Volume 18, Issue 48: November 29, 2016
- Tax Reform in 2017
- Trading Economic Truth for Electoral Victory?
- America Needs a Surge of Electricity Deregulation
- The Putin Problem: What Is to Be Done?
- Help Us Build Bridges to Liberty and Prosperity
- Independent Updates
Tax reform may be a top priority for the Trump administration and the next Congress. But what shape will it take? House Ways and Means Chairman Kevin Brady told the Wall Street Journal that, within the first 100 days of Trumps term, he will introduce legislation to make the Internal Revenue Service focused on customer service. Government institutions, however, have a way of derailing the best of intentions.
But whether IRS 2.0 becomes a kinder, gentler revenue-raising machine may be less consequential, at least at the economy-wide level, than whether Washington manages to simplify the U.S. Tax Code. Thats because compliance with its 2.4 million words costs the American economy a whopping $409 billion in lost productivity each year, according to the Tax Foundation.
Fortunately, streamlining the byzantine tax code is one thing that unites many winners in the Nov. 8 election. President-elect Donald Trump and House Speaker Paul Ryan, for instance, agree that reducing the number of tax brackets is important for the economy. This simplification, along with an overall reduction in corporate and individual tax rates, would send a helpful jolt to private investment and job growth. As Independent Institute Senior Fellow William F. Shughart II writes, Such tax reform will help spur economic growth further if lawmakers avoid a tendency to, at the behest of special interests, impose punitive taxes on certain sectors of the economy.
Economy-Boosting Tax Reform May Finally Be in Sight, by William F. Shughart II (Real Clear Markets, 11/18/16)
Taxing Choice: The Predatory Politics of Fiscal Discrimination, edited by William F. Shughart II
Does Donald Trump owe his election win to a popular economic fallacy? There is a distinct possibility. The idea that international trade destroys U.S. jobs was a notion widely held by voters in the battleground states of Wisconsin, Michigan, Pennsylvania, and Ohio. And make no mistake, the idea is a falsehood, as Independent Institute Senior Fellow Benjamin Powell explains in a recent op-ed.
International trade changes the mix, not the number, of jobs in the United States, Powell writes. While a rise of foreign imports can kill jobs in certain sectors, these very same imports create jobs elsewhere in the economy.
Trump can advance either protectionism or make America great again; he cant have it both ways, Powell adds. The contradiction is no small matter. Protectionism is among the most damaging things a country can do to itself, Independent Institute Research Fellow Gary M. Galles writes in the California Political Review. Because restrictions on willing trading partners offerings reduce the real purchasing power of incomes, Auberon Herbert described it as a war of the protected on the unprotected.
The Trump Policy that Will Shrink the Economy and Make the U.S. Poorer, by Benjamin Powell (CNBC.com, 11/18/16)
Allowing People Their Natural Freedom through Free Trade, by Gary M. Galles (California Political Review, 11/16/16)
Making Poor Nations Rich: Entrepreneurship and the Process of Economic Development, edited by Benjamin Powell
The Economics of Immigration: Market-Based Approaches, Social Science, and Public Policy, edited by Benjamin Powell
America needs more energy, but renewable sources such as wind and solar power have yet to solve the problem of intermittency: Because electricity cant be stored efficiently, solar panels and windmills cant help when skies are dark and still. Theres also the regulatory problem: Highly regulated energy marketsincluding government-regulated utilitieslack the strong profit incentives that encourage innovation, as Independent Institute Research Fellow Andrew N. Kleit argues in an op-ed for the Wall Street Journal.
Electric utility deregulation is therefore a critical step for encouraging innovations that would make energy more affordable, more efficient, and more reliable. The evidence comes in part from states that have undertaken partial deregulation, such as creating a competitive market for electricity at the wholesale level. Innovation happens more quickly because it doesnt have to run through the gauntlet of regulatory review, Kleit writes.
Allowing the purchase and sale of electricity across state lines is another deregulatory measure that has helped to balance supply and demand. These steps have reduced electricity prices and improved reliability, but deregulation must continue. To create a cleaner, more reliable and less expensive electricity grid, it is time to escape the dictates of government officials and free up competitive forces, Kleit concludes.
Is It Time to Deregulate All Electric Utilities?, by Andrew N. Kleit (The Wall Street Journal, 11/21/16)
Electric Choices: Deregulation and the Future of Electric Power, edited by Andrew N. Kleit
Vladimir Putin has become a thorn in the side of the American government. His military itself presents little challenge to genuine U.S. security. Energy prices are plunging its economy into a recession, leading to deep cuts in military spending. Its one aircraft carrier, dispatched recently to the Mediterranean in show of support for the Syrian dictatorship, even required accompaniment by a tug boatjust in case it conked out. But Putins government is capable of non-traditional mischief. Most notably, Russias leaks of Democratic Party emails, during the peak of the U.S. election season, exposes the political vulnerability of a country that embraces a free press.
No, Russia isnt the threat that hawks have portrayed it. Nevertheless, its hostile actions merit a firm response, according to Independent Institute Research Fellow Ivan Eland.
Fully defending the vast and decentralized American election system from attack is difficult, but such hacking can be deterred in the future by retaliating in kind on Russias computer systems with superior U.S. cyber attacking capabilities, Eland writes. U.S.-Russian relations should be improved, but U.S. elections are too important to the republic to allow Russia or any other country to feel that they can try to manipulate them without retaliation.
Russia Is Not as Much of a Threat as Depicted in the Media, but Does Need a Slap in the Face, by Ivan Eland (Huffington Post, 11/1/16)
On November 29, Independent Institute is participating in #GivingTuesday, a global day of giving powered by online fundraising and social media. Join with us as we work to ensure a brighter future of more freedom and prosperity!
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