Archives: 07/2009

A New Regulation I Can Support

Normally I would be happy to leave labelling decisions to retailers and manufacturers, but here’s a proposal for a new mandatory labelling scheme that I can get behind.

James Gibney, a reporter from the Atlantic, called me last week to ask some questions about dairy supports. He was preparing a blog post to propose a new labelling idea that might help break the frustrating stranglehold that the farm lobby has over U.S. agricultural policy. Here’s James’ idea:

To wit, every product whose ingredients benefit from a subsidy should include the following language on the label:

“This product has been subsidized by the U.S. government at taxpayer expense. For more information, please visit”

And every product that benefits from tariff protection should have the following language on the label:

“This product is protected from foreign competition by U.S. import tariffs. Its price is higher as a result. For more information, please visit”

I like it. For more on Cato’s work on agricultural policy, see here and here.

UK Home Secretary Abandons National ID

The UK has been operating in parallel to the United States on the national ID question, and rumors about the collapse of the UK national ID have been circulating for a couple of years.

Now comes word that Home Secretary Alan Johnson will scrap the national ID card system, making it voluntary. When volunteers fail to materialize, it is easy to anticipate that it will disappear entirely.

This is another thing U.S. Homeland Security secretary Janet Napolitano might want to note as she struggles with with national ID issue here.

Spend Money to Save Money?

You know all those promises that spending more taxpayers’ money on some program will actually result in taxpayer savings – eventually? Check out this story in Sunday’s Parade magazine:

Ten years ago, Congress created a new system of government credit cards for federal employees booking work-related travel. The cards were meant to curb waste and abuse. But since their introduction, charges have doubled—from $4.39 billion in 1999 to $8.28 billion last year.

Among the expenses flagged in a new report from the Congressional Research Service: $3700 for laser eye surgery, $4100 for a first-class trip to Hawaii, and $100 million in unclaimed refunds for airline tickets that were purchased but never used.

Of course, the doubled spending is not all waste, at least not in the narrow sense. In the past nine Bush-Obama years, total federal spending doubled from about $1.8 trillion to $3.6 trillion. But certainly it doesn’t look like the promised efficiencies have been realized.

Who’s Blogging about Cato

Here’s a roundup of bloggers who are writing about Cato research, commentary and analysis. If you’re blogging about Cato, cmoody [at] (let us know.)

  • Freedom Politics blogger Thomas J. Lucente Jr. cites foreign policy expert Christopher Preble in a post about the U.S. military withdrawal from Iraq.
  • Writing about the political situation in Honduras, Patrick Murphy draws from Juan Carlos Hidalgo’s analysis on the president’s removal.
  • At the Americans for Tax Reform blog, Tim Andrews cites David Boaz’s post that lists the “taxes proposed or publicly floated by President Obama and his aides and allies.”

Moving to Canada for Lower Taxes

In a recent op-ed, I noted that Canada’s industrial heartland of Ontario is cutting its federal-provincial corporate tax rate to 25%, or 15 percentage points lower than the average U.S. federal-state rate of 40%.

Marginal tax rates affect economic behavior. Thus I was not surprised when I read in a Mark Steyn column that retailer Tim Hortons (essentially Canada’s Starbucks) is packing up its U.S. headquarters and moving to Ontario. The company operates 3,457 retail outlets on both sides of the border.

Here is the company’s June 29 press release:

“Management and the Board believe that the proposed reorganization would be in the best interests of the Company and our stockholders by creating operational and administrative efficiencies over the long-term, enhancing the Company’s ability to expand in Canada and internationally, and improving the Company’s position to take advantage of lower Canadian tax rates.”

Note that the middle reason–“ability to expand…internationally”–probably implies tax factors as well. If the company wants to open locations in, say, Europe, it would be better that the parent company is located in Canada because of its more favorable tax treatment of corporate foreign investment than the United States.

With respect to jobs, Horton’s reorganization probably won’t affect where relatively low-wage jobs in retail branches will be located. But it might affect where higher-wage corporate headquarters jobs are located in the long run. 

As a U.S.-incorporated company in recent years, Hortons has had a high effective tax rate, averaging 32 percent. The company will shave that rate by moving to Canada by a few percentage points at first, and then by increasing amounts as lower Canadian rates are phased-in.

For more on such corporate “expatriations” get your copy of Global Tax Revolution

Senator Webb: Time to reinvent criminal justice system

Interesting article in today’s Washington Post on Senator Webb’s efforts to revamp the American criminal justice system.  Here’s an excerpt:

“I am, at bottom, a writer,” he says, invoking his default response. “I start with a theme, rather than a plot.” Webb wants to shape a plotline that, with each turn of the page, draws America closer to reinventing its criminal justice system. Questioning why the United States locks up so many of its youths, why its prisons swell with disease and atrocities while fundamental social problems persist in its streets, has earned Webb lavish praise as a politician unafraid to be smeared as soft on crime. And when a law-and-order type as rock-ribbed as Webb expresses willingness to consider legalizing or decriminalizing drugs, excitement follows.

Read the whole thing.  Tomorrow Cato will be hosting a Hill Briefing about federal drug policy.  For additional Cato work, go here and here.