Post image for Taxable Bitcoins: Property or Money?

Is Bitcoin currency or property? It depends on which parts of the federal government you ask. Last week the Internal Revenue Service (IRS) announced that bitcoins are taxable and how it would implement such taxation. While the rule could have been much worse, the manner in which the IRS went about doing so brings up many more legal questions.

In context, the fluctuating exchange rate between bitcoins and dollars does cause the cryptocurrency to behave more like property in terms of valuation. The IRS merely took its explanation on “virtual currencies” from the current definition of taxable bartering:

Bartering is an exchange of property or services. You must include in your income, at the time received, the fair market value of property or services you receive in bartering. If you exchange services with another person and you both have agreed ahead of time on the value of the services, that value will be accepted as fair market value unless the value can be shown to be otherwise.

This is clearer when seeing the IRS’s answer to how Bitcoin values must be calculated for tax purposes:

…A taxpayer who receives virtual currency as payment for goods or services must, in computing gross income, include the fair market value of the virtual currency, measured in U.S. dollars, as of the date that the virtual currency was received.

This classification of Bitcoin as non-currency for tax purposes isn’t that new. Back in January 2014, Sweden’s Tax Agency moved to classify bitcoins as assets rather than currency itself. In Australia, this month, the tax authority announced Bitcoin transactions person-to-person would be subject to a “goods and services” tax, similar to the IRS classification, as well as a capital gains tax for profits made through Bitcoin. It is not unusual for bitcoins to be treated as non-currency for tax purposes.

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Post image for Why Is Obama’s Report to Congress on the Benefits and Costs of Federal Regulation Delayed?

In April 2013, the White House Office of Management and Budget (OMB) issued its Draft 2013 Report to Congress on the Benefits and Costs of Federal Regulations, which covered rules and regs issued in fiscal year 2012. The final 2013 edition never appeared; now, the Draft 2014 edition is due. I’m not holding my breath.

President Obama claimed again as recently as February 2013 that “this is the most transparent administration in history.”

But getting this important document, as well as the oft-delayed Unified Agenda of Federal Regulatory and Deregulatory Actions, is like pulling teeth. Part of the recent House-passed ALERRT Act addressed the Agenda’s tardiness; it’s naturally stuck in the Senate. (The Agenda is an obscure but important document wherein federal departments and agencies reveal their priorities along with disclosing recently completed rules.)

The 2013 Draft Report revealed that costs of major rules jumped under Obama; The 14 rules added during the fiscal year ended September 2012 imposed costs of from $14.8 billion to $19.5 billion (that’s in the 2001 dollars OMB uses, which look better than 2012 dollars).

The OMB breakdown incorporates only benefits and costs of a handful of major rules which the OMB or agencies have expressed in quantitative and monetary terms. It omits numerous categories and cost levels of rules altogether, and rules from independent agencies are entirely absent.

OK, that’s worrisome, but normally, final reports look fairly identical to draft reports, so the reluctance to release it is unclear. We presumably already have the “bad news.” In any event, normally by April OMB has issued the year’s Draft Report, as can be seen in the list below. There were two big exceptions: one during Obama’s first year, one during George W. Bush’s last.

April is upon us, and without the final 2013 report, it’s not looking likely that the Draft 2014 we need to see is imminent. Regarding final reports, they always appeared by year-end up through 2005. Since then, apart from 2010 and 2011, a given year’s report hasn’t appeared until the following year. But they have only been this late twice (in 2012 under Obama, and in 2007 under Bush). Even when final reports were delayed into the subsequent year, we usually had them by January.

It should be adequate that regulation is allowed to grow without much restraint; the lack of timely disclosure of the relative handful of rules that get scrutiny in the only formal report on regulatory costs is too much.

Here is a list of Draft and Final reports’ dates of appearance since 2002.

Date Draft Final
2014 Due Now n/a
2013 April Overdue
2012 March April 2013
2011 March June
2010 April July
2009 September January 2010
2008 September January 2009
2007 March June 2008
2006 April January 2007
2005 March December
2004 February December
2003 February September
2002 March December

Post image for Ryan FY 2015 Budget Calls for Transportation Funding Rationalization

House Budget Committee Chairman Paul Ryan, R-Wisc., released his FY 2015 budget today. In just three pages, he calls for surprisingly sensible reforms to federal transportation programs. Unlike the Obama and Camp budgets — which I earlier criticized for continuing trust fund bailouts and merely kicking the can down the road — Ryan makes an attempt to fix the Highway Trust Fund’s revenue/outlay imbalance by refocusing transportation funding on core programs, while allowing states more flexibility to experiment with self-funding and -financing mechanisms.

As Ryan notes:

The budget recommends sensible reforms to avert the bankruptcy of the Highway Trust Fund by aligning spending from the Trust Fund with incoming revenues collected. The budget also includes a provision to ensure any future general-fund transfers will be fully offset, while at the same time providing flexibility for a surface-transportation reauthorization that does not increase the deficit. The budget includes a reserve fund to provide for the adjustment of budget levels for consideration of surface-transportation legislation, as long as that legislation is deficit neutral.

In addition, Ryan recommends the following positive transportation policy changes:

  • Eliminate Amtrak’s billion-dollar-plus annual subsidy;
  • Reduce the Transportation Security Administration’s outlays; and
  • Eliminate the Essential Air Service.

With highway bill reauthorization around the corner, it is great to see some real positive reforms being put on the table. Many free market transportation advocates would certainly like to see more, but we need to start somewhere, and Ryan’s budget appears to be that starting point.

In their latest report on climate change, officials at the U.N. Intergovernmental Panel on Climate Change (IPCC) once again fail to address important developments in climate science that conflict with their narrative of fear. (See: Threat from global warming heightened in latest U.N. report)

Specifically, the IPCC press release ignores: (1) the growing divergence between observed global temperatures and the computer model projections on which scary climate impact assessments depend, (2) 20 recent studies indicating that climate sensitivity (an estimate of how much warming results from a given increase in atmospheric greenhouse gas concentrations) is about 40 percent less than the mean estimate of IPCC models, and (3) studies indicating that the three main climate doomsday scenarios — ocean circulation shutdown, rapid ice sheet disintegration, runaway warming from melting frozen methane deposits — are scientifically implausible (for references, see pp. 23-26 of CEI’s comment letter on the social cost of carbon).

Worse, as usual, IPCC officials say nary a word about risks of carbon mitigation policies. Those include:

  • The public health and welfare risks of carbon rationing schemes or taxes that raise business and energy costs.
  • The economic, fiscal, and energy security risks of anti-fracking climate policies that endanger the shale revolution.
  • The economic development risks of coal power plant bans and other policies that limit poor countries’ access to affordable energy.
  • The risks to international peace and stability of impeding developing country economic growth through carbon caps or taxes and carbon-tariff protectionism.
  • The risks to scientific integrity when government is both chief funder of climate research and chief beneficiary of a “consensus” supporting more regulation and higher taxes.
  • The risk to the democratic process when governments promote “consensus” climatology to justify bypassing legislatures and marginalizing opponents as “anti-science.”
Post image for CEI’s Battered Business Bureau: The Week in Regulation

There was no Bureau post last week since I was out of the country. Here are the up-to-date numbers; it was very much business as usual while I was away.

On to the data:

  • Last week, 64 new final regulations were published in the Federal Register. There were 77 new final rules the previous week.
  • That’s the equivalent of a new regulation every 2 hours and 30 minutes.
  • So far in 2014, 730 final regulations have been published in the Federal Register. At that pace, there will be a total of 3,042 new regulations this year. This would be the lowest total in decades; this will likely change as the year goes on.
  • Last week, 1,938 new pages were added to the Federal Register.
  • Currently at 17,827 pages, the 2014 Federal Register is on pace for 74,280 pages, which would be the lowest total since 2009.
  • Rules are called “economically significant” if they have costs of $100 million or more in a given year. 10 such rules have been published so far this year, one of them in the past week.
  • The total estimated compliance costs of 2014’s economically significant regulations currently ranges from $1.05 billion to $1.34 billion. They also affect several billion dollars of government spending.
  • Sixty-nine final rules meeting the broader definition of “significant” have been published so far this year.
  • So far in 2014, 158 new rules affect small businesses; 24 of them are classified as significant.

Highlights from selected final rules published last week:

For more data, see Ten Thousand Commandments and follow @10KC and @RegoftheDay on Twitter.

Post image for Why and How I’m Celebrating Human Achievement Hour

“Better to light one incandescant bulb than curse the darkness”

Tonight is Human Achievement Hour, a time to celebrate human progress and the market institutions that facilitate and protect it. It’s also a time to laugh at the regressive ideology that implores us to turn out the lights to honor the Earth. Hence the wonderful acronym for our cheerful occasion: HAH!

Our friends at CFACT nail the contrast between our event and the other team’s when they proclaim: “It’s always Earth Hour in North Korea.”

Earth Hour CFACT

HAH is an alternative and antidote to Earth Hour, the premise of which is that carbon-based energy is bad for people and the planet. That’s about as wrong-headed about the big picture as one can get.

Carbon energy supports all the technological advances that sustain and improve a world of seven billion people who on average live longer, healthier, and with greater access to information than the privileged elites of former ages.

Fossil fuels have been and remain the chief energy source of what Cato Institute scholar Indur Goklany calls a “cycle of progress” in which economic growth, technological change, human capital formation, and freer trade co-evolve and mutually reinforce each other. Progressive civilization is the very context of modern life. It is the most valuable of all public goods. Without carbon energy, humankind would be dramatically smaller, poorer, and sicker.

The fundamental contribution of carbon energy to social progress is reflected in the strong correlation between carbon dioxide (CO2) emissions, per capita GDP, and population.

Global Progress 1760 - 2009 smallest

A survey by the National Academy of Engineers identifies 20 engineering achievements that made the greatest improvements in the quality of human life during the 20th century. Number One is electrification. All the others presuppose electrification either for their manufacture, operation, or mass production.  Here’s the list as presented on About.Com:

  1. Electrification – the vast networks of electricity that power the developed world.
  2. Automobile – revolutionary manufacturing practices made the automobile the world’s major mode of transportation by making cars more reliable and affordable to the masses.
  3. Airplane – flying made the world accessible, spurring globalization on a grand scale.
  4. Safe and Abundant Water – preventing the spread of disease, increasing life expectancy.
  5. Electronics – vacuum tubes and, later, transistors that underlie nearly all modern life.
  6. Radio and Television – dramatically changed the way the world received information and entertainment.
  7. Agricultural Mechanization – leading to a vastly larger, safer, less costly food supply.
  8. Computers – the heart of the numerous operations and systems that impact our lives.
  9. Telephone – changing the way the world communicates personally and in business.
  10. Air Conditioning and Refrigeration – beyond convenience, it extends the shelf life of food and medicines, protects electronics, and plays an important role in health care delivery.
  11. Interstate Highways – 44,000 miles of U.S. highway allowing goods distribution and personal access.
  12. Space Exploration – going to outer space vastly expanded humanity’s horizons and introduced 60,000 new products on Earth.
  13. Internet – a global communications and information system of unparalleled access.
  14. Imaging Technologies – revolutionized medical diagnostics.
  15. Household Appliances – eliminated strenuous, laborious tasks, especially for women.
  16. Health Technologies – mass production of antibiotics and artificial implants led to vast health improvements.
  17. Petroleum and Gas Technologies – the fuels that energized the 20th century.
  18. Laser and Fiber Optics – applications are wide and varied, including almost simultaneous worldwide communications, non-invasive surgery, and point-of-sale scanners.
  19. Nuclear Technologies – from splitting the atom, we gained a new source of electric power.
  20. High Performance Materials – higher quality, lighter, stronger, and more adaptable.

Note too that those technologies are highly developed and deployed at scale only in societies with access to plentiful, reliable, affordable energy, most of which comes from fossil fuels.

Ah, but our greener friends will say, HAH, as the very name suggests, is “anthropocentric.” What about the biosphere? Shouldn’t we turn off the lights to show respect for non-human nature?

Nope. As Goklany also explains, by improving the productivity and efficiency of food production, distribution, and storage, fossil fuels not only rescued mankind from a penurious Nature but also rescued Nature from an ever-growing humanity. [click to continue…]

zhangEarly in the week I wrote about a major breakthrough toward the peaceful use of nuclear fusion. While that type of energy could drastically change human life on earth by providing bountiful clean and safe energy, it is, unfortunately, likely decades away from being commercially viable. Fear not because there are armies of researchers working around the world to find other affordable alternatives to fossil fuels that will help humanity cruise into the future. In this past year, one group of scientists have discovered a way to extract large amounts of hydrogen from plants—a process that would provide plentiful, cheap, and “green” energy, that could hit the market as a way to power vehicles in as little as three years.

For seven years a team of researchers at Virginia Tech have been searching for a non-traditional way to produce large amounts of hydrogen at low cost. They believe they have found that solution by using xylose, a simple sugar first discovered in wood, but found in most edible plants, including bamboo (a popular plastic alternative on the eco-friendly home goods market). The scientists created a custom “enzyme cocktail,” and by mixing it with the xylose and polyphosphate they can produce about three times as much hydrogen than other methods have been able to achieve. Y.H. Percival Zhang, one of the researchers on the project believes that hydrogen power can replace less sustainable modes of energy production and that his technology will have an impact on energy markets in the very near future.

“The potential for profit and environmental benefits are why so many automobile, oil, and energy companies are working on hydrogen fuel cell vehicles as the transportation of the future,” Zhang said. “Many people believe we will enter the hydrogen economy soon, with a market capacity of at least $1 trillion in the United States alone.”

The real breakthrough in Zhang’s research is that he has found a way to create large quantities of hydrogen by using a renewable and abundant resource.

Zhang is using the second most prevalent sugar in plants to produce this hydrogen… This amounts to a significant additional benefit to hydrogen production and it reduces the overall cost of producing hydrogen from biomass.

Dr. Zhang is also the man behind a few other, related human achievements this past year including creating a sugar-powered battery that could power modern gadgets and a process that creates massive amounts of starch from wood, which could reduce food insecurity around the world, saving millions of lives. His work exemplifies one of the main messages of Human Achievement Hour: global challenges will not be solved through conservation or sitting in the dark, but rather through technology advancement, which the efforts of the environmentalist movement are slowing down.

About Human Achievement Hour (HAH): Human Achievement Hour is about paying tribute to the human innovations that allow people around the globe to live better, fuller lives, while also defending the basic human right to use energy to improve the quality of life of all people. Human Achievement Hour is the counter argument to Earth Hour, and promotes looking to technology and innovation to help solve environmental problems instead of reverting to the “dark ages,” by symbolically refusing to use electricity for an hour.

Post image for Human Achievement of the Day: Bionic Eyes

You won’t see the glory of human achievement if you abide by the World Wide Fund for Nature’s recommendation that you spend an hour in the dark this Saturday night to allegedly “show your commitment to a better future.” Rather than take that anti-technology approach, why not leave the lights on and celebrate human achievement, including a new invention that will help even blind people see?

Once only imagined in the 1970s TV series The Six Million Dollar Man or the 1990s Star Trek: The Next Generation, 2013 saw the introduction of real bionic eyes! Created by Second Sight Medical Products Inc., of Sylmar, Calif., the Argus II Retinal Implant involves placing an implant in a person’s eye that connects wirelessly to eye glasses equipped with a tiny camera, which transmits images through the optic nerve to the brain.

The device helps those individuals affected with an eye disorder called retinitis pigmentosa, which strikes first as night blindness and then can degenerate photoreceptor cells eventually causing total blindness. It is not yet designed to help those with glaucoma and some other forms of blindness.

The Food and Drug Administration approved the device in February 2013 for use in the United States, and the first FDA-approved implants began this year. Those in the experimental program testified at FDA pre-approval hearings, expressing great joy about what the device had done for them. One exclaimed: “I don’t mind telling you how much — I mean, how happy that made me, not only to see the silhouette of my son, but to hear that voice coming and saying, ‘Yeah, it’s me, Dad. I’m here and I love you.’”

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We are only three days away from Human Achievement Hour (March 29, 8:30pm to 9:30pm)! What better way to celebrate than with a post from our friends at HumanProgress.org. Stephanie Rugolo, HumanProgress’s managing editor, is spreading the good news about how far humankind has come by discussing some of the recent developments in organ replacement technology. Since this is a perfect example of how technological advancement benefits human life on earth, I wanted to share her insights:

Medical breakthroughs are giving hope to hundreds of thousands of people waiting for organ transplants. There are 120,000 people waiting for organ transplants in the United States alone. By this time tomorrow, twenty to thirty Americans will die because they cannot get a new kidney—not to mention other organs. Compare this man-made shortage to Iran where organ donors may be compensated with cash. In contrast to the United States, there is a donor waiting list in Iran. As long as the industrialized world rejects the Iranian model, we must turn to innovation to resolve the organ shortage crisis. Luckily, scientists are developing technologies that might accomplish just that.

French doctors implanted the first permanent and completely artificial heart in December. The lucky Frenchman was a 76 year old with terminal heart failure. Carmat, the company that engineered the artificial heart, intended their product for terminally ill patients like him who are too old to have any chance of receiving a human heart. Without the implant, the French patient may have lived for a few more days or possibly weeks—if lucky. Since he was the first person to be fitted with the artificial novelty, the operation would have been considered a success if he had lived for another month. With the Carmat’s artificial heart, this patient lived for another two and a half months before passing away in March 2014.  Carmat expects its heart to allow future patients to live for up to an additional five years. That could provide a normal social life to some 100,000 people in need of a new heart in the United States and Europe alone.

Last month, University of Texas scientists announced that they grew human lungs in a lab for the first time. This is a huge breakthrough considering the lung is probably the most complex of all organs in terms of cell types, according to UT researchers. Unfortunately, the use of lab-grown lungs as transplants in humans is as many as five to ten years away. When this technology reaches a mature stage, it will save thousands of lives, such as the 1,600 Americans who are waiting for a lung transplant today. Until then, these lab-grown lungs can be used by scientists and researchers to evaluate lung cells and better understand agents that target and damage the lung. Consequently, this new technology has the potential to improve the lives of those who suffer or will suffer from ailments like pneumonia, hemorrhagic fever, tuberculosis, or hantavirus.

Organovo, a San Diego-based company, made great advances in 3D printing of a human liver in the past year. This technological innovation could make it possible for the hundreds of thousands of people at death’s door while waiting for organ transplants to press ‘print’ and live. The life-saving process of 3D bio-printing involves layering sheets of live cells. The snag, it seems, is to keep 3D-printed organs “alive” for long periods of time. The 3D-printed liver, for example, has stayed alive in a lab for 40 days—a major breakthrough—and the outlook is optimistic for a functional 3D-printed liver this year. Like the lab-grown lungs, it will only be used in research for now. Luckily, that will speed up medical studies and drug research while making research results more accurate.  Watch the fascinating process of 3D printing an organ here.

Organ transplant recipients will directly benefit from medical advances that circumvent today’s shortage-inducing laws. As these technologies are used to speed up research, other medical advances will allow ever more people to live longer, fuller lives. This is timely to note considering that on March 29, from 8:30 – 9:30 p.m., we will mark the Human Achievement Hour, which pays tribute to human innovations that improve our lives. In honor of that Hour, many thanks to the researchers who develop technologies that facilitate human progress.

Stephanie Rugolo is the Managing Editor of HumanProgress.org.

About Human Achievement Hour (HAH): Human Achievement Hour is about paying tribute to the human innovations that allow people around the globe to live better, fuller lives, while also defending the basic human right to use energy to improve the quality of life of all people. Human Achievement Hour is the counter argument to Earth Hour, and promotes looking to technology and innovation to help solve environmental problems instead of reverting to the “dark ages,” by symbolically refusing to use electricity for an hour.

Have a listen here.

CEI Fellow Marc Scribner talks about his new paper, “Bait and Reciprocal Switch: Forced Access Regulation Threatens the Rail Renaissance.”