Unless Congress acts before the end of this year, the largest tax increase in American history is due to take effect when the Bush tax cuts expire at midnight December 31. According to the Tax Foundation, in the absence of Congressional action we can expect:

• The two “marriage penalty elimination” provisions will expire, so that:
  • The standard deduction for married couples will fall, no longer double what it is for single filers; and
  • The ceiling of the 15 percent bracket for married couples will fall, no longer double what it is for single filers.
• The 10 percent tax bracket will expire, reverting to 15 percent.
• The child tax credit will fall from $1,000 to $500.
• The tax rate on long-term capital gains earned by middle- and upper-income people would rise from 15 to 20 percent.
• The tax rate on qualified dividends earned by middle- and upper-income people would rise from 15 percent to ordinary wage tax rates.
• The 25 percent tax rate would rise to 28 percent.
• The 28 percent rate would rise to 31percent.
• The 33 percent rate would rise to 36 percent.
• The 35 percent rate would rise to 39.6 percent.
• The PEP and Pease provisions would be restored, rescinding from high-income people the value of some exemptions and deductions
• The estate tax would be restored with an exemption level of $1 million and rates that top out at 55 percent. Read more »

Back in the mid-1990s I interviewed for an information technology position with one of the nation’s largest home builders. In the course of the interviews, one of the company’s executives told me — almost as a boast — that the company didn’t own so much as a single hammer. The company had positioned itself as a project management firm, he said. All the actual work was performed by subcontractors.

Actually, it went beyond that. Some of the subcontractors in turn engaged sub-subcontractors to perform work for their part of the project.

There is, of course, nothing new in using subcontractors in construction projects. Home builders have always subcontracted specialized work, like plumbing and electrical, to firms that have the requisite licenses and skills. But subcontracting all the work is a relatively recent development.

For a big company operating in a free labor market this would not seem to make a lot of economic sense. Why not hire the workers directly and cut out the middleman? Read more »

Back in December 2004 the magazine Science published science historian Naomi Oreskes’ summary of an analysis of the abstracts of the peer-reviewed scientific studies dealing with climate change that had been published between 1993 and 2003. In the article, Oreskes reported that, of the 928 abstracts analyzed, fully 75 percent endorsed or accepted the hypothesis of anthropogenic — i.e. man-made — global warming while 25 percent dealt with methodological issues but took no position on the hypothesis itself Significantly, she said, none of the studies disputed the hypothesis.

This article was the origin of the oft-repeated assertion that there is a scientific “consensus” that global warming is caused by the activities of humans. It figured prominently in Al Gore’s fear-mongering propaganda film An Inconvenient Truth, and it was no doubt what was behind then President-elect Barack Obama’s bald assertion at last November’s global warming summit that “the science is beyond dispute”.

Oreskes’ finding begs credulity. Are we really to believe that, of 928 peer-reviewed studies, none — not even one — challenged the claim that global warming is caused by human activity? Such unanimity, if it exists, should set off alarm bells — not about global warming, but about what passes for scientific inquiry these days. Read more »

Yesterday I went down to my state capital, which happens to be Annapolis, to lobby for the repeal of a six percent sales tax the State of Maryland plans to levy on computer services beginning this July.

How this tax came about is a worthy subject for study by anyone who desires to understand how government operates in what some of us lovingly refer to as “The People’s Republic of Maryland”. Perhaps the lobbyist with whom we argued in the hallway just outside the state Senate Budget and Taxation Committee hearing room can write his Ph.D. dissertation on the subject. But then again, maybe not, since he thinks the computer tax is just dandy and will raise all the money needed to fund the pet projects favored by the special interest groups he was representing, while having no negative impact on Maryland’s economy.

But I digress. Here’s how the tax came about: Read more »

The always provocative Paul Craig Roberts recently penned a column in which he asks which is worse, regulation or deregulation. For a libertarian — which, incidentally, is what Roberts is — this would seem like a no-brainer. Regulation is worse. How could a libertarian even think otherwise?

But, is regulation always worse?

Consider a monopoly that is privately owned, but sanctioned and enforced by the state. Suppose a regulatory commission sets the price that can be charged by the monopolist below the price the monopolist would set if it could charge whatever it wanted. Now, abolishing the regulatory body and allowing the monopolist to charge whatever price maximizes its profits would be a type of deregulation — after all, we’re removing regulation — but can we really state unambiguously that this type of deregulation is better than the price regulation we had before? Read more »