Instead, policymakers should focus on more direct, effective, and less problematic solutions to reduce the tangle of regulatory burdens encountered by craft brewers. Eliminating regulatory burdens for all firms would allow brewers to succeed or fail on the basis of their ability to provide the greatest value to consumers at the lowest cost to society.
Removing the federal tax deduction for state and local taxes would make taxes more equitable throughout the nation, as both high-tax and low-tax states are treated equally by the federal government. It may also provide an efficiency boost for states and localities, as they abandon some services that could be better provided by private companies. The removal of this deduction would also allow federal marginal tax rates to be cut across the board, providing a secondary boost to the economy while still remaining revenue-neutral at the federal level.
We apply the methodology of RegData—which quantifies regulations using text analysis of the Code of Federal Regulations (CFR)—to objectively determine the number of new restrictions the Dodd-Frank Act has created and will create. We estimate that Dodd-Frank will increase financial industry regulatory restrictions by 32 percent once all of its rulemakings are finalized, yielding more new restrictions than were created between 1997 and 2010.
In recent years, food stamps have constituted about 80 percent of farm bill spending, which may be why nearly 100 percent of public debate has focused there. Unfortunately, with all of the attention on food stamps, both political parties have missed the opportunity for reform that lies in the remaining 20 percent of the farm bill.
Behavioral economics (BE) examines the implications for decision-making when actors suffer from cognitive flaws documented in the psychological literature. Broadly, BE replaces the assumption of rationality—that errors tend to cancel out over time and across populations, so on average firms and consumers act as if they were rational—with one of “bounded rationality.” When actors are boundedly rational, their cognitive flaws lead to systematic errors and self-control problems. It should come as no surprise that BE has become an increasingly common justification for regulatory intervention.
Historically, the FCC’s Universal Service Fund has paid for two programs that subsidize telephone service for low-income households. Lifeline, the larger program, pays phone companies to reduce monthly subscription fees for low-income households by an average of $9.25 per month, with some states providing additional funding. Link Up subsidizes one-time connection charges by up to $30.2 In 2012, the FCC voted to phase out Link Up.
Virginia’s labor market is more troubled than its unemployment rate suggests. If labor force participation were at its 2007 level, the state’s unemployment rate would be as high as 8.6 percent. We estimate that 10 percent of Virginia’s workforce is indirectly employed by the federal government via federal contract expenditures. Excluding these jobs, private job loss in Virginia since 2007 is on par with the national average.
The US federal tax code contains a number
of provisions designed to encourage
individuals to save for retirement. These
provisions allow individuals to avoid or
defer taxes if they choose to set aside a
portion of their income for future consumption.
When all of these provisions are combined, they
are the second largest “tax expenditure” category
as defined by the Joint Committee on Taxation.
The exclusion of retirement savings from taxation
causes some economic distortions, which we will
discuss in this paper. However, unlike some other
tax expenditures, there is a strong economic rationale
for not taxing savings. Higher rates of investment
lead to higher rates of economic growth, and
it may be sound policy for the tax code to encourage
this behavior, even after considering the economic
costs. Excluding retirement income from
taxation may also make the tax system more efficient,
even though most other tax expenditures
Many observers have been perplexed
by the slow recovery from
the 2008 recession. In the United
States, Congress passed a nearly
$800 billion stimulus in early 2009,
yet growth remained sluggish. More recently, a shift
toward fiscal austerity does not seem to have noticeably
slowed the rate of economic growth.1 This seems
to go against the textbook Keynesian model, which
says fiscal stimulus has a multiplier effect on GDP;
however, we shouldn’t be surprised that fiscal policy
seems less effective than anticipated. As we’ll see, fiscal
policy ineffectiveness is one byproduct of modern
central banking, with its focus on inflation targeting.
The F. A. Hayek Program for Advanced Study in Philosophy, Politics and Economics at the Mercatus Center invites you to a panel discussion featuring Peter Leeson and his new book, Anarchy Unbound: Why Self-Governance Works Better Than You Think.
To reflect on the significance of Hayek’s Nobel Prize and the various strands of influence his work has had in subsequent decades of scholarship, please join us for a keynote speech and panel discussion by some of Hayek’s most prominent colleagues and interlocutors.
In Homer Economicus a cast of lively contributors takes a field trip to Springfield, where the Simpsons reveal that economics is everywhere. By exploring the hometown of television's first family, this book provides readers with the economic tools and insights to guide them at work, at home, and at the ballot box.