Category: tax policy

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national politics & policies subsidy tax policy

The New Hollywood?

Hollywood, entertainment, Washington DC, democracy, subsidy, tax break

It may be the president’s goofiest idea yet.

His Monday brainstorm was for the federal government to get into the movie business. In a Truth Social post, Mr. Trump floated the notion of creating a “Federal Production Incentive to create Entertainment Jobs in America.” So this isn’t exactly a socialist proposal — where the government would seize the means of production and go about making movies — it’s a subsidy proposal: tax breaks; to “benefit ALL of America.”

Trump posts as if he has worked the math out, where the booty the government loses in direct taxation “will be made up tenfold by the money pouring into the Treasury’s coffers.”

A familiar rationale. But does it work? Do tax credits incentivize producers so much that taxes downstream of the productions make up for all the bother and paperwork?

Well, no need for theory. States already have such programs.

Tosin Akintola, in his Reason article — “State Film Subsidies Lose Money. Trump Wants To Try the Idea Nationally.” — found that “the film and TV industry in eight states returned between 3 cents and 31 cents for every dollar.” 

Entertainment projects do not create that many jobs.

We used to talk about the states as “laboratories of democracy,” by which we meant “laboratories for policy.”

The point isn’t to take the failed experiments and run them at the federal level, hoping for something different.

Sure, Hollywood is lame. But don’t make Washington the new entertainment capital of the world. It’s doing bad enough as the capital of more serious business.

This is Common Sense. I’m Paul Jacob.

Hollywood, entertainment, Washington DC, democracy, subsidy, tax break

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litigation tax policy

Humbled in Humboldt County

Humboldt County, property rights, Institute for Justice

For years, the county clobbered property owners with fines of “$10,000 or more per day for offenses they did not commit,” reports the Institute for Justice, which has represented several of the harassed residents.

More than 1,200 property owners in Humboldt County, California, were hit with such fines for growing pot despite only one form of evidence: old satellite images of their property. Followed by, often, no further investigation.

Among the victims: Corrine and Doug Thomas, whom the county charged more than a million dollars. They were also supposed to pay $200,000 to demolish a barn near their home because a prior owner had grown marijuana there. Another owner, Blu Graham, tried in 2018 to get a hearing to show that his greenhouses contained vegetables, not marijuana. As he waited year after year, the fines piled up.

Finally, in 2022, these and others targeted by the county sued in federal court with IJ’s help.

After some ups and downs, a court of appeals affirmed the plausibility of the plaintiffs’ claims, and the prospect of a trial motivated county officials to settle.

The county has withdrawn the fines, retracted the arbitrary allegations, and agreed to give owners 30 days warning in which to counter an accusation before the county acts further. No fines are to be levied until a case is decided. New owners cannot be punished for what previous owners did. Etc. 

And the county must pay the plaintiffs’ litigation costs.

This is Common Sense. Let’s hope it sticks.

I’m Paul Jacob.

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general freedom ideological culture tax policy

Uh & Other Naughty Words

Francesca Hong, Wisconsin, socialism

The love of other people’s money is the root of so much political evil. 

Francesca Hong, the Democratic front-runner in today’s gubernatorial primary in Wisconsin, embraces that evil. She’s even willing to add curse-words to declare her dedication to soaking the rich: “Tax. The. Fucking. Billionaires.” Or so she says on Facebook.

So edgy.

But Hong blanks out when it comes to the negative fallout of taxing the rich at higher rates. Says lame things; doesn’t use the f-word. She uses the u-word: “uh.” When challenged in last week’s debate, about what she’d do “if all the millionaires leave the state,” she responded with “You know, uh, discussing that hypothetical is, um, a little bit, uh — I’m confused about that.”

“Like most socialists, she is in denial about the costs and consequences of her proposals,” argues The Washington Post editorial board. 

“To fund ‘free’ child care, state-run grocery stores and more health care subsidies” she pushes an additional 1 percent in taxes on the top income bracket. “This might sound fine to a taxpayer who doesn’t make a million dollars, but Wisconsin — like every other state — relies on wealthy taxpayers to support state infrastructure, public schools and social programs,” WaPo explains. “The top 5 percent of earners pay about 40 percent of the state’s net income taxes.”

For years, journalists have enabled demagogues to lie about how much the highest income earners actually pay in taxes, fooling many voters into thinking that the goose that lays golden eggs can be plucked and plundered without consequences. A turnaround on the issue at WaPo is refreshing.

“Recent elections seem to suggest,” its editors conclude, “that Democratic voters no longer fear labels such as ‘socialist’ and are more interested in tearing down the party’s establishment. A better strategy to combat extreme policies is to explain the damage they will cause.”

Too late? I hope not. For Wisconsin and for other states.

This is Common Sense. I’m Paul Jacob.

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property rights tax policy thoughtNew

Two Horrors Don’t Make It Right

Zohran Mamdani, socialism, communism, New York City

The mayor of New York City, commie Mamdani, is trying to raise more money to pay for his socialism.

One scheme is to punish owners of a second home by imposing a so-called “pied-à-terre tax,” a tax on the second residence of wealthy New Yorkers above and beyond regular property taxes.

Now, the assumption that anybody with a second home, or an expensive second home in an expensive property market, must be rolling in liquid funds is faulty. The notion that if you have more wealth than somebody else it should be taken from you? Also faulty.

The new tax bill is going to many New Yorkers with only one home. And the website set up (speaking loosely) to permit challenges of the designation of one’s home as a pied-à-terre is proving nightmarish to navigate.

One recipient of an extra-tax bill, for $43,000, is Karen Young, who has lived in her brownstone with her husband for thirty years. Two minutes of research would have prevented the mistake, she observes. “Is this a witch hunt?”

New assaults on our rights often have two parts. One part is really horrific. The other part is even more horrific in some other way. The greedy government may eventually withdraw or correct the even more horrific form of the assault; at which point everybody is relieved . . . except anyone noticing that the first form, also horrific, and serving as precedent, is still ongoing.

Was that the game plan here?

This is Common Sense. I’m Paul Jacob.

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international affairs national politics & policies regulation tax policy

How to Lower Gas Prices

Iran, gas prices, oil, spending, taxes

Gasoline prices have skyrocketed. The Iran War is to blame, but the President has not been able to bring it to an end.

Still, he has offered a small fix. A federal gas tax suspension!

In its favor, this temporary measure would offer some relief. In addition, the federal government shouldn’t be attaching an excise to fuel sales anyway. The states already burden our fuel bills with their own taxes.

As if to seize a political win, Senator Josh Hawley (R.-Mo.) declared he will introduce a bill to enact that suspension.

Cutting off a source of revenue would increase the deficit, of course. But there is a simple solution to that: spend less. For example, the fuel taxes are supposed to fund road repairs. All but two percent of U.S. roads are state roads now. During the emergency, suspend the two percent spending on repairs and let the 98 percent of spending carry on, as it does now, at the state level.

Adam N. Michel at Cato argues that the best way to spend less would not only reduce the deficit but also lower gas prices: end the Iran War. 

And not just rhetorically. 

But Michel and his Cato colleagues offer a more politic plan, too: don’t merely suspend the tax, end the tax forever and end the highway spending burden along with it. “States know what their infrastructure needs are,” he contends, “and they have the fiscal tools — gas taxes, sales taxes, user charges, debt, and privatization — to meet them without a federal middleman.” 

Before October, Congress is supposed to re-authorize the federal highway program. Don’t. Dismantle it all. 

For good.

This is Common Sense. I’m Paul Jacob.

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initiative, referendum, and recall tax policy too much government

The New Property-Tax Revolts

property taxes, protest, revolt, taxes

Decades after a famous revolt by California homeowners led to the relief provided by Proposition 13, taxpayers acting to resist sky-high property taxes are making waves throughout the country.

Just a few of the many examples reported by The Epoch Times:

Ohio. The elderly couple who paid off the mortgage on their home long ago but cannot now afford the property taxes is one reason that people are signing a statewide petition to eliminate local property taxes. It will take about 413,000 signatures, collected by a July 1, 2026 deadline, for the measure to reach the November ballot.

Florida and Texas. Legislators in Florida and Texas hope to limit the “flexibility” that local governments enjoy in how they raise revenue.

Minnesota and North Dakota. Lawmakers are pushing a cap on property tax increases tied to inflation and population growth. Voters would have to agree to any change in the cap. Recent school-board driven increases of 8 or 9 percent would be limited to 3 or 4 percent in typical scenarios.

Montana. Lawmakers want a two-percent limit on tax hikes for “local government spending but not for schools, which consume about 55 percent of property tax revenues.” A fatal flaw? Public schools are better at bloating costs than improving education.

The author observes that 46 states and D.C. already impose some sort oflimits on local property tax increases — though “their designs and restrictiveness differ widely,” adds the Tax Foundation.

Let’s improve those designs and increase the restrictiveness ASAP.

This is Common Sense. I’m Paul Jacob.

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budgets & spending cuts deficits and debt tax policy

The Beast Cometh

national debt

As the U.S. Debt Clock ticks towards $39 trillion, a predictable but horrible beast slouches towards us, ready to knock on the door. Or, rather, burst through.

The federal debt hit $38.8 trillion this weekend: it’s $38,830,051,666,666 as I type these words on Sunday.

But that’s not the beast. 

This year’s annual deficit is $1.9 trillion.

But that’s still not the beast.

The Congressional Budget Office warns that the debt-to-GDP hits 120% by 2036 — above post-WWII peak.

That isn’t the beast either.

The beast is the interest on the debt, and the service charge the government must regularly make merely to keep the borrowing going.

Net interest payments will be over one trillion smackeroos this fiscal year. That rivals or exceeds spending on defense/veterans in many breakdowns — those payments are projected to double to over two trillion per year by 2036. 

It’s the fastest-growing line item. 

It’s non-discretionary. 

And it compounds; the beast only gets bigger.

And with it any hope for tax relief goes out the window. Just last week the president, reacting to the Supreme Court decision in Learning Resources v. Trump, floated what amounts to a revenue-directed tariff, and under normal circumstances voters could not unreasonably demand, say, an offsetting 15 percent reduction in income taxes, across the board.

Nothing like that is in the offing. Not because tax cuts wouldn’t be a big win for the tariffer-in-chief, but because any extra revenue might be more cost-effectively thrown as debt service at the American holders of $31 trillion in federal debt.

This is as bipartisan an issue — and failure — as anything can be, yet the bipartisan response?

Crickets.

This is Common Sense. I’m Paul Jacob.

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defense & war tax policy U.S. Constitution

The Emergency Tariff Question

tariffs, Supreme Court, Congress, balance of power

As is often the case in Supreme Court decisions, in Learning Resources v. Trump it is the dissenters’ views that are most interesting. 

At issue? The president’s authority to impose tariffs, or alter them. Donald Trump — a life-long tariff proponent — took the International Emergency Economic Powers Act (IEEPA) as an excuse to levy broad new duties on imports from multiple countries. That act delegated to the executive the power to use tariffs as emergency foreign policy measures.

On February 20, the majority on the court gave a decisive No to the President’s use of IEEPA to impose tariffs.*

I generally oppose Congress delegating powers to the executive branch and support free trade. But what does the Constitution actually say? Could dissenters Kavanaugh, Thomas and Alito have a point?

Kavanaugh’s humungous written opinion claims that tariffs are a traditional, common, and lawful means of “regulat[ing] . . . importation” in foreign-policy crises; he says the majority’s narrow reading ignores text, history, precedent, and the special deference due the President in external affairs. “The text of IEEPA authorizes the President to regulate importation,” explains Kavanaugh, “and tariffs are a means of doing so.”

Thomas stresses that IEEPA’s emergency-declaration process provides political accountability, so judicial second-guessing is unwarranted. Further, he argues that from the Founding, “regulate importation” has always included duties; early Congresses and Presidents (Monroe, Jackson, etc.) routinely delegated and adjusted tariffs. While matters of rights cannot be delegated, Thomas argues that privileges can, and have, and that this has long been recognized in constitutional law.

The key question, as Kavanaugh advances, is the balance of power. “Congress retains the ultimate authority to clarify, amend, or repeal IEEPA,” he reasonably asserts, “if it believes the President’s exercise of emergency powers has gone too far.”

This issue became a federal court case because Congress is dysfunctional.

Which puts the issue back in our lap. Where voters can have some control. How? Through elections, pressure, or pushing . . . term limits.

This is Common Sense. I’m Paul Jacob.

* Other avenues may remain open. And Trump is jumping on them.

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ideological culture media and media people tax policy

Post California Soaking

California, taxes, wealth, government

Rumors that Washington Post owner Jeff Bezos has been pushing the Post in a more commonsensical editorial direction could very well be true.

A recent Post editorial slams progressives who “think of taxation the way teenage boys think about cologne: if some is good, more must be great.”

I’m no fan of even a moderate amount of that brand of cologne. But anyway. The Post is discussing a proposed ballot measure backed by the ultra-lefty Service Employees International Union.

SEIU troops are currently collecting signatures. And before they’ve even gotten enough to post it to ballot, the people being targeted have started moving. 

Out of state.

The measure would impose a new 5 percent tax on billionaires. Some of the state’s billionaires, including Google cofounder Larry Page and Palantir cofounder Peter Thiel, aren’t willing to wait and see whether it actually reaches the ballot and passes in November. Why? The measure would apply retroactively “to those who were California residents on January 1, 2026.”

Some Democratic lawmakers are saying “good riddance,” as if it’s possible to loot billionaires who don’t wait around to be looted. Or that it’s good for state coffers to lose their billionaire entrepreneur “contributors.”

The Post says the retroactivity would open the measure to legal challenges, but that if it gets passed and survives litigation, “it’s a safe bet this won’t be a one-off. Funding ongoing expenses like health care with one-time taxes isn’t sustainable. Progressives will want to return to the well until they’ve sucked it dry.”

And no one should know better than Californians how dangerous dry wells are.

This is Common Sense. I’m Paul Jacob.

California, taxes, wealth, government

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property rights tax policy

Tax Assessor, House-Nabber

Pacific Legal Foundation, tax law

In 1994, Scott Pung won exemption from a school tax. He died in 2004. But years later, a local tax assessor contended that his widow, now also deceased, should have submitted new paperwork to retain the exemption.

Pacific Legal Foundation observes that according to state law, “the exemption continues as long as family members continue to live in the home. . . . Based on her misreading of the law, the tax assessor retroactively denied the exemption for several previous years.”

The estate’s administrator, Mike Pung, got nowhere trying to explain things to the tax assessor. So he brought his case to the Michigan Tax Tribunal. The tribunal ruled in favor of the Pungs.

Didn’t matter. When Mike paid the property taxes for 2012, the assessor called it an underpayment, since payment for the tax that the Pungs did not owe had not been included.

Mike still refused to pay the school tax. So the county grabbed the home that it had assessed at $200,000 and auctioned it for $76,000 to recover the amount of that tax.

With PLF’s help, the Pungs ultimately received $73,000 of this amount, less than half the home’s assessed value. Now PLF is headed to the Supreme Court to make the case for further compensation.

Chances are good. Two years ago, the Supreme Court affirmed in other PLF litigation that local governments “are not allowed to abuse the tax system to take more from families than is owed.”

Or not owed.

This is Common Sense. I’m Paul Jacob.

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