Friday, I wrote for The Daily Caller about the negative impact a tax deal between Amazon.com and the state of California would have the debate over taxing online transactions. Unfortunately, it looks as though that dubious deal was indeed approved by the State Assembly in the closing hours before the legislature adjourned. Below I discuss some of the history of the debate, but you can read the article in its entirety here.
All eyes are on the California statehouse today. On the table is a deal between online retail juggernaut Amazon and California lawmakers to postpone a major tax increase until fall 2012. Unfortunately, the compromise would mark a turning point in the online sales tax wars and pave the way for higher taxes nationwide.
California lawmakers and online retailers have been battling for years. In June, the state enacted a law requiring out-of-state online retailers to collect sales taxes on Californians’ purchases. To avoid the tax collection requirement, Amazon severed ties with its California-based affiliates. The retailer has even been working aggressively behind the scenes on a state ballot initiative to block implementation of the law.
If the compromise goes through, however, Amazon will reportedly drop its ballot initiative in exchange for lawmakers postponing implementation of the sales tax law for twelve months.
This would mark a major shift for Amazon, who has led the opposition among online retailers to tax laws such as California’s. Earlier this year, Amazon published an open letter condemning the law as “unconstitutional and counterproductive,” arguing that retailers with no physical presence in California should not be forced to collect taxes on the state’s behalf. Amazon also argued that the tax would distort the retail market and unfairly punish suppliers worldwide.
In April of this year, my colleague Ryan Radia and I wrote about a proposal making its way through the Texas State House to increase taxes on satellite television subscribers within the state. The article, originally published in the Austin-American Statesman, can be read here:
Spearheading this push to nearly double the tax on satellite television is state Rep. Craig Eiland, D-Galveston. Supporters of the tax argue that it would “level the playing field” between cable and satellite subscribers, complaining that Texans who get cable television pay a roughly 5 percent municipal franchise fee on top of ordinary sales taxes — a fee that doesn’t apply to satellite television.
To be sure, lawmakers should worry about discriminatory, unfair taxes, but municipal franchise fees are different. Assessing fees on private companies that use public resources is just common sense. Cable television lines typically run underneath city streets and other public lands that must be dug up from time to time for repairs or upgrades. This process can be inconvenient and costly. Why shouldn’t cable companies and their subscribers reimburse towns for the reasonable costs they incur?
Satellite providers, by contrast, don’t rely on public resources. Instead, they invest billions of dollars to launch their own satellites into space. DirecTV, for instance, has a fleet of a dozen satellites that orbit Earth, beaming video signals to the small dishes that are so frequently seen on residential rooftops and balconies. Upgrades to this system typically involve nothing more than swapping out a set-top box or adding a new dish — there is no tearing up city streets or public lands.
It’s a basic economic principle that when a service becomes more expensive, people will tend to consume of less of it. Under Eiland’s proposed tax hike, many Texans will likely downgrade their satellite service, or cancel it and switch to cheaper alternatives. This would distort the market for video services, putting cable and satellite installers out of business and limiting choices for Texas consumers.
Today, August 3, 2011, marks the one year anniversary of Treasure Secretary Tim Geithner’s op-ed in The New York Times, ostentatiously titled “Welcome to the Recovery.” Read the whole article here.
He might as well have printed that on a banner and hung it over a battle ship for how much he has likely grown to regret those words. “We are on a path back to growth” Geithner declared, as he went to great lengths to justify and praise the stimulus package.
The economic rescue package that President Obama put in place was essential to turning the economy around. The combined effect of government actions taken over the past two years — the stimulus package, the stress tests and recapitalization of the banks, the restructuring of the American car industry and the many steps taken by the Federal Reserve — were extremely effective in stopping the freefall and restarting the economy.
Jerry Jasinoski, former President of the Association of Manufacturers, writes in the Huffington Post about the distinct lack of good indicators.
Housing is depressed, 15 million people are unemployed, and there are signs of slowing in manufacturing. The ISM Manufacturing Index fell 4.4 percentage points to 50.9 in July from 55.3 in June, the lowest in a year.
Everyone in Washington seems to be excited about the debt deal that Republicans and Democrats were able to shake hands on today. Pundits are prattling, politicians are posturing, and everyone believes that their side won. But as this new video by the Cato Institute points out, there is nothing more than belief about success coming out of this debate.
With Congress finally coming to an agreement that they will come to an agreement later, nothing substantive has been achieved. We have just kicked the “debt crisis” can slightly farther down the road.
On Thursday, Russia boasted that the world was now moving into the “Era of the Soyuz.” With the landing of the last U.S. shuttle, the Russian craft stands alone as a means of transportation between the Earth and the International Space Station.
This shows a lack of forethought by the National Aeronautics and Space Administration (NASA) to not prepare for the inevitable retirement of the shuttle program. It also demonstrates deep-seeded fears within the bureaucracy to relinquish the stars. The years leading up to the retiring of the shuttle program could have been the long-waited for opportunity to privatize U.S. space travel, or at least to permit meaningful private competition, but that launch window has closed. This could have been the dawn of an era of private interstellar innovation, but the Sun has yet to rise on that day.
Better late than never, many private aeronautics companies are finally moving forward with their efforts to reach the stars. In a recent op-ed in The Washington Times, Robert Zurbin, president of Pioneer Astronautics, described the many options of privately-developed launch vehicles:
Right now, the choice of most cost-effective launcher is a horse race between the Boeing Delta IV, the Lockheed Atlas V and the Spacex Falcon 9. However, starting in 2013, Spacex will field the Falcon Heavy, which, with a lift capacity of 53 metric tons and a price tag of $80 million, will offer three times the amount of goods delivered for the price as any of its competitors.
The Yale Cultural Cognition Project recently released a new study with surprising findings. According to the data of their national survey, people who are more “scientifically literate and numerate” are more skeptical of “climate change as a serious threat” than those who are less scientifically literate and numerate. Of course, this flew in the face of the presumed scientific consensusthat climate change is a threat.
To most rational people this would indicate that since the “smart” people of this study are most skeptical of the evidence, then maybe the evidence is not so definitive. This did not detour the experts at Yale, however, as they concluded that,
The data in this study suggest that the impact of cultural cognition on perceptions of scientific evidence only grows in strength as individuals become more knowledgeable about science and develop greater facility with technical reasoning.
That’s right, according to this study, the better grip a person has on the facts, the more likely they are to ignore them in favor of their personal bias. Apparently,
This evidence reflects a conflict between two levels of rationality: The individual level, which is characterized by citizens’ effective use of their knowledge and reasoning capacities to form risk perceptions that express their cultural commitments; and the collective level, which is characterized by citizens’ failure to converge on the best available scientific evidence on how to promote their common welfare. Dispelling this, “tragedy of the risk-perception commons,” we argue, should be understood as the central aim of the science of science communication.
In Sacramento, California, a bill that would regulate social networking is reportedly on its death bed after failing by five votes last week. The online industry and Internet users will be able to breathe a little easier this evening if the bill’s author, State Senator Ellen Corbett (D-San Leandro), doesn’t find the votes needed to bring her bill back by the end of today. Unfortunately, Corbett, has pledged to keep pursuing the issue if she fails today.
Corbett’s legislation (S.B. 242) would force social networking sites to alter their privacy settings to ensure that no user’s personal information is ever made available to the public without that individual’s explicit permission. The bill’s definition of personal information encompasses names, addresses, phone numbers, locations, and global positioning coordinates. It also includes more sensitive items such as social security numbers, savings account numbers, and credit card numbers.
The scope of information covered by the legislation is especially worrisome. Most individuals’ names, addresses, and phone numbers are already a matter of public record. Why should government dictate the default sharing settings of social networks? Users who are wary about publicizing their phone number or email address aren’t required to disclose any information to social networking sites.
Besides, when you sign up for an online service and disclose personal details, you’re already opting in to sharing. Shouldn’t users assume their basic identifying information willbe made public when they sign up for a social network? Social networking has the world “social” in it for a reason! If some users don’t fully appreciate the privacy risks of social networking, shouldn’t we be focused on educating those users, rather than imposing harmful mandates on an innovative young industry?
My colleague Ryan Radia and I recently wrote in an editorial for Investor’s Business Daily that the 2002 Sarbanes-Oxley Act should be dismantled for the sake of up-start businesses specifically in the technology sector. We argue that the burden of regulation imposed by the law is inequitable and puts businesses today at a disadvantage not experienced by businesses before the law’s passage. Read the full article here.
Companies like Microsoft, Apple and Google created immense wealth and opportunity in an era of less heavy-handed regulation. Firms such as Facebook and Skype may well represent tomorrow’s giants, but mandates such as Sarbanes-Oxley make these innovative firms much less likely to launch independent public companies.
Seeking an acquirer is often a sensible move for startups, but whether and when to go public should be based on market opportunities, not the costs of short-sighted legislation.
For the sake of today’s entrepreneurs and investors, Congress needs to take a close look at burdens that discourage companies from seeking public offerings. Revisiting the Sarbanes-Oxley Act would be an excellent first step. Section 404, which purports to prevent conflicts of interest, should be scrapped. The section establishes duplicative layers of oversight that are exorbitant to maintain. For instance, companies must assess for fraud, assess the measures to assess for fraud, then assess the assessors!
The murky waters on the tech IPO front should serve as a wake-up call to legislators. If America’s entrepreneurial spirit is to realize its full potential, many more capable high-tech firms may need to go public to raise the capital they’ll need to grow. The next generation of innovation depends on it.
According to Chris Frates’ article this morning in Politico,
After years of wrangling, labor and business groups are gearing up for an epic showdown over free trade this summer as President Barack Obama pushes Congress to approve pacts with Panama, South Korea and Colombia.
This is a debate we should all be aware of as it unfolds in the next few months because it will have far-reaching consequences in our economy that’s still showing signs of struggling.
Markets in the 21st century span the globe, bringing wealth and opportunity to people worldwide. Economic globalization is not a force that we can stop, nor should it be a goal of ours to interfere in the development of global markets — lest we end up with economic stagnation similar to the current state of North Korea.
Since the early part of this year, the president and Congress have appeared to be making it a priority to tear down some trade barriers keeping American businesses out of these global markets. Too little too late? Some think so.
Re: “EPA’s days as ‘rogue’ agency are numbered” & “Democrats will yield on everything but abortion,” April 11
Congressional Democrats’ approach to their pet projects demonstrates that their spending policies are not about economics. They are about power.
The evidence is their different reactions to proposed cuts to Planned Parenthood and the Environmental Protection Agency. The former is being defended tooth and nail because of its consistent support for Democratic candidates. The latter is being reined in because it is unpopular with the electorate.
As members of Congress on both sides of the aisle often are, Democrats are being tempted by power at the expense of ideology. The policy proposals that have emerged from the latest budget debate are merely a means to that Machiavellian end.
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