The Wall Street Journal reports today that the National football League’s new policies intended to improve player safety have significant effects on competitiveness. When combined with past rule changes that benefited offense over defense, the prospect of fines levied predominately on defensive players is expected to further tip the competitive balance in favor of offense.
The IRS Exempt Organizations Scandal
Part 6: A review of reforms proposed by the National Taxpayer Advocate
In her mid-year report to Congress, National Taxpayer Advocate Nina Olson proposes remedies that she believes would prevent similar scandals from occurring in the future.
Wall Street Journal columnist Caril Bialik notes that estimates by the Congressional Budget Office of the effects of proposed legislation are likely to be highly inaccurate. He notes several reasons for this, including rules that require CBO to rely on assumptions that everyone knows are false:
The agency is in a tough spot. Its purpose is to give Congress a quick take on how a law would affect the nation’s finances, and occasionally to assess broader economic impact. But, unlike private forecasters, it is constrained by rules on what can and can’t be taken into account. For instance, the CBO assumes existing laws will prevail, or expire as scheduled, even if the political reality likely is different.
Another reason why CBO estimates are unreliable is the CBO refuses to discount future effects, something that is taught to every student enrolled in a course on benefit-cost analysis. In the case of the immigration bill recently passed by the Senate, CBO has company from at least one Washington-based think tank: the Heritage Foundation. Unlike the CBO, however, Heritage economists are not compelled by legislators to rely on substandard and misleading methods.
The IRS scandal is not going away. At TaxProf Blog, Paul Caron keeps a running list of news articles. In Monday’s Best of the Web column in the Wall Street Journal, James Taranto repeats his view that the scandal is worse if no one in the White House ordered the IRS to target its ideological or political opponents:
[I]f the Internal Revenue Service scandal turns out not to have been directed by the White House, the situation is much direr than if it turns out Barack Obama or Valerie Jarrett was giving the orders. In the latter case, we have a corrupt administration; in the former, a corrupt government (emphasis in original).
He then provides a lengthy quote from a reader who offers a public choice hypothesis: that senior career staff at the IRS may have targeted these applicants to protect their personal and bureaucratic interests:
Even if every single one of the elected federal officials were a Republican, and even if the entire federal bureaucracy were populated by Republicans, you would still get this self-protective behavior from IRS leadership and staff.
In this reader’s view, “the only remedy is to remove the institutional incentives for this kind of behavior,” and that requires eliminating the federal government’s power of direct taxation.
This inference does not hold even if the reader’s remedy is presumed to be the only one that could work. Further, the reader’s remedy would not in fact solve the problem because he has diagnosed it incorrectly.
In an opinion column published in the Washington Post, Joe Carr describes being arrested for the crime of offering to sell valid Washington Nationals baseball tickets for less than their face value. In Washington, selling event tickets for more (“scalping”) is illegal. But so is selling them for less (“soliciting”).
A popular tool for estimating regulatory costs is the event study. The idea is that stock prices should reflect rational market expectations of the discounted after-tax present value of the company’s stream of future profits. If a regulation (or similar abrupt event) occurs, stock prices will rise or fall quickly to capture its effects.
A Supreme Court opinion issued today illustrates why it pays to interpret these data with care.