April 15, 2019 12:03PM

Supreme Court Argument in the “Scandalous Trademarks” Case Wasn’t So Funny

FUCT may be f … Well, you get the idea. Two years ago in the Tam case, the Supreme Court struck down the Lanham Act’s “disparaging trademarks” provision, but the justices seem less likely to erase the “scandalous trademarks” prohibition now — at least as far as one can tell from this morning’s argument in Iancu v. Brunetti.

That’s because racial slurs and other offensive phrases necessarily have a viewpoint — on the basis of which the First Amendment doesn’t allow the government to discriminate — but swear words can be just a “mode of expression.” At the same time, the “scandalous” mark restriction is so broad that the government is asking the Court to either accept its benevolent assurances or narrow the statute. There were echoes of the government’s assurances not to prosecute certain kinds of speech in Citizens United there, and indeed the same deputy solicitor general, Malcolm Stewart, initially argued that case — leading to the Court’s setting it for re‐​argument and blowing up the relevant statute.

The most telling series of questions involved the regulation of bus advertising, and that example should indeed decide the case: you should be able to register trademarks that come short of obscenity (which is generally pictures or sentences, rather than single words), but both registered and unregistered trademarks are still properly subject to time, place, and manner restrictions. And that includes “limited public forums” like the sides of municipal buses, public park benches, and the like.

One other note: none of George Carlin’s seven dirty words were used during the argument (though the late comedian’s formulation was invoked several times). Stewart described FUCT’s “scandalous” homonym as the “past participle of paradigmatic profanity,” while Chief Justice John Roberts at one point asked (page 58): “I take it that the — a correct spelling of the vulgar word at the heart of the case, that can’t be trademarked, right?”

We’ll know by the end of June whether edgy marks are up Schitt’s Creek.

I previously wrote about the background of Brunetti — in which Cato filed its latest “funny” (more “vulgar”) brief.

Editor’s note: This post originally misstated the chief justice’s question.

April 15, 2019 9:30AM

Tax Rates Rise as Income Rises

Tax Day is here. In a column about this unhappy day, Christine Emba of the Washington Post provides her views regarding income tax filing and tax simplification.

But then she says:

Meanwhile, the wealthier among us (remember: corporations are people, too!) are able to hire tax lawyers, consultants and accountants to clue them in on lightly advertised but heavily lobbied for loopholes that allow them to pay a lower tax rate or even no taxes at all.

Emba’s language is imprecise, but generally the wealthier among us do not “pay a lower tax rate.” There are exceptions. Agriculture has good lobbyists and many farmers pay little income tax on farming.

However, it is ridiculous to imply that the rich generally pay lower tax rates when the contrary facts are readily available from authorities such as the Urban-Brookings Tax Policy Center (TPC).

Emba may be referring to statutory federal income tax rates. These rise from 10 percent to 37 percent, as shown in the first chart below from TPC. The Republican Tax Cuts and Jobs Act (TCJA) slashed statutory rates virtually across the board, but the chart shows that higher earners still pay steeply higher rates. The TCJA also reduced some “loopholes” that the wealthier among us use, such as the state and local tax deduction.

Or Emba may be referring to average effective tax rates, which are total taxes paid divided by income. These are shown in the second chart below from TPC. Looking at the income tax column, the bottom two fifths, on net, pay no taxes. Then the rate rises from 2.5 percent on the middle fifth to 14.3 percent on the top fifth. The top 1 percent—the wealthier among us—pay 23.4 percent.

The far-right column in the table includes all federal taxes. The rates rise from 2.9 percent on the bottom fifth to 22.9 percent on the top fifth. The top 1 percent pay 29.6 percent. This rate on the wealthier among us is 10 times the rate on the bottom group.

Perhaps Donald Trump will turn out to be an exception, but the wealthier among us who are campaigning for the White House pay quite high income tax rates. Wealthy Kamala Harris has paid a roughly 32 percent average effective tax rate since she got married. Wealthy Elizabeth Warren paid 25 percent tax on her total income in 2018. And fairly well-off Amy Klobuchar paid 21 percent in 2017.

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April 12, 2019 10:02AM

Why Is U.S. Government Infrastructure So Costly?

Tracy Gordon of the Urban‐​Brookings Tax Policy Center writes interesting columns on taxes, fiscal federalism, and other economic issues. Before Congress and the administration enact another costly infrastructure bill, they should consider what Gordon wrote in a 2015 article:

… it is an opportune time to reexamine the so‐​called consensus on infrastructure funding — that we need more of it and now. Focusing on how much we spend leaves out a more important question: how much infrastructure we get for our money.

Put bluntly: the costs of US infrastructure are too damn high.

How high? It’s not easy to find comprehensive data on infrastructure costs around the globe. But with help from various government and business websites as well as some very busy bloggers, we pulled together data on 144 planned and finished rail projects across 44 countries.

… It turns out that, at least in our sample, the United States is home to the four most pricey per kilometer rail and majority‐​tunnel projects in the world.

Towering among giants is New York City’s East Side Access project to join the Long Island Rail Road and Grand Central Terminal at cost of $3 billion per kilometer by the time it’s finished in 2023. Beyond East Side Access, New York has two more projects (the Second Avenue Subway and No. 7 Line extensions) in the $1.5 billion to $2 billion per‐​kilometer range.

To put these numbers in global perspective, New York’s Second Avenue Subway will cost roughly eight times more than Tokyo’s Koto Waterfront line and 36 times more than Madrid’s Metrosur tunnels on a per‐​kilometer, purchasing power parity (PPP) basis.

But this is not strictly a New York problem. Outside of New York, there are three more US projects in the top 12: Boston’s proposed Red‐​Blue Line Connector, San Francisco’s Central Subway, and Los Angeles’s Westside Subway Extension.

Gordon discusses reasons why U.S. infrastructure costs may be so high, but more research is needed. Before any major infrastructure bill is considered, Congress and the administration should study the whole cost issue in depth. Since Gordon’s piece, there have been many other projects in the news (such as here, here, and here) that illustrate the productivity problem with government‐​funding infrastructure.

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April 12, 2019 8:45AM

Republican Tax Law: Across the Board Cuts

Americans are scrambling to file their 2018 federal income tax returns. The good news is that most folks should be left with more cash this year after Uncle Sam’s greedy grab than in past years.

The 2017 Republican Tax Cuts and Jobs Act slashed taxes across the board, with about 90 percent of tax-paying households receiving a cut. The individual tax cuts will be in place from 2018 to 2025, at which point Congress will decide whether to extend them. If Americans want to retain their tax cuts, they need to pressure Congress to restrain spending.

The Joint Tax Committee—the tax scorekeeper of Congress—released the table below showing the effects of the tax cuts in 2019. In the confusing way they’ve labelled it, “present law” is the law before the cuts and “proposal” is with the cuts. Also note that the law cut income taxes, but the table includes income taxes, payroll taxes, and excise taxes.

The GOP law cut taxes for every income group. The largest percentage benefits went to households with incomes between $20,000 and $50,000. House Speaker Nancy Pelosi has repeatedly called the law a “tax scam for the rich,” but she is quite wrong. The law made our highly progressive tax code a bit more progressive.

The table shows that average tax rates (total taxes paid divided by income) rise steeply as income rises. With the GOP cuts in place, households earning more than $1,000,000 pay a rate about twice that of households earning between $50,000 and $100,000, and three times that of households earning between $40,000 and $50,000.

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April 11, 2019 3:20PM

New Paper Measures Social and Psychological Costs of Pedestrian Stops on Black and Latino Adolescents

Measuring police effectiveness is a daunting task at both the agency and at the individual officer levels. At the macro level, studies indicate that some proactive policing strategies can lower crime rates, but there are many other factors that also affect crime so there is no one-size-fits-all answer to what police can do to lower incidents of crime in any given area. On the individual officer level, departments usually measure tangible production—e.g., tickets issued, arrests made, individuals contacted via police stops—but that doesn’t say what effect, if any, those actions had on the community well-being. So, while departments want to lower crime rates and enhance community well-being, they usually evaluate officers on actions that have no proven bearing on either metric. Many officers are thus incentivized to make certain contacts with individuals irrespective of whether or not it will ultimately benefit the community. As a result, the costs of those encounters with the public are often ignored or overlooked as the police go about their business.

A new collaborative article in the Proceedings of the National Academy of Sciences measures the criminogenic effects of pedestrian stops among non-white* adolescent males. Put simply, the researchers measured whether police stops of male adolescents of color had an effect on their likelihood to commit crimes in the future (measured as “delinquency"). The study also measured whether the police encounters had the desired deterrent effect on future criminal behavior. What the study found is troubling, given that police agencies often employ proactive strategies like officer contact to deter crimes.

The research indicates that a pedestrian stop of an adolescent male of color slightly increased the likelihood of future delinquent behavior, regardless of the young man’s previous engagement in delinquent activities. The research also indicates that multiple pedestrian stops further increases the likelihood of future delinquent behavior. The research neither indicated that police stops had the desired deterrent effect on delinquency nor that delinquent behavior had an effect on the number of police stops. That is, these stops had a one-way effect on delinquency, and it was not the good way. This evidence suggests that certain common types of proactive policing amounts to what we at Cato have dubbed “self-defeating policing.”

One doesn’t have to believe that police act maliciously or in an intentionally racist manner to understand that policing can have unintended, negative effects on the communities officers try to serve. This article is important because it tries to quantify the psychological and other social costs of policing tactics on those who experience them. Kudos to the researchers and authors of this important article. More work like this could have a significant impact on the future of policing.

You can read the abstract and download the paper here.

 *N.B. Adolescent males of color were singled out because they are far more likely than white adolescent boys or females of any race to be stopped by police while on foot. It should be noted, however, that the reactions to stops did not vary among the races measured (black, Latino, and multi-racial).

Related upcoming event

May 7, 2019 | Book Forum | Cato Institute, Washington, DC

Join us Tuesday, May 7, as Professor Natapoff discusses her important and revealing book with the Cato Institute’s Jonathan Blanks.

April 11, 2019 2:44PM

The AG’s Position on Marijuana Legalization a Welcome Contrast to That of His Predecessor

Lost in all of the media frenzy over the Mueller Report, redactions, and alleged improprieties within the Department of Justice and FBI, was Attorney General William Barr telling the Senate Appropriations Committee yesterday that he favors a more federalist approach to marijuana laws.

In response to a question from Senator Lisa Murkowski (R‑AK), Barr said that allowing the states to set their own marijuana policy and removing the federal government from the matter would be an improvement over the present situation, which he called an “intolerable” conflict between state and federal laws. Senator Murkowski is a sponsor of the Strengthening the Tenth Amendment Through Entrusting States (STATES) Act, which would give immunity from federal action against business and people engaged in the manufacture, sale, purchase, or consumption of marijuana in states where it has been legalized. President Trump has signaled in the past that he would sign the bill if it was passed and sent to his desk.

Unfortunately, Barr still opposes federal legalization, but his approach to the issue is a stark and welcome contrast to that of his predecessor Jeff Sessions, and would amount to de facto federal decriminalization — at least in the states that have decided to legalize marijuana. 

It also signals a realization that the march toward state‐​by‐​state legalization continues to gather momentum. It may be just a matter of a few years before federal decriminalization of marijuana becomes a reality and, as is the case with alcohol, it will be a matter left up to each of the states and the District of Columbia.

Decriminalization should be a welcome change for all who are concerned with the growing rate of opioid‐​related overdose deaths. There is growing evidence that marijuana reduces the need for opioids to relieve pain and numerous studies have shown lower opioid‐​related overdose death rates in states where access to marijuana is legal. Furthermore, marijuana has great potential as a harm reduction strategy. At the recent conference on harm reduction held at the Cato Institute, Dr. Adrianne Wilson‐​Poe, a nationally recognized cannabis clinical researcher at Washington University School of Medicine, gave a detailed and enlightening presentation on the potential role for cannabis in Medication Assisted Treatment (MAT) as well as opioid withdrawal management. You can see that presentation here. Dr. Wilson‐​Poe was also interviewed on a Cato Daily Podcast here.

April 10, 2019 4:50PM

New Bill Would Restrict Executive Power to Ban Legal Immigrants

In January 2017, President Trump banned nationals of seven majority Muslim countries from receiving visas or entering the United States. He followed up that ban with two subsequent bans, and as of April 10, 2019, the U.S. government is still blocking most legal admissions from five majority Muslim countries and North Korea (which received almost none anyway).

Last year, the Supreme Court upheld these actions as legal based on legislative grants of authority to the executive branch. In my comments reacting to the Supreme Court decision, I wrote:

As a matter of policy, no president should be given such broad power to determine immigration law. While the travel ban currently affects only a small share of immigrants and foreign travelers, all legal immigrants should be concerned that the president will wield this power against them next. Congress should immediately intervene to preserve its power to determine immigration policy.

A new bill would do just that. Senator Chris Coons (D‑DE) and Rep. Judy Chu (D‑HI) have introduced the National Origin‐​Based Antidiscrimination for Nonimmigrants Act, or NO BAN Act, that would explicitly protect the normal immigration system from this executive overreach. It would ban religious or nationality‐​based discrimination from decisions about granting visas or immigration privileges and remove president’s authority to ban immigrants not explicitly authorized to be banned by Congress except in very narrow circumstances.

To win at the Supreme Court, the president relied on Section 212(f) of the Immigration and Nationality Act, which grants the president near limitless authority to “suspend the entry of all aliens or any class of aliens” if he determines that they will be “detrimental” to the United States. The Ninth Circuit had ruled that this authority would be an unconstitutional delegation of legislative power if interpreted as giving the president authority to rewrite all immigration law. The Supreme Court disagreed, allowing the statute to stand as written.

To remedy this congressional error, the NO BAN Act would do the following:

  1. It would amend section 202(a) of the Immigration and Nationality Act to explicitly ban religious discrimination in the issuance of visas. This section already bans nationality‐​based discrimination in the issuance of immigrant visas, but the Supreme Court ruled that the president can use his authority to ignore this provision. The bill would also clarify that this provision would guard against discrimination in decisions governing entry or other immigration decisions, including for nonimmigrants (temporary visitors, tourists, guest workers, students, etc.).
  2. It would amend section 212(f) to allow the president to ban aliens only if the ban is:
  • based on credible facts that entries should be restricted to address specific acts that undermine the security or public safety of the United States, human rights, democratic processes or institutions, or international stability;
  • not based on religion or nationality;
  • narrowly tailored to meet a compelling governmental interest;
  • using the least restrictive means possible to achieve the governmental interest;
  • for a specific duration; and
  • based on specific evidence that the president provides; and
  • apply a rebuttable presumption in favor of granting family‐​based and humanitarian waivers.

These provisions address all of the problems with the travel ban. It wasn’t based on any facts — credible or otherwise — and its supposed secret “evidence” was never released and may not have even existed. It was—according to the president at least—intended to restrict the entries of Muslims to the United States. It was not narrowly tailored as it banned millions of people who had never even lived in the targeted areas. It did not use the least restrictive means of achieving its supposed goal of keeping out people who couldn’t be vetted since it applied to people who the government admitted it could vet. It is no longer time‐​limited in any way, and it has a rebuttable presumption against granting waivers.

The innovative legislation would essentially establish a heightened strict scrutiny standard for presidential actions to restrict entry to the United States. The NO BAN Act would protect the rights of both immigrants and U.S. citizens. It would prevent U.S. citizens from being separated from their spouses and minor children who happened to be born in one of the banned countries. As I have reported before, the travel ban has already separated thousands of U.S. citizens from their spouses and minor children, a crisis that grows by the day. Congressional action is desperately needed to reverse this human tragedy.

While this issue developed out of the “travel ban,” I warned that the president would take the Supreme Court’s decision as authorizing open season against all legal immigrants, and sure enough, the president quickly expanded it to include asylum seekers already inside the United States — a policy still being held up in the courts. But it is clear that the president — no president — should have the power to unilaterally restrict Americans’ rights to associate, contract, and trade with people born in other countries.