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.
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.
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.
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.
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.
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.
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.
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...
Health care is a major domestic policy issue in this year's federal election campaigns. Two States have initiatives on the ballot concerning health care. They reflect very different public policy perspectives.
Arizona's is a constitutional amendment that would prohibit the legislature from enacting any law that would restrict the right to purchase legal health care services.
Montana's is a statute that would expand the State's Child Health Insurance Program (CHIP) and authorize new regulations mandating coverage.
The text of the Arizona and Montana initiatives is reprinted below.
The Wall Street Journal reports that landfills that collect methane and sell it as fuel also can sell the value of these avoided greenhouse gas emissions.
Department of Education secretary Margaret Spellings has announced a new regulation to control how states report drop-out rates. Under existing law, the states have the discretion to devise their own formulas. This makes interstate comparisons problematic. It also reflects the states' interest in devising formulae that under-report actual drop-out rates.
Under the proposed rule, all states would have to use the same federally prescribed formula. More...
Washington Post staff writer Tim Craig reports that the Virginia legislature is expected to repeal the law that authorized the voluntary tax on bad Virginia drivers. The action follows a Virgina Supreme Court decision issued on February 29 declaring unconstitutional the legislature's other 2006 transportation policy innovation -- the creation of unelected regional authorities with the power to levy taxes. More...
New York State Governor Eliot Spitzer has proposed to plug part of an expected $4.4 billion budget deficit by enacting a tax on illegal drugs. Similar laws have been enacted elsewhere to enable law enforcement to charge drugs distributors and dealers with another form of tax evasion. (Chances are they already evade federal and state income taxes.)
Are there any conditions in which this proposal could raise significant revenue? More...
