by Richard Belzer

in Regulatory Economics

Sin taxes are always popular with legislators. People volunteer to pay them, and volunteers garner little public sympathy.

Maryland legislators are proposing to levy a new tax of ten cents per eight ounces of alcoholic beverage sold in the State. A news story today shows how proponents of sin taxes tend to also be in favor of sin.

7 Jan 2010

A Pollution Tax or a New Sales Tax?
The District of Columbia charges 5 cents for each disposable shopping bag

by Richard Belzer

in Regulatory Economics

On January 1, the District of Columbia began imposing a a 5-cent "fee" on disposable shopping bags.

Is this a pollution tax, as its backers claim, or just another sales tax?

4 Jan 2010

The Market Failure in Mail-Order Brides:
Can State regulation help?

by Richard Belzer

in Regulatory Economics, Regulatory Policy

Washington Examiner reporter Alan Suderman says "Maryland lawmakers are pushing for tighter regulations on the mail-order bride industry."

There is no question Maryland can write more regulations. But can regulation solve market failure?

21 Nov 2009

Government as Competitor:
Eliminating the 'public option' produces a market

by Richard Belzer

in Regulatory Economics

Local governments across the country arte having to cut services to balance their budgets. Roanoke (VA) has cut curbside leaf collection, and the result is a vibrant private market.

13 Nov 2009

Smart Electric Meters:
Are the data inaccurate or just ugly?

by Richard Belzer

in Information Quality, Regulatory Economics

California is at the vanguard of pricing electricity by the time of day it is used. The reason is that it costs more to produce (or buy) electricity at peak times. By charging prices linked to marginal cost, electricity consumers can be motivated to use power when it is less expensive.

The movement toward marginal cost pricing is encountering opposition.

24 Oct 2009

How Big is the Risk of H1N1 ("Swine") Flu? Part 2:
Where is the anti-vaccination movement located

by Richard Belzer

in People & Institutions, Regulatory Science

In a recent post we noted an apparent factual inconsistency: Vaccine opponents are often described as being motivated by religion and animus toward science, but the most public vaccine opponents do not appear to have these characteristics.

We've found more data showing that opponents of childhood vaccines are predominantly located in wealthy, liberal communities.

21 Oct 2009

How Big is the Risk of H1N1 ("Swine") Flu?
Putting risks in analytic and ethical perspective

by Richard Belzer

in Regulatory Policy, Regulatory Science

The Washington Post's Rob Stein reports some interesting information useful for estimating the magnitude of this risk. Elsewhere in today's Post, others argue that people have a moral obligation to be vaccinated. The moral argument hinges on the fact that vaccination reduces risks to others, but this is complicated by the fact that most of the "others" in question are people who choose not to be vaccinated.

13 Oct 2009

Cap and Trade, Part 5:
How Pigouvian taxes turn into mere revenue generators

by Richard Belzer

in Legislation, Regulatory Economics

Economic incentive schemes are popular among economists and increasingly embraced by legislators. Cap-and-trade to control greenhouse gas emissions is perhaps the most visible of these incentive schemes. Pigouvian taxes are the other, and news today from an unexpected source provides useful and interesting lessons in how such taxes can work -- and how they can degenerate into plain vanilla taxes.

25 Mar 2009

The AIG Bonuses, Part 4:
Return your bonus? Pay more in income taxes

by Richard Belzer

in Regulatory Economics, Regulatory Policy

We have blogged on the original AIG bonus controversy, the House of Representatives' decision to confiscate these bonuses, and the extent to which the government's actions could undermine the Obama Administration's new Legacy Loans Program.

In short, the House's action, which President Obama did not contemporaneously discourage, creates the precedent that the government may choose not to honor the legal commitments it makes to investors who participate in the Treasury Department's new program. If investors earn "too much" in profit -- a term that would be defined subjectively after the fact -- they may be prevented from realizing these earnings. It is reasonable for prudent investors to discount the government's credibility.

The Obama Administration could have included strong language promising to protect these property rights in its Legacy Loans Program, but it did not do so. Such a promise might prove to be unenforceable in fact, but the absence of a promise means there is nothing yet for investors to rely upon. This uncertainty may (or may not) be resolved when the Treasury Department issues implementing regulations. For now, the cleanup of underwater financial assets has entered a zone in which political risk -- uncertainty about the government's reliability -- may be as great or greater than financial risk.

Even if Treasury's regulations appear bulletproof, it is not clear they can ever constrain Congress from undermining them. Finally, nothing can constrain other political actors, such as New York Attorney General Andrew Cuomo, from exercising other legal and extralegal powers. As an example of extralegal power, Washington Post staff writer Brady Dennis says Cuomo threatened to publicize the recipients names, thereby exposing them to public ridicule and potential risk of physical harm, if they did not agree to return their bonuses:

[AIG's] chief operating officer, Gerry Pasciucco, had set a 5 p.m. Monday deadline for staffers to indicate whether they planned to return their retention payments, and if so, what percentage. His e-mail included what appeared to be a tacit ultimatum from Cuomo.

"We have received assurances from Attorney General Cuomo that no names will be released by his office before he completes a security review which is expected to take at least a week," Pasciucco wrote. "To the extent that we meet certain participation targets, it is not expected that the names would be released at all."

Yesterday afternoon, 18 of the 25 most senior Financial Products executives had agreed to return their retention payments, amounting to more than $50 million thus far. Company officials expect more employees to follow suit.

"They are doing the right thing," Cuomo said on a conference call with reporters, adding that he now saw no need to reveal the names.

Returning one's bonus is not the end of it, however. Recipients still will be subject to significant taxes. We address that issue today.

3 Jan 2009

The Economics of Charity:
Lessons from San Francisco

by Richard Belzer

in Regulatory Economics

The annual meeting of the American Economic Association should be expected to teach many lessons in economics. Friday's lesson occurred away from the convention hotel. More...