Tag Archives: budget deficit

CEI Podcast for April 14, 2011: Avoiding a Government Shutdown

Have a listen here.

Warren Brookes Journalism Fellow Kathryn Ciano analyzes the Continuing Resolution passed by the House today that will keep the federal government open for another 6 months. She also looks at proposals from President Obama and Rep. Paul Ryan to reduce the budget deficit over the next decade.


Regulation of the Day 118: Unlicensed Dogs

In Los Angeles, it is illegal to own a dog without a license. The city government employees eight people whose full-time job is to make sure that people are complying. But they aren’t doing a very good job of it; roughly two thirds of Los Angeles’ dog population is unlicensed.

This epidemic of unlicensed dogs is easily the most pressing issue facing America’s second-largest city. Packs of wild, unlicensed dogs roam the streets at night. People are scared to go out after dark. An entire city huddles in fear.

Or not. Maybe unlicensed dogs don’t really matter. Most places do just fine without dog licensing regulations. So why is the city government clamping down on enforcement all of a sudden?

The answer is simple: money. LA is looking at a $400 million budget deficit this year. At $15 per license, the city estimates it will make $3.6 million from full compliance. Hopefully it will spend somewhat less than that getting there.

Los Angeles is hardly the only city having revenue troubles. One wonders what other obscure regulations are being used for money grabs across the country.

Against a Value Added Tax

Over at Investor’s Business Daily, Wayne Crews and I make the case against a Value Added Tax. Policy makers have been flirting with the idea as a way to reduce the $1,400,000,000,000 budget deficit.

We argue that a VAT is:

-Complex; it would require roughly doubling the size of the IRS.

-Untransparent; most VATs don’t show up on receipts the way sales taxes do. Taxpayers are clueless as to how much tax they actually pay.

-Vulnerable to special-interest tinkering; politically incorrect goods are routinely penalized with higher rates. Politically favored goods are granted exemptions.

-Prone to increases; 20 out of 29 OECD countries with a VAT have increased their rates since implementing a VAT.

A point we didn’t make is that VATs affect industrial organization. VATs are applied at each stage of the production process. That gives companies an incentive to reduce the number of taxable steps. That means more vertical integration than would otherwise occur. This can decrease the efficiency of the manufacturing process. Which means higher prices and fewer goods. Plus the tax.