Lower taxes bring more prosperity. Plus: Obamacare mandate repeal, mass transit no way to help the poor, and net neutrality's First Amendment problem.

November 18, 2017 They say government will bring in less revenue if taxes are cut, as if smaller government would be a problem. It isn't. The Senate tax plan would boost family incomes by 4.4 percent over the next decade. Should repealing the Obamacare individual mandate be in the tax plan? Of course—it is a tax after all. Transit funding is an expensive and ineffective way to help the poor. Net neutrality wants all your platforms. Lower taxes, more prosperity. Richard Rahn: Could the United States obtain higher levels of growth and more jobs at higher real wages with tax rate reductions? The U.S. has been suffering from very slow economic growth and stagnant real wages for the past decade. The causes are clear — too much regulation, government spending and mismanagement, and a destructive tax system. Other countries do a far better job of meeting the real needs of their citizens with lower tax rates and a smaller tax burden, as can be seen in the accompanying table. There are several (non-petro) states that have higher real incomes and longer life expectancies than the U.S. All have a lower tax burden (i.e., total taxes as a percentage of GDP) than the U.S. They also have lower rates of poverty and better student test scores. Switzerland, Singapore and Ireland are all free-market democracies, which rank higher than the U.S. in both of the major indexes of economic freedom and life expectancy. Hong Kong is a leader in economic freedom, but not a democracy, and is now a "special zone" of China, since its handover from the British two decades ago. Hong Kong still enjoys the rule of law (the British common law) and has a low level of corruption. Most basic freedoms still exist, even though the Chinese have become increasingly meddlesome, particularly regarding press freedoms. [Washington Times]   Would you like a 4.4 percent raise? The Tax Foundation estimates the economic effect of the Senate's tax bill: Using the Tax Foundation's Taxes and Growth (TAG) macroeconomic model, our analysis found that "the plan would significantly lower marginal tax rates and the cost of capital, which would lead to a 3.7 percent increase in GDP over the long term [and] 2.9 percent higher wages." The TAG model estimates that the plan would result in the creation of roughly 925,000 new full-time equivalent (FTE) jobs, while increasing the after-tax incomes by 4.4 percent in the long run, meaning families would see an after-tax income boost of 4.4 percent by the end of the decade. [Tax Foundation] See the accompanying table for a state-by-state breakdown of the jobs and income growth.   Eliminate the uninsurance tax. The Obamacare individual mandate is just a tax on not having health insurance. So said the Supreme Court. That makes it a prime candidate for elimination in any tax cut legislation. And that's what the Senate has done with the tax bill it will consider soon. Good move, say Whitney Jones, Marie Fishpaw, and Edmund Haislmaier: According to the most recent IRS reports, 6.2 million tax filers chose to pay the tax penalty rather than buy Obamacare insurance, 12.7 million tax filers obtained an exemption from the mandate, and 4.3 million tax filers omitted their health insurance status on their tax return. In total, 23.2 million tax filers paid the fine, obtained an exception, or simply ignored the individual mandate. And with good reason—the products they were being forced to buy were from a private market broken by Obamacare's many regulatory mandates. Plan prices skyrocketed and plan quality and availability dropped. […] Until now, the IRS has been lax in its enforcement of the mandate. However, this upcoming tax year the IRS will begin to actively enforce the individual mandate by requiring proof of health insurance coverage. In previous years, Americans have been able to omit reporting health care coverage and still receive a tax refund. No longer will this be the case. Moving forward, the IRS will refuse the submission of a tax return unless it includes proof of coverage, a coverage exemption, or payment (read: tax) for lack of coverage. Repealing the individual mandate would provide relief to millions of Americans who have to either buy a health insurance product they don't want, or pay tax penalties. [The Daily Signal] The Senate is likely to vote on its tax cut bill this coming week.   More transit is not the best way to help the poor. Randal O'Toole: One recent study found that low-income people with cars have access to 30 times as many jobs as low-income people dependent on transit. Not only do transit speeds average just 15 mph (see p. 9), while average auto speeds in most cities are twice that, autos allow users to go where and when they want to go, while transit riders must go where and when the transit goes, which often means less direct routes than they could drive. An alternative to spending billions on new transit infrastructure would be to give some of the subsidies now being spent on transit to low-income people in the form of vouchers they could use on any form of transportation. Some might continue to ride transit; others might buy a used car; still others might use Lyft or other ride-sharing services. The Ways to Work program offers low-income people low-interest loans to buy a used car or repair a car so they can more easily get to work. Loan repayment rates are high, so the program ends up costing taxpayers very little money. While the link goes to a program in Wisconsin, many other states have similar programs. This is not only more effective than transit infrastructure, it is more sustainable because once people have a job, they will pay their own transportation costs. By comparison, transit requires heavy and continuing subsidies that are something like 40 times greater, per passenger mile, than highway subsidies. In many cases, transit subsidies to commuters are so great that it would be less expensive to simply give those commuters new cars. But the Ways to Work program doesn't give anyone anything; it merely loans them money so they can become self-sufficient. Thus, Ways to Work can reach far more people for far less money than building new transit infrastructure. [Cato Institute]   Net neutrality has a First Amendment problem. How do proponents of net neutrality square the idea that government can impose common carrier obligations on Internet providers with the First Amendment? Doesn't that amount to compelled speech? If you're net neutrality booster Public Knowledge, you cite Red Lion v. FCC, the Supreme Court case upholding the fairness doctrine, and PruneYard Shopping Center v. Robins, an obscure case on whether a private shopping center could be compelled to allow the public to use its property for their speech. Those arguments, observes Gus Hurwitz, actually signal that there is a real First Amendment problem with net neutrality rules: Under the fairness doctrine, the FCC could compel broadcasters to provide coverage of political topics that were, in the estimation of the FCC, politically balanced. This is a doctrine that many today view as anathema to First Amendment principles. It is a doctrine under which, for instance, the Republican or Democratic majority of the FCC's commissioners could require broadcasters (say, for completely random example, NBC affiliates) to provide more positive coverage of a president. […] In practice, PruneYard does little to advance Public Knowledge's arguments. Even in 1980, the Supreme Court read important limitations into its holding. For instance, and "[m]ost important, the shopping center, by choice of its owner, . . . is open to the public to come and go as they please [such that] views expressed by members of the public . . . will not likely be identified with those of the owner" (emphasis added). This limitation goes to the heart of the First Amendment concerns raised before the DC Circuit: whether an internet service provider (ISP) can choose to offer a curated internet package under the Open Internet Order, and whether doing so removes that ISP from the ambit of the rules. […] Net neutrality has always been the thin end of the wedge. It contains in itself no limiting principle. Once we accept that we can require ISPs to treat data traversing their networks "neutrally," we accept both that similar neutrality can be required of other platforms and that the government is a proper arbiter of "neutrality." Proponents of net neutrality have always resisted this characterization, knowing that it is a political loser. But when push comes to shove — as it has in recent weeks — these proponents are forced to acknowledge net neutrality's endgame. Tech neutrality, the fairness doctrine, and commandeering private property as public fora are all on the table to net neutrality's proponents. [American Enterprise Institute] The Heritage Foundation 214 Massachusetts Avenue, NE Washington, DC 20002 (800) 546-2843 Add info@heritage.org to your address book to ensure that you receive emails from us. You are subscribed to this newsletter as johnmhames@comcast.net. If you want to receive other Heritage Foundation newsletters, or opt out of this newsletter, please click here to update your subscription.

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