America’s Next Tax Revolt

Did you see this editorial in Friday’s Wall Steet Journal? Excerpts:
“It hasn’t yet hit the intensity level of Howard Jarvis’s Proposition 13, the famous ballot measure that slashed California property taxes by 30% and sparked a nationwide tax revolt in the late 1970s. But activists in at least 20 states — from Alaska to South Carolina — are working to enact Taxpayer Bill of Rights (Tabor) laws to cap runaway state spending and tax increases.”
“Last week in Richmond, Virginia, taxpayer groups from 30 states gathered under the banner of the State Policy Network to discuss how to insert these anti-tax restrictions into state constitutions.”
The Rio Grande Foundation is taking part in this revolt. Stay tuned this summer as we further our documentation of runaway state spending in New Mexico.

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Sun Screen Blocked

In today’s report from Chuck Muth:
YOUR FDA AT WORK
According to the latest “Give Me a Break” commentary by ABC’s John Stossel, the chemical Mexoryl effectively blocks UVA the rays from the sun which cause wrinkles. Dermatologists swear by it. And sun worshippers in Rio, Paris, Mexico, Canada and Australia have been lathering up with it for over a dozen years now.
But don’t look for it on the shelves of your local drug store here in the U.S. of A. It ain’t there. Why? Because it’s illegal here. You see, the federal Food & Drug Administration (FDA) still hasn’t “approved” Mexoryl as safe and effective.
How typically “governmental” to be told over and over and over that the sun is dangerous and not to forget to wear sunscreen…while the feds continue to ban the most effective sunscreen on the market today.
And this is the same group some want to turn the regulation of tobacco over to? Give me a break.

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Subsidies for drunks?

New Mexico now has a law requiring ignition interlocks on the cars of convicted drunk drivers. (An interlock is a device that uses a breathalizer to estimate the driver’s blood alcohol content and then shuts down the ignition if the driver flunks the test.)
These devices cost more than $500–not cheap. So here’s my prediction: Within the next 18 months a bill will be introduced in the state legislature to pay for interlocks for drunks who “can’t afford them.”
Does this sound absurd? Yes, but not unlikely.

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Health Savings Accounts

Two weeks ago Winthrop Quigley (subscription) gave us a pessimistic report on the status of Health Savings Accounts in New Mexico. An excerpt:
“Tax-advantaged savings accounts designed to restrain health-care spending have been slow to take off and haven’t made much of a dent in the number of uninsured workers, according to insurance industry research.”
But a report today from Michael Barone is much more promising. Health care costs may actually be slowing their rate of growth. According to Barone “…the evidence is that health care costs are being held down, by the workings of the marketplace, partly in response to health care legislation passed in the last four years.”
New Mexico is not likely to benefit, however. Our tax treatment discourages these accounts. And our vast array of Medicaid recipients do not need the accounts, since someone else pays for their health care.

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So far, so bad

So called “school reform” New Mexico style is not going to work because the incentives are all wrong. Look here for one assessment of the results so far. Last again.

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Tax Relief by Mistake

Does ignorance of basic economics ever do any good? Maybe so.
When New Mexico repealed its gross receipts tax on groceries, it raised the tax on nearly every other good and service. It attempted to calculate this rate increase to exactly offset the revenue loss from grocery tax relief.
However, the state’s “economists” failed to allow for consumers’ negative responses to higher taxes. Supply side economics in reverse, as it were. With a nearly one percent increase in the cost of most goods, people bought less, or increasingly shopped out of state. The result was that net revenue losses were ten pecent more than expected.
Of course, any tax cut—even if by accident—is a good idea. Sadly, this was merely a reduction in a tax hike, but it was better than nothing. Truly, an “error of enchantment.”

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Medical Marijuana decision

Too bad we don’t have more doubting Thomases on the Supreme Court. Here is a portion of Justice Clarence Thomas’s dissent:
“Respondents Diane Monson and Angel Raich use marijuana that has never been bought or sold, that has never crossed state lines, and that has had no demonstrable effect on the national market for marijuana. If Congress can regulate this under the Commerce Clause, then it can regulate virtually anything and the Federal Government is no longer one of limited and enumerated powers.”
The Commerce Clause has enabled activist judges to make up the rules as we go along. So much for the Constitution.
See more thoughtful discussion here.

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Another Government Failure: Ethanol

From NCPA:
Ethanol’s advocates have long argued that increasing the amount used in
gasoline would be a boon to the economy, reduce our dependence on
foreign oil and improve air quality.
Yet, more than two decades and tens of billions of dollars in subsidies,
tax credits and fuel mandates have done little other than enrich the
agribusinesses that produce ethanol, says H. Sterling Burnett, a senior
fellow with the National Center for Policy Analysis.
Indeed, the economic impact of ethanol subsidies is negative. One report
by the U.S. Agriculture department determined that every $1 spent
subsidizing ethanol costs consumers more than $4.
There are several reasons for this, says Burnett:
o Every bushel of corn devoted to ethanol production leaves less
for human consumption and animal feed — thus people pay more for
corn, beef, poultry and pork than they would absent the
subsidies.
o And prices for other goods are also higher since farmers, in
pursuit of lucrative subsidies, devote more acreage to corn
rather than other, unsubsidized, produce.
o Additionally, the costs of growing, distilling and blending
ethanol into gasoline makes it cost 51 cents more per gallon to
produce than regular gasoline.
The clamor for increased use of ethanol also raises the specter of the
current problems surrounding the use of MTBE, the fuel additive that oil
producers began blending with gasoline in the mid-1990s to meet stricter
clean-air standards. Although not carcinogenic in humans, MTBE has
caused huge problems recently because it leaks from storage tanks and
contaminates local water supplies.
Absent federal subsidies and mandates, ethanol would likely disappear
from the marketplace. Like so much of the pork Congress bestows upon
special interests, ethanol is bad for the economy, consumers and the
environment, says Burnett.
Source: H. Sterling Burnett, “Ethanol benefits makers, legislators who
support their cause,” Billings Gazette, June 5, 2005.

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