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.
Freakonomics is the partnership between University of Chicago economist Steven Leavitt and New York times Magazine writer Stephen Dubner. In books, blog posts, and a host of other media, they use economic principles to expose “the hidden side of everything.” On June 3, they posted a podcast that revealed some of the hidden sides of tipping, but in doing so they gave credence to researchers with hidden noneconomic agendas that are unsupported by the economic evidence they muster.
Ezekiel Emanuel proposes a “simple way to reduce suicides” that would cause previously normal people to give suicide serious consideration.
Reason’s Jim Epstein has posted several times on a study performed by the National Transportation Safety Board purporting to show that curbside bus companies (commonly called “Chinatown” bus companies) are much more dangerous than conventional bus companies. Epstein’s re-analysis indicates that they are not less safe. After considerable give and take, Epstein reports that the NTSB remains unwilling or unable to credibly rebut his critical review of its analysis.
We recently examined one of the letters sent by the IRS to a particular civic group that had applied for designation as a Section 501(c)(4) tax exempt entity. Today we update that post with an examination of the questions contained in the second letter. We conclude that every question was either duplicative, and thus unapproved, or it required the disclosure of information that the IRS had never been approved to collect.
On Capitol Hill today, Acting Commissioner Steven Miller testified about the IRS scandal. Based on news reports (a transcript is not available), he was asked whether what the IRS Exempt Organizations division had done was illegal. He characterized it as a “foolish mistake,” but denied that it was illegal.
Whether it was in fact illegal depends on what statute is used as the reference. Lacking expertise in tax law, Neutral Source focuses on whether the IRS’ actions violated the Paperwork Reduction Act. For the sample case we have examined, the IRS’ screening or targeting actions that were the subject of the question posed to Miller would not be affected by the Paperwork Act. For the Paperwork Act to be relevant, the IRS screening or targeting would have had to be undertaken in the context of a survey or research project.
Nonetheless, it does appear that several of the questions posed in the IRS’ follow-up demand letters were illegal under the PRA.