The Lighthouse^®

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The Lighthouse^® is the weekly email newsletter of the Independent Institute.
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Volume 17, Issue 19: May 12, 2015

1. Death to Death Taxes!
2. Context Missing from Obamacare’s Enrollment Cheerleaders
3. Water Sanity in California?
4. Republicans Miss Opportunity to Critique Clinton’s Real Blunders
5. New Blog Posts
6. Selected News Alerts

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Death taxes are among the most insidious of government revenue raisers, yet they’ve been a fixture in the federal tax code since World War I. Eight states in the nation are moving toward reducing the bite of their own versions this year, and members of the House of Representatives have taken steps to abolish it at the federal level. If they succeed, this would be good news for economic growth and justice, according to Independent Institute Senior Fellow John C. Goodman.

Goodman makes the case for killing the death tax by dispelling numerous economic misunderstandings. Citing Harvard economist Greg Mankiw, he notes that lifetime earnings of children and their parents are not as strongly correlated as most people think, even when inheritances are included in the mix. If a set of parents is wealthy, this does not ensure that their children will be just as wealthy, let alone their nieces, nephews and other possible heirs.

What’s more surprising is that many people avoid paying estate taxes, through effective (and perfectly legal) estate planning techniques. The widespread use of tax loopholes is the reason why Austria, Canada, Hong Kong, India, New Zealand, Norway, Russia, Singapore, and other countries have moved to abolish their estate on inheritance taxes in recent years. Nevertheless, such taxes take a huge economic toll—mainly by encouraging people to shelter their assets in ways that minimize revenue collection but also reduce private investment, capital formation, and economic growth. Lifting such taxes therefore would help lift all boats.

Why Do We Have a Death Tax?, by John C. Goodman (Forbes, 4/27/15)

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Obamacare’s supporters cheered when open-enrollment closed last month with 2.6 million more enrollees than the White House had expected. But don’t let sign-up numbers fool you: What matters far more is the total enrollees who end up paying their premiums. And if last year’s statistics are a reliable indicator, “we can expect two million enrollees to drop out as the year progresses,” writes Independent Institute Senior Fellow John R. Graham.

Too often members of the health-policy community downplay the prospect of significant numbers of Obamacare drop-outs, just as they ignore major differences in the kind of healthcare coverage people can access. Employer-based coverage, for example, is qualitatively better than many policies purchased in Obamacare exchanges—which helps explain why enrollees in exchange-based plans switch at more than twice the rate of enrollees in Medicare Part D who switch plans in a given year.

“This high degree of switching is directly at odds with the goal of improving care coordination and quality outcomes,” Graham writes. “No wonder beneficiaries are more confused than ever about which doctors and hospitals are in insurers’ networks. And regarding deductibles and copayments, who can figure those out if you’re switching plans within the year?” If the Supreme Court invalidates the subsidies in the federally operated exchanges, perhaps Obama and Congress will go back to the workbench and put together a health-insurance system bereft of the frustrating fragmentation that plagues Obamacare.

Obamacare’s Enrollment Success Disguises More Fragmented Coverage and Care, by John R. Graham (Atlanta Journal-Constitution, 5/5/15)

A Better Choice: Healthcare Solutions for America, by John C. Goodman

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California authorities have announced the closure of a dozen oil wells in the Central Valley, due to concerns about toxic substances leaching into groundwater supplies. In an op-ed for the Orange County Register, Independent Institute Policy Analyst Aaron L. White argues that the root problem is that groundwater rights in most of the Golden State are poorly defined and enforced, leading to the misuse of water resources and inequities in water distribution. Fortunately, at least one region in California serves as a model for sound groundwater management.

For forty-six years, the San Bernardino basin area has managed its underground aquifers through a process of adjudication. Simply put, the courts have enforced a system of property rights that has helped keep pollution from Lockheed Martin’s regional facility out of the water supply. This adjudication approach, according to White, offers hope for the rest of the state.

“Adjudication would provide similar benefits and protections if contamination were later detected at the Central Valley sites,” White writes. “With snowpack levels low, rain scarce and existing water reserves in question, the time to start the adjudication process is now.”

Solving California’s Groundwater Problems, by Aaron L. White (Orange County Register, 4/29/15)

Aquanomics: Water Markets and the Environment, edited by B. Delworth Gardner and Randy T. Simmons

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Congressional Republicans hoped that exposing a conspiracy of spin regarding the Benghazi attacks would bring a halt to the Hillary Clinton juggernaut. After three years, however, their attempt to discredit the former Secretary of State over how she and her staff characterized the deadly 2012 attack on the U.S. consulate in Libya has yielded little political fruit. It’s been a huge waste of time, according to Independent Institute Senior Fellow Ivan Eland.

In a recent op-ed for the Huffington Post, Eland argues that the best available evidence about the Benghazi massacre—testimony from former CIA Deputy Director Michael J. Morell, who served under both Presidents Bush and Obama—indicates that Clinton and former UN Ambassador Susan Rice did not spin a story to mislead the American public about the administration’s counterterrorism successes. Senator Lindsay Graham, in the hope of scoring political points, has been barking up the wrong tree.

The Republicans’ effort, according to Eland, would be better spent focusing on genuine weaknesses in the foreign policies of Hillary Clinton—such as lax security at the Libyan consulate under her watch and her disastrous call for the U.S. military to “take out” Qaddafi in Libya and Saddam in Iraq. “Both interventions violated international law and common sense, and have turned into chaotic messes that have bred more terrorism,” Eland writes. “She could also be disparaged for her support for the ineffectual escalation of the Afghan War, the expansion of Obama’s illegal drone wars, and the aborted plans to conduct airstrikes against Syria.” In other words: It’s misguided military adventurism, Stupid!

Republicans Should Finally Abandon Benghazi and Talk about Hillary’s Other Foibles, by Ivan Eland (Huffington Post, 5/4/15)

Recarving Rushmore: Ranking the Presidents on Peace, Prosperity, and Liberty, by Ivan Eland

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From MyGovCost News & Blog:

You can find the Independent Institute’s Spanish-language website hereand blog here.

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