Archive for April 2005

I Guess I am an Extremist

I have not really had the time to do the research to form an opinion about Bush's judicial nominees, and the MSM is not very helpful in its coverage on the issue.  I wrote here that the judiciary has started to overreach of late, legislating from the bench to advance an agenda generally supported by the Democrats.  I don't know the candidates well enough to decide if these proposed judges are conservative activists who want to legislate from the bench but for conservative ends, or if they represent a first shot at reversing extra-constitutional judicial activism (which I would support).

However, I may have started to develop an favorable opinion on a couple of judges, based on what I have learned from their detractors.

Take this example, from a NY Times editorial, March 6, 2005.  In disparaging how extremist Bush judge nominees are, they use the example of:

Janice
Rogers Brown, who has disparaged the New Deal as ''our socialist
revolution.''

Woe is me, I must be an extremist.  First, the New Deal was clearly a "revolution", in that it was one of two events (the other being the Civil War) in the last 200 years that fundamentally changed the role of the federal government in what was a massive reinterpretation of the Constitution.  But was it socialist?  We can argue about whether the New Deal legacy that reaches us today is socialist or not- many quite normal non-extremist folks would argue yes and many similarly rational folks would argue no.

However, arguing the nature of the New Deal from what programs reach us today leaves out a lot of the picture.  Much of the New Deal was voided by the Supreme Court.  While some was re-passed later once FDR had a chance to remold the court with his own (for the time) extremist ideologues, some of the most socialist-statist-fascist legislation never was reinstituted.

The most dramatic of these institutions that fortunately were left on the cutting room floor was the National Industrial Recovery Act, or NRA.  Roosevelt actually modeled the NRA on Mussolini's fascism in Italy, so I guess it might be more correct to call it fascist rather than socialist but in practice, I can't ever tell those two apart.*

The image of a strong
leader taking direct charge of an economy during hard times fascinated
observers abroad. Italy was one of the places that Franklin Roosevelt
looked to for ideas in 1933. Roosevelt's National Recovery Act (NRA)
attempted to cartelize the American economy just as Mussolini had
cartelized Italy's. Under the NRA Roosevelt established industry-wide
boards with the power to set and enforce prices, wages, and other terms
of employment, production, and distribution for all companies in an
industry. Through the Agricultural Adjustment Act the government
exercised similar control over farmers. Interestingly, Mussolini viewed
Roosevelt's New Deal as "boldly... interventionist in the field of
economics." Hitler's nazism also shared many features with Italian
fascism, including the syndicalist front. Nazism, too, featured
complete government control of industry, agriculture, finance, and
investment.

If you are not familiar with the NRA, you need to be if you are going to come to a conclusion about the New Deal and just how statist FDR's aspirations were.  The actual text of the act is hereHenry Hazlitt has a long evaluation here.  In the end, the NRA was scrapped in large part because it was a disaster for the economy.  Many blame the NRA for strangling the recovery that began in 1933-34 and thus extending the depression.  Parts of the law (collective bargaining, minimum wage) were incorporated in other later legislation, but the core concept of organizing industrial cartels with government backing to run industries and set prices, wages, and production levels died, fortunately.

Update:  More here.  Mr. Gregory quotes John Flynn's The Roosevelt Myth:

[Mussolini] organized each trade or industrial group or professional group into a state-supervised trade association. He called it a corporative. These corporatives operated under state supervision and
could plan production, quality, prices, distribution, labor standards,
etc. The NRA provided that in America each industry should be organized
into a federally supervised trade association. It was not called a
corporative. It was called a Code Authority. But it was essentially the
same thing. These code authorities could regulate production,
quantities, qualities, prices, distribution methods, etc., under the
supervision of the NRA. This was fascism. The anti-trust laws forbade
such organizations. Roosevelt had denounced Hoover for not enforcing
these laws sufficiently. Now he suspended them and compelled men to
combine.

*  I disagree with people who want to argue that socialism is freedom but without property rights while fascism is property rights without other freedoms.  Neither of these conditions are stable, and both converge to the same destination of suffocating statism, just with different starting points and different people in charge.  One of the things that drive libertarians nuts is being presented with a grade school civics book that has a linear political spectrum with fascism on one end and communism on the other.  Are those really my only two choices? 

 

Republicans and Federalism

Many people of late have suspected that Republicans, now that they have power in the central government, have abandoned federalism (federalism being the philosophy of government that legislative power for as many issues as possible be devolved to the most local unit of government possible).  The recent abortion bill passed by the House seems to confirm this:

The House passed a bill yesterday that would make it a federal
crime for any adult to transport an under-age girl across state lines to have an
abortion without the consent of her parents.

When selling federalism in the past, Republicans have argued that federalism better protects individuals and their rights, because it creates competition among states.  Individuals and businesses fed up with bad legislation in one state can move to a more favorable climate.  Now, however, the Congress is stepping in to limit free movement between states to prevent individuals, in this case teenage girls, from shopping for a better regulatory climate.  What's next?  Preventing businesses from moving across state lines to a state with lower taxes?

By the way, there is a lot of sloppy thinking in the debate on parental notification for teenage abortions.  In this debate, the legal or moral status of abortion is nearly irrelevant.  Underage children are special class of citizen who are not yet acknowledged by the law as being able to make certain adult decisions.  Already we regulate and restrict underage decision-making on driving, drinking, smoking, voting, etc.  All of these are perfectly legal activities that we don't let teenagers do at all.  So even if abortion is entirely legal and Constitutionally protected, it can still be both legal and ethical to place restrictions on it for minors -- remember that voting, and to some extent drinking due to the 21st amendment, are Constitutionally guaranteed activities we legally deny teenagers).  Heck, most states have parental permission laws for teenagers to use tanning salons, which is certainly a much more trivial activity than getting an abortion. 

I am not an expert on abortion law, but my memory is that the Supreme Court ruled that abortion parental notification and permission laws are Constitutional if the law includes an option for the girl to override her parents veto through the judiciary.  I have always argued that we should place an additional proviso in the parental permission laws, one I think both sides of the abortion debate might accept -- if a parent refuses to allow their daughter to have an abortion, then the girl's parents must adopt the baby and be ready to raise it themselves. 

My Proposal on Filibuster Rules

I am about at the end of my rope on listening to the current filibuster debate, all the more so because whatever side some Senator is on today, you can bet a pile of money that they were on exactly the opposite side 10 years ago, when the majority-minority positions of the two major parties was reversed.  Senators from both sides can argue all day that their current stand is "on principle", but this is crap.  If all these people's stands were "on principle", then about 100 Senators have completely changed their principles in the last 10 years. 

Before I take my shot at truly coming up with a solution "on principle", here is but one example of this switch of sides.  I will use the NY Times as an example, mainly because they are so much fun to criticize.  Thanks to Powerline for pointers to some of these editorials.

In their editorial titled "Senate on the Brink", dated March 6, 2005 the Times stated:

To block the nominees, the Democrats' weapon of choice has been the
filibuster, a time-honored Senate procedure that prevents a bare
majority of senators from running roughshod.

and further:

Now [the White House] threatens to do grave harm to the Senate. If Republicans fulfill
their threat to overturn the historic role of the filibuster in order
to ram the Bush administration's nominees through, they will be
inviting all-out warfare and perhaps an effective shutdown of Congress.

Wow! Its sure good that we have this filibuster thingie to protect our way of life.  And its great to have champions like the NY Times who are stalwart defenders of this procedure. 

Except when they are not.  Back when the majorities were reversed almost exactly a decade ago, on January 1, 1995 the NY times editorialized:

The U.S. Senate likes to call itself the world's greatest deliberative body. The
greatest obstructive body is more like it. In the last season of Congress, the
Republican minority invoked an endless string of filibusters to frustrate the
will of the majority. This relentless abuse of a time-honored Senate tradition
so disgusted Senator Tom Harkin, a Democrat from Iowa, that he is now willing to
forgo easy retribution and drastically limit the filibuster. Hooray for him.

For years Senate filibusters--when they weren't conjuring up romantic images
of Jimmy Stewart as Mr. Smith, passing out from exhaustion on the Senate
floor--consisted mainly of negative feats of endurance. Senator Sam Ervin once
spoke for 22 hours straight. Outrage over these tactics and their ability to
bring Senate business to a halt led to the current so-called two-track system,
whereby a senator can hold up one piece of legislation while other business goes
on as usual.

and further (note the Senators who are players in this quote 10 years ago):

Mr. Harkin, along with Senator Joseph Lieberman, a Connecticut Democrat, now
proposes to make such obstruction harder. Mr. Harkin says reasonably that there
must come a point in the process where the majority rules. This may not sit well
with some of his Democratic colleagues. They are now perfectly positioned to
exact revenge by frustrating the Republican agenda as efficiently as Republicans
frustrated Democrats in 1994.

Admirably, Mr. Harkin says he does not want to do that. He proposes to change
the rules so that if a vote for cloture fails to attract the necessary 60 votes,
the number of votes needed to close off debate would be reduced by three in each
subsequent vote. By the time the measure came to a fourth vote--with votes
occurring no more frequently than every second day--cloture could be invoked
with only a simple majority. Under the Harkin plan, minority members who feel
passionately about a given measure could still hold it up, but not indefinitely....

The Harkin plan, along with some of Mr. Mitchell's proposals, would go a long
way toward making the Senate a more productive place to conduct the nation's
business. Republicans surely dread the kind of obstructionism they themselves
practiced during the last Congress. Now is the perfect moment for them to unite
with like-minded Democrats to get rid of an archaic rule that frustrates
democracy and serves no useful purpose
.

Gee, now I'm starting to think this filibuster thingie might not be so good.  I kindof get confused as to which principled stand by the NY Times I should get behind.

My Plan

First, recognize that I am not a lawyer, nor a constitutional scholar, nor do I play one on TV.  But seeing as the "experts" are tripping over themselves in their hypocrisy, there is not reason I can't jump in the fray too.

My idea for this started when I found out something about filibuster rules -- there are already certain votes that by Senate rules have been made immune to filibuster.  Thank God for blogs, because you won't find this anywhere in the MSM, though its apparently common knowledge.  Everyone treats a change in filibuster rules for judge confirmations as "a break in the dam" or a "slippery slope" which will wipe out the entire filibuster rule.   However, such exceptions have already been made.  The most used one is for budget votes - neither party may filibuster certain budget votes.  The logic for this is obvious - no one want to let 41 people shut down the government.  The majority party should be able to pass their budget.  This exemption is why Senate leaders often bury controversial provisions (recent example:  ANWR drilling) in the budget -- so they can't get filibustered.  Other votes exempt from filibuster include votes under the War Power Act and a number of really trivial things that I can't remember right now - I am looking for a link and would appreciate help.

This leads me to what seems like a fairly obvious, moderately principled position on filibuster:  Change the Senate rules to allow filibuster on new legislation, but exempt votes from filibuster that are required to keep the basic functions of government running.  This latter exempt category would include things like approving budgets, raising the debt ceiling, and voting on nominees of all types.

Postscript:  By the way, as a libertarian, I am generally all for seeing the government shut down, and don't shed many tears when the Senate does nothing.  However, I think my proposal is pretty true to the intentions of the Constitution.  In particular, of all the functions that are currently being shut down by the filibuster, it is galling that it is the court system that is being ground to a halt, since the courts are one of the few institutions where even a hard core libertarian like myself accepts a strong role for government.  Which is not to say that I am happy with the power courts and judges have been taking on themselves of late.

Update:  Here is a further good proposal that I am not sure why no one is talking about - if they are going to filibuster, lets make them actually filibuster, i.e. keep talking and talking:

  However, I think that these Princeton students have the right idea:  If you are going to filibuster, then you should have to filibuster.
Filibusters should come at some personal and political cost. We should
abolish the candy-ass filibusters of modern times, and require that if
debate is not closed it must therefore happen

The
prospect of John Kerry, Hillary Clinton or Ted Kennedy bloviating for
hours on C-SPAN would deter filibusters except when the stakes are
dire, if for no other reason than the risk that long debate would
create a huge amount of fodder for negative advertising. If Frist were
to enact the "reform" of the filibuster instead of its repeal, he would
sieze the high ground. He could take the position that the Republicans
are merely rolling back the "worst excesses" of the long period of
Democratic majority in the Congress, and that filibusters will still be
possible if Senators are willing to lay it all on the line. Indeed,
even the students at Princeton would be hard-pressed to argue against
such a reform of the filibuster, since extended speechifying is
precisely the means they have used to make their point.

Princeton Speech Code

I could easily have chosen nearly any university in the country as the example for this post, but I will choose my alma mater Princeton

Like many universities, Princeton has a speech code.  Like many universities, Princeton's speech code is an affront to the First Amendment and an open license to selectively apply administrative punishments based on political beliefs.

The Princeton speech code says, in part:

Abusive or harassing behavior, verbal or physical, which demeans, intimidates, threatens, or injures another because of his or her personal characteristics or beliefs, is subject to University disciplinary sanctions...

And further defines sexual harassment as:

verbal or physical conduct [that] has the effect of unreasonably interfering with an individual's work, academic performance, or living conditions by creating an intimidating, hostile, or offensive environment.

This is the worst kind of arbitrary legislation.  In no part of the guidelines are any of these terms defined.  In fact, both as written and as practiced, the definition of these terms is left entirely up to the victim, with outrageous consequences.  Basically we have gotten to the point where hurting someones feelings, or even disagreeing with them, is a crime. 

This would be bad enough if enforced even-handedly, but in practice, speech codes become a tool of the University faculty and administration to squelch speech they don't agree with.  One of my pet peeves is the term "hate speech", which is used frequently in political diatribes by both the left and the right.  While this term may have at one point had some utility in narrowly describing the most extreme racism, today in its common usage it has come to mean "speech I don't agree with".  In a similar manner, campus speech codes are effectively enforced as banning speech that the ruling orthodoxy of the university does not agree with.  If a gay rights activist and a conservative Christian get into an
argument on campus and use similar invective against each other, you
can bet only one is probably going to get sanctioned.  And, given the typical politics of universities today, you can guess what speech is protected and what is sanctioned. 

Here is my rule of thumb:  unless speech meets the (narrow) definition of libel, no legally or
administratively actionable harm can be claimed as a result of it.  Or, as we were taught as kids, sticks and stones will break my bones but names will never hurt me.  In the adult world, this should translate to:  Physical assaults are actionable, verbal assaults are not. 

The Princeton Tory has a nice article on these policies, as well as the really bad idea to extend this to a "social honor code".  And, the Foundation for Individual Rights in Education (FIRE) is the leading defender of free speech on campus and has a great web site.

Postscript:  Speech limitations are a very slippery slope.  So much so that I have never encountered speech or expression by adults aimed at other adults that I would limit.  Nazis, communists, birchers, pornographers, racists, revolutionaries, militia, muslims, atheists:  Have at it.  Even Congressmen.  And even this.

Update:  One other thought.  I have never understood why so many people think that the right approach to people who have stupid, awful ideas is to keep them from being heard.  This applies not only to speech codes but the increasingly frequent attempts to ban speakers from campus or, if that is unsuccessful, drown their speech out with chants and interruptions.  Why?  I have always thought that Sunlight is the Best Disinfectant not just for government proceedings but for bad ideas as well.  Let them be heard and ridiculed.  After all, Hitler "called his shots" more than a decade before he began his horrible reign.  The world would have been better off if he had been listened to carefully in those early years.

Update: More on Taxes and Class Warfare

Earlier this week I posted my thoughts on taxation, which included thoughts on taxation and class warfare and linked this recent WSJ editorial on tax shares paid by the rich.

Today, Kevin Drum rebuts the WSJ editorial with a post of his own.  Though I find Mr. Drum's consistent socialism and the-rich-will-be-first-against-the-wall rhetoric tedious, he is a smart guy and does have a point.  There is, as usual, a mixed message in the data.  However, this also means, as I will point out in a second, that Drum is guilty of picking and choosing his data points just as much as does the WSJ.

Drum points out, rightly, that while the share of taxes paid by the "super rich" (his term for the top .5% of income earners) has increased, their share of income has increased faster, such that their rates have gone down (god forbid that anyone violate the left's rule of the tax ratchet that says that tax rates may always go up but can never ever come down).  Using the same study as the WSJ, he rebuts this table of share of tax burden...

Share of Taxes (Income & Social Security) Paid By Income Classes

Category of Earners

1979

1999

1999 (at 2003 rates)

Top .1%

5.06%

11.05%

9.52%

Top 5%

14.69%

16.84%

17.75%

Top 20%

58.28%

68.17%

67.47%

Bottom 20%

1.22%

0.63%

0.65%

...with this chart , including Drum's subtle annotations in red:

His point is that the Super Rich actually pay lower rates now and the middle class pays higher rates, or as he puts it:

So shed no tears for the super rich in America. Their incomes have tripled in
the past couple of decades and at the same time their tax rates have decreased
by 9 percentage points. That's a pretty sweet deal in anybody's book.

Here are some thoughts on Drum's rebuttal:

Drum cherry-picked data too:  I will get back to the folks in the top 1 percentile in a minute.  Leaving them aside for a minute, note that Drum's storyline breaks down for everyone else.  If you compare the merely rich in the 1-20th percentiles, they got a smaller reduction in the Bush tax cuts than anyone in the middle and lower quintiles.  For example (comparing the 1999 before tax cut and 1999 after tax cut lines) the 1-5% richest got a rate reduction of 0.21%, while Kevin's favored group at 40-60% got a 1.45% rate reduction.

Don't blame this administration for previous tax increases:
  Drum is correct in saying that the tax rate has risen for the middle class over 20 years, but incredibly disingenuous not to explain why.   Note that the 1 point rise (which presumably Drum wants to hang on the current administration) actually consists of a 2.5 point rise from past tax increases, AMT creep, and payroll tax changes (passed by Democratic Congresses and generally supported by Drum) offset by a 1.5 point cut courtesy of the current administration.  Drum is in fact using data that clearly disproves his ongoing "tax cuts for the rich" mantra.  By the way, it is also interesting to see a good "progressive" ignoring progress on the lower two quintiles to decry higher taxes on the upper middle class -- seems like an interesting shift in focus.

Payroll taxes skew the picture:
  Including payroll taxes (social security and Medicare) in these numbers causes funny things to happen.  Why?  Because social security tax is straight-out regressive since it is flat up to about $90,000 in income and then zero after that.  This means that the total tax rate shown for the lower quintiles will include nearly 8% for payroll taxes (if this looks funny to you because it seems to imply that the lowest quintile must be paying negative income taxes, you are right, they are paying negative income taxes via the EITC).  However, as incomes rise above $90,000, taxpayers get an effective total rate reduction.  For an income of $180,000, a taxpayer only is effectively paying 3.1% to Social Security.  At $1 million, they are only paying 0.56%.  So, even if income tax rates were perfectly flat with no deductions for anything, those in the 1% category of richest people would have a total rate including payroll taxes over 5.5% points lower than the middle class.  If you recast the numbers above leaving out payroll taxes, you would not see the decrease in rates into the 1% group, the numbers would continue to increase, as can be seen here (from government data):

Effective Income Tax Rate (excludes payroll taxes) by income class

Category of Earners

2005 Fed Income Tax rate (effective)

Top 1%

21.4%

Top 5%

19.2%

Top 20%

15.4%

2nd quintile

7.5%

3rd quintile 4.1%
4th quintile 0.6%
Bottom 20% -5.6%

So, for income tax rates, there is still progressivity all the way to the top.  If you want to argue Social Security taxes, fine, but don't use Social Security tax effects to make a point about income taxes

By the way, in terms of the regresivity of Social Security, the defenders of that program need to stick with a story - is it a transfer payment or is it a government run insurance program?  If it is a government run insurance program (as defenders want to argue, since that seem more palatable to the public) then the $90,000 income cutoff makes sense:  Since the program does not pay benefits based on any incomes higher than this, "premiums" shouldn't be based on higher incomes.  Update: Kevin Drum says in this post that Social Security is

a modestly progressive social insurance program that's paid for by everyone and
that benefits everyone. If it ever stops being that, if it ever stops being
universal, it will eventually cease to exist.

OK, but stop lumping the "premiums" of this program in with income taxes to try to prove a point about the income tax system.

All that being said, there may be something funny going on in the top 1%:  As pointed out above, a portion of the apparent rate reduction for the top taxpayers is in fact due to the odd math surrounding Social Security taxes.  Any income tax cut, even if it is progressive, can make total taxes more regressive by shifting the mix to the very regressive social security tax. All that being said, the taxes of the very very rich are odd, because their income streams are so very different than those of you and I.   In particular, that weird mess of targeted tax reductions that I have decried on any number of occasions come much more into play in the very rich's tax returns, with results that are almost impossible to understand or forecast.  If Drum wants to use this data to argue for flat taxes and an elimination of deductions, I am all ears.

Student Government, Pirates, and Antarctica

Okay, how could you resist that title for a post.  My thoughts on this subject were spurred by an article by Fox News about pirates that won election to the NC State student government:

By an overwhelming majority, the Raleigh school last week elected a candidate
called "The Pirate Captain" student body president, giving the old sea dog 58
percent of the vote.

"We're quickly goin' to bae getting our plank started, get the simple things
out of the way," The Pirate Captain (search), real name Whil
(or maybe "Will") Piavis, a junior, told supporters after election results were
unveiled Wednesday night.

Many outlets have reported this story with incredulity that such an unserious person could be elected to so lofty an office.  Several student government weenies at NC State agreed:

More sober student-government types seemed appalled that a character straight
from "SpongeBob SquarePants" had crashed their party.

I was not surprised in the least, for two reasons.  First, I think many Americans in general are fed up with the self-importance of most legislators.  This goes double for students and the student government.  In fact, I think it is nearly a law of nature that the more trivial the government post, the more self-important the occupants of that post are.

The second reason I was not surprised was that we had a similar event twenty years ago at Princeton where the student government was taken over by the Antarctic Liberation Front:

Back when I was an undergrad
at Princeton, one of my fondest memories was of a bizarre Student Body
Governing Council (USG) election.  The previous USG administration,
headed by none other than fellow Princetonian Eliot Spitzer, had so
irritated the student body that, for the first time in memory, the
usually apathetic voting population who generally couldn't care less
who their class president was actually produced an energetic opposition
party.  Even in his formative years, Spitzer was expert in using his
office to generate publicity, in this case frequent mentions in the
student newspaper that finally drove several students over the edge.

The result was the incredibly funny and entertaining Antarctic
Liberation Front.  I wish I had saved their brochures, but their
proposals included things like imposing a dawn to dusk curfew on the
school and funding school parties by annexing the mineral rights
between the double yellow lines of the US highways.  All of this was
under the banner of starting jihad to free Antarctica.  The ALF swept
the USG election.  This immensely annoyed Spitzer and other USG
stalwarts, who decried the trivialization of such an august body.  The
pained and pompous wailing from the traditional student council weenies
(sounding actually a lot like liberals after the last presidential
election) only amused the general student population even further.
After a few student-council-meetings-as-performance-art, the ALF
resigned en mass and life went back to being just a little bit more
boring.

Yes, that Eliot Spitzer, the overreaching Aspiring Governor of New York.  He is STILL mad about getting dissed in this student election, and whined about it twenty years later in print.  And don't miss fellow Princetonian Virginia Postrel's reflections on the ALF and Eliot Spitzer.

Cardio Tennis

Since Instapundit has been fitness blogging and my post on weight and mortality stirred up some comment, I thought I would put in a plug for my new exercise class.  My wife talked me into signing up for a 1-hour class called cardio-tennis.  Basically its a group tennis lesson, but with very little instruction.  Instead, the instructor hits three or four balls to me, typically running me all over the court.  Then I jog around to the other side, pick up my 3-4 balls and put them in his basket, and go back to the other side to wait my turn.  With the right sized group, I am jogging constantly and I get a fair amount of practice on my tennis strokes.  Its exhausting but it beats the hell out of jogging.

Five Worst Traits About Taxes

Generally, in any discussion of taxes, I focus on the foundations of
property rights
, to argue that taxation is no different than
stealing.    Most of us agree that grabbing someone else's money at
gunpoint is immoral.  I do not hold to a theory of government that says
that this immoral action is suddenly moral if 51% of my neighbors
sanction it.

Anyway, I am going to leave behind the moral basis (or lack thereof)
for taxes and focus instead on five practical problems that a
well-crafted tax system should be able to avoid.

1.  Complexity and Preparation Time

I probably don't need to go into great depth on this one to convince you that taxes and tax returns are ridiculously complex.  We all know how complicated even the individual 1040 has become, so much so that using tax preparation software is nearly de riguer for most middle class taxpayers.  Last year, our federal and state income tax returns for the company were over 400 pages long.

For a small business, the tax preparation burden goes much further.  For example, the burden of payroll tax preparation, not to mention staying on top of compliance issues, is so high that no sane business person does payroll in house any more.  Quarterly state and federal unemployment and withholding tax returns must be filed, with salary detail to the last penny for every single employee.   As a result, everyone uses a service like ADP, and though this solves the workload problem, it still costs money - about $12,000 a year in our case.  That's not the tax bill, just the cost to keep up with the government paperwork. 

But with payroll taken care of, businesses still must file sales tax returns, excise tax returns, detailed property tax returns, census data requests, labor and commerce department surveys, and of course income tax returns.  Each of these typically have to be done at the state level and in many cases separately for every single county and city where we do business.  Each in and of itself is horribly time consuming - see this example for property taxes, this one for sales taxes, and this one for government surveys

In Kentucky, for example, we have to file quarterly state withholding tax returns, quarterly payroll withholding returns in each county we operate in, a quarterly state unemployment return, an annual property tax return in each county, and annual income tax return at the state level, an annual income tax return in each county, a monthly sales tax return, a monthly survey for the US Department of Labor about Kentucky headcount levels, an annual foreign corporation renewal, a new hire report whenever we hire a new employee, and a monthly report to the workers comp state fund


2.  Disguising the Tax Load

Quick, how much total do you pay in taxes?  Perhaps the greatest innovation of statists in the 20th century was the tax load shell game - the clever balkanization of the tax load that makes it nearly impossible for the average person to truly know how much they pay in taxes to the government.

Start with income taxes.  OK, April 15 has just passed, but even so, how many people know how much they paid in income taxes last year?  For many people, this is the single largest expense they have, but the total amount is disguised by the fact that most income taxes are taken out as direct payroll deduction.  Statists and leftists everywhere in the US should get up in the morning and give thanks for direct payroll deduction -- without it, if every American had to write a single check once a year for the sum total of their annual income taxes, there would have long since been a revolution.

OK, so you don't know how much you paid in federal, state and local income taxes.  But in addition to that, how much did you pay in social security and medicare (typically about 8% of salary)?  Property taxes (typically 1-2% of your home value)?  How about sales taxes (typically 6-9% of your purchases)?  What about vehicle licensing fees and special taxes on hotels and airfare and rent cars?  If you add all these up, the average American pays about 30% of his/her salary in taxes.  The Tax Foundation has a great chart summarizing this shell game, with relative burdens expressed as days of work each year required to pay the tax.  Note that on average, your federal income tax is only 1/3 of the total of what you are paying:

 

Taxchart


 
So those are the direct ones, but how much are you also paying in higher prices due to government import duties?  What about the 8% FICA and medicare that employers pay on your behalf - how much higher might your salary be if they did not have to pay these?  What about corporate taxes - you may not pay them directly, but they certainly get passed on to you in the form of higher prices and lower dividends.  What else? - try this list on for size.

3.  Taxes on Wealth and Savings

Most taxes are on income or sales, and so they are at least marginally calibrated with an individual's cash flows.  The exceptions to this are property taxes and inheritance taxes.  These two taxes both go after an individual's savings -- property taxes mainly on the home, the primary savings vehicle for most Americans, and inheritance taxes on everything you've saved when you die.

Lets take property taxes first.  Many people complain that modern life has become a treadmill, forcing families to work harder and harder to keep up their lifestyle.  To a large extent, I think this is a myth - people may be working harder but their effective standard of living is way, way higher than say 30 years ago.  But one of the things that definitely creates a treadmill are property taxes. 

Many people have worked hard to pay off their mortgage, thinking they could settle down into their retirement in a paid off house.  Unfortunately, they may find that their home has increased in value so much that their property taxes at retirement are actually much higher than their original payment on the house.  Take the case of a couple who bought their house in an urban area for $25,000 and find its now worth $375,000 forty years later (this is an average urban price increase over the last 40 years).  For simplicity, we will assume the effective tax rate has stayed at $1.50 per $100 for these forty years (though its more likely to have gone up).  In 1965, they paid $375 a year in taxes.  Today, they have to pay $5,625.  In other words, their property taxes today are over 22.5% a year of the original price they paid for the house.  Now, this is all fine if the couple strove to work up the corporate ladder and get promotions and grow their income proportionately.  But what if they didn't want to?  What if they just wanted to buy that house, pay it off, and live modestly selling driftwood sculptures at farmers markets, or whatever.  The answer is, because of property taxes, they can't.  Likely they will have to sell this house, give up the urban life they wanted, and either move to an urban dump they can afford the property taxes on, or they move out to the country.  Here is an example, via Reason, of this process of property taxes forcing out urban residents living small in favor of yuppies living the dream.  It is ironic that a tax initially invented for populist reasons to cut back on wealth accumulation hurts the lower income brackets and those trying to step off of the capitalist treadmill the most.  In fact, it was the poor in the Great Depression who typically lobbied for laws to put moratoriums on property tax collections.

The estate tax has many of the same origins and issues.  The biggest downside of the estate tax is that it tends to force premature sales of productive business assets to pay the tax.  Rather than leaving small businesses in the family, who have the experience and passion to make them work, they typically must be sold to third parties outside the family to pay the estate taxes.  Again, the law of unintended consequences crops up - estate taxes and the sales they force have done more to contribute to merger and acquisition activity, which in turn drives consolidation of economic assets into fewer and fewer corporations.  The tax meant to stifle wealth accumulation among individuals has in fact spurred wealth accumulation among corporations.  While used for many purposes today, LBO's, that bogeyman of the left, were invented to manage this estate tax forced sale problem.

Asymmetrical Information has a thoughtful series of posts going on estate taxes.

4.  Picking Favorites for Special Treatment

One of the defining characteristics of statist politicians of both the left and the right is that they think they are smarter and more moral than the average American, and certainly than the average American businessman.  Statists and technocrats distrust markets and assume that they can succeed in managing the economy in general and individual decision-making in particular where markets have "failed" to reach whatever end-state politicians would prefer.

Therefore politicians insist on using tax policy to reinforce (or discourage) certain behaviors or to influence certain outcomes or to frankly enrich some favored group.  Examples are all around us, but include:

5.  Class Warfare and Punishing Success

Many of the taxes we pay - income, property, estate - have strong class warfare origins.  Heck, the income tax and the Constitutional Amendment that made it possible because Americans were told that only the richest 1% or so would ever have to pay it.  Today, tax debate is littered with class warfare arguments. 

Today, the richest 1% of Americans pay about a third of the total individual taxes, and the richest 10% pay two-thirds.  The richest 50% of Americans pay 100% of the taxes (in the other half, some pay a bit, and some get a bit back in EITC, but the net is zero).  So, a small percentage of Americans pay for the services and government
cash subsidies enjoyed by the majority.  So how do we treat these
people?  As heroes, or benefactors, or as the most productive?  No we treat them as evil parasites who are not
doing their fair share
.

By the way, These shares paid by the rich actually went up after the Bush tax cuts (yes, that's not a typo).  The very fact that this statement might seem unbelievable points to how much ridiculous class warfare demagoguery permeated the last election.  By the way, these numbers are for income taxes.   The numbers for total taxes, including the regressive payroll taxes, yields slightly different numbers but the same results, as outlined in TaxProfBlog today.

The fact is that most "progressive" taxes are in fact punishing the successful and most productive.  The Left loves to wave Paris Hilton around as an example of the useless and unproductive rich who presumably should be taxed into poverty.  They want to obscure the fact that 99% of the rich got to be rich honestly, through hard work, and via the uncoerced interaction with others.  Because saying that your government rewards success with its highest tax rates and confiscates the vast majority of its operating funds from the people who would employ this money the most productively, um, doesn't sound very good.

UPDATE:  I have more here, including a rebuttal of Kevin Drum.

Economics of NFL Draft

Forget the UN and judge nominations and other trivial matters.  This weekend is the NFL draft.  Via Marginal Revolution comes this cool article about the economics of the NFL Draft.

The article is pretty long, so let me summarize the couple of things I thought were pretty interesting.  The first was the relative value of draft picks.  They did a lot of work quantifying the performance of players selected at different positions in the draft (i.e first pick, second pick, etc).  You'll have to see the detailed study as to their methodology, but it struck me as pretty reasonable.  They also looked at the cost or salary by draft pick.  Combining the two got this curve:

Curve1
The "surplus" line is the difference of the curves, ie performance value minus compensation cost.  Since compensation costs fall faster in the late first round (the first round is 30 picks) and into the second round than does performance, the surplus value peaks in the second round.  This does not mean the best players can be found in picks 25-75, but it does mean that the best values can be found there.  Since the NFL works under a salary cap that equalizes total compensation, the best team should be the one that consistently picks these value players (this is different than the baseball / NY Yankees model, where there is no cap, and maximum performance presumably comes from getting the top players, irregardless of salary).

If this is correct, teams should be willing to straight-up trade a pick in the top 15 for a pick around 35.  However, in reality, they can usually trade a pick in the top 15 for two or more picks in the 25-75 ranges, which should make the trade a no-brainer.  Interestingly, the market for picks is actually going the other way:

Curve2
The researches studied hundreds of past draft day trades of picks to generate these curves.  It basically says that early picks are valued exponentially higher than even late first round picks, and this preference for very early picks has actually increased in the past few years.  This curve says that a #5 pick might be worth at least 3 and possibly many more picks in the 25-75 band.

Given these two curves, if they are correct, why don't more teams trade their top picks into the 25-75 band.  There are at least 3 answers to this:

  1. Read Moneyball.  Once you read it, you will understand that sports GM's do not understand these concepts of value.
  2. There may be other values, other than player performance, that teams get from top picks.  For example, most fans will have heard of the top ten people drafted, but will know few from the 25-75 band.  The top, well-known picks generate a disproportionate amount of fan excitement and "hope" which can translate into more paying butts in seats, which this study does not take into account
  3. Some teams are getting it.  In listening to several mock drafts lately, it is clear many teams want to trade down from the top picks this year - no one wants to pay the signing bonuses commanded at these levels.  By the way team that has traded for the most picks in this band is ... Philadelphia.  Who has been in the NFC championship game 4 years in a row, so maybe someone out there does get it.

 

Food Nazis Get Fact-Checked

Apparently, the mortality rates from obesity that the media has been breathlessly lecturing us with were overestimated by at least 1500%:

But in a study released this week by the CDC
and published in the Journal of the American Medical Association ("Excess Deaths
Associated with Underweight, Overweight, and Obesity"), the public health
community has finally owned up to their massive fib by acknowledging that the
number of deaths due to obesity in the US is closer to 26,000 not 400,000 as
previously reported.

The part of the earlier study that really got people's attention was the fact that even those slightly overweight but well short of obese had a significantly increased risk of death.  Now, the CDC channels Emily Littella in saying "never mind":

for the merely overweight with BMI's from 25-30 there is no excess mortality. In
fact, being overweight was "associated with a slight reduction in mortality
relative to the normal weight category." Being overweight not only does not lead
to premature death, something that dozens of other studies from around the world
have been saying for the last 30 years, but it also carries less risk from
premature death than being "normal" weight. In other words the overweight=early death "fact" proclaimed
by the public health community is simply not true.

In fact, the study argues, the risks from being underweight are greater than overweight, something that resonates with me having known two women who died due to complications from anorexia.

Other studies will have to replicate these findings, but this study does seem to have taken a more careful approach than previous approaches.  One thing you can be sure about, is that this will not stop lawsuits against fast food companies, since overwhelming medical evidence of the safety of breast implants has not stopped litigation in that arena.  Heck, the fact that most people who are suing asbestos companies admits they are not even sick has not stopped litigation in that arena.

 

Chocolate Blogging

Lynne Kiesling of the Knowledge Problem has been blogging on just what chocolates are the best in the world (her normal beat is economics and electricity markets).  In this post, she answers my question about my wife's favorite, Maison
du Chocolat
, and how it compares to her favorites.

I am reminded of my kids' favorite Johnny Depp line from Chocolat:  "good, but not my favorite".

By the way (just to make this post totally stream of consciousness), I think it would be impossible to have Lena Olin's character in Chocolat be any different than her role as Sydney's mom in Alias.

Nice Bunny

A few weeks ago, I was admiring some of the recent art of my 8-year-old daughter (art being one of her passions).  Some time in the last year, her art ability crossed an imaginary line where her drawings are better than what I am able to produce (don't worry, I do bring this back to blogging before the end of the post).

I was telling her that the art was beautiful, and expressing what a relief it is to critique her art nowadays vs. when she was much smaller.  I told the story from when she was four or so of looking at a drawing she brought home from school with pride and my saying "nice bunny".  Of course, every parent knows what happened next - she responded "dad, that's a fire engine".  And my saying, "oh, yea, I see, there's the ladder" and her saying "dad, those are the wheels", and, well, you get the idea.

So about a week after I told her this story, she was telling me about something that happened that day at school.  As sometimes happens to her, she got excited and that made her story kind of disjointed and hard to parse.  At the end of it, I said something like "that's great".  She looked at me for a second in the eye and said "nice bunny".

The more I think about it, the more proud I am of her.  She was telling me, in two words, that she was self-aware enough to know that she had done a poor job telling her story.  She was also telling me that she realized that I was patronizing her and she didn't like it.  I am a little sad that she might be this cynical at such a young age, but really I am happy to move our relationship to a more grown-up level.

Today, "nice bunny" has become our family in-joke, and we all use it now (ex:  my wife comes home with a new haircut, that I of course totally miss.  She says "do you like my haircut" and I of course say "it looks great".  She now responds "nice bunny")

Last time I hosted Carnival of the Vanities, about 5 of the submitted posts made absolutely no sense to me, no matter how I hard I read them, but I dutifully included them with some kind of neutral introduction.  Next time I will be tempted just to say "nice bunny", but I am not sure anyone would know what the hell I was talking about.

A Couple of Thoughts on John Bolton

I don't know John Bolton from Michael Bolton, so I can't comment on whether he is an appropriate choice for the UN.  Nevertheless, there are a couple of things I do know:

  1. Absolutely no one in the Senate gives a crap if Bolton has a temper or sometimes was tough on subordinates.  I am willing to wager about any figure you can name that many of the Senators commenting on Mr. Bolton are themselves strutting prima donnas who have blasted subordinates.  I remember that former CA Governor Gray (Grey?) Davis supposedly had some incredible temper tantrums with subordinates, but at the time that was not thought to be a disqualifier for office.  Why is it that stupid issues like this (or the immigration status of nannies) seem to dominate confirmation hearings rather than the person's qualifications and philosophy?
  2. I have worked for not one but two men who have been featured on that famous "Toughest Bosses in America" list.  Compared to some of my encounters with these two, the stuff being talked about with Bolton is a joke. 
  3. When you hear "the UN" when any senator is talking, substitute the word "Enron".  This is not quite appropriate, because in many ways, as referenced here, the UN scandals are much worse than Enron.  However, if this comparison is at all apt, why is it so inappropriate to send an ambassador who is openly skeptical of the UN in its current state?  When the feds sought out a prosecutor to oversee the Enron investigations, did they go looking for a person who had a high degree of respect and friendship for Ken Lay and Jeff Skilling?

Go Suns!

The Suns are the best in the West, and for the first time since Charles Barkley wore a Suns uniform, the town is excited about the team´s chances.  My wife was commissioned to design a handbag for the wife of one of the Suns owners (in Suns' colors, of course) for her to display during the playoffs.  It was finished just in time:

Sunspurse_1

Forest Service May Close Recreation Sites

Frequent readers of this site may know that my day job is running a company that manages recreation sites under concession contract to a number of public landowners, including the US Forest Service.  I take a lot of pride in this job, as our company helps keep recreation facilities open that the government might not have the personnel or the skills or the money to run.  The Forest Service's budget gets cut about every year, such that tax money comes nowhere near covering the cost of managing recreation sites.

Of late, the Forest Service has begun looking to actually close some recreation facilities:

The cash-strapped
U.S. Forest Service can no longer afford to maintain many of its parks
and has started ranking recreational sites, including campgrounds and
trail heads, for possible closure.

Supporters of public lands generally hate the onset of fee-based recreation, and wish it was still possible for all public recreation facilities to be free.  This was a realistic goal back when recreation facilities were cheap to run, but today campgrounds and other such facilities can be tremendously expensive(a single large campground might cost as much as a half million a year to operate), in large part due to actions by the same people who support free use of public lands.  Some examples:

  • 50 years ago, campgrounds labor was essentially free because it could be staffed with volunteers.  With current labor laws, this is no longer possible (even if people still want to volunteer), and a large campground can require hundreds of thousands of dollars of labor to maintain each year, even at minimum wage.
  • 50 years ago, people in the outdoors just drank water from a stream or out of the hand pump.  Today, in certain complexes, we spend tens of thousands of dollars keeping water systems in compliance with complex state laws.
  • 50 years ago, if someone tripped over a root in the forest or twisted their ankle on a rock, they accepted that as a normal risk of being out in nature.  Today, everyone calls their lawyer.  Each year, campground visitors file millions of dollars of lawsuits for accidents once thought to be normal hazards of nature.
  • 50 years ago, active timber sales in the forest helped fund recreation programs.  Today, timber sales in many forests are at an all time low, due in large part to opposition by nature lovers

So, I admit I don't know the person who said this:

"They will close
those sites the public has always enjoyed but which they cannot afford
because they are not profitable," said Scott Silver of the Bend group
Wild Wilderness. "It's the complete perversion of the meaning of public
lands."

But I would bet quite a bit that he supports some or all of the laws and government regulations listed above that make running recreation facilities so much more expensive than 50 years ago.

Update: By the way, though I might disagree with Scott Silver on the necessity of use fees at developed facilities like campgrounds or boat ramps, he is dead on in certain respects:

  • Politicians love to fund splashy new recreation projects, but hate to fund basic maintenance.  This means that at the same time campgrounds and facilities are closing due to lack of maintenance dollars, new facilities are being opened all the time.  This strikes me as absurd. 
  • Recreation facilities on public lands are missing the boat when they attempt to emulate private operations too much.  There are plenty of KOA's next to the interstate with pools and video game rooms.  Campgrounds on public lands have typically taken a different approach and served a different niche, that of providing a more primitive experience closer to nature, and I think its a mistake when they move away from this approach.

Unfortunately, as is often the case, I will never be able to see eye-to-eye with such groups because they refuse to acknowledge that as a private company I can be anything but Darth Vader with secret plans to put up a Walmart in Yosemite or put up billboards along a nature trail.  Crusading socialists often have the funniest ideas about the profit motive.  For example, if I make most of my money at a recreation site catering to people who want a wilderness experience, why in the world would I do anything to interfere with that experience?  It does not matter what the situation or the facts or the company, the first arguments are always that private companies just want to take a natural setting and put up advertising, then build a shopping mall.

By the way, Mr. Silver sees conspiracies among the private recreation companies.  I have sat on some committees in the "evil" organizations he cites, and I will tell you with complete assurance that these groups would have trouble crafting a successful plan to buy a 6-pack of beer from the local 7-11, much less shape government policy to their ends.  But maybe I got left out of all the really cool SPECTRE-type meetings. 

What a Concept

Marginal Revolution notes a recent piece by Jeffrey Rosen about potential libertarian supreme court nominees.  In particular, they noted this quote:

...Epstein was promoting a legal philosophy far more radical in its
implications than anything entertained by Antonin Scalia, then, as now, the
court's most irascible conservative. As Epstein sees it, all individuals have
certain inherent rights and liberties, including ''economic'' liberties, like
the right to property and, more crucially, the right to part with it only
voluntarily. These rights are violated any time an individual is deprived of his
property without compensation -- when it is stolen, for example, but also when
it is subjected to governmental regulation that reduces its value or when a
government fails to provide greater security in exchange for the property it
seizes.

Whoa, how crazy is that?  I find it depressing that believing in the right to part with property "only voluntarily" is today considered so wildly out of the mainstream that it is necessarily a disqualification to be a Supreme Court judge.  The courts today are terribly important battle ground in protecting individual rights against both creeping socialism and paternalism.  Unfortunately, neither Republicans nor Democrats can be trusted with leading this battle.  Each wants the judiciary to protect individual rights in one area and restrict them in another.  The left supports limitations on political speech via campaign finance restrictions and an unfettered right of government to invade personal property.  The right wants limitations on non-political speech via "community standards" on entertainment and hopes to regulate America's sexual practices.

Most people interested in politics are constantly hoping their party is the winner in the race to power.  I just wish I had a horse in the race.

Jim Balsillie: Congratulations on Making Me Feel Like a Loser

There is a price one pays for slipping into the Harvard Business School through some mysterious hole in the Harvard admissions process:  From time to time, one must be ready to be humbled by their peers.  Of course, with nearly 900 people in a graduating class, one expects someone in that group to distinguish themselves at some point.  However, this large groups is somehow indistinct - at HBS one spends most of their time with 90 people in their "section", spending the vast majority of waking hours, both in class and in the pub, with this group.  After a couple of years with the same 90 people, one gets the overwhelming impression of normality -- these people are just as full of shit as anyone else I have gotten to know.

So it is both expected and with some surprise that I have begun to see these 90 people start making headlines.  My section-mates have distinguished themselves as executives and industry leaders and entrepreneurs  and lifestyle writers and business writers and fashion moguls and artists even as the notorious.  Humiliating levels of fame and success seem to be the rule among these ostensibly ordinary people.

This week, however, another member of our 90-person section (1989-B, on the off chance you are a fellow alum and were wondering) has gone to the next level.  This week Time magazine named Jim Balsillie, CEO of RIM (the Blackberry people) to their list of the 100 most influential people.  Wow.  Congratulations Jim.  The bad news is we are all totaled humbled about our own success trajectories in comparison.  The good news is that Jim will obviously "draw fire" away from the rest of us when Harvard comes looking for money.  Its a funny combination of old and new to think about the CEO of Lili Pulitzer and the CEO of Blackberry sitting next to each other all through our first year.

Postscript:  By the way, for those of you who may be tempted to put me on suicide watch, I am pretty much joking, though not about my section mates - they are all as awesome as portrayed here -- but about any dissatisfaction with my career.  Several times in my life I have been presented with opportunities to pursue high-profile wealth.  In most cases, I have turned these down, with zero regrets.  In fact, since one of the first of these rejected opportunities involved following Jeff Skilling from McKinsey to Enron, I really, really have no regrets.   Each day I am out visiting my operations at some National Park or other, I will think about the rest of you filling out your TPS reports.

UPDATE:  Welcome to fellow sectionmate Karen Page, author of numerous Amazon 5-star rated books on food, wine and becoming a chef, who links to me today (oops, Karen is slipping - a few of the books only have 4-1/2 stars).  Not only is Karen part of that vast section B conspiracy to make me feel inadequate, she also has a much cooler blog than mine.

Power Blog Review of This Site

Small Business Trends publishes weekly reviews of business-oriented web sites called "Power Blog Reviews".  This week, they have a very nice review of Coyote Blog:

The Power of the Coyote Blog
is the straight-shooting way its author comes right out and says what
he means, without dancing around subjects. And the real-life business
experiences he conveys are eminently helpful, providing information it
is hard to get elsewhere.

Thats really generous, thanks!

Update: I deeply resent the suggestion of several of my "friends" that some other blogger must have been spoofing my IP address the week I got reviewed.

Carnival of the Capitalists

This week's Carnival is up at Gongol.com

Continuing in the efforts of the host last week, Brian has tried to reformat that Carnival to make it more useful and user-friendly than the data-dump model.  I think he has done a really nice job, and I am not just influenced by the fact that my article this week gets an "editors choice".

The Scandinavian Standard of Living Myth

There is a widespread notion that the Scandinavian countries somehow have crafted for themselves the highest standard of living in the world.  This never made much sense to me, since I just couldn't believe their socialist economies could really create the wealth needed to support this alleged standard of living.  As it turns out, they can't and don't, and owe their reputation more to PR than reality:

THE received wisdom about economic life in the Nordic countries is
easily summed up: people here are incomparably affluent, with all their
needs met by an efficient welfare state. They believe it themselves.
Yet the reality - as this Oslo-dwelling American can attest, and as
some recent studies confirm - is not quite what it appears....

All this was illuminated last year in a study by a Swedish research
organization, Timbro, which compared the gross domestic products of the
15 European Union members (before the 2004 expansion) with those of the
50 American states and the District of Columbia. (Norway, not being a
member of the union, was not included.)

After adjusting the
figures for the different purchasing powers of the dollar and euro, the
only European country whose economic output per person was greater than
the United States average was the tiny tax haven of Luxembourg, which
ranked third, just behind Delaware and slightly ahead of Connecticut.

The next European country on the list was Ireland, down at 41st
place out of 66; Sweden was 14th from the bottom (after Alabama),
followed by Oklahoma, and then Britain, France, Finland, Germany and
Italy. The bottom three spots on the list went to Spain, Portugal and
Greece.

Alternatively, the study found, if the E.U. was treated
as a single American state, it would rank fifth from the bottom,
topping only Arkansas, Montana, West Virginia and Mississippi. In
short, while Scandinavians are constantly told how much better they
have it than Americans, Timbro's statistics suggest otherwise. So did a
paper by a Swedish economics writer, Johan Norberg.

So Europeans, in terms of being well-off, rank right up there with... Appalachia.  "Jimmy, you have to finish that liver - you know there are starving kids in Norway that would love to have that food."

Anyway, if this topic interests you, of true comparisons of US vs European economies, income distribution, work weeks, etc., Cowboy Capitalism is a good place to start.  (hat tip Instapundit)

The ACLU is a Little Late to the Party

Reason reports that the ACLU is jumping into the fray to try to prevent Las Vegas from levying a special sales tax on strippers (emphasis added)

A Nevada bill that would impose a
10 percent tax on strip club dancing will be struck down in
court if lawmakers pass it, an American Civil Liberties Union
lawyer said on Wednesday.

"You can not have a special tax aimed at First Amendment
activity based on content," said Allen Lichtenstein, general
counsel of the ACLU of Nevada.

"Adult entertainment, which is protected by the First
Amendment, is being targeted to bear the burden of taxes where
other businesses are not," Lichtenstein said, referring to the
bill. "To single out a particular business based on content and
tax it with a special tax is unconstitutional
."

Don't get me wrong, I am certainly happy that the ACLU has suddenly discovered the rights of taxpayers, but they seem a bit late to the party.  I mean, states that charge the same tax to every business, especially the same sales tax rate, are the exception.  States all charge special hotel rates, rent car taxes, airport fees, long distance surcharges, etc etc.  For example, here are just a few of the special unique industry-specific taxes on the California BOE site (by the way, you know you live in a socialist state when your tax department is called the "Board of Equalization"):

This is far from a complete list, but you get the idea. This article from the Tax Policy Center explains that narrow industry specific excise taxes have a very long history in this country.  And this completely leaves off the issues of subsidies that are targeted at particular industries, such as the billions in direct subsidies received by farmers, not to mention the additional billions in price supports they get as well.  (Reason, by the way, has done some entertaining research on the millions of dollars of farm subsidies received by the family of Farm-aid founder John Cougar Mellancamp).  I am eager to see the ACLU begin tackling these other "special taxes" on "particular businesses".

I am not sure what motivated the ACLU to finally join the taxpayer cause, other than perhaps a personal financial interest their leadership team might have in this particular tax, but I for one am happy to welcome them to the cause.

Update: I am still having fun trying to imagine how the ACLU, the supposed protector of individual rights that has never had a problem up 'till now with our class warfare tax rates that are zero on some Americans and 40+% on others, suddenly had an epiphany about unequal levels of taxation when it comes to taxing strippers.  I have this visual picture in my head of the local head of the ACLU slipping a five into an entertainers g-string but getting mad when he couldn't get the two extra quarters in there to pay the tax.

Update #2: By the way, for all the flippancy in my post about the ACLU, they are absolutely right in this case, if way too narrowly focused.  I criticize the ACLU often because of the 21 policy areas it considers critical to individual rights, none have anything to do with property rights or economic freedom.  However, the ACLU is a strong and consistent defender of free political speech during a time when speech is under attack from all sides of the political spectrum.  The ACLU realized early on something the left still won't acknowledge, that it is impossible to separate regulation on spending for speech from restrictions on speech itself

Unfortunately, what the ACLU refuses to recognize is that all commerce, not just purchasing political ads or buying couch dances, is a form of communication and free expression.  The economy is nothing more than individuals, millions of times a day, communicating and reaching agreements to trade for mutual benefit.   Why is it any less of a restriction of free speech when the government places restrictions on this communication, say by restricting the range of wages I can offer an employee?  Or, more obviously, how can the government place regulations on what I can say about my company in an advertisement, but not on what I say about a political candidate?

The ACLU in this case seeks to evade sanctioning free speech in that dirty commercial world by apparently arguing that stripping is not commerce but artistic expression.  But by that logic, the government shouldn't be allowed to tax building and construction, for surely buildings are a strong and lasting form of art and expression.  Or how about cars - I certainly consider a Ferrari a much higher form of expression than a couch dance.  How can the government tax cars?  Or what about T-shirts with a political message -- can governments charge sales taxes on those?  What about the lawn service I pay to have a beautiful green lawn, which is the ultimate form of suburban expression?

At the end of the day, it is impossible to separate money and commerce and property from speech and expression.  Commerce is the most ubiquitous and important form of free expression we have in this country.  So far, the ACLU seems to acknowledge this fact only for topless dancers and politicians.  I wish they would extend their efforts to protect both free speech and free commerce to the rest of us.

OK, this is Weird

I resisted blogging about it when a woman claimed to have found a human finger in her Wendy's chili.

I was tempted to blog when it was discovered that the woman had a suspicious history of torts against other restaurants and public companies.

I still held out when authorities began searching the woman's home, supposedly to find evidence that she put the finger in herself, perhaps from her dead grandmother's hand.

However, I just can resist this new addition to the story:

A woman who lost part of her finger to a leopard in Nevada thinks it
somehow ended up in a bowl of chili in a California Wendy's.

Her
lawyer says Sandy Allman wants to participate in any DNA test on the
finger. The lawyer says Allman last saw her digit packed in ice in a
Las Vegas emergency room. Doctors had told her it couldn't be
reattached.

The hospital says it can't account for the three-quarter-inch fingertip.

Las
Vegas resident Anna Ayala claimed she found an inch and a-half
fingertip in her chili about a month after the leopard attack.

Update: Unfortunately, authories are now leaning away from the leopard story.  Have they checked Roy Horn?

Movie-Making Becoming a Subsidy Magnet

Politicians seem to love the movie business, or so I infer from the rash of proposals of late to subsidize the movie business. 

New York City seems to have been first out of the blocks, with this program to provide tax rebates and free advertising for shooting movies in NYC.  The article tells us this is the only industry being so targeted at this point by NY.  Why?  Why are movie jobs and movie makers somehow better than every other kind?  Maybe its because they think the movies provide good advertising for NYC, like the great light they cast on the city in movies like this and this.

Anyway, the trend got my attention when our own Arizona governor lamented that Arizona is no longer home to as many movie shoots as it once was decades ago.  Far be it for me to suggest that this is probably more of an issue of westerns going in and out of style (since about a majority of movies shot in Arizona were westerns).  Nevertheless, Napolitano is pushing ahead with her plan to improve the net income line of Hollywood studios by subsidizing production in Arizona.

Finally, via Reason, we see that Hollywood is worried that it is being left out of the subsidy competition, by actually paying companies to film in LA:

Mayor James K. Hahn on Thursday announced a plan he hopes will keep Hollywood in
Hollywood "” by paying film production companies to shoot in Los Angeles.

Hahn's proposal, which was inspired by a program that New York City
adopted in December, would use as much as $15 million in public funds to
reimburse companies that make a movie in Los Angeles, paying them 5% of their
production costs or up to $625,000.

OK, so one would think that all these locations have struggling media and production industries.  But in fact, just the opposite is true.  In New York:

But Wylde thinks film is just the tip of the iceberg. The city's entire media sector is growing explosively, she notes. From Time Warner to Hearst to Bloomberg LLP, media firms account for $13 billion in city wages, 50% more than tourism.

And, in LA:

Last year, however, film, video and television production in Los Angeles
actually reached record highs. Entertainment Industry Development Corp. issued
permits for 52,707 location production days "” one day representing a single day
of work on a single project "” a 19% increase over 2003.

Doesn't sound like they are in much trouble.  Their film and media businesses are already growing explosively to record highs.  So why do they need a subsidy?  Doesn't exactly sound like the New England textile business.

Look, at the end of the day, this is about politicians handing taxpayer money to powerful media people, people who have the ability to disproportionately influence public opinions and things like ... elections!  This is a barely disguised campaign expenditure, except for the fact that taxpayers pay the bill.

I wrote more about the idiocy of subsidizing corporate relocations to one's state or city here.

Update:  Match Welch has more

State Payroll and Tax Links

Here is a great link page to tax and employment related agencies in the 50 states.  And this is a good link page pointing to the text of labor law from all 50 states.  This is particularly useful if you do business in multiple states or you are considering growth into a  new state.  Thanks to George's Employment Blawg for the link.

Who Will Die in the Next Harry Potter Book

We are big Harry Potter fans in our house.  The world has been warned that another major character will buy it in the next book Harry Potter and the Half-Blood Prince (similar to Sirius Black's death in the last book).  Trust the Brits to have a betting line on it:

Hagrid (6/4)
Professor Dumbledore (2/1)
Cho Chang (3/1)
Neville Longbottom (3/1)
Professor McGonagall (7/2)
Fred and/or George (4/1)