James Pethokoukis

Free markets and mass transit

October 14, 2009
Matt Lewis favorably cites the book Moving Minds: Conservatives and Public Transport, as he makes the conservative case for mass transit:
For starters, their book seeks to shape conservatives’ views on mass transit by pointing out that our current system is anything but the product of free market forces. Since the invention of the Model T, the U.S. government has poured hundreds of billions of dollars into the highway system, while mass transit (which historically had been privately owned) received vastly smaller infrastructure benefits — while being taxed heavily to boot. What’s more, the government simultaneously prohibited these mass transit companies from raising fares. Privately owned mass transit companies simply could not compete when they had to build and maintain infrastructure while their competition was funded by tax dollars. In addition, the authors note that post-World War II building codes in many areas created sprawl – a situation where homeowners cannot walk to work or to shop, and thus, must rely on an automobile. The authors present numerous and convincing arguments in favor of mass transit – especially street cars and electric-powered light rail trolleys – that are applicable to conservative thinking: Unlike automobiles, rail fosters a sense of community; increased use of electric rail would help accomplish national security goals by lessening our dependence on foreign oil; and mass transit policy is also pro-growth – something most conservatives favor.

Good tax policy vs. bad policy

October 14, 2009

Don Marron explains thusly:

Taxes on income, for example, are usually worse for the economy than taxes on consumption. That’s why there’s a rising chorus of economists recommending the introduction of a value-added tax, rather than higher income taxes, if our nation decides it wants to support substantially higher government spending. High tax rates similarly tend to be worse for the economy than low rates. That’s why economists usually favor broad tax bases and low rates, rather than narrow tax bases and high rates. Finally, it’s preferable to levy taxes on bads rather than goods. Where appropriate, taxes on pollution (e.g., emissions of greenhouse gases) should thus be preferred over taxes on working, saving, or investing.

Venture capital firms are down. Hey, let’s raise their taxes

October 14, 2009

First this from Reuters:

In the first three quarters of this year, only 86 U.S. funds raised money, according to data compiled by the Venture Capital Journal and the National Venture Capital Association. It the trend is maintained, by year’s end there will be somewhere between 104 and 118 new funds. By comparison, even in the blackest days of the dot-com bust of 2001, investors averaged 234 funds a year.

VAT Attack! The perfect tax … or maybe perfectly awful

October 14, 2009

Greg Mankiw does a good explaining the value-added tax. But this is ominous:

From a strictly economic standpoint, a VAT is great. It is essentially a flat consumption tax, like the so-called FairTax, but implemented in a way to reduce compliance problems. Because it is collected in stages along the chain of production, rather than all at the retail level, tax evasion is more difficult. … My bottom line: If I could replace our current tax system (including the personal income tax, corporate income tax, payroll tax, and estate tax) with a VAT, I would gladly do it.