether the 20-person Democratic primary will be decided by those who want ideological purity (read, “Socialism”), or by those who want to beat Donald Trump.

“It is unlikely that a Socialist Dem can beat Donald,” Reed said.

As the Washington Post’s senior correspondent Dan Balz and polling director Scott Clement more elegantly put it:

“At least 20 contenders are courting a Democratic electorate closely divided over whether to nominate someone who can energize the party’s core constituencies or win over political independents.”

That statement was part of a review of a poll released Sunday showing, as nearly every other poll has shown, that at this stage it is a two-person race between former VP Joe Biden and Senator Bernie Sanders. In this poll, respondents were not read a list of candidates to choose from, but rather they were asked as an open-ended question, who they supported.

In that format, 54 percent said they had no preference. Of those who did show a preference Biden as first with 13 percent with Sanders right behind at nine percent. Pete Buttigieg was third at 5, Kamala Harris and Elizabeth Warren tied at 4, and Beto O’Rourke who, at three percent, was the only other candidate above one percent.

Central to our discussion was the observation that

“Asked to choose which is more important, 48 percent say they prefer a candidate who is best positioned to energize the Democratic base, while 44 percent prefer a candidate who can best win over independent voters.”

I assume “independent voters” represent those persuadable, but non-aligned voters who might got to Trump based upon immigration and the economy among other issues.

Rarely will someone answer a poll saying they would rather lose and remain faithful to their ideology. Far more often they say, “If we’re true to our ideology, we will energize enough like-minded people to win.”

Most often this is stated in the reverse, after a loss: “If more candidates that delivered a more pure message, they would have won.” That is not often true, but it has been a powerful fund raising message over the past 40 years.

In addition to guiding their messaging into the appropriate, in the current vernacular, “lane,” Democratic candidates are like the starters in the Olympic Marathon final. In 2016, 155 runners started the race (140 finished) and each was elbowing the guy next to him to try to get, and maintain, an edge.

Biden left the starting gate talking about Trump. Specifically talking about Trump’s reaction to the White Supremacist demonstration in Charlottesville. He has clearly set himself up as the person who can win in November 2020.

Sanders has continued to talk about the long-held and well-developed positions that credit his self-description as a “Democratic-Socialist.”

The Beto O’Rourke/Pete Buttigieg sub-contest is currently heading in Mayor Pete’s direction. O’Rourke hasn’t re-established the vibe that followed his exciting, but unsuccessful, race for U.S. Senate in Texas against Ted Cruz last year. Mayor Pete showed up about a month ago and has raised eyebrows (in a good way) every day since. As he said last week, “I think I’ve gone from being viewed as adorable six weeks ago to now plausible.”

The other head-to-head sub-contest appears to be between California’s Kamala Harris and Massachusetts’ Elizabeth Warren. To eye, Harris appears to be happy to run (continuing the marathon metaphor) just off the leaders’ shoulders for now. Warren keeps trying to elbow her way to the front as if she fears she will get lost in the mob if she doesn’t exhibit more energy night in, and night out than everyone else.

There is a poll released almost every day and the top six or seven will bounce up and down, but the remaining 12 or 13 are going to have to grit their teeth and make a move or voters will just forget them.

Biden, who has only been in the race for a couple of days, has claimed the “I can beat Trump” jersey.  Sanders is holding up the Socialism for Everyone banner.

We’ll see what Democratic voters are looking for.

Holman W. Jenkins:

ObamaCare is finally popular with the American people according to a variety of polls, and it’s instructive to understand why. The doing is Donald Trump’s and the Republicans’, and not in a way that made ObamaCare a sensible program.

Thanks to their effective repeal of the individual mandate, nobody is forced any longer to buy ObamaCare or pay a tax penalty. ObamaCare’s user cohort now consists almost entirely of willing “buyers” who receive their coverage entirely or largely at taxpayer expense. It also consists of certain users who take advantage of the coverage for pre-existing conditions and stop paying once their condition has been treated.

So why is ObamaCare growing in popularity with the 94% of Americans who don’t use it? Because it’s there if they need it.

A lesson here is worth holding on to: The public wants a safety net if they are caught without health insurance. In the absence of a personal emergency, they prefer their existing arrangements, which for 68% of us means employer-provided health insurance or some other purely private arrangement.

In every larger aim, the Affordable Care Act has predictably failed. It was supposed to ramrod efficiency through the health-care marketplace. Instead, it has become just another inefficient program bringing subsidized medicine to one more arbitrarily defined subset of the population.

Donald Trump listens to his briefings, apparently, because he cut to the heart of the issue with a recent tweet pointing out that, for most people, ObamaCare was not “useful.” He’s right. For a family of four not benefiting from a subsidy, notes insurance industry veteran Bob Laszewski, a policy can cost $15,000 with a $7,000 deductible. In other words, “they have to pay $22,000 before they get anything.”

Nonetheless, this column once maintained that a reformed ObamaCare, with its now-defunct individual mandate and its half-impulse to confine handouts to the needy, was potentially a better program than the menagerie of programs we have now. ObamaCare, in theory, could replace them all, including Medicare and the tax giveaway for employer provided insurance.

Alas, the idea of sweeping health-care reform seems to have gone out with the Bill Clinton and George W. Bush administrations. Two obstacles stand in the way. Nothing says “I care” like promoting more health-care spending, so U.S. politicians are addicted to dishing out incentives for Americans to consume medical attention whether or not it does them any good.

Secondly, how to climb down from any existing set of subsidies without provoking some vital bloc of voters has proved the unsolvable equation of America’s gridlocked politics. Notice that even the GOP’s “repeal and replace” campaign devolved into trying to repeal the funding for ObamaCare (e.g., the media-device tax) without repealing the benefits.

Our destination is clear. In the future, there will be one gold-plated health-care system for the rich and workers in high tax brackets. There will be another system for those who depend on a proliferating array of government programs. They can read their future in the latest report of the Trustees of Social Security and Medicare, out this past week. These giant budget sucks are rapidly outrunning their dedicated funding sources. Soon they will be openly competing with every other federal priority for nonexistent tax dollars, including those that the Democratic presidential candidates would like to spend on free college and Medicare for all.

If you depend on government-provided health care, the upshot is inevitable: longer waiting lists, rising copays and steeper deductibles as Washington struggles to pay for the medical procedures it has promised you regardless of whether these procedures leave you better off.

Should we abandon hope? No. The saving grace of our funky system is the giant tax incentive it gives employers to preserve profits by figuring out which medical treatments actually keep their employees healthy and which don’t. This shouldn’t be corporate America’s job, but it is. It’s no joke to say many U.S. businesses have more to gain from controlling health-care costs than they do from running their own operations better.

Hence the vaunted new health-care alliance created by Amazon CEO Jeff Bezos, J.P. Morgan CEO Jamie Dimon and Berkshire Hathaway CEO Warren Buffett. It’s called “Haven.” If it succeeds, it will do so by figuring out which half (a plausible estimate) of America’s medical spending is a complete waste of money.