Category Archives: Economics

Miscellaneous economy stuff

Child Tax Credit

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And other tax credits. Scott Hodge was one of the developers of the Child Tax Credit more than 25 years ago, and today he thinks the idea—well intended as it was—turns out to be bad tax and social policy (did I hear a sotto voce “unintended consequences?”).

His Monday Wall Street Journal op-ed went into detail on how the child tax credit, along with the subsequent proliferation of tax credits, turned out to be heavily counterproductive, reducing family prosperity through reducing the number of workers—who are family members—in the work force and thereby reducing overall GDP.

But the kicker of his piece was his closer.

No wonder the IRS is dysfunctional—it’s not equipped to be a social-service agency.
The “put money in people’s pockets” approach of the child tax credit might have been good politics, but 25 years’ experience shows it was bad policy. The country needs a tax agenda that promotes growth and opportunity, not handouts and redistribution.

Indeed.

The best tax agenda for growth and opportunity promotion begins with taking our tax code, and so the IRS, out of the social engineering milieu altogether. Tax collections should be limited (at the Federal level at least; although State tax codes would benefit from similar changes) to the Constitutionally mandated purposes of pay[ing] the Debts and provid[ing] for the common Defence and general Welfare of the United States. Keeping in mind, too, that the general Welfare of the United States is itself limited to the items enumerated in our Constitution’s Article I, Section 8.

That tax agenda concludes with enacting a tax code that eliminates business income taxes altogether (keeping in mind that it’s the business’ customers who pay the lion’s share of those taxes, anyway, in the form of higher prices, while the rest of us pay in the form of reduced innovation and fewer jobs). That adjustment needs to go along with setting a single flat tax rate on all personal income from any source, with no deductions, credits, subsidies, surcharges, or any of the other froo-froo currently extant in our existing byzantine and mendacious tax code.

But What is the Or Else?

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President Joe Biden (D) is right, this time, and so are Congressional politicians (assuming they actually can get anything done on this), to move to block the coming railroad strike.

But. But, but, but.

What is the or else here? What enforcement mechanism can the government use to enforce its no-strike diktat against the railroad workers? Not against the unions, but against the rail workers?

It isn’t union leadership, after all, who have rejected the just-negotiated agreements, it’s the rank-and-file, the folks who actually do the work, who’ve rejected the agreement.

How would the government deal with the rail worker equivalent of the Blue Flu?

How would the government deal with another standard union tactic: working explicitly and exactly to the letter of the relevant regulations and the letter of the law about to be imposed on the railroad businesses and labor unions, with the result of a drastic slowdown in work performance?

How would the government deal with an overt strike, where the workers of one or more of the four unions explicitly walk off the job (and the workers of the other unions walk out in solidarity or at the least refuse to cross the picket lines)?

Mass arrests in the latter case? Where would the government find the replacement workers? The rail lines still would be shut down until those replacement workers could be found and hired, assuming anyone qualified actually would be interested.

Certainly, civil action with civil—financial—penalties could be taken, but how much will those matter if the union workers themselves have already determined they have nothing to lose? Their beef, after all, isn’t about higher wages, it’s about the quality of the work environment and work benefits, canonized by the number of sick days allowed.

I’ve seen no evidence that anyone in the Federal government is thinking about a response to the possibility the workers call government’s…bluff(?).

In Which a Judge Gets It (Mostly) Right

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Judge Reed O’Connor of the US District Court for the Northern District of Texas ruled at the end of the summer that the Obamacare requirement that health coverage providers must provide coverage for particular aspects of health care—and do so at no cost to the individual being covered—was unconstitutional. He’s currently considering whether to make his ruling permanent and if so, whether to make his ruling applicable only to the litigants in the particular case or to make it nationwide. (As an aside, I have trouble seeing how a ruling of unconstitutionality can have any range less than national.)

Michael Cannon, Cato Institute’s Director of Health Policy Studies, testified as an expert witness in the case that

People have a right to choose whether and what kind of health insurance they need and want. The government shouldn’t be requiring people to buy coverage of any service, whether preventive or otherwise.

O’Connor’s ruling to that extent would be partially correct. However, Government also shouldn’t be dictating to private companies what they must or must not produce. That’s textbook fascism.

There’s also no authority in our Constitution for government to determine what private companies can and cannot produce.

They Should Take Him Up on His Offer

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Many California local jurisdiction officials dispute with California Governor Gavin Newsom (D) over which has the larger responsibility for the homelessness rampant in those jurisdictions and what action should be taken to mitigate the problem. As a result of the dispute,

Mr Newsom recently put a temporary freeze on $1 billion of state grants for city and county homelessness programs. He also rejected a slate of proposals from local officials outlining how they would spend the money, saying the measures would have reduced homelessness statewide by 2% between 2020 and 2024, which he deemed inadequate.

In response,

Mayors and county officials, meanwhile, have said they need the Newsom administration to provide reliable, recurring revenue streams and a cohesive statewide framework to address the issue.

No, they don’t. City and county officials need to reassess their own spending priorities and their own ordinances regarding housing, employment, and homelessness and make their own adjustments. Nor should they be holding out for a Statewide “framework” for the problem: each local area has its own unique set of homeless problems, even if there might be considerable overlap among the areas.

Then these city and county officials need to accept Newsom’s generous offer to step back from interfering in city and county governance; they should accept his withholding from them of State funding.

The less State funding a city or county takes from the State government, the less hold on the city or county the State has and the weaker the ability of the State to dictate behaviors to the city or county government. This would be a relative increase in city and county power relative to the State and a net gain for the individual liberties of the local residents and the State citizens resident in there.

What’s not to like?

Whose Choice Is It?

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And whose property is it?

A new law being seriously considered by lawmakers in New York City could strip landlords of the ability to perform criminal background checks on prospective tenants.

Because landlords shouldn’t be able to control who rents their property, shouldn’t be able to protect the interests of their existing tenants—who have, by dint of their rent agreements, have some property of their own in the landlord’s buildings.

This law means it’s city government property; landlords possess the buildings only in fee from the city lords.

Republican Councilwoman Inna Vernikov has the right of it:

A bill which would prohibit landlords from conducting criminal background checks of potential tenants. Murdered someone? Beat up your girlfriend? Robbed? Stabbed your neighbor? No problem. Come live among us!

Certainly felons, even violent felons, shouldn’t be blanketly denied a second chance, shouldn’t be blanketly denied an opportunity to demonstrate that they’ve rehabilitated themselves, shouldn’t be blanketly denied an opportunity at redemption.

But that should be the choice of the property owner, the landlord; it cannot be, legitimately, a choice forced upon the property owner, in a one-size-fits-all diktat by the Lords of the city.