November 5, 1999

by Peter J.M. Orvetti

Those Old Income Tax Blues
The Root Of The Canal Question
You Have The Right?

Those Old Income Tax Blues

In Tennessee, the state legislature has taken up Republican Gov. Don Sundquist's proposal for a first-ever state income tax. In a barnstorming speech to legislators late Monday, Sundquist told legislators, "You'll die by a thousand cuts with a razor blade by the cuts you'll have to make… I'm not going to tell our citizens that it's so important that we remain 50th in taxes that we're prepared to settle for 50th in everything else… I cannot understand how those who oppose tax reform in the name of Tennessee's families can believe they help families by denying their children health-care coverage. Maybe you can look a struggling family in the eyes and tell them we won't cover their kids anymore. I can't, and I won't." Sundquist argued that even with an income tax, Tennesseans would pay less in taxes than they would in surrounding states.

"On November 2 the Tennessee legislature… convene[d] a special session to debate reform of the state tax system. The center of the controversy is whether Tennessee should adopt a personal income tax, as proposed by Gov. Don Sundquist, to close an estimated $400 million budget shortfall," Stephen Moore and Richard Vedder write in the new Cato Briefing Paper "The Case against a Tennessee Income Tax". "This study finds that a personal income tax in Tennessee would likely have two negative economic effects. First, an income tax would almost certainly reduce economic growth and job creation in the state. The absence of an income tax in Tennessee gives Tennessee a large competitive advantage over other states with which it competes for jobs and businesses. We find, for example, that Kentucky, a state very similar to Tennessee except that it has an income tax, has had considerably weaker economic performance since 1980. Between 1980 and 1998 the per capita economic growth rate of Tennessee was 47 percent compared to 36 percent in Kentucky.

"The second negative effect of a state income tax would be to trigger much faster growth in state expenditures. That has been the almost universal pattern in other states after they enacted a state income tax. Yet the premise of pro-income tax forces in Tennessee that the state's revenues have been growing too slowly is contradicted by the evidence. In the 1990s, even without an income tax, Tennessee's per capita tax receipts have grown 12th fastest among the 50 states. Tennessee's tax revenues have climbed at twice the rate of inflation plus population growth. The legislature should be cutting taxes, not introducing new ones."

The Root Of The Canal Question

Despite lingering doubts about potential Chinese influence, the United States completed another phase of its military withdrawal from Panama Monday, handing over a World War II air force base, AP reports. Howard Air Force Base, Fort Kobbe and the Farfan residential zone were all turned over to the Panamanian government; all canal operations will be turned over to Panama by the end of the year. When Panama assumes control of the canal Dec. 31, all U.S. forces must be out of the Canal Zone.

"Some conservatives argue that the Panama Ports Company, which won a long-term contract to operate the port facilities at both ends of the canal, and the owner of its Hong Kong-based affiliate Hutchison-Whampoa Ltd. shipping company have links to China's People's Liberation Army and intelligence services… The alarmists also note that 10 percent of Panama Ports is owned by China Resources Enterprise (CRE), the commercial arm of China's Ministry of Trade and Economic Cooperation. Sen. Fred Thompson (R-Tenn.) has called CRE an agent of espionage for China," writes Ivan Eland in the commentary "Ghosts of the Cold War".

"Yet do the Hutchison-Whampoa owner's links to the Chinese military and intelligence services and the Chinese government's ownership stake in Panama Ports necessarily constitute an insidious geopolitical plot by China to control a strategic asset in America's backyard? The contract by a shipping company to operate port facilities may simply be designed to make money. Even the Chinese government and military have routinely been engaged in business activities overseas to turn a profit--for example, in the food and clothing industries… Even if the Chinese business activities in Panama have a geopolitical motivation rather than a commercial one, they will likely have little strategic effect. After the demise of the Soviet Union, which was capable of launching simultaneous, coordinated attacks in the Atlantic and Pacific Oceans, the Panama Canal is much less important for U.S. security. Today, the two large American navies--the Atlantic and Pacific fleets--each can maintain overwhelming dominance in their respective regions. Even during the Cold War, the Navy's capital ships--the aircraft carriers--were too large to fit through the canal.

"Finally, the timing of the alarmists' shrill warnings is suspicious. The search for threats to a man-made body of water that has declined in strategic importance is a desperate attempt to roll back the treaty-mandated withdrawal, to take place in December of this year, of an unneeded U.S. military presence. Imperialist cold warriors just cannot bear to give up Panama. They will have postpartum depression, but the rest of us can celebrate the rebirth of Panama without a humiliating and anachronistic colonial presence on its territory."

You Have The Right?

The Justice Department has filed a brief in support of sustaining the Miranda warnings that resulted from the landmark 1966 Miranda v. Arizona decision, AP reports. The Miranda decision on suspects' rights must take precedence over a later law aimed at limiting the ruling's scope and making it easier to use confessions against defendants, the brief, filed with the Supreme Court, argues. The court will review the findings of a federal court that could overturn the Miranda decision. DOJ lawyers said the 1966 decision "is of constitutional dimension" and "cannot be superseded merely by legislation."

The Miranda warnings and self-incrimination were discussed in the early Cato Briefing Paper "Individual Rights and Majoritarianism: The Supreme Court in Transition": "In New York v. Quarles, the Court, departing from prior precedent, use cost-benefit analysis to create a 'public safety' exception to Miranda. The Court held in Quarles that the government could introduce into evidence a defendant's statement disclosing the location of a gun, even though the statement was elicited in a custodial interrogation without Miranda warnings, in cases of immediate need to find the gun to protect the 'public safety.' The Court explained that although the benefits to be derived from Miranda may outweigh the 'cost . . . of fewer convictions,' those benefits do not outweigh the costs when one adds to the government's side of the equation the additional cost of 'a threat to public safety.'

"The Court in Quarles posed a false conflict in order to inflate the costs to the government. Consider, for example, the following situation: Defendant is arrested for planning to blow up a public building. The police have reliable information that the bomb is set to explode in 15 minutes. The police beat the defendant until he discloses the location of the bomb. The police then find and defuse the bomb. In such circumstances, the defendant's statement disclosing the location of the bomb may not be used against him at trial even if the beating was a 'reasonable' means to protect the 'public safety.' There is, in other words, a simple way to accommodate both the interest in 'public safety' and the privilege against compelled self-incrimination: permit the government to compel the disclosure, but exclude its use at trial. This solution was equally available in Quarles. Rather than adopt this solution, the Court manipulated its assessment of costs in order to reach its 'desired' result."