1 September 2009
Today’s Tabbloid
PERSONAL NEWS FOR lgn@limitedgovernmentnetwork.com
FISCALLY CONSERVATIVE BLOG FEEDS
Hillary: The Movie [Cato at
Liberty]
AUG 31, 2009 06:24P.M.
The Supreme Court is soon to hear a case that may drastically roll back
campaign finance regulation in the United States:
The case involves “Hillary: The Movie,” a mix of advocacy
journalism and political commentary that is a relentlessly
negative look at Mrs. Clinton’s character and career. The
documentary was made by a conservative advocacy group
called Citizens United, which lost a lawsuit against the
Federal Election Commission seeking permission to
distribute it on a video-on-demand service. The film is
available on the Internet and on DVD. The issue was that the
McCain-Feingold law bans corporate money being used for
electioneering.
The right position for the Court is that McCain-Feingold, and all other
campaign finance regulation, constitutes unconstitutional limitation on
free speech. This means reversing the Court’s 1974 Buckley v. Valeo
decision, which held that government limits on campaign spending were
unconstitutional but limits on contributions were not.
This distinction is meaningless. If it is OK for a millionaire to spend his
own money promoting his own campaign, why can he not give that
money to someone else, who might be a more effective advocate for that
millionaire’s views, so that this other person can run for office?
More broadly, campaign finance regulation is thought control: it
takes a position on whether money should influence political outcomes.
Whether or not one agrees, this is only one possible view, and freedom of
speech is meant to prevent government from promoting or discouraging
particular points of view.
It would be a brave step for Court to reverse Buckley, but it is the right
thing to do.
For more background on the case, watch this:
C/P Libertarianism, from A to Z
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FISCALLY CONSERVATIVE BLOG FEEDS
Dumb Law Makes Coffee Illegal
in NYC [The Club for Growth]
AUG 31, 2009 04:39P.M.
From the New York Post:
The owner of a Financial District tobacco shop was amazed to
learn he was violating the law by offering his customers a free
cup of joe while they legally puffed away on his cigars.
Vince Nastri III, the third-generation owner of Barclay Rex —
where bankers, City Hall staffers, lawyers and detectives
smoke while sitting in plush leather chairs or browsing in the
walk-in humidor — complained that the city is “trying to take
away my livelihood over a cop of coffee.”
[...] Nastri first got into hot water on June 10, when Health
Department inspectors arrived at his shop, at 75 Broad St., to
check out a complaint that cigar odor was wafting to the
building’s upper floors.
The inspectors decided the complaint was unfounded. But
one inspector pointed out the coffee machine, which
customers used gratis to make themselves espressos, lattes
and cappuccinos.
“That’s illegal,” the inspector pronounced — and issued
Nastri a citation, which can lead to fines ranging from $200
to $2,000.
Nastri found himself in a classic Catch-22 situation.
To serve coffee — even free coffee — he needs a permit to
operate a food-service establishment. But smoking is banned
in food-service establishments.
Today’s Tabbloid PERSONAL NEWS FOR lgn@limitedgovernmentnetwork.com 1 September 2009

FISCALLY CONSERVATIVE BLOG FEEDS millions of pounds in tax revenue, according to an August 6
report on www.guardian.co.uk.
Pork Free and Loving It [The
The departure of these sports betting firms, particularly if
Club for Growth] other sports bookmakers follow, could put the U.K.’s entire
AUG 31, 2009 03:34P.M. online gambling market (the largest legal betting market in
the world) beyond the reach of either the Gambling
My buddy Jon Fleischman writes to me: Commission or the Treasury, according to media reports.

“I think that it is notable and a good sign that the top Ladbrokes CEO Christopher Bell cited “intense competitive
fundraiser this period from the entire California delegation pressure” as the main spur pushing his company offshore.
was Tom McClintock – who has sworn off earmarks.” “Our award winning sportsbook Ladbrokes.com is the biggest
in the U.K. market but faces aggressive competition from
Jon has more to say here. McClintock, a former Club PAC-endorsed offshore operators who hold a very significant cost advantage
candidate, is a rock star on economic issues. by operating from low tax jurisdictions. Operating from the
U.K. has become unsustainable and we will relocate by the
year end,” he was quoted as saying in an August 6 statement
on the Ladbrokes Web site.”
FISCALLY CONSERVATIVE BLOG FEEDS
The 15 percent tax on online gambling (the industry had
ATR Supports H.R. 3463, Death lobbied for a 2 percent or 3 percent tax), one of Gordon
Brown’s last acts as chancellor of the Exchequer, has been
Tax Repeal Permanency Act of generally seen as an embarrassment for London, which had
sought to position the U.K. regulatory approach as world
2009 [Americans for Tax leading. Instead of applying for licenses with the Gambling
Commission as the laws’ drafters had hoped, members of the
Reform] online gambling industry have boycotted the U.K. and headed
AUG 31, 2009 03:25P.M. offshore.

ATR today sent the following letter (pdf) to Congressman Kevin Brady “The U.K. has effectively turned its back on the industry. It
(R-TX), who has introduced a bill to fully-repeal the death tax. will now be almost impossible for a U.K.-based operator to
Congratulations on your introduction of H.R. 3463, the “D... compete with offshore business,” John Coates, chair of the
Remote Gambling Association, said in a March 2007
statement. Sports betting became the last gambling
subindustry to remain onshore.
FISCALLY CONSERVATIVE BLOG FEEDS
Currently, the total tax faced by U.K.-based sports
Britain’s Brown Bounces bookmakers includes the 15 percent profits tax, a 15 percent
VAT, corporate tax, and a special 10 percent tax for horse
Betting Businesses [Cato at racing betting profits. Tax rates in offshore locations such as
Gibraltar, Malta, or the Isle of Man are only about 1 percent
Liberty] to 2 percent, according to the statement on the Ladbrokes
AUG 31, 2009 02:22P.M. Web site, and there is no special horse racing profits tax.”

A further chapter in Britain’s economic suicide comes from Tax Notes

International today (subscription only):

In a move apparently aimed at lowering their tax bills, major

U.K. sports bookmakers William Hill and Ladbrokes plan to
relocate their sports betting operations to Gibraltar,
according to media reports.

The move by William Hill was announced on August 4 and

was subsequently followed by Ladbrokes’ announcement on
August 6. The moves are projected to cost the U.K. Treasury

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FISCALLY CONSERVATIVE BLOG FEEDS
A Warning for President Obama
[Cato at Liberty]
AUG 31, 2009 02:08P.M.
Last November’s rejection of the failed GOP didn’t mean voters were
ready to embrace a massive increase in the size of the federal
government, says Scott Keeter, director of survey research at Pew
Research Center:
Obama campaigned for strong government action on the
economy and health care, and most of his voters agreed with
this direction. But Obama’s efforts to expand the role of
government have alienated many of those who did not vote
for him but nonetheless gave him high marks when first he
took office.
Pew Research’s political values survey this spring showed no
surge in public demand for more government. Indeed, anti-
government sentiment, which had been building for years,
was heightened by the financial bailout and stimulus
program.
FISCALLY CONSERVATIVE BLOG FEEDS
Anti-Sex School for Johns?
[Cato at Liberty]
AUG 31, 2009 01:51P.M.
In a novel approach to punishing men who attempt to hire prostitutes,
Nashville and other cities are sending first-time offenders to a one-day
class where they learn from former prostitutes, health experts,
psychologists and law enforcement officers about “the risks of hiring a
prostitute.”
This is a waste of time.
Prostitution is “the oldest profession” for a reason: sex is a biological
imperative. A day of anti-sex school will have no effect on the demand
for prostitution.
The better approach is to legalize.
Under legalization, the vast majority of men would patronize legal
establishments. This would also allow quality control, since competition
would encourage prostitution services to certify their employees as free
from STDs and above the age of consent. Legalization would help the
women who serve as prostitutes by reducing the violence they suffer
from johns and pimps. In particular, legalization would mainly eliminate
forced prostitution.
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1 September 2009
The claim that prostitution encourages sexual assault does not pass the
sniff test. Many countries, plus Nevada and Rhode Island, allow legal
prostitution to varying degrees, but no evidence suggests they have a
higher incidence of violence toward women.
C/P Libertarianism, from A to Z
FISCALLY CONSERVATIVE BLOG FEEDS
Union-Funded Study Says
Private Schools Expensive!
[Cato at Liberty]
AUG 31, 2009 12:36P.M.
I know, it’s a bit of a dog-bites-man headline, but bear with me. A new
study by a Rutgers University ed. professor purports to tell us about
“Private Schooling in the U.S.: Expenditures, Supply, and Policy
Implications.” The trouble is, the study presents no data that are
representative of private schooling in the U.S.
Author and ed school professor Bruce Baker analyzed per pupil
expenditures of private schools that had registered with Guidestar.org.
Based on its mission statement, Guidestar is a service brings together
charities seeking donations with would-be donors, in an effort to
encourage philanthropy. Only a fraction of the nation’s private schools
participate, and they are self-selected into that group. It is reasonable to
think that the schools that self-select into Guidestar are the ones most
avidly seeking donations. According to a PowerPoint presentation on
Guidestar’s site, its top five types of users are:
• Non-Profit Development Directors
• Non-Profit Fundraising Directors
• Grant Writers
• Foundation Grants Administrators and Donor Services Managers
• Corporate Foundation Giving Program Managers
Quite possibly, the private schools most actively seeking non-tuition
revenue are the ones… receiving the most non-tuition revenue. So not
only is the Guidestar population of private schools not randomly
selected, and non-representative of private schools nationally, there is
reason to believe it is biased in the direction that its author and
funders favor.
This would be bad enough, but it gets worse. The author makes no
serious attempt to determine the extent of the bias, or to control for it. In
fact, he consciously makes it worse: he choses to eliminate from
consideration any private schools reporting revenues or expenditures
Today’s Tabbloid PERSONAL NEWS FOR lgn@limitedgovernmentnetwork.com 1 September 2009

under $500,000, thereby excluding smaller, less expensive schools. FISCALLY CONSERVATIVE BLOG FEEDS

I have literally NEVER seen a serious academic study that starts from a Monday Links [Cato at Liberty]
sample that is known to be biased in the direction favored by its funders AUG 31, 2009 12:21P.M.
and then consciously makes matters worse by actively skewing it
even further! • Seven ideas for dealing with North Korea.

An example of the kind of analysis that is supposed to accompany the
presentation of a non-random sample to ascertain extent and direction
of bias appears in my own 2006 study of Arizona private schools,
available here. I dedicate five pages (beginning on page 14) to an
assessment of whether and to what extent my survey respondents
differed from the universe of all Arizona private schools. Significant
effort was expended on that section of the study, because it is both
necessary and expected. I was disappointed, though not surprised, by the
absence of such a section in the Baker study.
• Paging the Fifth Amendment: Florida high court rules that the
state can seize your private property without giving you a dime.
• How to cut the deficit by spending less. It sounds crazy, but it just
might work.
• Why stop at “Cash for Clunkers”? Why not have a “Cash for
Everything” program? Because it was a dumb idea to begin with,
that’s why.

Not only can the Baker study not tell you how much U.S. private schools • Podcast: When Germany enacted their own “Cash for Clunkers”
really spend, it seems to have a little difficulty getting the public school scheme, some of the old vehicles were illegally exported and sold
spending figures right, too. For instance, there is a line on page 42 out of the country before being destroyed. Could it happen here?
implying that DC public schools were spending $14,000 in 2007. Would that be so bad?
Federally-reported data show that DC was already spending over
$18,000 per pupil in 2005-06. And I’ve shown that it spent
$28,000/pupil in 2008-09.
FISCALLY CONSERVATIVE BLOG FEEDS
Finally, did I mention that Baker’s study was funded by the NEA-
bankrolled “Great Lakes Center for Education Research and Practice”? Time to Unravel U.S. Cotton
As Ed Sector pointed out a couple of years ago: “The Great Lakes Center
and the NEA’s Michigan affiliate are also linked on a personal level: [the Subsidies [Americans for Tax
Center’s director] Teri Battaglieri is married to Michigan Education
Association Executive Director Lou Battaglieri.” Reform]
AUG 31, 2009 11:56A.M.

Today, the World Trade Organization (WTO) ruled that Brazil could set
FISCALLY CONSERVATIVE BLOG FEEDS $295 million in annual sanctions against American goods entering that
country in retaliation for the United States’ failure ...
Congress’ Cybersecurity Act:
What Will They Regulate Next?
[Americans for Tax Reform]
AUG 31, 2009 12:28P.M.

In early April, Representative Jay Rockefeller (D-WV) introduced a bill

(S.773) in Congress that would allow the U.S. Federal Government to
take control of and shut down the Internet should there be a...

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Today’s Tabbloid PERSONAL NEWS FOR lgn@limitedgovernmentnetwork.com 1 September 2009

FISCALLY CONSERVATIVE BLOG FEEDS FISCALLY CONSERVATIVE BLOG FEEDS

Monday’s Daily News [The Club How Cap and Tax will Hurt
for Growth] Iowa [Americans for Tax
AUG 31, 2009 11:32A.M.
Reform]
THE DAILY NEWS Charlie Crist Lite: A Case of Senate Cronyism in AUG 31, 2009 09:54A.M.
Florida - WSJ Editorial Dems Backtrack on Single-Payer Bill - David
Shalleck-Klein, The Hill ‘Kennedy’ Once Meant ‘Tax Cutter’ - Jeff Jacoby, In our continuing, daily, state by state, look at the financial impact of the
Boston Globe Dem Split on the Public Option Casts Doubt - Soraghan Waxman-Markey Cap and Trade Tax Bill, we will show you the projected
and Stoddard, The Hill Value of U.S. Currency in Circulation - Mark losses in Gross State Product, Personal Income, and...
Perry, Carpe Diem Ezra Klein’s Confusion Over “Rationing” - Ronald
Bailey, Reason A Path to Fiscal Sanity - Jagadeesh Gokhale, National
Review Blogger Poll Results On Health Care - Right Wing News Free the
Mails - Chris Edwards and Tad DeHaven, Cato Institute Baseball Cards FISCALLY CONSERVATIVE BLOG FEEDS
And The Current Economy - John Tamny, Forbes.com Cubs 1, Mets 4 -
Associated Press Olympia Snowe [The Club for
Growth]
AUG 31, 2009 09:43A.M.
FISCALLY CONSERVATIVE BLOG FEEDS
She’s quickly becoming the Group of One.
AWF Urges Senators to Oppose
Confirmation of Craig Becker to
FISCALLY CONSERVATIVE BLOG FEEDS
National Labor Relations Board
Dems Could Face Double-Digit
[Americans for Tax Reform]
AUG 31, 2009 10:21A.M. Losses in 2010 [The Club for
A little known government body, the National Labor Relations Board Growth]
(NLRB), has the ability to drastically shape labor-employer relations AUG 31, 2009 09:37A.M.
through its interpretation of labor law. The five member board ...
The general elections are still a long ways off, but this was predictable.
From the Politico:

After an August recess marked by raucous town halls,

troubling polling data and widespread anecdotal evidence of
a volatile electorate, the small universe of political analysts
who closely follow House races is predicting moderate to
heavy Democratic losses in 2010.

Some of the most prominent and respected handicappers can

now envision an election in which Democrats suffer double-
digit losses in the House — not enough to provide the 40
seats necessary to return the GOP to power but enough to put
them within striking distance.

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FISCALLY CONSERVATIVE BLOG FEEDS
Lighting for People, not Politics
[Cato at Liberty]
AUG 31, 2009 08:53A.M.
Unfortunately, there are many good (and sad) examples of Uncle Sam’s
insatiable desire to regulate the smallest aspects of our lives. Legislators
can’t even let us decide which light bulbs to buy. Government believes
that it knows best, and is banning the venerable incandescent bulb.
Lighting consultant Howard Brandston makes a plaintive plea for
lighting that serves people rather than politics:
The Energy Independence and Security Act of 2007 will
effectively phase out incandescent light bulbs by 2012-2014
in favor of compact fluorescent lamps, or CFLs. Other
countries around the world have passed similar legislation to
ban most incandescents.
Will some energy be saved? Probably. The problem is this
benefit will be more than offset by rampant dissatisfaction
with lighting. We are not talking about giving up a small
luxury for the greater good. We are talking about
compromising light. Light is fundamental. And light is
obviously for people, not buildings. The primary objective in
the design of any space is to make it comfortable and
habitable. This is most critical in homes, where this law will
impact our lives the most. And yet while energy conservation,
a worthy cause, has strong advocacy in public policy, good
lighting has very little.
He hopes for a congressional reversal of the ill-considered prohibition. If
that doesn’t work, people do have one more option: stock-piling bulbs for
future use. Of course, that probably would lead to the creation of a
federal light bulb police, tasked with wiping out the black market in
incandescent bulbs. “Use a bulb, go to jail” may become the newest law
enforcement slogan!
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1 September 2009
FISCALLY CONSERVATIVE BLOG FEEDS
Wall Street, Big Oil, and Federal
Workers [Cato at Liberty]
AUG 31, 2009 08:49A.M.
What do workers in finance, energy, and the federal government have in
common? Very generous compensation packages, according to data from
the Bureau of Economic Analysis.
When I posted federal compensation data last week, I received a flood of
comments that disputed my contention that federal workers are
overpaid. A common retort was that “federal workers are not burger
flippers.” That’s true, but workers in the computer systems design,
computer manufacturing, and chemicals industries are not burger
flippers either, yet those folks also earn less than federal workers, on
average.
The Bureau of Economic Analysis presents compensation data for 72
industries that span the U.S. economy (Table 6.2D). Figure 1 shows the
20 industries with the highest levels of average compensation, including
wages and benefits. It also shows the average for all U.S. private
industries and the average for the industry with the lowest
compensation, which, indeed, includes burger flipping. (I’ve simplified
the names of the industries in some cases).
Federal civilian workers have the seventh highest average compensation
of 72 industries. Compensation in the federal civilian workforce is
topped only by compensation in three finance-related and three energy-
related industries.
Should federal compensation be so high? We are always told that the 1.9
million federal civilian workers are “public servants,” implying that they
are selflessly sacrificing for the good of the nation. I’m sure that most
federal workers are dedicated employees, but looking at these
compensation levels, I don’t see much sacrificing going on.
It is true that there are some elite agencies in the government that need
to have high compensation levels. But the bulk of the federal workforce is
in sprawling bureaucracies such as the U.S. Department of Agriculture,
which has a huge army of about 100,000 workers. The main job of USDA
workers is to administer farm aid, food stamps, and other subsidy
programs. That sort of paper-pushing work is not rocket science.
Today’s Tabbloid PERSONAL NEWS FOR lgn@limitedgovernmentnetwork.com 1 September 2009

FISCALLY CONSERVATIVE BLOG FEEDS

The Government Can! [Cato at

Liberty]
AUG 31, 2009 08:37A.M.

I don’t sing in my videos (much to the relief of every living creature). I

don’t dance either (there is a limit to self-deprecation). But Tim Hawkins
does sing and dance, and he uses those skills to great effect in this video.
Enjoy.

FISCALLY CONSERVATIVE BLOG FEEDS

The other point I made last week is that the BEA data makes clear that Why Is Marijuana Still Illegal?
federal compensation has skyrocketed this decade. Figure 2 provides
more support for that claim. [Cato at Liberty]
AUG 31, 2009 08:35A.M.
Federal civilian workers had the fifth highest average compensation
increase among 72 industries between 2000 and 2008. Average federal According to Rasmussen Reports, a majority of Americans believe that
civilian compensation increased 57 percent, which compared to the alcohol is more dangerous than marijuana:
overall average increase in the private sector of 31 percent.
Pot or not, that is the question.
Let’s slow this freight train down. Federal pay ought to be frozen for a
period of years, at least until the economy recovers and private sector Fifty-one percent (51%) of American adults say alcohol is
pay starts catching up. more dangerous than marijuana, according to a new
Rasmussen Reports national telephone survey. Just 19%
disagree and say pot is worse.

But 25% say both are equally dangerous. Just two percent
(2%) say neither is dangerous.

Younger adults are more likely than their elders to view

alcohol as the more dangerous of the two.

Fifty-three percent (53%) of women say alcohol is more

dangerous than marijuana, compared to 48% of men. Men by
a two-to-one margin over women say pot is riskier, but
women are more inclined to say both are dangerous.

Unmarried adults are more critical of alcohol than those who

are married. Those with children at home think alcohol is
more dangerous than those without kids living with them.

So why are pot users still being tossed into jail?

There are lots of good reasons why people shouldn’t use drugs. But
making drug use illegal only compounds the social consequences,
turning a moral and health problem into a legal and criminal problem.
The result is the worst of both worlds: all of the problems of drug use
plus all of the problems of prohibition. Unfortunately, those
consequences flow overseas, further undermining fragile societies such
as Afghanistan, Colombia, and Mexico and ultimately American security

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Today’s Tabbloid PERSONAL NEWS FOR lgn@limitedgovernmentnetwork.com
objectives as well.
It’s time to call off the Drug War.
FISCALLY CONSERVATIVE BLOG FEEDS
Oklahoma Sen. Gumm: We
Accept Your Invitation to Speak
[Tax Foundation]
AUG 31, 2009 12:00A.M.
The Tulsa World asked Oklahoma sales tax holiday supporter Sen. Jay
Paul Gumm (D) what he thought of our report debunking common
claims about sales tax holidays. His response? A challenge:
“I would invite this group to speak with the thousands of Oklahoma
families who saved millions of dollars during the back-to-school sales-
tax holiday,” [Gumm] said. “Perhaps then they might have a real-world
view of what this policy means to real people and the budgets of real
families.”
Gumm does not believe that Oklahoma retailers increased prices for the
sales-tax holiday.
“In most communities, retailers run specials to coincide with the sales-
tax holiday, providing even greater savings for families,” he said. “It also
helps level the playing field for the middle- and low-income families by
reducing the most regressive tax at one of the times of year when families
spend the most.”
On the latter point, our report looks at every published analysis of prices
around sales tax holidays (including one done by a news reporter in
North Carolina) and found that at least some prices are higher during
holidays. That makes sense, since supply is constrained but demand is
sharply up as everyone crowds the stores at one time. Recessions blunt
the price increases, however.
As for Sen. Gumm’s invitation for us to talk to his constituents about
how sales tax holidays affect them, we accept. I’m sending this to the
Senator today:
August 31, 2009
Dear Senator Gumm:
On behalf of the Tax Foundation, I would like to accept your invitation to
participate in a forum with you and your constituents on the benefits and
costs of sales tax holidays. I share your determination to provide tax
savings to the families of Oklahoma, and I believe such a forum would be
an excellent opportunity to explain how sales tax holidays fail to achieve
that.
8
1 September 2009
I look forward to details about location and time.
Yours Very Truly,
Joseph Henchman
Director of State Projects, Tax Foundation
Meanwhile, the Tulsa World followed up today with an editorial, calling
sales tax holidays a political gimmick that doesn’t spur the economy,
albeit a harmless one. Certainly they can be less harmful than other
disastrous tax policies. But the costs and distortions imposed by sales tax
holidays are real and harmful.
Past open letters to Oklahoma officials here, here, and here.
FISCALLY CONSERVATIVE BLOG FEEDS
Housing Lobby Seeking More
Handouts for Housing [Tax
Foundation]
AUG 31, 2009 12:00A.M.
The First-Time Homebuyer Tax Credit is set to expire on Nov. 30, and as
you’d expect from one of the most powerful lobbies in Washington,
they are looking to hold their hand out beyond Nov. 30. The National
Association of Home Builders and the National Association of Realtors,
two groups whose information is about as close to the truth as The
Onion, are feverishly lobbying Congress to extend the credit.
The Baltimore Sun described the two groups’ campaign:
Delegations of home builders and real estate brokers already have begun
descending on district offices, delivering what Jerry Howard, president
and CEO of the builders association, calls “the hard economic facts” ––
the numbers of houses sold in each congressman’s district that are
attributable to the tax credit; the economic ripple effects on local
businesses, manufacturers and service industries; new jobs and income;
plus the additional tax revenues that all this activity will help produce.
On a national basis, according to economists at the National Association
of Realtors, anywhere from 300,000 to 350,000 additional sales of
houses will be stimulated this year by the credit. Each home sale
generates about $63,000 in downstream “ripple effects” elsewhere in the
economy, they say - sales of furnishings, appliances, lawn mowers,
landscaping, renovation materials, plus moving expenses.
This information should be taken with a grain of salt by members of
Congress. What the paid shill Jerry Howard won’t tell you is what’s not
seen: the deficit financing and the resources that were diverted from
other productive activities. I could show with B.S. economic
activity statistics how a tax credit for strip clubs would be an economic
Today’s Tabbloid PERSONAL NEWS FOR lgn@limitedgovernmentnetwork.com 1 September 2009

boom to a region, but that doesn’t make it good public policy.
Never do these analyses address their fallacy of the ceteris paribus (all
else equal) assumption. Also, look at the NAR logic: moving expenses are
good for the economy. That’s pure hogwash. If I invented a space capsule
machine tomorrow that could magically take all your stuff from point A
to point B (and the machine was $5), according to the Realtors logic,
government should ban it because moving expenses would be lower. The
same for renovation materials. This is the broken window fallacy that
would make any econ 101 student laugh.
Finally, the homebuyer tax credit is 100 percent refundable, making it in
no substantive way different from a government spending program. Not
even critics of the tax expenditures concept should disagree given that
the amount one receives in credit is totally INDEPENDENT of the
person’s tax liability. The program is just run via the IRS so we call it a
“tax cut,” whereas if it was ran via HHS, we’d call it spending (or even
put it in a negative light and call it welfare for homeowners). There is no
economic difference between the two; it’s pure semantics. (At least a
nonrefundable credit has a floor of zero and thereby creates a zero
percent marginal tax rate zone.)
FISCALLY CONSERVATIVE BLOG FEEDS
Maine Tax Amnesty [Tax
Foundation]
AUG 31, 2009 12:00A.M.
Maine is offering a three month tax amnesty beginning September 1,
where unpaid taxes may be squared with the state at a 90 percent
reduced fine. Tax amnesties, an effort to mop up extra revenue, are
popular with states during bad economic times.
While states get a quick injection of cash from these programs, there are
reasons to be cynical. If states offer amnesty programs multiple times,
taxpayers will expect them, and depending on the likely terms (in some
cases delinquent taxpayers were made to pay about half of the interest on
taxes owed and no penalty), frequent amnesty programs will encourage
future tax evasion. Maine offered a more generous amnesty just back in
2003.
Then there is the issue of fairness, or rule of law. If a tax cheat ends up
better off after the amnesty, this will anger law abiders for good reason.
Criminality shouldn’t be made a beneficial strategy.
FISCALLY CONSERVATIVE BLOG FEEDS
WSJ: (Tax-Free) Home
Barbering Grows with
Recession [Tax Foundation]
AUG 31, 2009 12:00A.M.
The Wall Street Journal had an interesting article in today’s paper about
the growing trend of home barbering. Due to tighter family budgets,
many are deciding to cut their own hair.
I think can of two public policy perspectives on this. First, there would be
less at-home hair cutting if barbers were not required to get licenses,
which drives up the market price. While I can see some cases where
licenses may improve social well-being, I think this is one of those areas
where licenses make society worse off (as a whole).
On the tax side, this domestic production of hair cuts is taking place free
of income taxation. (The value of this domestic production is also not
counted in GDP.) And given that most of this production, as well as most
other domestic production, is likely taking place
disproportionately among low-income Americans, by allowing this
“income” to be earned tax free, the income tax is actually even more
progressive than IRS statistics show, all else equal.
In other words, a low-income American is more likely to cut his own
grass and do other tax-free domestic production himself than a rich
American, who is more likely going to use that time to earn more income
in the private sector where the income is taxed and pay someone else to
cut his grass. But we never count the imputed income that is earned by
the low-income American, thereby overstating that American’s average
effective tax rate (tax paid divided by income).

That being said, a study in the Journal of Public Economics claims:

[A]lthough cheating will rise as a result of the amnesty, it does not

directly follow that tax revenues will also fall. In particular, cheating will
rise only to the extent that people expect to participate in the amnesty. If
they do participate, the government will recapture not only the new
cheating, but the pre-existing cheating as well.

So amnesties might encourage more tax evasion, but as long as the state
continues to offer amnesties the lost revenue will be captured (if interest
is charged). Seems like an ugly cycle.