In Utah, You Work for the UEA

On November 6, Utahns will vote on a referendum to decide the fate of a statewide voucher program passed by the Utah legislature and signed by the governor earlier this year. As anyone who knows anything about public schooling would have predicted, the major force fighting against choice has been teacher unions, with the National Education Association (NEA) having donated at least $1.5 million to date to the anti-choice cause. And, as this article in yesterday’s Salt Lake Tribune makes clear, defeating choice is an obsession for the state’s NEA affiliate, the Utah Education Association (UEA). Of course it is, because monopolists will stop at nothing to protect their monopoly. But this begs a question to which almost everyone must already know the answer, but many just won’t admit it: Who really works for whom? Do public school teachers work for the public, or does the public really work—and pay taxes—for the teachers?

The answer is all too clear, and that alone ought to make people in Utah, and around the country, support as much school choice as they can get.

Corporate Tax Cut Revolution Continues

From the Canadian Financial Post:

The Conservative government delivered a mini-budget yesterday that lowered the Goods and Services Tax for a second time and reduced corporate taxes by one-third over the next five years as part of a $60-billion multi-year package of tax cuts…Perhaps the biggest surprise was Mr. Flaherty’s commitment to cut the corporate income tax rate deeper than planned, from its current 22.1% to 15% in 2012.

To put this in context, $60 billion over five years means about $12 billion per year. Since the American economy is about 10 times larger, the equivalent cut here would be about $120 billion per year, which is pretty big cut.

The average federal/provincial corporate tax rate in Canada today is 36%. Thus, cutting the federal rate by 7 points should drop the average combined rate to about 29%. By contrast, the combined U.S. federal/state rate is about 40%.

Here’s the interesting political part:

Liberal leader Stéphane Dion said his party would not oppose the measures, ensuring they receive Parliamentary approval as early as today…The proposal comes as Mr. Dion toured the country arguing for lower business rates and promising, if elected, to take the general corporate rate lower than the 18.5% the Conservative government had initially proposed.

That’s the Liberal party leader, in a country where “liberal” used to mean left-of-center statist. It seems that everywhere but Washington, the times are a changin’.

Former Narcotics Cop Creates a Tell-All Video

Barry Cooper was a narcotics cop in Texas who made countless arrests. But when he started busting the relatives and friends of politicians, he found himself in trouble with the law. Disgusted with this turn of events, Cooper came up with an idea to get even with the authorities. He created a DVD called Never Get Busted Again. The DVD reveals dozens of ways to avoid detection and arrest by narcotics officers. The DVD is causing a stir in law enforcement circles, but Cooper is unbowed. He has plans for another DVD called Never Get Raided Again. Interestingly, Cooper admits that he feels quite guilty about raids that he was personally involved in: “I used to break into houses at three o’clock in the morning with 10 other men, after throwing a flash grenade through the window,” Cooper says. “I would drag Mom and Dad away and send the kids to the department of human services — over a bag of pot — and totally ruin that entire family.” And those are just the raids where no one is injured or killed. Cato has documented plenty of raids that go awry.

In my book, After Prohibition, three former law enforcement officers explain how they started out as drug warriors but eventually came to the view that the drug war was not only not working, but it actually has disastrous side-effects. Colorado Sheriff Bill Masters is another example. Early in his career, Masters received awards from the DEA for his drug busts. Later, Masters turned against the war and wrote a terrific book called Drug War Addiction. There are so many cops breaking ranks these days, that there is now an organization called Law Enforcement Officers Against Prohibition (LEAP).

For Cato scholarship on the drug war, go here. I also recommend this recent essay by Ethan Nadelmann. And for more info on how to handle yourself in a confrontation with the police, go here.

Update: Several individuals who work in the drug reform movement have emailed me to say that they dispute the quality and accuracy of Cooper’s Never Get Busted Again DVD.  I thank them for alerting me and wanted to pass it along.  Buyer beware.  For what it’s worth, I can and do recommend the Busted DVD from Flex Your Rights.

Halloween Fright From Iowa Tax Collectors

Trick-or-treating just got a bit more expensive thanks to the hobgoblins at the Iowa Department of Revenue. The tax-hungry bureaucrats have decided to tax pumpkins because they are used for decoration instead of food. Yahoo.com reports:

The Iowa Department of Revenue is taxing jack-o’-lanterns this Halloween. The new department policy was implemented after officials decided that pumpkins are used primarily for Halloween decorations, not food, and should be taxed, said Renee Mulvey, the department’s spokeswoman. …Previously, pumpkins had been considered an edible squash and exempted from the tax. The department ruled this year that pumpkins are taxable — with some exceptions — if they are advertised for use as jack-‘o-lanterns or decorations.

But in the glorious tradition of bureaucracies everywhere, there is a form to fill out - at least for taxpayers who eat pumpkins:

Iowans planning to eat pumpkins can still get a tax exemption if they fill out a form.

This sounds like added bureaucracy, but Iowa taxpayers should be happy. By this time next year, the bureaucrats will decide that some people are falsely claiming that they are eating pumpkins in order to dodge the tax. So the new form will require families to send in photos of pumpkin pie. The following year, some bureaucrat will decide that some of the pies were actually bought in stores, so tax exemptions will only be allowed if a bureaucrat is invited over for dinner. I’m just kidding, of course. At least I think.

On a more serious note, special tax exemptions for pumpkins based on their use is symptomatic of why the tax code is a mess. It’s a mess in Washington, and it’s a mess in the states. The common thread in all cases is that politicians try to micro-manage the economy (and raise campaign cash) by imposing penalties and creating loopholes. The ultimate victims are the small business owners who now will have even more of their time consumed by bureaucratic nonsense:

Kautz, who has owned his farm for seven years, was particularly dismayed with the notion of requiring customers to fill out a form verifying that they planned to eat the pumpkins they were buying. “It’s another crazy, crazy, stupid thing,” he said. Kautz said he will estimate how many pumpkins were bought for non-food purposes, and then will send the tax on that amount to the revenue department. “It gets unfeasible for people to have small businesses,” he said. … Other Iowa pumpkin sellers also expressed confusion about the new policy. … None said they are asking customers to fill out the tax-exemption certificate.

Arabic Lamp of Liberty Re-Lit!

Arabs have had almost no access to the literature and the ideas of liberty….until now. The Misbah al Hurriyya (“Lamp of Liberty”) project of the Cato Institute is bringing Adam Smith, John Stuart Mill, Ludwig von Mises, F. A. Hayek, Milton Friedman, and many more thinkers to the Arab public. The team behind the Lamp of Liberty, notably Editor Fadi Haddadin and Business and Promotions Manager Ghaleb Hijazi, have outdone themselves with a newly redesigned website for the project: www.misbahalhurriyya.org.

It’s got more than a new look, though. Now you can see the incredible success of Ghaleb’s syndication of hundreds of articles to the Arab press, find information on Misbah al Hurriyya books, including John Stuart Mill’s On Liberty, Ludwig von Mises’s Economic Policy, F. A. Hayek’s The Road to Serfdom, Johan Norberg’s In Defense of Global Capitalism, and the Economic Freedom of the World Report, and browse through hundreds of studies, articles, and essays. The site also features Mudawwanat al Hurriyya (“Blog of Liberty”), an interactive map of economic freedom (in the bottom left corner), policy debates, video streaming of interviews, online books, and much, much more.

Even those who can’t read Arabic will appreciate the ingenuity and brilliant design of the site. And when you know that it’s presenting a positive alternative to the violence, oppression, and poverty that have plagued so much of the Middle East and North Africa, you will know that the positive attractions of what Adam Smith called “the simple system of natural liberty” – rather than more violence and military force – are a powerful response to the ideas of statism and intolerance. Ideas aren’t generally defeated with mere force; ultimately, it takes another idea.

The re-designed Arabic Lamp of Liberty will be joined soon by its Kurdish [www.chiraiazadi.org] and Persian [www.cheragehazadi.org] sister projects. They’re all part of Cato’s Center for Promotion of Human Rights family of projects, including the existing Spanish [www.elcato.org] and Russian [www.cato.ru] projects (each with books, podcasts, websites, and more) and forthcoming Portuguese, Azeri, French, and African (in English, French, and Portuguese) initiatives. Ten team members of the African initiative will meet in Tanzania at the African Resource Bank meeting in a few weeks. Anyone who’s interested in supporting the promotion of libertarian ideas and policies around the world should contact the Institute. (Any funds specified for a particular language or region will be spent only on works in that language or region.)

Latest Income Tax Data

Data releases by the IRS attract much attention as pundits dig through to find out which types of taxpayers paid more or less income tax.

The Joint Committee on Taxation recently released its own data on federal income tax payments, which is somewhat different. The latest IRS data is for 2005, while the JCT data are estimates for 2006. Another difference is that the JCT data include estimates for nonfilers, which gives a more universal view of the population than the IRS data.

Here is a summary table based on the JCT data (see Table 2, page 37).

Observations:

  • 57.6% of households paid income tax in 2006, meaning that 42.4% did not pay any income tax.
  • Looking at the similar JCT table for 1990, that 42% nonpayer share is up from about 30%. Some of the reasons include the expansion of the earned income tax credit (EITC), the creation and expansion of the child tax credit, and President Bush’s new bottom tax rate of 10%.
  • The JCT data show that for 2006, 23 million filers received $43 billion in EITC, which is a key reason why most people at the bottom do not pay any tax.

As Sallie discusses, it is a problem for a democracy–particularly one less constrained by constitutional rules than in the past–to have such a large and growing share of residents not paying any tax because these folks are unconstrained in campaigning for more benefits for themselves at the expense of others.

(Yes, all workers pay federal payroll taxes, but that is often wiped-out for those at the bottom end by the receipt of EITC payments from the Treasury. And, of course, low-income workers receive an array of Social Security and Medicare benefits loosely tied to their payment of payroll taxes).

Slaughterhouse of Dreams

More than one in ten public high schools in America is a “dropout factory” according to an analysis by education researcher Bob Balfanz of Johns Hopkins University. At these schools, dropping out is the norm, not the exception, and their record of sky high dropout rates is consistent over time.

What can be done about it? The most obvious solution, to anyone familiar with school choice research, is to stop assigning students to these slaughterhouses of dreams, and stop sending tax dollars to them so that they can continue apace with their grizzly work. Instead, make it possible for all families to afford the schools of their choice, public or private.

Economist Derek Neal has shown that in urban areas, where most “dropout factories” are located, Catholic schools do a far better job keeping kids in school. African American students benefit the most. After controlling for differences in student background between the sectors, minority Catholic students had an 88 percent high school graduation rate, compared to just 62 percent for similar students in public schools. In other words, black students attending Catholic schools are almost one-and-a-half-times as likely to graduate as their public school peers. Still more impressive, these gains persisted through to college. Catholic school students were two-and-a-half-times as likely to graduate from college as similar public school students.

Jay Greene has found similarly favorable results for private schools (.pdf) in Milwaukee’s school choice program.

So let’s stop herding children into failing schools. Let’s give them a choice and a far better shot at educational success.