Monthly Archives: March 2018

Idiocy in the Nanny State

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Starting in May, the Food and Drug Administration will require chains like Applebee’s and TGI Fridays to list calories next to all their menu items. That includes alcohol.

Because we need to know that stuff.  Or so says Government.  And of course, we’ll pay for that knowledge in higher prices for our drinks, because generating and posting that information—and defending against lawsuits over trivial errors in the postings—doesn’t come free.

Never mind that most of us don’t care.  Nana Government knows better.

Never mind, either, that Government already provides those data for free, for all who actually do care.  Here’re some data for beer.  Nana clearly thinks we’re just too stupid or lazy to make use of those data.  Or not smart enough to know we should care.

A Better Answer

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The Supreme Court might take up a case involving cy pres, the policy of handing class action suit settlement fund “leftover” money to third parties.  It’s especially used where the number of plaintiffs in the class is huge.

In privacy or data-breach cases, where the number of potential plaintiffs reaches into the millions, the majority of a settlement can go to cy pres recipients.

A 2015 class-action settlement involving Alphabet that centered on its Google subsidiary would have led, after the lawyers’ cut, to four-cent checks being sent to each of nearly 130 million plaintiffs, for instance.

Cy pres also becomes a player when the bulk of the funds are distributed and the remainder is impractical to distribute (“impractical” generally is determined by the court involved, or by the court’s acceptance of an agreement between plaintiffs and defendant(s)).

The Court should take the case and strike the practice.  Part One of a better answer, which the Court can impose, is to reduce the permissible per centage of the total payout that can go to the lawyers.  That would leave more money for the payout and reduce, if only by a little, one of the problems: the pennies distributed were all the monies disbursed to the plaintiffs.

Part Two of the better answer is a political decision, and so it’s beyond the reach of the Court; although, the Justices can, and should, inveigh Congress to address the matter.  That political decision is to bar the leftover monies from going to third parties.  By definition, those entities were not victims of the misbehavior that led to the payout, and so they should not receive any of it.  Instead, the leftovers should be delivered to the Federal or State Treasury, depending on whether the case was a Federal or State one.

Part Two-a of the better answer likely would find the most use in those privacy or data-breach cases, where all of the plaintiffs might each get impractically small payouts.  In this sort of case, all of the settlement funds should go to the Federal or State Treasury.

Credit Reports and Tax Liens

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The thee major credit reporting firms, Experian, Equifax, and TransUnion, are moving to eliminate records of tax liens from their credit data and credit reports.

The three companies, which provide vital, behind-the-scenes services in consumer credit, have been grappling with class-action lawsuits over their handling of consumers’ tax liens and judgment information.

This is a mistake.  The right answer is to defend, actively, those suits that are wrong, rather than to surrender to the extortion of lawfare, and to correct the mishandlings of the tax liens in their data and reports.

Running away from the matter altogether can only further deprecate the usefulness of these credit reporting agencies. All debt needs to be reflected in the reports so that accurate pictures of an individual’s credit risk can be developed.

Beyond that, a tax lien cuts two ways: it’s the result of a serious failure, whether of the one with the lien or of events beyond the person’s control. With the other slice, like any credit card, a record of prompt payments, keeping the lien current until it’s paid off, would reflect favorably in the minds of lenders reading the reports.

Absent the data, though, a loan’s interest charge would need to be increased to reflect the greater uncertainty, or the loan denied altogether, and either of these outcomes will harm far more consumers far more deeply than the numbers and injuries claimed by the suits.

The Anti-Competitive EU

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Now the European Commission wants to tax “behemoth” digitally-oriented multinational companies for doing business within the EU.  The only companies that fit the EC’s definition of behemoth—large firms with annual worldwide revenue above €750 million ($922 million) and annual taxable EU revenues above €50 million ($61.5 million)—are American companies like Alphabet through its Google subsidiary, Apple, and Amazon.com.

That taxable EU revenue is key here.

The EU says these firms have exploited loopholes in tax laws and managed to lower their tax bills by shifting profits to low-tax jurisdictions within the EU such as Ireland and Luxembourg.

The effective corporate tax rate paid by digital firms amounts to just 9.5%, but traditional businesses pay about 23.3%, according to EU data.

But the measure is likely to pit low-tax European member states against countries like France and Germany, which have often complained about digital companies’ aggressive cross-border tax planning….

Heaven forfend the EU should lower, or allow its member nations to lower, those traditional business’ effective tax rates to the 9-10% range.  On the contrary, the EU is adamantly opposed to tax rate competition and to lowering member nations’ tax rates.  All members much charge substantially the same high tax rates.

And this anti-competitive, so say nothing about anti-liberty, position:

the European authorities’ push for more control over how the digital world operates.

This is the tax portion of the EU’s mercantilist push for protectionism, even as it decries what it sees as American protectionism.  The EU, though, is aiming its moves at its own members as well as the outside world.

Free Speech

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The Supreme Court has taken up the case of National Institute of Family and Life Advocates (Nifla) v Becerra, whose proximate subject centers on abortion rights but whose real subject is freedom of  speech.

California’s Reproductive FACT Act, the law in question in NIFLA, requires pro-life centers to advise their clients of the availability of abortion centers.  This is forced speech, and it destroys the 1st Amendment’s protection of freedom of speech, since speech cannot be freely spoken if it cannot also be freely not spoken.  This is as true for factual speech as it is for opinion speech.

The Supreme Court expressly held as much…when it rejected a distinction between compelled statements of opinion and compelled statements of fact, finding that “either form of compulsion burdens protected speech.”

Indeed. And one obvious consequence of losing that distinction (by, for instance, ruling for Becerra rather than for NIFLA) would be to expose all news outlets to lawsuits over their editorial choices of what sets of facts to publish and what to withhold in every single article they publish.