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Cato Dispatch for October 24, 2008

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(Links to outside sources were active as of the date of this dispatch; however, not all news sources maintain links to current stories indefinitely. Some links also may require registration.)

Presidential Candidates Battle Over Tax Policy

While comparing Obama's tax plan to IRS data, Chris Edwards reveals that Obama's tax plan isn't as "fair" as it's made out to be. 

Jack M. Mintz argues in favor of cutting the effective corporate tax rate in Cato's latest Tax and Budget Bulletin. "Corporate tax reform that lowers the rate and achieves a more neutral burden across business activities could boost capital investment, aid the adoption of new technologies, and increase the capacity of the economy to grow."

In the wake of the financial crisis, William Shipman urges the federal government to suspend capital gains taxes on toxic assets. "The U.S. is on a path that will accelerate its already well-established departure from free-market principles, individual liberty and personal responsibility."

Will Wilkinson calls all tax plans wealth redistribution, even McCain's. "In the system we have...democracy just is one big machine for spreading the wealth around. The real question is how much of whose money is taken, and who gets it. Politics gets nasty because everyone wants to control the business end of the tax-and-spend stick."    

Administration Urges Patience on Bailout

Robert A. Levy dissects the recent legislation and asks, "Is the bailout constitutional?" "The federal government has no constitutional authority to spend taxpayers' money to buy distressed assets, much less to take an ownership position in private financial institutions.... Necessary or not, temporarily effective or not, the bailout is unconstitutional."

William Poole contends that the treasury has no right to coerce banks. "The capital-infusion program would be voluntary for the banks wanting to raise new capital this way. This approach was the right way to go. It promised to use federal resources in an effective and relatively market-friendly way. But we've since learned from press reports...that the program was not quite so voluntary for nine of the nation's largest banks."

In an ongoing discussion in the Los Angeles Times, Daniel J. Mitchell explains how to avoid the next housing bubble. "If politicians want a stronger economy (or, to be more accurate, if they want a stronger economy more than they want to curry favor with special-interest groups), they should get rid of the policies that caused today's mess. That means abolishing Fannie and Freddie, which hopefully should be easy now that they've gone bankrupt and have stopped giving campaign contributions. It also means repealing the Community Reinvestment Act and ot'er 'affordable-housing' mandates. Luring people into homes they cannot afford is bad for banks and bad for poor people."

Watch Jim Powell compare today's crisis with the Great Depression on C-SPAN's Washington Journal.

Candidates Offer Health Care Proposals

Michael F. Cannon explains why universal coverage kills. "McCain, Obama, and the voters would do well to keep in mind what this month - October 2008 - has to say about the quality of medical care when government is in charge. Federal bureaucrats have announced that, as of this month, the Medicare program will no longer provide financial rewards to doctors and hospitals who harm patients. That is not a typo. For more than 40 years, Medicare has provided financial rewards to providers when a patient requires follow-up care following a medical error."

Michael D. Tanner answers frequently asked questions about Obama's health care plan.

Find out how government regulation of hospitals drives up the price of health care%u2014and how to cut those costs. Shirley Svorny writes, "Let's deregulate medical care so that providers can find innovative ways to deliver high-quality care cheaply. Let's eliminate the increasingly strict education requirements for clinicians and let medical professionals offer walk-in physicals or other services at competitive prices."

For an in-depth guide to market-based health care, read Healthy Competition: What's Holding Back Health Care and How to Free It, by Michael F. Cannon and Michael D. Tanner.

Chris Moody, editor, cmoody@cato.org