We at the Rio Grande Foundation took the position earlier a few weeks ago on this blog that the Belgian company InBev should have the right to purchase Anheuser-Busch. Unfortunately, the purchase of InBev was not simply an example of the free market at work. Instead, the takeover was at least partially the result of America’s high corporate taxes.
As Stephen Moore and Tyler Grimm pointed out recently in the Wall Street Journal:

According to the Tax Foundation, Belgium ‘s corporate tax rate is 33%, but the effective tax rate can be half the nominal rate thanks to adjustments for something the OECD calls a “notional allowance for corporate equity.” Bottom line: InBev was paying around 20% of its profits in corporate taxes, compared to Anheuser-Busch’s rate of 38.4%.
Things have gotten pretty bad when U.S. companies relocate to Europe to cut their tax payments. But a research analysis by Morgan Stanley finds the combined company’s corporate tax bill will be lower than in the U.S. and that the tax differential indeed figured into the economics of the sale…
New data from the OECD for 2008 indicate that the international average for corporate tax rates fell by another percentage point last year, meaning the U.S. is pricing itself out of the market as a corporate headquarters. ” America ‘s 35% corporate tax rate is not just bad economics, it’s downright unpatriotic,” says tax expert Kevin Hassett of the American Enterprise Institute.

High taxes have an impact not only when American companies leave for lower taxes, but when New Mexico businesses move out of state or to other nations for lower taxes. This is a real issue and we need to address it both in Santa Fe and Washington.

You may not be aware that today would be the 96th birthday of Nobel Prize winning economist Milton Friedman. Israel Teitelbaum of SchoolChoiceVoter.com has an excellent article on Friedman’s legacy of free choice and individual liberty as it applies to education.
The Rio Grande Foundation is taking part in the celebration of Friedman’s legacy by hosting a school choice event in Albuquerque this evening. Seats are still available!
Happy Birthday and thank you Dr. Friedman!

Too many elected officials seem to get into politics simply to tell the rest of us what to do. One of the most prominent examples of this tendency is Albuquerque City Councilor Isaac Benton. Benton, in an op-ed published in the Albuquerque Journal, argued in favor of the City’s new green building codes and ripped the national industry group that is currently suing to prohibit the City from implementing the code.
While the industry group is suing on the basis of federal preemption of local law, the idea that governments rather than individual actors in the marketplace should determine how homes are built and what utilities they should use is ridiculous. After all, as we have seen recently with the rush to more fuel efficient cars, consumers will naturally purchase appliances that provide the greatest efficiency for the money.
Hopefully, Benton and those pushing costly green building codes on Albuquerque will suffer a legal setback in this case, but the probability of the nanny-statists and those who would control our every decision giving up is small.

Recently at the Rio Grande Foundation, we have been working harder than ever to get our message out in the community and around the state. A particular emphasis of our work is to reach out to those in areas, like Deming, that are often forgotten by denizens of Albuquerque and Santa Fe. Recently, I had the pleasure of visiting Deming to speak to the Deming Rotary Club and talk to a reporter with the Deming Headlight You can read the interview here.
If your group needs a speaker, please contact us at 505-264-6090 or email info@riograndefoundation.org.

T. Boone Pickens is a smart man. He’s made billions of dollars in the oil and gas industry and should be applauded for engaging in economically-productive behavior that has benefited all of us. Unfortunately, now Pickens is looking to make money in a less honorable way — by putting his hands in taxpayer pockets.
Pickens was on Capitol Hill recently to discuss his new energy plan which he says would result in the United States producing 22 percent of its electrical energy needs using wind-powered electricity. More information on the Pickens plan is available here.
During the year 2003 alone, federal energy subsidies ranged from $37 billion to $64 billion, according to a study prepared for the National Commission on Energy Policy. Wind energy accounted for less than 1% of the total.
Thankfully, our friends at the Cato Institute are fighting back against Pickens’ self-serving subsidy “plan.” In a recent column, Jerry Taylor showed how Pickens’ plan benefits him at the expense of taxpayers and consumers. More information on the flaws and subsidies associated with wind power can be found here.

If you missed today’s episode of “Eye on New Mexico,” I discussed the proposed arena/convention center expansion with UNM professor Kate Krause this morning. Video of the show is available here. Considering that she was supposed to be a supporter of the project, Krause certainly comes off as sharing my healthy skepticism of the proposed project.

I’ve recently blogged about Al Gore and his out-of-control energy usage — all while he tells the rest of us to eliminate our carbon footprints. At his recent speech, some folks from the free market advocacy group Americans for Prosperity talked to Gore supporters and questioned them for their own energy usage. Check the video out here.
The fact is that Gore and the environmental radicals go far beyond traditional environmentalism. They want to control our lives and force us to abandon our cars, flying, heating, air conditioning, and technology. Climate change can be dealt with in the marketplace.

In case you haven’t heard, Governor Richardson has called for a special legislative session to begin on August 15. While the session was originally to be exclusively on the topic of health care, he has since broadened his agenda to include other issues including an economic stimulus known as the CARE Package.
It is certainly a good sign that the Governor seems to be backing off of imposing “universal” health care, but New Mexicans must be aware of the very real pitfalls associated with massive government intervention in the health care sector of our economy. Check out this informative website with interviews and discussion of some of the problems associated with government health care.

As previously mentioned on this blog, the Rio Grande Foundation and Educate New Mexico are hosting a free showing of the new film “Flunked” on July 31 in Albuquerque. Following the showing, Ben Chavis, the former administrator of the American Indian Charter School in Oakland, CA, will be presenting his ideas on education reform. Chavis is a star of the film.
The NPR show “Day to Day” did an excellent story on Chavis’s success a few years back. Check out the 5-minute audio clip here.
I hope you’ll consider attending this exciting event.

Although taxpayer activists managed to beat back previous efforts by the Mayor and many on City Council to put a $28 million a mile streetcar down Central, bad ideas never die. The Albuquerque streetcar is one that has recently resurfaced via a consultants report outlining how the project should, in their minds, move forward. View their presentation here.
Jim Scarantino over at The Alibi, wrote an excellent article on the streetcar in which he questions ridership assumptions and whether it makes sense to spend $28 million a mile for what would be at best marginal gains in ridership.
Thankfully, Scarantino is by no means the only voice of opposition to this crazy proposal. The excellent blog Eye on Albuquerque questioned the project’s merits in a recent posting. Mario burgos also has an interesting analysis.
Even the Albuquerque Journal questioned the project’s merits in a recent editorial. Hopefully our illustrious representatives on Council and Mayor Marty will abandon this project once and for all due to the widespread and well-reasoned opposition.

Today’s Albuquerque Journal front page included a silly headline “Oil, Gas Drilling Practices Questioned” that attempted to lead the casual reader to assume that oil and gas drillers are doing something wrong by choosing not to drill on certain leased federal lands. While the article goes on to explain that permitting and the lack of any known oil and gas in some of the leased areas are just two of the many reasons that 68 million acres of federal lands are leased but not currently producing oil and gas.
The Journal is not alone in promoting ignorance of oil and gas. Indeed, there is widespread misunderstanding of oil and gas issues. For example, did you know that now that the President has rescinded the executive order prohibiting oil and gas drilling on the outer continental shelf, Congress must act before the election to keep the ban intact? The following is from the Institute for Energy Research.

American oil and gas leasing has been prohibited on most of the OCS since the 1982. The U.S. is now the only developed nation in the World that restricts access to its offshore energy resources.
The Congressional Moratorium comes in the form of an annual appropriations rider in Congress. It must be renewed annually by a vote in the Congress, which has enacted OCS leasing moratoria every year since 1981.
**Unless Congress approves a new rider – and the President signs into law a bill that includes the rider – the Congressional ban will expire on September 30, the end of the federal FY2008 fiscal year.**

To see if you are knowledgeable on this and other oil and gas issues, take this quiz from the American Petroleum Institute. I scored 70%.

The anti-modernity, anti-drilling environmentalists seem to have latched onto two basic strategies in opposing more domestic drilling and innovative energy exploration at home. First is to blame speculators for all of our problems. The other is that additional drilling won’t bring oil and gas prices down and therefore won’t solve our problems. Laura Sanchez makes the latter argument in the Alibi.
Not surprisingly, we at the Rio Grande Foundation disagree strongly that drilling won’t improve our situation. In a letter to the editor I make the following arguments:

Although I disagree with her ultimate point (opposition to drilling), Laura Sanchez makes some good points in her article. Indeed, the days of $1 and perhaps even $2 gas may be over in the United States. As she points out, no amount of drilling, whether here in New Mexico, in the Arctic National Wildlife Refuge or offshore is going to return us to the “good old days” of cheap gas.
Freer markets in China and India have raised living standards for literally billions of people. While we should celebrate this, it is also true that China adds 1,000 new cars to its roads every day.
Oil is a finite resource. Energy independence is a pipe dream, but if we don’t drill here our economy (most particularly, the poor and low-income for whom filling the tank is a larger portion of their family budget) will suffer and prices will continue to spiral upward. Economic progressives should be especially sensitive to this fact.
We also must realize two additional facts: 1) Every source of energy, including politically correct solar and wind, has its drawbacks; 2) Prices will create efficiency and spur innovation.
Energy policy, like most factors in a multitrillion-dollar economy, makes a difference on the margins and over time as adjustments are made. High prices will spur conservation; we should not stand in the way of efforts to increase supply as well.

As mentioned in previous postings, I spoke at the New Mexico First town hall on the proposed taxpayer-financed arena and hotel in downtown Albuquerque. The event was covered in both the Albuquerque Journal and on KOB TV (article and video available).

As most readers of this blog are probably aware, I used to work in Washington with the National Taxpayers Union, which is dedicated to lower taxes, less government spending, and tax reform. For years, my colleagues at NTU and I were voices in the wilderness telling Congress that government-sponsored housing giants Fannie Mae and Freddie Mac were in need of reform.
To his credit, President Bush has repeatedly attempted to reform Fannie and Freddie to make a bailout less likely and wean these two mortgage giants off the taxpayer teat, but to no avail. After all, Fannie and Freddie toss money around Washington ($200 million over the last decade) like it grew on trees. Of course, when you are implicitly backed by the US Treasury and you are competing against banks that are not, money does grow on trees.
Unfortunately, Washington did not act and now, due to the difficult housing market, the chickens are coming home to roost and taxpayers are on the hook for what could be billions in bad debt owned by Fannie and Freddie. Just the latest reason that government should not get involved in business.

Democracy in New Mexico is hard to come by because most citizens don’t know what’s going on in the opaque shadows of government. Unless you’re actually attending the legislative sessions and committees in Santa Fe, odds are you won’t be able to see through the impenetrable iron curtain surrounding the Roundhouse.
New Mexico is one of only four states nationwide that don’t broadcast any part of the legislative process. Thanks to the efforts of Senator Mark Boitano, the state Senate will begin web casting its floor sessions starting January 20. Excellent; this is a big step for a government whose transparency is nearly non-existent.
Unfortunately, the House of Representatives and the myriad of legislative committees remain largely undocumented. Every time a bill is introduced in either house, it’s assigned to at least one, usually three, committees for deliberation (One committee is perfectly normal. The speaker assigns bills he and/or the majority don’t like to multiple committees in order to bring about their deaths. In addition he’s been known more than once to change a bill’s committee assignments in mid-stream.) Minutes, if they’re kept, are not made public for any of these standing committee hearings. The only time anything is publicly documented is if they actually decide to take a vote on it.
In 2007 (the last 60-day legislative session), three groundbreaking bills aimed toward increasing government transparency were introduced, and only one actually made it through without getting lost in the usual veil of secrecy. Rep. Brian K. Moore introduced House Bill 235, which would’ve forced the state to disclose exactly who was getting special exemptions through the tax code and how much the state was foregoing. The bill passed through the House and Senate with flying colors. According to the Senate Chief Clerk’s Office, Senator Michael Sanchez of Valencia County was the only legislator in the entire state to vote against the bill… before Bill Richardson used a pocket veto to kill the legislation after the Legislature adjourned.
Reps. Larry Larranaga and Kathy McCoy teamed up with House Bills 554 and 993 (respectively) to create a searchable transparency website where all state revenues and expenditures would be made available to the public (including the recipients of all state contracts). Both bills were “postponed indefinitely” in the House Taxation and Revenue Committee.
Without some detailed, written record of the committee hearings, we’ll never be able to actually know what was discussed unless we attend. Democracy will not be able to succeed until the citizens of New Mexico are allowed to watch everything the politicians are doing in government. That’s a right to which we are entitled. Unfortunately, there are probably plenty of bad reasons why Governor Richardson doesn’t want us to know who’s getting special favors in the tax code and why Lujan and the House Taxation and Revenue Committee want to make it hard for us to know where our money’s going.

While President Bush has certainly had his share of mis-steps on energy policy (his support for ethanol being one prominent example), but he was definitely on the right track yesterday when he lifted the ban on offshore drilling which was enacted by his father. Unfortunately, as Michael Coleman points out in today’s Journal, Sen. Bingaman and Senate candidate Udall decried the lifting of the ban and made it clear that they would not support expanded offshore drilling in the Senate.
Bingaman said he supports offshore oil and gas drilling, but objects to allowing individual states to initiate or reject drilling off their coastal waters. He went on to say, “We need a national energy policy; we don’t need every state legislature or governor making our policy.” This statement shows that Bingaman both doesn’t understand federalism and the fact that individuals operating in an economy ultimately make our “energy policy,” not politicians. Rather than forcing states that don’t want offshore drilling, allowing each state to accept or reject it seems eminently reasonable. Also, with rising prices, individual consumers are reacting in ways that are far more powerful than Bingaman’s impotent efforts to mandate and regulate.
Udall, for his part, pointed out that oil companies “can now drill on 68 million acres of federal land they have leased and not used.” He would “force them to drill on the land they already have access to in order to boost supply quickly.” Udall clearly does not understand the oil and gas industries or how federal leases work:
The fact is:

Many of them cannot be drilled because there is no oil in them. The government makes these oil companies purchase these leases before they are allowed to survey them. The company geologists then survey, find there’s nothing in there, and now the big oil companies are stuck with these leases that they can’t do anything with..and…who pays the cost for those non-productive leases? We the people do as a pass through expense. It’s just another scam by the government and something they don’t want everyone to know about.

Republicans have clearly been asleep at the switch as far as increasing America’s ability to access oil and gas resources is concerned. They may be waking up. Bingaman and Udall seem to be running for Chair of the “Head in the Sand” caucus.

Bad ideas never die. While Albuquerque Mayor Martin Chavez’s streetcar is one well-known local example, high gas prices have given Virginia Senator John Warner an excuse to propose a plan to return America’s speed limit to 55 mph.
With every supposed crisis (high oil and gas prices being only the most recent) some propose pro-freedom solutions, like more drilling in this instance, and others decide to restrict freedom like Sen. Warner. In fact, contrary to the rantings of Ralph Nader and his left-wing allies, eliminating the 55 mph speed limit actually saved lives rather than resulting in additional deaths.
While driving faster may reduce gas mileage, shouldn’t it be up to the individual whether their time is more important than a few additional mpg? I’d rather drive a smaller car than drive 55 mph; some people would rather pay a little more to save time, especially on long trips. The fact is that with gas prices rising, people will react in the manner that is best for them. The last thing we need to do is return to a Congressionally-mandated 55 mph speed limit nationwide.
Hopefully Sammy Hagar won’t have to rejoin the “I can’t drive 55” protest movement.

As I just discussed in a blog posting, Albuquerque’s leaders are overly focused on downtown at the expense of taxpayers and other areas of the City. The schedule for the New Mexico First discussion at which I’ll be a panelist can now be found online. A background report (including comments from the Rio Grande Foundation) is available here.

Apparently, Albuquerque’s City Council has been listening to too much Petula Clark recently, because their obsession with downtown is approaching fever pitch. First and foremost, the recent decision to allocate a whopping $700,000 to study an arena and events center has seemingly placed this latest redevelopment issue on the fast-track with New Mexico First set to hold a meeting on the issue on Thursday, the 17th (I’ll be a panelist).
Then there’s the $28-million-a-mile streetcar that consultants recently recommended should be built from San Mateo to Downtown. The presentation can be found here. The presentation is full of platitudes and happy talk about the supposedly tremendous impact the streetcar will have in the form of additional residents and employers moving into the areas served by the system. But it is never stated why Albuquerque’s system will cost $28 million a mile while a “peer system” in Little Rock cost a mere $7.8 million per mile. Also, while anecdotal evidence that the streetcar will draw additional riders over the current bus system is presented, specific service improvements over the current Rapid Ride buses which run in the same area for far less money are nowhere to be found.
The fact is that the streetcar has support primarily among those who believe that other areas of the city exist primarily to support downtown. If a streetcar and events center are important to the public and are financially viable they will be built with private money when and where it makes sense to do so. Politicians shouldn’t force the issue on taxpayers.

The Rio Grande Foundation and Educate New Mexico are sponsoring a film event on July 31, what would have been Dr. Milton Friedman’s 96th birthday. We will be showing Flunked, the Movie, a film with an important message for New Mexico’s parents, teachers, and students.
Flunked is a 45-minute documentary that discusses America’s failing educational system, analyzes the reasons for that failure, and profiles some leaders who are making a difference. Ben Chavis, principal of the American Indian Public Charter High School in Oakland, California, (and a star of the film) will discuss the film and what can be done to improve our lagging educational system. Executive Producer Steven Maggi will be on hand to answer questions about the making of Flunked.
• Results of national and international tests show that our students are falling further and further behind. The average American student is no longer able to compete with foreign students, and in many cases, they’re failing to meet even basic academic standards;
• Complaining about the problem is easy, but it produces few productive results — especially when many schools nationwide are truly “getting it right;”
• Flunked is the story of these schools—their founders, leaders, and students—who are breaking the mediocre mold and attaining great results with their students…without government programs or mandates!
• By focusing on schools that are successfully applying these principles, Flunked sends a message loud and clear: Parents, students, principals, and teachers—in New Mexico and across the nation—do not have to settle for mediocrity in their own schools!
When: July 31, 2008 – 5:00 PM to 7:00 PM
Where: New Mexico Bar Association
5121 Masthead NE,
Albuquerque, NM 87109
The Bar Association is off Jefferson, south of Paseo in Albuquerque. Drinks and hors d’oeuvres will be provided. Happy hour begins at 5:00 and the film will start promptly at 5:30.
This event is free and open to the public.
Please RSVP to info@riograndefoundation.org or call 505-264-6090.

This excellent article appeared in the Albuquerque Journal today and explained the need to explore for oil and keep options open for securing our energy future.

The Rio Grande Foundation and New Mexico Prosperity Project hosted a luncheon with John Stossel at the end of April. Needless to say, Stossel’s visit was of interest to local media outlets. Gene Grant of KNME’s Channel 5 and host of “In Focus” sat down with Stossel to discuss his evolution as a journalist and Stossel’s perspective on some important issues facing New Mexico.
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Residents of Santa Fe will vote next spring whether or not to impose higher taxes. According to the New Mexican, the tax would work as follows:

When a house is sold for more than $750,000, the buyer would be responsible for paying a fee that represents 1 percent of any amount over $750,000. For example, a house sold for $800,000 would owe $500. Revenue would go to the city’s Affordable Housing Trust Fund and would be earmarked to help increase home ownership among the city’s work force and for other housing needs.

Supporters claim the tax is needed to curb the economic and social consequences of the migration of the city’s workers to less-expensive nearby communities while earning wages in Santa Fe. In other words, Santa Fe is too expensive for many middle-income people to live in.
Of course, at a time when politicians are hoping to raise taxes, the fact that Santa Fe’s tax burden has gone up dramatically in recent years is conveniently ignored.
Residents of Santa Fe have seen their gross receipts rates climb more than 25 percent from 6.3125 percent back in 1999 to the current rate of 7.9375 percent. Of course, property taxes and hotel taxes have also risen in the last several years.
This doesn’t even address the impact of the proposed real estate transfer tax. Thankfully, the Texas Association of Realtors has done a useful analysis of the negative economic impact of real estate transfer taxes. The vote isn’t until March, but look for more on this from the Rio Grande Foundation.

Today’s headline in the Albuquerque Journal says it all: Tesla will be making its electrically-powered roadsters in California, not New Mexico. According to the San Francisco Chronicle:
California’s offer includes the state’s purchase of $100 million in manufacturing equipment, which it will then lease to Tesla. The company will have the option to buy the equipment at the end of the lease term tax-free, for an estimated savings of $9 million. California will also make job training grants to Tesla of up to $1.5 million.
The Rio Grande Foundation has been critical of such payouts in the past for the very fact that companies like Tesla are simply playing governments against each other to extract the largest payout possible. This certainly seems to be the case with Tesla.
While the loss of Tesla will undoubtedly be portrayed as a major loss for New Mexico, the reality is that Tesla’s cars are based on unproven technologies and the company needs a sweetheart deal because no private investor — at least one who is concerned about earning a reasonable return on his investment — would consider making such a significant investment.
As the Wall Street Journal points out, California Governor Arnold Schwarzenegger has a terrible economic record and faces extreme economic difficulty. While the payouts to Tesla will be extremely small relative to California’s overall economy, New Mexicans shouldn’t lose any sleep over losing Tesla to Arnold and his big payoff.