What is a Picture Worth?

Thanks to Natasha Gordon, I have posted some new pics from DC v. Heller.

Tid Bit

Did you know Deaf Smith is a county in Texas? Interesting name. Wikipedia says:

The county was named for Erastus "Deaf" Smith (1787–1837), a partially-deaf scout and soldier who served in the Texas Revolution. He was the first to reach the Alamo after its fall.

Roadkill Tax

As Mark points out, South Carolinians are eligible for a new $50 tax credit.

Section 12‑6‑3750.

(A) Beginning with the year 2008, there shall be allowed a nonrefundable credit against taxes imposed by this chapter for a meat packer, butcher, or processing plant licensed or permitted by this State or the United States Department of Agriculture that, during the tax year for which the credit is claimed, had a valid contract with any nonprofit organization to process deer for donation to any charitable organization engaged in distributing food to the needy. No portion of the donated deer shall be used by a commercial enterprise. The amount of the credit shall be fifty dollars for each carcass processed and donated. The credit must be claimed in the year earned and may not be carried to any other taxable year.

(B) For the purposes of this section, 'process' means to skin, cut, bone, grind, package, or perform any butchering tasks necessary to prepare the meat for distribution and consumption. The processing must take place in a licensed or permitted establishment.

The best part: it was vetoed by Gov. Sanford and then overridden by the state legislature. You cannot make this stuff up...

Speaking of Guns

One of my office mates was telling the story of Rachel Jackson today in lieu of the Supreme Court's decision. The article contains many other interesting anecdotes. The moral of the Rachel Jackson story: .25 caliber is just too small.

DC v. Heller

I went to the Supreme Court today to hear them hand down what turned out to be an incredible decision (here and here). My boss knows Richard Heller and introduced me. So I ended up in some of the photos.

I guess that makes me a mover and a shaker.

What I am Reading

Common Sense Economics

Ok. I started reading this on the metro today. And only because the books I have ordered have not yet arrived. But it is ok. Very elementary. I am pretty sure I will not finish it. Unless my books are lost in the mail... But buy it. And then just leave it around your house so that you can casually pick it up ever so often and relish in the scores of examples used to illustrate economic points.

Fiscal Fact

I have been working on a new Fiscal Fact for the Tax Foundation and it is finally up. Check it out.

Fourty Years of Floods

I sent this to the local fishwrapper today in response to an editorial.

The editorial board (“Rebuild and learn,” June 23) suggests the “latest round of flooding ought to encourage more [government] buyouts” of homes “built in harm's way.” Good observation; poor solution.

Purchasing flood plains to prevent disasters blocks potentially productive uses. Consider Portsmouth Raceway Park in Scioto County, which floods several times a year. With a seasonal schedule, this otherwise useless land is converted into value for spectators; such a venture would cease to exist if the government bought up flood zones.

When considering a remedy for reoccurring disasters, we should go straight to the problem: The National Flood Insurance Program. Created in 1968, it was designed to protect property owners living in flood plains. But property owners living in flood plains are choosing to live in flood plains. They would certainly move elsewhere if their insurance premiums—rather than our tax bills—reflected the actual cost of living in such dangerous areas.

If anything, the outpour of aid and assistance following natural disasters demonstrates that the private sector is better suited for dealing with unforeseeable catastrophes than the public sector. Continuation of the forty year old program means more disasters, more deaths, and more debt.

Headlines

Best Headline I have seen today:
Swearing chef prompts tighter #*@%& rules

Ramsay's programs are ratings winners on free-to-air television in Australia, but prompted outrage earlier this year when one episode featured the volatile chef using a four-letter expletive more than 80 times in 40 minutes.

Outrage from select groups, mind you. Recall that it is a "ratings winner," so clearly a lot of people were not stirred up.

'Nudging' Back

George Will writes:

By a "nudge" Thaler and Sunstein mean a policy intervention into choice architecture that is easy and inexpensive to avoid and that alters people's behavior in a predictable way without forbidding any options or significantly changing an individual's economic incentives. "Putting the fruit at eye level counts as a nudge. Banning junk food does not."

And nudging would be acceptable in an ideal society. But we live in the real world.

By real world, I mean that place were government bureaucracy exists. Opt out forms in the real world are only available in a crowded office on the other side of town. And only from 9:30 AM to 4:00 PM (minus the hour they take for lunch, of course), Monday through Friday (…while most of us are at work). I can hear it now: Did you bring two valid IDs? Does one have your social security number? No, then try again next week.

I have taken off work too many times for the Department of Waste and Mismanagement to support more of the same. Nudging? No thank you.

Cracking Down on Crime Celebrity Tax Evaders

The New York Department of Taxation and Finance is cracking down. And Katie Couric is finding out first hand. Her $210.41 bill seems like nothing when contrasted with the $15 million she earns each year. But the tax man wants his. So they issued a warrant!

...a little absurd if you ask me. But Couric isn't alone in the assault on celebs.

Olbermann's Taxing Dilemma
Snipes Headed to the Slammer
Britney Mired in Red Inc.
Appeals Court Buries the Hatch
Marc Anthony Sings for IRS
Sweden's Taxman After ABBA's Ulvaeus Again
Tax Trouble for Wayne Newton

[HT: Sarah]

Liberty in Zimbabwe? Don't Bet On It

We can't ask the people to cast their vote on June 27 when that vote will cost their lives.

That is from Morgan Tsvangirai, chief opposition to Robert Mugabe. Tsvangirai withdrew from the runoff race following the tactics of terror imposed by Mugabe's ZANU-PF party. Read the full story here.

Walter Williams

David Skarbek at The Perfect Substitute has uncovered and incredible resource: The State Against Blacks on YouTube. These episodes, based on Dr. Walter Williams' book by the same name, are a little dated. Nonetheless, they are worth the watch.

Part 1
Part 2
Part 3
Part 4
Part 5
Part 6

I will be taking Micro with Dr. Williams in the Fall at GMU.

What is a Picture Worth?

I posted some new pictures on the website.

What I am Reading

Sports, Jobs, and Taxes: The Economic Impact of Sports Teams and Stadiums

You guessed it. All those arguments about tourism and economic booms to follow stadium construction are bunk. This book is an ok read; worth the skim if nothing else.

How to be Human

You will be hard pressed to find an economist who writes better than Aunt Deirdre. She does a very nice job of identifying key figures in the field, as well as the major pros and cons of the discipline. I would highly recommend it for incoming PhD students.

GAO: Uncle Sam Paying Medical Providers But Not Vice Versa

Medicare pays out approximately $400 billion in benefits to 43 million Americans every year. Of course, some of this tax money comes from medical service providers, who send taxes to the IRS in April and receive payments all year long. At least, that is how it is supposed to work. Today's Wall Street Journal reports on a Government Accountability Office (GAO) study released June 13:

...27,000 doctors, hospitals, nursing homes and hospices paid by Medicare failed to pay more than $2 billion in federal taxes in 2006.

Now that is what I call cutting out the middleman. Apparently it is not the first time this back-and-forth in taxes has become a one-way flow:

The report, ordered by the Senate Homeland Security and Governmental Affairs Committee's investigations panel, is the result of the third tax-fraud probe involving health-care providers. Last year, the GAO found 21,000 of Medicare's doctors and outpatient services owed $1 billion in taxes through September 2005, and 30,000 providers of Medicaid services, the state-federal health-care program for the poor, owed more than $1 billion through September 2006.

Of course, if cutting out the middle man-as I humorously suggest-was a noble effort to reduce wasteful government paper pushing, they should have stopped receiving payments from Medicare. But I am sure that was just a minor detail they overlooked. A $2 billion minor detail.

[TF Post]

Joke of the Day

Oh, if only it were a joke. But it is true. And in the NYT. It does however provide an example of a brilliant caption.

Caption:
“We’re not fighting over a rock,” a prosecutor says. Above, the rock that is not being fought over, in Portsmouth, Ohio.

What is a Picture Worth?

Benchwarmers

The Associated Press summarizes the decisions handed down by the Supreme Court today. Truthfully, I am only mentioning this to (boastfully) bring up the fact that I was there.

I was hoping they would address this case, but I guess we will have to wait until Monday (...or potentially Thursday).

Rent Movie Seeking

On Monday, I posted about Michigan's Film Tax Credits. Well, Mike Binder disagrees.

For Michigan to turn away from its newly enacted tax credit for film making would, quite simply, be one of the most sorrowful, spiritless, wrongheaded things a state government could possibly do.

This new law is just a few months old and already some of the legislators who voted for it are talking about repealing it or capping the tax breaks. That says more about the lawmaker than the law. Either they didn't understand what they were doing or don't have enough faith in their decision to stand behind it and let it work.

But I think this is probably the most telling part of his argument...

As some know, my brother Jack and I are filmmakers who grew up in Michigan. I personally advocated for this bill with Gov. Jennifer Granholm and the Legislature.

Joke of the Day

I am currently reading Tax Gap, an IRS "Report on Improving Voluntary Compliance," when suddenly I couldn't stop laughing. Get it? Voluntary Compliance.

...I guess they do not consider that the mere threat of force might lead to Compelled Compliance.

A Brief Review of the Literature for Presidential Hopefuls

From today's Wall Street Journal:

While Sen. McCain has argued that tax cuts—particularly on business—spur growth, Sen. Obama rejected that as flawed economics. "I've seen no evidence that . . . would actually boost the economic growth and productivity," he said.

Here's your evidence...

From the National Bureau of Economic Research: The Effect of Corporate Taxes on Investment and Entrepreneurship:

Our data reveal a consistent and large adverse effect of corporate taxes on both investment and entrepreneurship, A 10 percentage point increase in the 1st year effective corporate tax rate reduces the aggregate investment to GDP ratio by about 2 percentage points (mean is 21%), and the official entry rate by 1.4 percentage points (mean is 8%).

We find negative correlation between our measures of effective tax rates and recent growth in cross-country data. We also find that higher corporate taxes are associated with a larger informal economy.

We estimate that a 10 percentage point increase in the 1st year effective tax rate reduces the growth rate by around 1 percentage point per year.

One highly relevant piece of data, however, is that corporate taxation has a large adverse effect on FDI.

From the OECD: Taxation and Business Environment as Drivers of Foreign Direct Investment in OECD Countries:

Standard models of the [multinational enterprises] predict that corporate taxation can influence foreign direct investment (FDI) by creating a wedge between the pre- and post-tax returns on investment.

Consistent with previous findings, the regressions suggest that corporate taxation has a significant impact on FDI location choices, and that forward-looking measures based on tax codes - including bilateral arrangements and features of foreign income taxation - capture this impact more effectively than simple statutory rates.

From the U.S. Treasury Department: Approaches to Improve the Competitiveness of the U.S. Business Tax System for the 21st Century (PDF):

Taxing business income discourages investment by raising the cost of capital. The higher the cost of capital, the greater the disincentive to invest. The relatively high U.S. tax rate, compared to our trading partners, places a higher cost on investment. Business taxes play a particularly key role in the economy because they influence the incentive to acquire and use capital-the plants, offices, equipment, and software that corporations employ to produce goods and services. In general, an economy with more capital is more productive and ultimately attains a higher standard of living than economies that have accumulated less capital. Workers gain when businesses have more capital and, correspondingly, workers stand to lose when the tax system leads businesses to invest less and have a smaller capital stock.

The Treasury study also found that business tax reform could increase the size of the economy by as much as 2 to 2.5 percent!

And the list goes on...

From the American Enterprise Institute: Taxes and Wages:

The results in this paper suggest that corporate tax rates affect wage levels across countries. Higher corporate taxes lead to lower wages. A 1 percent increase in corporate tax rates is associated with nearly a 1 percent drop in wage rates.

From the Oxford University Centre for Business and Taxation: The Incidence of Corporate Income Tax on Wages:

Our central estimate is that 61% of any additional [corporate] tax is passed on in lower wages in the short run and around 100% in the long run.

From the Kansas City Fed: Passing the Burden: Corporate Tax Incidence in Open Economies:

Using cross-country panel data from the Luxembourg Income Study, I estimate that a ten percentage point increase in the corporate tax rate decreases annual gross wages by seven percent. Using U.S. data on corporate tax revenues and total wages, these estimates predict that labor's burden is more than four times the magnitude of the corporate tax revenue collected in the U.S.

But if math-intensive journal articles do not suit your fancy, have no fear. There is plenty of anecdotal evidence in Making Poor Nations Rich: Entrepreneurship and the Process of Economic Development by Ben Powell (Economic Freedom and Growth: The Case of the Celtic Tiger, for example)

As the research listed above indicates (relying on the experience of developed nations over the past 20 years), there is plenty of evidence to suggest corporate tax rates "boost economic growth and productivity"—not to mention real wages and living standards for US workers.

[TF Post]

Looking Back

From the WSJ:

Sen. Obama cited new economic forces to explain what appears like a return to an older-style big-government Democratic platform skeptical of market forces. "Globalization and technology and automation all weaken the position of workers," he said, and a strong government hand is needed to assure that wealth is distributed more equitably. He spoke aboard his campaign bus, where a big-screen TV was tuned to the final holes of the U.S. Open golf tournament.

Yes, yes. Because life was so swell for workers before globalization, technology, and automation crowded in.

War on Culture

Douglas Holtz-Eakin, a McCain adviser, has said "the law needs to start addressing the underlying cultural problems in our education system."

That is from the New York Times, Comparing Bush and McCain.

Some of us, Mr. Holtz-Eakin, would like to resolve social problems without the long arm of the law. Or maybe we should just rethink the term civil society.

Read My Lips

While accepting the Republican nomination for president in 1988, George H. W. Bush stated the now-famous phrase: “Read my lips: no new taxes.”

Well, as unlikely as it seems, Hugo Chavez is paying more than mere lip service to the elder Bush’s stance. Last Wednesday, Chavez stated that Venezuela would eliminate its problematic 1.5% tax on bank transfers. In addition to the cut, Chavez also announced that there would be no new taxes in 2008. Maybe Grover Norquist should send him a pledge form.

If Chavez’s history is any indication, these baby steps will soon be offset by giant leaps in the wrong direction. Until then, let’s hope American politicians follow his lead in eliminating distortionary taxes; it wouldn’t be the first time Chavez set a trend.

[TF Post]

Movie Tax Credits

Over at Reason, David Weigel draws attention to Canadian tax policy as a financier of films, such as Young People F***ing. Just south of the Eh State, Michigan State Senator Nancy Cassis (R-Novi) criticizes a similar initiative.

According to the nonpartisan Senate Fiscal Agency, the credit will bring $17 million into Michigan through income and sales taxes in fiscal year 2009. Yet due to the payouts to film companies, the credit will reduce the Michigan Business Tax revenue that year by $127 million -- for a net loss of $110 million.

One reason for this loss is that the film credit is a "refundable" one, which means that if a company's credits are more than its tax liability, the state will send the company a refund check. Such credit "cotton candy" may be sweet, but it provides no real nourishment to our economy.

As she notes in the article, she was the only Michigan legislator to vote against the Film Tax Credit.

What is a Picture Worth?

Takin' on the Tax Code

I am presently interning at the Tax Foundation. Here is a youtube clip you might find interesting.

Public Housing

I am writing an op-ed and found some cool housing data.

I found it particularly interesting that most families stay less than 1 year. In fact, 42% are out in under two years. It says nothing about how long before they return... so that is a weakness in the data. Nonetheless, this seems to support income mobility... even among the poorest.