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InsiderOnline Blog: July 2012

Milton’s Friedman’s Free Market Ideas Made the World a Better Place

A 2009 article by Andrei Shleifer provides the basic facts about worldwide progress from 1980 to 2005, a period Shleifer dubs the age of Milton Friedman. Here’s his summation:

The last quarter century has witnessed remarkable progress of mankind. The world’s per capita inflation-adjusted income rose from $5,400 in 1980 to $8,500 in 2005. Schooling and life expectancy grew rapidly, while infant mortality and poverty fell just as fast. Compared to 1980, many more countries in the world are democratic today.

The last quarter century also saw wide acceptance of free market policies in both rich and poor countries: from private ownership, to free trade, to responsible budgets, to lower taxes. Three important events mark the beginning of this period. In 1979, Deng Xiao Ping started market reforms in China, which over the quarter century lifted hundreds of millions of people out of poverty. In the same year, Margaret Thatcher was elected Prime Minister in Britain, and initiated her radical reforms and a long period of growth. A year later, Ronald Reagan was elected President of the United States and also embraced free market policies. All three of these leaders professed inspiration from the work of Milton Friedman. It is natural, then, to refer to the last quarter century as the Age of Milton Friedman. [Journal of Economic Literature, March 2009]

Thanks, and happy 100th Milton!

Posted on 07/31/12 04:07 PM by Alex Adrianson

Happy 100th, Milton Friedman!

Milton Friedman, a man whose ideas changed the world for the better, would have turned 100 on Tuesday, July 31. An economist, thinker, lecturer, author, and winner of the 1976 Nobel Prize in Economics, Friedman powerfully argued that capitalism and economic freedom were not only indispensible for economic growth but also essential for individual liberty and democratic governance. His ideas, in fact, spawned one of The Heritage Foundation’s signature products, The Index of Economic Freedom, a country-by-country measure of economic freedom published every year since 1995. In a new paper, Anthony Kim and Terry Miller outline Friedman’s ideas on economic freedom, and the lessons that emerge from Heritage’s 18 years of measuring economic freedom. Chief among these lessons is that economic freedom and prosperity are indeed powerfully linked. Friedman said in 1979:

In the only cases in which the masses have escaped from the kind of grinding poverty you’re talking about … they have had capitalism and largely free trade. … So that the record of history is absolutely crystal clear: that there is no alternative way so far discovered of improving the lot of the ordinary people that can hold a candle to the productive activities that are unleashed by a free enterprise system.

And here is what we find when we look at countries’ economic freedom scores and their GDPs per capita:

This graphic is but one of many datasets confirming Friedman’s arguments. Kim and Miller’s paper also provide data showing that democratic governance, entrepreneurship, innovation, and overall well-being are powerfully correlated with economic freedom. Unfortunately, the United States has slipped in economic freedom since 2008. That means it’s time to re-read, and indeed, re-learn what Milton Friedman taught. See “Commemorating Milton Friedman’s 100th Birthday with the Index of Economic Freedom,” The Heritage Foundation, July 31, 2012.

Posted on 07/31/12 03:18 PM by Alex Adrianson

Who Needs Accreditation?

You can produce better teachers by forgoing national accreditation—or so Hillsdale College is determined to demonstrate. A few years ago, after Michigan decided to stop accrediting state teaching schools and require national accreditation instead, Hillsdale decided it had better uses for its resources than revamping to meet a new set of standards.

In a recent article, Hillsdale professor Daniel Coupland explains that the school realized dropping accreditation would actually be an opportunity to improve its teaching program. The school eliminated a number of courses it had offered only to meet state standards, such as classes in methods and education psychology and technology. “[M]uch of the content was irrelevant or antithetical to the mission of both the college and the department,” says Coupland. “We believe that our students’ undergraduate experience will be much richer if they take more courses in their major or work with a teacher in a real classroom than if they have to slog through low-information courses.” Hillsdale revised its teaching program to ensure a rigorous core curriculum in the sciences, language, history, and art; require in-depth study associated with an academic major; and emphasize apprenticeship in the classroom.

After 2013, Hillsdale will no longer be able to recommend its students for state certification, but the school is already building a niche as a trainer of teachers for private and charter schools around the country. “Because [charter and private schools] are free to hire the most talented applicants available, regardless of certification status, they have flocked to Hillsdale for teacher candidates,” says Coupland, who points out that the school’s recent job fair “drew representatives from 30 schools in states as far away as Oregon, Arizona, Colorado, Texas, Pennsylvania, Massachusetts, and North Carolina.” [The John William Pope Center for Higher Education Policy, July 26]

Posted on 07/30/12 06:07 PM by Alex Adrianson

Toolkit: The Hidden Secrets of 140 Characters

1. Use hashtags. Check trending topics nationally and locally. If it’s possible, find a way to make the hash tag relevant to the content of your tweet. Then, you will get the tweet into a stream of conversation that is being seen by multiple thousands of people.

2. Ask for retweets. Twitter studies show that when you ask followers to retweet your messages, they will do it. Spell out “retweet” instead of writing “RT,” as the former is proven to get more action.

3. Be clear. It’s easy to give a rambling opinion on Twitter but resist the urge. Facts, statistics, and studies speak for themselves and are often the strongest message. If 75 percent of people disapprove of Obamacare, that’s way more powerful than you making a snarky comment about how misleading Obama has been.

4. Use declarations (sometimes). You don’t want to be the boy who cried wolf, but using an all caps declaration can often help in getting your message out there. Use “BREAKING” or “MUST-READ” on special occasions to signal importance.  At Heritage, click rates are always higher when these kinds of terms are used.

5. Go even shorter. A tweet may allow you 140 characters, but like your speedometer, it doesn’t necessarily want you to hit the limit. Tweets that are around 120 characters tend to do the best. Leave space for someone to easily retweet without going over 140 characters. Simple, clear messages can be shortened easily. Take a minute to edit your tweet down to the least characters possible. You’ll be surprised how much can be eliminated to get the bare bones point across.

Posted on 07/27/12 03:44 PM by Alex Adrianson

To Do

• Not sure exactly what overcriminalization is? You need to check out The Illustrated Guide to Criminal Law.

• Watch the best episode of the Tonight Show ever (well, it was pretty good): Ayn Rand’s first appearance on the Tonight Show with Johnny Carson, recently uploaded by Libertarianism.org.

• Want to become a citizen journalist and fight the culture of corruption? Sign up to be a citizen watchdog at WatchDogWire.com.

Posted on 07/27/12 03:38 PM by Alex Adrianson

The Welfare State Is a Growth Industry

[James Pethokoukis, AEIdeas, July 11]

Posted on 07/27/12 02:45 PM by Alex Adrianson

People Don’t Overthrow Tyrants, People with Guns Do

Member countries of the United Nations have been busy negotiating a treaty to regulate the international weapons trade this month. Hey, can’t nation states already do that on their own? Why do they need a treaty? Ted Bromund, who has been following the U.N. negotiations, explains the mischief that’s going on:

The [Arms Trade Treaty] is a classic aspirational treaty: It will require many nations to do things that they do not currently do and have no intention of doing. Treaties like this are inherently a bad deal for the U.S., because we have a well-developed administrative system and are basically law-abiding. Unlike a lot of other nations, we have the ability and the intention of living up to our word. Given the fact that the treaty criteria will be vague, open-ended, and ill-defined, that is extremely dangerous, because it will subject the U.S., U.S. allies, and U.S. companies to the perpetual risk of lawfare—the use of law as a continuation of war by other means—based on legal criteria that we are not responsible for defining. A treaty based on such criteria will end up constraining the U.S. in ways that we cannot now foresee but cannot be in our national interest. […]

The fundamental idea behind the ATT is that governments have an inherent right to arm themselves; individuals, it is presumed, have no such inherent right. There is no doubt that most nations, and the U.N. itself, dislike the U.S. belief that individuals (who are “non-state actors”) have an inherent right of personal self-defense. On the other hand, many nations want to retain the freedom to transfer arms to terrorists, which are also “non-state actors.” The treaty thus has the impossible job of preventing arms transfers to “bad” non-state actors, even though there is no agreement whatsoever on who is bad and who is good. [The Foundry, July 23]

In other words, such a treaty will never achieve its ends, but you can be sure the bad actors will use it as cover for mau-mauing the foreign policies of the gullible.

Posted on 07/27/12 02:36 PM by Alex Adrianson

Guns Stop Crime

We’ll never know what would have happened if the film-goers in Aurora, Colo., hadn’t been disarmed when a killer entered the theater and started shooting last week. But thanks to the Cato Institute’s Guns and Self Defense Map, we know that there are plenty of times when law abiding citizens use guns successfully in self-defense. Go check out the map.

Each of the instances recorded by the map is a story about innocent people who would have been victims if the law had prevented them from possessing a gun.

Posted on 07/27/12 12:59 PM by Alex Adrianson

Will Greening the Fleet Corrode the Fleet?

The Navy and the Air Force programs to substitute biofuels for petroleum may run into a bigger problem than cost—which is a still pretty big problem. For recent demonstrations, the Navy bought biofuel at $26 per gallon, while the Air Force spent a whopping $59 per gallon [Reuters, July 15]. As Melanie Wilcox reports, at least three studies have identified another problem: The use of biofuels may increase corrosion in fuel tanks [The Foundry, July 25]. These studies include one by Rice University professor Pedro Alvarez, one by the University of Oklahoma and the U.S. Naval Research Laboratory, and another conducted by the Oakridge National Laboratory in Tennessee. The Oakridge study found: “Dissolved water in biofuels can … contribute to corrosion and stress corrosion cracking. Stress corrosion cracking of mild steel may be of particular concern with ethanol.”

Posted on 07/27/12 12:46 PM by Alex Adrianson

As Regulations and Taxes Grow, So Does the Shadow Economy

If governments want to reduce their “shadow” economies and collect more taxes, they should consider increasing economic freedom. The heavier the regulation and tax burdens, the more people tend to conceal transactions from the government. The list below, put together by J.D. Tucille, shows this effect. The countries of the Organisation for Economic Cooperation and Development are listed in descending order of economic freedom, as calculated by The Heritage Foundation/Wall Street Journal’s 2012 Index of Economic Freedom.

Australia: 10.7
New Zealand: 9.8
Switzerland: 8.2
*
Canada: 12.6
Ireland: 12.7
United States: 7.2
Denmark: 14.8
United Kingdom: 10.6
The Netherlands: 10.1
Finland: 14.5
Sweden: 15.6
Japan: 9.0
Germany: 14.6
Austria: 9.4
**
Spain: 19.3
Belgium: 18.3
Norway: 15.4
France: 11.8
Portugal: 19.2
***
Italy: 22.3
Greece: 25.1
[Reason, July 20]

The number to the right is the size of the country’s shadow economy as a percentage of its gross domestic product, as calculated by the Institute for the Study of Labor in Bonn Germany. The shadow economies of Italy and Greece, rated “mostly unfree” in the Index, are nearly two and a half times bigger relative to their total economies than those of the countries rated “free,” Australia, New Zealand, and Switzerland.

Posted on 07/27/12 11:54 AM by Alex Adrianson

Cut Here

The federal government spends $100 billion every year on corporate welfare, according to a new study by Tadd DeHaven [Cato Institute, July 25]. So maybe President Obama thought he was talking to those companies when he said “you didn’t build that.” If so, there’s an easy way to fix that problem. Just cut it out.

Posted on 07/26/12 08:54 PM by Alex Adrianson

The Taxpayers’ End of the GM Deal Keeps Getting Worse

General Motors’ shares hit new post-bankruptcy lows this week. Kevin Williamson does the math:

Taxpayers’ losses on the GM bailout are now about $35 billion — to save a company that is worth less than $30 billion. The amount of forgone Treasury revenue thanks to sweetheart tax breaks written into the law to subsidize GM already cost twice what Treasury’s stake in GM is worth: More than $18 billion in tax breaks to prop up a $9 billion stake in the company. [National Review, July 25]

Posted on 07/26/12 08:44 PM by Alex Adrianson

But Who Will Oversee Those Bureaucrats?

Lack of training and failure to engage in risk management are the reasons Jerry Sandusky’s predations at Penn State went unchecked for so long. Or so one would think, judging from the calls for heaping more bureaucracy onto higher education. The response is predictable but no solution, says Harvey Silverglate:

Today, administrators outnumber full-time faculty on campus. Forty years ago, there were roughly twice as many professors as administrators and staffers. Since then, the number of professors has increased by slightly more than 50%—roughly equivalent to growth in student enrollments—while the numbers of administrators and administrative staffers have increased by a whopping 85 and 240 percent, respectively. These are extraordinary developments that say much about the nature of our institutions of higher education today.

The modern administrative university is a business machine without a soul. It is an administrative fiefdom that operates outside of the sights and controls of its governing boards or its alumni, with the primary goal of avoiding criticism. This is what allowed, even encouraged, Penn State administrators to do all that they could to prevent knowledge of reports of Sandusky’s ventures from reaching the light of day. (Can a serious claim be devised that says that Penn State administrators, given the reports coming in, had no idea what was happening?) […]

The Penn State scandal should be a wake-up call to our nation’s universities, not to institutionalize more vigilant Clery Act compliance, not to hire more administrators, not to increase the frequency of risk assessment seminars, but to undo the tyranny of the toxic campus cultures that administrators have created with the quiet acquiescence of trustees. The problem is not the lack of lawyers, and risk reduction consultants. It’s the fatally decrepit culture that infects our universities nationwide. [Minding the Campus, July 23]

Posted on 07/26/12 07:55 PM by Alex Adrianson

Mass Shootings Like the One in Aurora, Colo., Happen Where Citizens Have Been Made Vulnerable

… by gun control, explains John Lott:

With a single exception, every multiple-victim public shooting in the U.S. in which more than three people have been killed since at least 1950 has taken place where citizens are not allowed to carry their own firearms.

The Cinemark movie theater in Aurora, like others run by the chain around the country, displayed warning signs that it was illegal to carry guns into the theater.

This applied to all nonlaw enforcement personnel, including individuals with concealed handgun permits. In other words, despite more than 4% of the adult population of Colorado having concealed handgun permits, a gunman intent on killing a lot of people could be confident that law-abiding citizens there would be sitting ducks. [New York Daily News, July 25]

Posted on 07/25/12 06:16 PM by Alex Adrianson

The Internet Was Not the Product of a Far-Sighted Government Plan

President Obama’s “you didn’t build that” speech wasn’t just infelicitous of the accomplishments of private business; it gave government undue credit for the Internet. Yes, the communications protocols used by the Internet today have their origins in the Department of Defense’s ARPANET project. But, as Gordon Crovitz explains, the key step was taken by Xerox:

It was at the Xerox PARC labs in Silicon Valley in the 1970s that the Ethernet was developed to link different computer networks. Researchers there also developed the first personal computer (the Xerox Alto) and the graphical user interface that still drives computer usage today.

According to a book about Xerox PARC, “Dealers of Lightning” (by Michael Hiltzik), its top researchers realized they couldn’t wait for the government to connect different networks, so would have to do it themselves. “We have a more immediate problem than they do,” Robert Metcalfe told his colleague John Shoch in 1973. “We have more networks than they do.” Mr. Shoch later recalled that [Advanced Research Projects Agency] staffers “were working under government funding and university contracts. They had contract administrators … and all that slow, lugubrious behavior to contend with.”

Crovitz goes on observe that even Xerox didn’t fully realize the value of what it had built, which explains why Xerox isn’t the biggest company in the world today:

Blogger Brian Carnell wrote in 1999: “The Internet, in fact, reaffirms the basic free market critique of large government. Here for 30 years the government had an immensely useful protocol for transferring information, TCP/IP, but it languished. … In less than a decade, private concerns have taken that protocol and created one of the most important technological revolutions of the millennia.” [Wall Street Journal, July 22]

Posted on 07/24/12 05:49 PM by Alex Adrianson

To Do: Milton Friedman’s 100 Birthday

• Celebrate the birthday of one the greatest champions of individual liberty we’ve ever had: Milton Friedman’s 100th birthday is July 31, 2012. Numerous organizations will hold events throughout the week, including these: Beacon Center of Tennessee, Cascade Policy Institute (Oregon), The Friedman Foundation for Educational Choice, Grassroot Institute of Hawaii, Idaho Freedom Foundation, Pacific Research Institute, Show-Me Institute (Missouri). You can find many more Milton Friedman events listed at the Free to Choose Network.

• Get ready for Americans for Prosperity’s Defending the American Dream Summit. It will be August 2 – 4 in Washington, D.C. Among the speakers will be Gov. Scott Walker (Wis.), Rep. Paul Ryan (Wis.), and American Enterprise Institute President Arthur Brooks.

Hear John Goodman explain why the solution to America’s health care crisis is to stop suppressing markets in health care. Goodman will be speak at 12:30 p.m. on July 24 at The Heritage Foundation about his new book Priceless: Curing the Healthcare Crisis.

Posted on 07/20/12 01:13 PM by Alex Adrianson

Miss Free Checking?

The Dodd-Frank Wall Street reform law is two years old this week, and it’s nothing to celebrate, says Diane Katz:

Coming in at some 2,300 pages, Dodd–Frank presented a challenge to implement within the statutory deadlines: at least 400 separate rulemakings affecting virtually the entire financial sector. As of July 2, 63 percent of the deadlines have been missed, which has intensified the cloud of uncertainty enveloping the finance sector—and the economy—since passage of the act. Thousands of businesses do not know what the government demands they do differently or when they must do it. With financial firms constrained by undue caution, consumers will experience tight credit, higher fees, and fewer service innovations. Job creation will suffer.

The proposed and final rules issued in the past 12 months reveal the alarming extent to which the federal government is seizing control of financial services—from individual checking accounts to the $300 trillion “swaps” market. As a result, financial firms of all sizes are shelling out hundreds of millions of dollars for regulatory compliance officers and attorneys rather than making loans for new homes and businesses.

Just last month, Moody’s Investors Service cut the ratings of 15 of the world’s biggest banks, in part because of looming regulatory burdens. Community bankers, meanwhile, are restraining growth to remain below the asset threshold at which the more stringent Dodd–Frank rules kick in. And consumers are paying more for financial services: The number of large banks that offer free checking has declined from 96 percent in 2009 to 34.6 percent in 2011. [Internal citations omitted.] [The Heritage Foundation, July 17]

Posted on 07/20/12 12:07 PM by Alex Adrianson

Occupy’s Chaos Is Intended

There was a method to the Occupy Movement’s madness, and it wasn’t too different from that of the Brown Shirts. That’s one of the things you learn from the new Citizens United’s new film, Occupy Unmasked. The Daily Caller has a few details:

While many of the students were “well intentioned,” there were more radical elements at work, [filmmaker Steve] Bannon said. “Occupy would always need a continual flow of college kids to give it mass. Useful idiots. That’s why Occupy had no demands. They didn’t want to. It’s all about creating structured chaos.”

Part of the way that Occupy created this “structure,” according to Bannon, was through Lisa Fithian and other organizer’s three-tiered model adopted from the 2008 Republican National Convention protest.

One group, “green,” consisted of regular liberal citizens, who came to protest. A second “yellow” group was individuals willing to break the law, like handcuffing themselves across a road. The last “red” group of the most violent anarchist organizers and professional agitators was there to create a scene that swept innocent “greens” into confrontations with the police. [Daily Caller, July 19]

The film’s makers plan to release it later this summer. For what it’s worth, the Occupy movement’s Wikipedia page contains a box noting that the movement’s protests have led to 7,250+ arrests, 320+ injuries, and 30 deaths. There is no analogous box on the Tea Party’s Wikipedia page.

Posted on 07/20/12 11:30 AM by Alex Adrianson

Doing Things Together—Obama’s Way

In a speech you may have heard about over the weekend, President Obama said: “[W]hen we succeed, we succeed because of our individual initiative, but also because we do things together.” He’s not exactly out on a limb there, but—as the President’s supporters insist—let’s put his speech in context: It was an argument for raising taxes on the top 2 percent of income earners. Obama’s idea is that we need more teamwork from the 2 percent who already shoulder over 40 percent of the income tax burden. (According to recent CBO data, the top 1 percent alone pay 38.7 percent of all income taxes.)

Politicians say inane things all the time, but in this case, it may just be that the President really believes that people don’t normally do things together unless the government is force marching them into it. As Aaron Ross Powell puts it: “At some fundamental level, Obama simply doesn’t understand that ‘we’ are not the state. For him, acting together simply is the same thing as legislating, regulating, and taxing.” [Cato-at-Liberty, July 16]

Over the weekend, before the President’s Roanoke speech became the buzz, Jack and Suzy Welch took to the Wall Street Journal to argue, contra Elizabeth Warren: “Of course corporations are people”:

[P]eople in corporations do indeed love and cry and dance. If you don’t know that, you’ve never been part of a team that has pulled together over coffee and late nights and shouting and laughing and created something amazing to hit a deadline. You’ve never been in the room when a longtime client says it’s not working anymore and she’s taking her business to your biggest competitor. You’ve never sat in the lunch room when someone runs in and says the new medical device that no one thought had a chance, the little heart valve or something like it that every engineer in the place has been working on for two years, has just passed its first human clinical trials with flying colors. [Wall Street Journal, July 15]

A pretty good reminder, as if one were needed, that corporations exist because people have decided to do something together. So if Obama wants more of that, he’ll tell Nancy Pelosi to stop attacking the Constitutional rights of people who come together to form corporations.

Posted on 07/20/12 12:08 AM by Alex Adrianson

Well Done, Canada!

Over the past five years, net worth per Canadian household has exceeded net worth per American household (total combined value of liquid and real estate assets minus debt) for the first time.

Currently, the average Canadian household is more than $40,000 richer than the average American household. (According to the latest Environics Analytics WealthScapes data, the average household net worth in Canada was $363,202 in 2011; in the U.S. it was $319,970.) And these are not 60-cent dollars, but Canadian dollars more or less at par with the U.S. greenback. Furthermore, these figures ignore public-sector (government) debt that presumably people on both sides of the border or their children will some day have to pay. Such debt is higher in the U.S. as a percentage of GDP than it is in Canada. [The Globe and Mail, June 30]

But don’t credit socialism for this result. Canada has ranked higher in economic freedom than the United States since 2009. [2010 Index of Economic Freedom, Chapter 7, The Heritage Foundation/Wall Street Journal; see also Country Rankings at 2012 Index of Economic Freedom]

A caveat: The comparison doesn’t count U.S. 401(k) wealth. [Fox Business, July 18] Still, the trend has been clear. Between 1997 and 2007 Canada had the highest rate of economic growth of any of the G7 countries; that followed a program of austerity in which Canada reduced government spending as a share of the economy from 16.2 in 1994 to 13.1 percent n 1996. [See Brian Lee Crowley, Jason Clemens, and Niels Veldhuis, “The Canadian Beacon: What Washington Can Learn from Ottawa,” The Insider, Summer 2011.]

Posted on 07/19/12 09:34 PM by Alex Adrianson

Obama’s Tax Increase Will Cost 710,000 Jobs

Obama’s proposed tax increase would hurt the economy, says a new study buy Ernst & Young:

Through lower after-tax rewards to work, the higher tax rates on wages reduce work effort and labor force participation. The higher tax rates on capital gains and dividend increase the cost of equity capital, which discourages savings and reduces investment. Capital investment falls, which reduces labor productivity and means lower output and living standards in the long-run.

Specifically, the study finds that long-run output would fall by 1.3 percent, or $200 billion, in today’s economy; long-run employment would fall by 0.5 percent or, roughly 710,000 fewer jobs, in today’s economy; and real after-tax wages would fall by 1.8 percent. The study explains:

The concern over higher individual tax rates has also been a focus because of the prominent role played by flow-through businesses—S corporations, partnerships, limited liability companies, and sole proprietorships—in the US economy and that a large fraction of flow-through income is subject to the top two individual income tax rates. These businesses employ 54% of the private sector work force and pay 44% of federal business income taxes. The number of workers employed by large flow-through businesses is also significant: more than 20 million workers are employed by flow-through businesses with more than 100 employees. [Robert Carroll and Gerald Prante, Long-Run Macroeconomic Impact of Increasing Tax Rates on High-Income Taxpayers in 2013,” Ernst & Young, July 2012]

Curtis Dubay adds:

President Obama is fond of saying his tax increase wouldn’t impact 97 percent of small businesses. But those 97 percent of small businesses aren’t job creators. […] The businesses that would pay this tax increase are the businesses that hire millions of workers. [The Foundry, July 18]

Posted on 07/19/12 07:56 PM by Alex Adrianson

ObamaCare’s Mandate-Tax Might Not Be Very Effective

… since it has no teeth, explain Joseph Antos and Michael Strain:

First, the tax (nee penalty) is too small to matter to the people who are its target. In 2014, the tax will be the larger of $95 or 1 percent of taxable income for an individual. By 2016 it rises to $695 or 2.5 percent of income. Young people would not want to pay a dollar if they could avoid it, but avoiding the tax means signing up for insurance that many do not think they need. That insurance is not free. Even with subsidies, they will pay at least 3 percent of their incomes for premiums and up to 6 percent of the cost of the insurance in deductibles and copayments. That adds up to a lot more than 95 bucks.

Second, the law counts on most of the scofflaws turning themselves in. If you do not have insurance and think you owe the tax, then you will be asked to check a box to that effect on your tax return. If you choose to ignore the mandate, you might also choose not to check the box. But even those who do confess that they do not have insurance may not be liable for the new tax. Illegal aliens, Native Americans, prisoners, those who are without insurance for less than 3 months, those who do not have to file an income tax return, anyone who faces a hardship or cannot find affordable coverage, and others are all exempt. [The American, July 17]

Nothing written here is to be construed as an attempt to encourage taxpayers to deceive the Internal Revenue Service.

Posted on 07/19/12 07:32 PM by Alex Adrianson

Big Government Looks Out for the Big and Powerful

That’s the way politics works, explains Matt Zwolinski:

Posted on 07/18/12 06:02 PM by Alex Adrianson

Tipping Points

We’ve noted previously that the rising percentage of non-taxpayers creates a seriously problem for a democracy: If a large group of people bear none of the cost of the political choices they make, they will make choices that are very costly to the rest of society. Indeed, Will Freeland and Scott Hodge have a new report out this week finding that the percentage of tax filers with zero income tax liability reached a new high of 41 percent in 2010, the latest year for which IRS data are available. [Tax Foundation, July 20]

But when you take into account the combined effects of both taxing and spending policies, maybe we have already blown past the tipping point. As Greg Mankiw notes, spending and taxing are two sides of the same coin, and recent data from the Congressional Budget Office now show that “the middle class, having long been a net contributor to the funding of government, is now a net recipient of government largess.”

Here’s what Mankiw found, using data from supplemental table 7 of the recent CBO report, “The Distribution of Household Income and Federal Taxes, 2008 and 2009”:

Bottom quintile: -301 percent
Second quintile: -42 percent
Middle quintile: -5 percent
Fourth quintile: 10 percent
Highest quintile: 22 percent
Top one percent: 28 percent

For every dollar it earns, the typical family in the bottom quintile receives $3 in transfer payments minus taxes. The data go back to 1979, and Mankiw notes that, for the middle quintile, this measure of redistribution had been positive (the quintile was a contributor to government funding) for every year up until 2007. [Greg Mankiw’s Blog, July 14]

Posted on 07/17/12 07:33 PM by Alex Adrianson

The Cost of Getting a Degree in California Has Gone Way Up

Here’s a look at what’s wrong, from the American Council of Trustees and Alumni:

Posted on 07/16/12 05:07 PM by Alex Adrianson

Welfare Reform Is the Latest Obama Rewrite

There he goes again: On Thursday, President Obama rewrote another law via executive discretion. This time he gutted the work requirement of the 1996 welfare reform law; he cited section 1115 of the law, which he says provides the administration with a waiver authority. But, no it doesn’t, explain Robert Rector and Kiki Bradley:

Section 1115 states that “the Secretary may waive compliance with any of the requirements” of specified parts of various laws. But this is not an open-ended authority: Any provision of law that can be waived under section 1115 must be listed in section 1115 itself. The work provisions of the TANF program are contained in section 407 (entitled, appropriately, “mandatory work requirements”). […] Of the roughly 35 sections of the TANF law, only one is listed as waiveable under section 1115. This is section 402.

Section 402 describes state plans—reports that state governments must file to HHS describing the actions they will undertake to comply with the many requirements established in the other sections of the TANF law. The authority to waive section 402 provides the option to waive state reporting requirements only, not to overturn the core requirements of the TANF program contained in the other sections of the TANF law.

The new Obama dictate asserts that because the work requirements, established in section 407, are mentioned as an item that state governments must report about in section 402, all the work requirements can be waived. This removes the core of the TANF program; TANF becomes a blank slate that HHS bureaucrats and liberal state bureaucrats can rewrite at will. […]

In a December 2001 document, “Welfare Reform Waivers and TANF,” the non-partisan Congressional Research Service clarified that the limited authority to waive state reporting requirement in section 402 does not grant authority to override work and other major requirements in the other sections of the TANF law […] . [The Foundry, July 12]

Posted on 07/14/12 08:26 PM by Alex Adrianson

Toolkit: Use Google+ Hangout to Get Personal with Your Audience

Google+ has a feature called Hangouts that lets you have real-time face-to-face conversations on the Web. Don’t overlook this platform as part of your Web marketing strategy. Here’s what to do:

Get Started: Begin by creating a Google+ profile for yourself if you don’t already have one. This can be done by going to Google.com, clicking on the “You” in the upper left hand corner. Then, click the option to “create a new account.” Having a Google+ profile is necessary for Hangout but also beneficial for communicating with customers and consumers in other ways as well. Once you have a Google+ profile, you can follow the instructions to start up a Hangout. Then, you are ready to roll with these three tips:

Have Real-Time Interaction: Create a select group of supporters, customers, etc. to participate in a Google+ Hangout. Create an agenda to talk over during your scheduled time and get honest, face-to-face feedback from your most valued consumers. They will appreciate the personal aspect of Hangout and feel especially valued. The feedback you get from a real-time—as opposed to email or even a phone call—will be more genuine and also give the consumer a personal connection with you. For that, he will become more endeared to your product or service.

Host a Virtual Panel: Like at a conference or event, Hangout can provide a virtual panel of speakers or experts to talk about their areas of expertise. Create a title for the panel and have each person speak for a few minutes. Then, take questions from others logged in and from other Web-based social media like Twitter and Facebook. This allows you to get your ideas and expertise out there without going to all the trouble of traveling to a conference. It can be used for your advantage if you need to respond to something quickly.

Give it Away! Attract interest in your Hangout by holding a contest in which you will announce the winner during the Hangout. Give-aways always generate huge spikes in traffic and by doing something innovative like this, you’ll gain even more attention. Local blogs and news sites may even take notice and promote it for you, which will give you even more traffic. Consumers will find it interesting you are a step ahead and this is the perfect platform for a give-away.

Google+ Hangout makes it so easy for you to have genuine interaction with fans and consumers. Take advantage of this free service and up your game in the social media world at the same time.

Posted on 07/13/12 05:00 PM by Alex Adrianson

To Do: Activities to Fill Your Dog Day Afternoons

• Not a fan of body scanners at airports? Consider signing the new petition at WhiteHouse.gov that calls on the President to tell TSA to conduct a notice-and-comment rulemaking already. A federal court told TSA it had to get the public’s input on using Advanced Imaging Technology at airports—and to do so promptly! But that was a year ago.

Find out how bad the cronyism has gotten in the age of Obama. Writers Jay Cost and Tim Carney will talk at The Heritage Foundation at noon on Tuesday, July 17.

• Students get ready for National Conservative Student Conference, the biggest conservative event of the year for students. Organized by the Young America’s Foundation, the conference takes place July 30 – August 4 at the George Washington University in Washington, D.C.

• Save the date for Milton Friedman’s 100th Birthday. It will be July 31. Next week, we’ll send along a roundup of events.

Posted on 07/13/12 04:53 PM by Alex Adrianson

Government Eats Up 197 Days this Year

In 2012, it will take 197 days for the country to earn enough income to pay for both the cost of government spending and the cost of the regulatory burdens government imposes. That means if we worked only for the government starting January 1, it would take the country until July 15 to cover the cost of government, which makes July 15 the Cost of Government Day, as Americans for Tax Reform dubs it.

The group has calculated Cost of Government Day back to 1977. For the second consecutive year, Cost of Government Day has moved earlier in the year. It was July 18 last year and July 19 in 2010. It was July 17 in 2009. Cost of Government Day had never been later than June 26 before 2009. In 2000, the Cost of Government Day fell on June 7.

Posted on 07/13/12 03:53 PM by Alex Adrianson

Real Public Pension Costs Revealed

The underfunding in the nation’s public pensions is three times as big as the pensions have claimed according to a new Moody’s estimate, reports Ed Mendel:

A new estimate from Moody’s Investor Services triples national public pension debt from $766 million to $2.2 trillion, mainly because the major Wall Street bond-rating firm uses a lower forecast of pension fund investment earnings urged by critics.

In a reporting overhaul proposed last week to give investors a better way to compare pension funding, Moody’s uses an annual earnings forecast based on corporate bonds, 5.5 percent, much lower than the 7.5 to 8.25 percent forecast by pension funds. [Calpensions, July 9]

In other words, the pension funds were lying.

Posted on 07/13/12 03:35 PM by Alex Adrianson

U.S. Taxpayers Subsidize a War on Financial Privacy

The Organisation for Economic Cooperation and Development has issued a new report bragging about its role in promoting the automatic sharing of tax information among governments. Richard Rahn explains why U.S. taxpayers, who subsidize the OECD, should not be pleased:

This means that the most vile governments will receive financial account information automatically about individuals from other countries. Assume you are standing up to or protesting some corrupt or authoritarian regime in your own country – there are too many to name – and to protect your family, you have a bank account in the United States, Switzerland or some other nation that offers basic protections of civil liberties. Under automatic information-sharing, the thugs you are opposing will be receiving information about your finances from the U.S. government and other governments, which can put your property and your life at risk. The response from the bureaucrats in the OECD and Obama administration is “we protect confidential information,” as if they had never heard of Wiki-Leaks or the other never-ending hacks of government data. Again, we are told that governments will increasingly engage in “automatic” information-sharing and will “protect confidential information,” but please don’t notice the disconnect. [Washington Times, July 9]

Posted on 07/13/12 03:27 PM by Alex Adrianson

Fighting City Hall—There’s an App for That

For some start ups, social media offers more than just a new way of getting product or services to customers. Its letting them break the regulatory cartels created by special-interest politics, too. This week in the nation’s capital, the relatively new and popular sedan-booking service, Uber, used social media to mobilize its customers against a proposal before the city council to impose minimum prices on sedan services.

Uber’s mobile-phone app allows patrons to book a ride only minutes before they need one, effectively blurring the distinction between a car service and a taxi. The taxis and their regulators did not appreciate that blurring. They wanted a crackdown, calling Uber an illegal taxi service. The city council appeared set to solve the impasse by passing a law that would have let Uber carry on as a sedan service but require all such services to charge a minimum of $15 per trip. That charge is five times the standard taxi charge for the “flag drop,” a level that would have threatened Uber’s plans to roll out a low-price version of its service. Uber used social media to mobilize its customers, who didn’t like the idea of paying higher prices for something they liked. After receiving tens of thousands of e-mails from Uber supporters, the council dropped the price provisions and passed the bill giving Uber a green light to continue as it is.

Uber’s victory is one more example of how social media empowers consumers and taxpayers at the expense of special interests. When mobilizing your customers or followers is no harder than pushing a few buttons, the highly motivated but smaller special interests lose their organizing advantage.

Posted on 07/13/12 02:13 PM by Alex Adrianson

Free Enterprise Doesn’t Just Make Us Wealthier

There is a moral argument for free enterprise, too, which Arthur Brooks outlines in the video below:

Posted on 07/12/12 04:21 PM by Alex Adrianson

Maybe We Need More Income Inequality

We don’t know whether the Gini co-efficient is going up, but we do know that liberals think it is and that they think that’s a bad thing. The Gini co-efficient is a measure of income inequality. But is rising income inequality really a problem that needs a solution (i.e., more income redistribution)? It certainly wasn’t for the Chicago Bulls of the Michael Jordan era, as Matthew Schoenfeld points out:

In 1986, the Bulls’ median player salary was $300,000. The team’s lowest-paid player made $135,000, and its highest-paid player made $806,000. The team’s Gini coefficient was 0.36. But Jordan’s superstardom increased the team’s popularity and revenues, and by 1998 salaries looked different. The median income was $2.3 million, the lowest was $500,000, and the highest (Jordan’s) was $33 million. The Gini coefficient had nearly doubled, to 0.67.

Jordan’s salary of $33 million consumed over half the payroll, but everyone was better off. The median player in 1998 made more than seven times what the median player made in 1986, while the income of the lowest-paid player in 1998 quadrupled that of his 1986 peer. [Wall Street Journal, July 10]

Posted on 07/12/12 03:26 PM by Alex Adrianson

The Doctors’ Prescription Is More Patient Control, Less Government

Has the government confused health insurance with health care? Being covered doesn’t mean much if you can’t find a doctor to give you care. A new poll of doctors from the Doctor Patient Medical Association suggests that physician shortages may become the defining feature of the era of ObamaCare. Specifically, the poll found that 83 percent of doctors are considering quitting medicine; 90 percent say the health care system is on the wrong track. Why?

Hands-down, doctors blame government involvement in medicine for the current problems in medicine, and are not shy to say they want it out. Two out 3 doctors ranks government involvement as the top reason, one-half rank health plans/insurance as the top reason […] and third-party payers and lawyers are tied for the third highest ranking at 40%.

The reasons cited range from the deluge of regulatory compliance that siphons time away from patient care, to de facto rationing achieved through complex payment schemes, to cushy relationships that favor corporations and special interests in medicine […]

Doctors say that a key government provision in the Affordable Care Act – the huge expansion of Medicaid enrollees – is likely to backfire, as almost half (49%) say they will stop accepting Medicaid payments.

Medicare draws even more complaints. Three-quarters (74%) say they will stop accepting new Medicare patients or leave it completely. […]

And they report that insurance companies are often barriers to reforms that would give patients tools to find and negotiate for more affordable care. Fifty-nine percent would post prices or consider posting them, but 40% report that their insurance contracts gag them from disclosing prices. […]

Doctors say that many problems in health care could be fixed if patients would get more involved, take more responsibility for their health, and pay for their care themselves instead of asking doctors and other medical professionals to file the insurance claims and wait for payments. “More patient involvement” was ranked as a “most important” factor by 68%, just behind reducing government regulations and mandates. [“Doctors’ Attitudes on the Future of Medicine: What Wrong, Who’s to Blame, and What Will Fix It,” Doctor Patient Medical Association, June 2012]

Posted on 07/11/12 05:29 PM by Alex Adrianson

Obama’s Tax Increases Would Hurt Job Creation

On Monday, President Obama at last addressed the Taxmaggedon problem, proposing to extend current income-tax rates only for individuals earning less than $200,000 and families earning less than $250,000 per year. That leaves higher-income taxpayers looking at increases in the top two marginal rates. Instead of 35 percent and 33 percent, the rates will be 39.6 percent and 36 percent. Promising to make some other guy pay always has a certain political appeal, but the move will surely stifle job creation. As Scott Hodge points out, more than a few businesses report their income through the income tax code:

[T]he vast majority (66 percent) of pass-through business income was reported by taxpayers earning more than $250,000. Millionaire tax returns earned 36 percent of this private business income while taxpayers earning between $250,000 and $1 million earned 30 percent. Meanwhile, taxpayers with incomes below $100,000 earned 13 percent of all private business income.

It is also illuminating to look at the distribution of specific types of business income. […] Whereas only 25 percent of sole proprietor income is reported by taxpayers earning over $250,000, some 85 percent of partnership and S-corp income is reported by these high-income taxpayers. Indeed, more than half of all partnership and S-corp income is earned by millionaire taxpayers.

The president and his economic team also tend to overlook how many of these pass-through businesses are employers. A recent Treasury report analyzed IRS data from 2007 and found that roughly 4.2 million pass-through business returns – out of 34.7 million overall – were employers. […] 50 percent of the income generated by these employers accrued to taxpayers with incomes above $1 million. Fully 90 percent of this business income was generated by employers with incomes above $200,000. [Scott Hodge, Tax Foundation, July 9; related: Curtis Dubay, The Heritage Foundation, July 9]

Posted on 07/10/12 05:40 PM by Alex Adrianson

Crony Capitalism Is a Bigger Problem than Just Bailouts

… as the metaphorical iceberg below shows:

(Roll over or click on the graphic for more information.) [Related: Matthew Mitchell, “The Pathology of Privilege: The Economic Consequences of Government Favoritism” Mercatus Center, June 8.]

Posted on 07/09/12 02:59 PM by Alex Adrianson

Toolkit: Don’t Just Pile Your Literature on a Table—Use Your Exhibit Booth to Engage People!

Your organization can increase its outreach significantly by using best practices when exhibiting at conferences. The marketing company Marketech surveyed thousands of conference attendees to determine the most effective techniques at exhibit booths. Here are a few ideas:

• Choose energetic outgoing people to run your booth.
• Remove all chairs from behind your display table, to make sure your booth attendants are standing up and engaging as many passers-by as possible.
• Have a promotion, like a drawing for a Kindle Fire. That will significantly drive up the number of attendees who sign up for your newsletters and campaigns.
• Be selective in what you display. Make sure the literatures/product you choose to bring to the conference matches the interests of those who will be attending.
• Use short videos and product demonstrations to catch people attention.

Read Mike Thimmesh’s “White Paper: What Attendees Tell Us About Best Exhibiting Practices” to learn more about how to drive up make the best impact with your exhibit booth.

—By Ryan Nichols

Posted on 07/06/12 02:55 PM by Alex Adrianson

Higher Ed Is the Next Bubble

The government continues to do the same things to higher education that it did to housing, which means we’re in for another crisis, explains Anthony Davies:

Posted on 07/06/12 02:45 PM by Alex Adrianson

For and Against

The federal government is both attacking and subsidizing the consumption of soda. Lachlan Markay [The Foundry, July 2] points out that the 2012 farm bill, passed last week, “preserve[s] tariffs on the importation of sugar and domestic quotas that keep prices artificially high” while food stamps may still be spent on sugary drinks. Yet:

In New York City, which is looking to ban soft drinks larger than 16 oz., the federal government has financed 87% of a $2.8 million ad campaign linking soda to obesity, according to a Sunday report in the New York Times.

This example of schizophrenic policy reminds us of Ronald Reagan’s quip: “Government’s view of the economy could be summed up in a few short phrases: If it moves, tax it. If it keeps moving, regulate it. And if it stops moving, subsidize it.”

Posted on 07/06/12 02:38 PM by Alex Adrianson

Breaking News from Every Month for the Last 36 Months

The employment picture still lags the promises made for President Obama’s stimulus plan:

 

Posted on 07/06/12 01:38 PM by Alex Adrianson

What Part of “No Law” Do They Not Understand?

Somehow, governments across the country have come to believe that sign codes are a kind of First Amendment loophole. How did that happen? The Institute for Justice, which is hard at work challenging this trend, explains in this video:

Posted on 07/06/12 01:28 PM by Alex Adrianson

To Do: Summer Reading, Filmmaking School, Interns Debate

• Stock up on summer reading. For ideas, consult National Review’s and the Mercatus Center’s summer reading lists. The Mercatus list is heavy on serious works of political economy, but there are some surprising choices as well. (Bill James Baseball Abstract! Well, maybe it’s not so suprising that policy geeks like baseball stats.) The National Review list provides more choice in history, fiction, and philosophy.

• Apply for the Atlas Foundation’s filmmaking training program for think tanks, Lights, Camera, Liberty. The program includes training with experienced filmmakers in Los Angeles and up to $5,000 in equipment. Apply by August 31.

• Find out which philosophy makes more sense, libertarianism or conservatism. And find out which think tank’s interns are better at making an argument for their respective institution’s philosophies. Heritage Foundation interns will square off against Cato Institute interns on July 18 at 6:30 p.m. at the Cato Institute.

• Learn how leftist critics have things exactly backward on the free market. At The Heritage Foundation, on July 12 at noon, Father Robert Sirico of the Acton Institute will talk about his new book Defending the Free Market: The Moral Case for a Free Economy.

Posted on 07/06/12 01:15 PM by Alex Adrianson

The ObamaCare Taxes Ahead

And these are just the ones the law refers to as taxes:

Posted on 07/06/12 12:45 PM by Alex Adrianson

Gun Rights Group Schools Chicago on Gun-Buy Back Program

Who turns in their guns when cities offer to buy them back? Turns out, it’s pretty much the same people who abide by gun laws—the non-criminally-inclined. But, as Franklin Main [Chicago Sun-Times, June 30] reports, Chicago took notice of one particular law-abiding group at its recent buy-back event:

The city collected 5,500 guns last Saturday in the annual buyback. The city gave out $100 MasterCard gift cards for each gun and $10 cards for BB guns and replicas.

Sixty of the guns and several BB guns were turned in by the Champaign-based Guns Save Life. In return, the group received $6,240 in gift cards, said John Boch, president of the group. […]

Most of the money will go toward buying ammunition for an NRA youth camp in Bloomington. The rest will pay for four bolt-action rifles that will be given away to campers.

“This was rusty, non-firing junk that we turned in,” Boch said. “We are redirecting funds from people who would work against the private ownership of firearms to help introduce the next generation to shooting safely and responsibly.”

The police were not happy:

“We host the gun turn-in event on an annual basis to encourage residents to turn in their guns so we can take guns off the street and it’s unfortunate that this group is abusing a program intended to increase the safety of our communities,” said Melissa Stratton, a police spokeswoman.

Actually, the incentives for “abuse” (the city’s word) are there for anybody who turns a gun in; the city just didn’t want to notice until an avowedly pro-gun rights group started doing it. As Eugene Volokh [Volokh Conspiracy, July 2] points out, if the police thought they were going to get guns worth more than $100 by offering $100, then they need some economics lessons.

Posted on 07/05/12 06:43 PM by Alex Adrianson

That Regulation and Taxation Are Close Substitutes Is Not a New Problem

As you probably know by now, last week Chief Justice John Roberts rejected the government’s expansive theory of its Commerce Clause powers only to give ObamaCare a thumbs up under Congress’s tax power. Richard Epstein [New York Times, June 28] points out that this case wasn’t the first time the Supreme Court had been asked to consider the use of the tax power for regulatory purposes:

In the Child Labor Tax case of 1922, the Supreme Court refused to uphold a tax equal to 10 percent of the net profits of any firm that shipped goods into interstate commerce if the firm used child labor anywhere in its plants. Chief Justice William Howard Taft noted that the court’s earlier decision in Hammer v. Dagenhart (1918) forbade Congress to use its commerce power to prohibit outright the shipment of ordinary goods across state lines because they were made in factories that used child labor. A heavy tax, the court argued, could not be used to mount an end run around this constitutional obstacle to its own power.

The same point was reinforced in 1936 in United States v. Butler, which struck down a tax on agricultural commodities because it sought to achieve the then unconstitutional regulatory aim of reducing the total acreage in agricultural production. After the 1942 case Wickard v. Filburn, when the Commerce Clause was held to permit such regulation, the tax became just as permissible as direct regulation. Wickard expanded the scope of federal power, but it did nothing to upset the constitutional parity between the taxing and commerce powers.

So these limits on the tax power survived the New Deal—only to be upended by Chief Justice Roberts.

Posted on 07/05/12 05:46 PM by Alex Adrianson

Somebody’s Been Talking Too Much

A rundown of the national security leaks of the past year, from the American Enterprise Institute:

Posted on 07/05/12 04:48 PM by Alex Adrianson

What If Progressives Could Update the Declaration of Independence?

Walter Russell Mead imagines how it might go:

The unanimous Declaration of the Thirteen Post-Colonial, Multi-Racial Societes of North America

When in the Course of human events, it becomes necessary for one people to strengthen the political bands which have connected them with the Global Community, and to assume among the powers of the earth, the cooperative and deferential station which a careful review of the relevant peer reviewed literature suggests is most appropriate for long term win-win outcomes, a decent and rigorously equal respect to the opinions of woman- and man- and transkind requires that they should declare the causes which impel them to the ever deeper union.

The rest of the rewrite is available at Via Media, July 3. The forces of political correctness have already messed with Mark Twain, so maybe a non-satirical rewrite of the Declaration isn’t too far off. On the other hand, why bother? Progressives have already shown that they can rewrite the Constitution as practiced without actually altering the text. [See, for example, Ronald Pestritto, “The Birth of the Administrative State: Where It Came From and What It Means for Limited Government,” The Heritage Foundation, November 20, 2007; and Richard A. Epstein, How Progressives Rewrote the Constitution, Cato Institute, 2006.]

Posted on 07/05/12 04:31 PM by Alex Adrianson

ObamaCare Has Another Legal Problem

The Supreme Court has upheld the Individual Mandate, but the law’s subsidy scheme won’t work unless the Internal Revenue Service gets away with imposing a tax not authorized by the law. Jonathan Adler and Michael Cannon [USA Today, June 25] explain:

Under the guise of implementing the law, the Internal Revenue Service has announced it will impose a tax of up to $3,000 per worker on employers whom Congress has not authorized a tax. […]

The Act’s “employer mandate” taxes employers up to $3,000 per employee if they fail to offer required health benefits. But that tax kicks in only if their employees receive tax credits or subsidies to purchase a health plan through a state-run insurance “exchange.”

This 2,000-page law is complex. But in one respect the statute is clear: Credits are available only in states that create an exchange themselves. The federal government might create exchanges in states that decline, but it cannot offer credits through its own exchanges. And where there can be no credits, there is nothing to trigger that $3,000 tax.

In other words, unless the courts let the IRS ignore the law, states have it in their power to make the law’s subsidy scheme unworkable by refusing to create exchanges.

Posted on 07/02/12 05:48 PM by Alex Adrianson

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