“Obama will invest in rural small businesses”; tax people who walk around energy-efficient cities to help encourage folks to settle in places where the supermarket is a 30-mile drive away.

Ignoring the politician – the other part of the statement bugs me.

What exactly qualifies as “energy-efficient cities”? Are all cities energy-efficient? Why is this notion so common and so unquestioned?

We are talking about real cases – not some rarely realized ideal.

If cities are so “efficient”, why does it usually cost more to live there? If the “free market” were truly efficient, then overall cost-of-living should be less – at least so one might think. If cities are too expensive (and/or lousy) as a place to live, then you get folk commuting. With lots of traffic comes lots of congestion – which is not remotely efficient.

In fact I do believe cities (and dense suburbs) are efficient – at moving money from the economic majority to a minority.

I do also believe that there is or could be a “sweet spot” where a city is not over-expensive or over-congested … but that is not the usual case. I suspect that most or all larger cities fail this test.

Think a bit about that supermarket trip. In the country you might be able set the cruise-control for most of the 30-mile trip, get there in about 30 minutes, and not burn a lot of gas. In a denser area with poor traffic, a 30 minute trip may involve a lot of stop-and-go driving, burn a lot more gas, and not get you nearly so far.

So which is “efficient”??

Highlights:
# Accelerate Depreciation on Investment. We need to help companies grow and create jobs.
* Pass H.R. 4995 to amend the Internal Revenue Code of 1986 to reduce corporate marginal income tax rates.

# Eliminate Taxes on Capital Gains. Investment should be embraced and rewarded.
* Pass H.J. Res 23 (The “Liberty Amendment”), proposing an amendment to the Constitution of the United States relative to abolishing personal income, estate, and gift taxes and prohibiting the United States Government from engaging in business in competition with its citizens.

In particular, this piece might resonate:
http://www.ronpaul2008.com/articles/104/taxes-spending-and-debt-are-the-real-issues/

An excerpt: “Lower taxes benefit all Americans by increasing economic growth and encouraging wealth creation. I’m in favor of cutting everybody’s taxes – rich, poor, and otherwise. Whether a tax cut reduces a single mother’s payroll taxes by forty dollars a month, or allows a business owner to save thousands in capital gains and hire more employees, the net effect is beneficial. Both either spend, save, or invest the extra dollars, which helps all of us more than if those dollars were sent to the black hole known as the federal Treasury.”

http://online.wsj.com/article/SB121124460502305693.html

This Zakaria guy doesn’t put the Iraq war cost at $3 trillion, but only $125 billion for Iraq with Afghanistan thrown in.

More good stuff: “[we] are selling off their assets to foreigners to buy a couple more lattes a day.”

It is charming to find someone who has faith in the value of Computer Science PhDs as a source of economic growth (Zakaria points out that we graduate a lot more than other countries).

Buried deep in the article… “For most of the last 30 years, the United States had the lowest corporate tax rates of the major industrialized countries. Today, it has the second highest.” Aha! Now I see the connection to my posting.

“[everyone else] has better cell-phone service than the United State” — Amen

“A can-do country is now saddled with a do-nothing political process” — I wish that the Massachusetts legislature would do a little less, since they seem to be rather energetically creating new taxes at the moment, including my pet peeve, the sales tax on aircraft that will force me to move to New Hampshire, take up smoking, and buy some guns.

He says we “can stabilize the emerging world order by bringing in the new rising nations”. What does that mean? Isn’t that what we are trying to do with Iraq? He recommends “accepting a world with a diversity of voices and viewpoints”. We don’t have a choice, do we? Fidel Castro expressed his voice and viewpoints for 50 years from 90 miles off the coast of Florida and there was nothing that we could do about it. Hugo Chavez says whatever he wants even if we don’t like it.

My conclusion is that this article is lame. He consumes nine pages and has hardly a single concrete recommendation. He says that American politics is captured by big money interests but doesn’t say how to fix it. He says that we have the 2nd highest corporate tax rate but doesn’t explicitly propose eliminating it (as Mankiw does).

Anyway, his premise is questionable. Why should Americans want to be the dominant world power? Let’s say that the only way to be dominant is to grow the country to 2 billion in population and accept very tight housing, a degraded environment, and continuous traffic jams on highways and sidewalks. How would that benefit us as ordinary citizens?

http://www.foreignaffairs.org/20080501facomment87303-p0/fareed-zakaria/the-future-of-american-power.html

Your theory of corporate taxes is at variance with Mankiw and the European study. Perhaps we could tax corporate profits at 100 percent and there would be no effect on wages.

How could the government survive without a tax on corporate profits? It would somehow have to survive on federal personal income tax, state personal income tax, state sales tax, local sales tax, state property tax, local property tax, federal payroll tax, state payroll tax, federal automotive fuel excise tax, federal aviation fuel excise tax, federal tariffs on imported goods, federal excise tax on airplane charter, federal taxes on cigarettes, state taxes on cigarettes, federal taxes on alcohol, state taxes on alcohol, state taxes on restaurant meals, local taxes on restaurant meals, state taxes on hotels, local taxes on hotels.federal taxes on airline tickets…

I’m hardly an economist, but the statement that all corporate taxes
simply reduce wages seems weird to me. I thought wages represented
the relative supply and demand of labor, or the relative political clout
of labor/management. Beyond that, management will keep as much profit
as possible, taxes or no taxes.

On helping people re-finance homes, no doubt too much of that
is bad, as you say. But too little could feed a crisis and end up worse.
Surely you don’t regard the great depression as a beneficial object
lesson in moral hazzard, that taught people not to invest in bubbles.
How did that work out?

I happen to agree with many of your points. But you mix notions
of appropriate taxation (how much, who pays, and what behavior
does it modify) with how those taxes are spent. To my mind, the
two should be decoupled. I also miss a sense of balance; it kinda
sounds like you want the money spent differently, but don’t want
to pay for it, because taxes create incentives to do the wrong thing.