Nearly two centuries ago Daniel Webster stood before the U.S. Supreme Court on behalf of James McCulloch, head of the Baltimore branch of the Second Bank of the United States. At issue were two basic questions: Did the federal government have the authority to establish a bank? And did states have the authority to tax that bank (and by extension the federal government)? “An unlimited power to tax involves, necessarily, the power to destroy,” Webster famously argued in opposition to the latter question.
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California Emulates European Socialism, Gets Same Results
The euro zone isn’t the only economy reeling from “failed states.” The United States has several of its own — most notably California and Illinois. Both California and Illinois are hoping that tax hikes will bridge gaping deficits created by politicians’ failure to rein in government growth — including expanded entitlements and exorbitant public sector pensions. Does any of this sound familiar? It should.
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