Weird Food Taxes

Via Bon Appetit:

When you buy gazpacho in California, it comes tax-free. But hot tomato soup, at the same restaurant, that’s maybe a little chilly? Totally taxed! Blueberries in Maine? Yup, taxed. Milky Ways in Iowa? No tax! But the dark chocolate Milky Way Midnight, right next to it at the candy stand? Yeah, that’s taxed.

Food taxes are everywhere, and they are insane. Without even getting into the corn-syrupy morass of big agriculture taxes and subsidies, the taxes that we all pay on food in our day-to-day life are a patchwork of state laws that, more often than not, get businesses and taxpayers into some pretty absurd situations. Most problems arise from a basic conflict: everyone needs food, and most lawmakers agree that “essential” food should be tax-free. But wait, what’s “essential”? And what even counts as “food”?!

The article provides many examples of arbitrary food taxation policies.  My favorite is:

Pumpkins with Intent to Carve

Pennsylvania, New Jersey, and Iowa all tax pumpkins differently depending on whether they’re sold as potential Jack-O-Lanterns or as future pie fillings. So think long and hard the next time you’re purchasing a pumpkin, and resolve in your heart, “I will eat this,” as you get to the check-out line, and you might just save a dollar or two on the taxes

Locked down with some Joe

Here is an  interesting side-note from the Boston bombing story that you may have missed:

It was clear amidst the chaos Friday which was the hometown coffee chain.

On block after block of the Boston’s Financial District and Downtown Crossing, Starbucks shops went dark as the city locked down, spurred by a manhunt for the second marathon bombing suspect. Dunkin’ Donuts stayed open.

Law enforcement asked the chain to keep some restaurants open in locked-down communities to provide hot coffee and food to police and other emergency workers, including in Watertown, the focus of the search for the bombing suspect. Dunkin’ is providing its products to them for free.

Shutting down a city is one thing, but doing without your “coffee regular” is quite another.

Your government in action: Congress passes laws without voting

Just how appalling is the government we all live under? Many Americans already know that Congress votes on legislation that nobody has read. None of the members who voted for Obamacare had read the 2,300 pages of the bill. None of the members who voted for the Dodd-Frank financial “reform” had read the 1,300 pages of the bill. Many of those who voted for these laws had in fact read little or nothing. But that didn’t stop them from imposing these sweeping legislative actions on the American people.

Well if not reading the bill weren’t bad enough, now the Wall Street Journal reports that Congress often passes legislation–unconstitutionally–without even holding a vote! For the Congress to do legislative business, the Constitution requires a working majority, that is, a quorum, to be present in the chamber. Congress nonetheless ignores this Constitutional requirement.

The plain meaning is that a majority of the membership must be in attendance to conduct legislative business. When any group smaller than a majority is present, it can do only two things: adjourn and compel the attendance of absent members.

Yet Congress—particularly the Senate—too often proceeds without a quorum. The Senate conducts much of its business by “unanimous consent.” This is a procedural device that allows virtually any action to be taken so long as no senator actively objects.

A classic example is the Americans with Disabilities Act Amendments Act of 2008. This was important legislation, but the Senate passed it on Sept. 11, 2008, as the result of a unanimous consent motion by Tom Harkin (D., Iowa) with only a handful of senators present…

The House of Representatives also occasionally disregards the Constitution’s quorum requirement—as it did on Dec. 23, 2011, when it extended the payroll tax cut by unanimous consent with nowhere close to a majority of members present.

So Congress, while making laws for the rest of us, does not itself follow the law, that is, the Constitution. Any law, however, enacted by unconstitutional means is illegitimate, and therefore void. No American is obliged to obey an unconstitutional law. As the legal encyclopedia American Jurisprudence puts it

The general rule is that an unconstitutional statute, though having the form and the name of law, is in reality no law, but is wholly void and ineffective for any purpose since unconstitutionality dates from the time of its enactment and not merely from the date of the decision so branding it; an unconstitutional law, in legal contemplation, is as inoperative as if it had never been passed … An unconstitutional law is void. (16 Am. Jur. 2d, Sec. 178)

We’d love to someday see somebody challenge one of these no-quorum laws in court. For instance, if the payroll tax is raised without a quorum, some enterprising employer should withhold the additional tax, and fight the government on the grounds that the law is unconstitutional. That would require, however, some serious gumption, as well as legal resources.

And unfortunately, no-quorum votes are not the only way in which Congress evades responsibility and accountability. For instance, do you know how your Congressman voted on the auto bailouts of General Motors and Chrysler? It’s a trick question: NOBODY in Congress voted on the auto bailouts. What Congress did was to appropriate money to bail out the banks, and only the banks; the legislation stipulated explicitly that the money could be used for no other purpose. Nonetheless, the Bush Administration, and later also the Obama Administration, ignored the law and proceeded to use the bank-bailout money to rescue the auto companies, even though doing so was illegal and unconstitutional. They were able to get away with it because no serious objections were raised in Congress, the media, or Hollywood. If only Jessica Simpson had said something!

But the issue is quite serious because it undermines the ability of the people to hold their representatives accountable for their actions. By not voting on the auto bailouts, Congress avoided having to answer to the people. No members of Congress were compelled to go on record for or against the auto bailouts. And if the people objected to the bailouts, the members could always excuse themselves by pointing out that, after all, they never voted for it! Indeed, they never did vote for it, and yet the money was spent. Real money. Our money.

H. L. Mencken remarked that every decent man must be ashamed of the government he lives under. Certainly our political class should be ashamed of the weaselly contrivances to which they resort in order to evade accountability.

Do non-profits seek to make money? The case of universities

Universities like the University of Dayton are non-profits. Unlike for-profit businesses, they are allegedly pursuing a mission–research, scholarship, and the education of young people–and not merely seeking to “make money.” As a result, non-profits are tax exempt, and indeed, the tax exemption is the most important privilege enjoyed by non-profits. But when we consider how non-profits actually behave, do they pursue their mission with a single purpose, or do they instead try to “make money,” that is, increase their income?

Well, let’s take universities. An insightful student recently posed the following question. When demand for higher education increases, do universities take advantage of the opportunity to charge higher tuition? Or do they keep tuition down in response to increases in demand, and increase price only when they need to do so in order to cover higher costs? The latter is what we’d expect to see if universities cared only about their mission and not about income. We should see only cost-push inflation and not demand-pull inflation in tuition rates.

Unfortunately, cost-push cannot explain tuition increases, since the increases far exceed the growth in costs. The bulk of the costs are salaries and benefits for faculty. These costs, however, have risen much more slowly than has tuition. In fact, the American Association of University Professors recently released a study showing that, adjusted for inflation, salaries in the past decade rose 7.7% at doctoral-granting private schools, and only 0.7% at doctoral-granting public schools. Meanwhile, full-price and inflation-adjusted tuition at these schools over the same decade rose 28.9% and 72% respectively. Now, those figures are for the full “sticker” price, and overstate the tuition rise a bit because they don’t account for price-discriminating discounts, euphemistically termed “scholarships.” Still, it seems clear that universities are raising tuition far beyond what is needed in order to merely keep up with costs. And tuition has also increased more rapidly than wages and salaries paid outside the university.

In 1975, a University of Minnesota undergraduate could cover tuition by working six hours a week year-round at a minimum-wage job, the Journal calculated. Today, a student would have to work 32 hours at minimum wage to cover the cost.

In case any more evidence were needed, now comes news that the University of Wisconsin has amassed a slush fund of at least $450 million. At the same time, the university, while awash in cash, was complaining about budget cuts and begging for more money! The folks at assembled some damning quotes, such as the following.

Regent Regina Millner urged Board members to remember that belt-tightening cannot proceed indefinitely without compromising the quality of the product. “There is some point when you’re eliminating fat, you’re also eliminating muscle,” she said.

“I’m already worried about degrading the quality of the educational experience for students,” [UW-Milwaukee Chancellor Mike] Lovell said. He pointed to already high ratios of students to providers of student services such as mental health counselors and academic advisers. He also noted that the availability of fewer class sections would lengthen students’ time to degree, thereby increasing their costs.

Upon discovery of the slush fund, GOP pols in the state Assembly were livid, and issued a statement that reads in part as follows.

We are outraged with the mishandling of taxpayer dollars and the pattern of incompetence shown by  university system administrators. We want the citizens of this state to know that we will examine the gross  mismanagement of the system’s finances. We will demand accountability and transparency.

At a time when the UW System is asking for more flexibility and funding from the state, this situation clearly  illustrates the need for strong legislative oversight. Our state deserves better from the institutions that are educating our students and future leaders. It is not only unfair to the students and their parents who keep  getting hit with tuition hikes; it’s unfair to the taxpayers of Wisconsin.

We beg to differ, however. Rather than “gross mismanagement,” the existence of the slush fund represents much better management than we have come to expect from universities. At least in this case, the funds are still available. They were not wasted internally by financing administrative bloat, which is how universities typically dispose of surplus funds; they hire more and more useless administrators–people who never teach a class, never publish research. For instance, the Wall Street Journal reports that at the University of Minnesota, administrative staff increased by 37% from 2001 to 2012, more than twice as much as the growth in faculty, and nearly twice as much as the growth of the student body.

This wasteful spending highlights an important distinction between non-profit and for-profit institutions. The profit motive is constantly under attack from people who don’t know better; for instance, insurance company profits are blamed for higher health insurance premiums, and oil company profits blamed for higher gasoline prices. None of that is true, of course, but it’s also important to note that when Exxon makes a surplus it pays out the money in dividends on stocks, often held in 401(K)’s by people trying to save for retirement. Exxon doesn’t primarily waste resources and destroy wealth by dissipating the surplus on internal bloat, which is what often happens at non-profits. The problem is that non-profits don’t have shareholders who can claim those funds before the institution can waste them.

So now the news of the slush fund has put UW’s leadership on the hot seat. The irony is that if the leadership had instead blown the money on worthless campus bureaucracy, there would be no slush fund and no controversy. Rather than punish these managers, we need to encourage similar behavior by rewarding them. Some money should be taken from the slush fund and used to give UW leaders a huge cash bonus and a plastic trophy, spray-painted gold. Then, UW’s budget and tuition should be slashed.

The Fannie Mae of electricity

The government has put itself in charge of breaking up monopolies, and the Department of Justice has an anti-trust division devoted to the purpose. But as usual with all things government, the reality is nearly diametrically opposed to the perception. In reality, the largest and most harmful monopolies were created and sustained by government.

A prime example is the Tennessee Valley Authority, the largest monopoly in America. The TVA was created by the federal government in 1933, during the heady days of the New Deal. Since then, it has come to dominate electricity supply over a vast area encompassing over 80,000 square miles and 9 million people. A primary reason why monopolies like the TVA are bad is that, because they don’t face competition, they don’t have enough incentive to produce efficiently by keeping down costs. Indeed, a good reason for privatizing the TVA and subjecting it to competition is the TVA’s appalling record of waste and inefficiency.

Backed by the power of the federal government, the TVA promoted electricity for home heating–even when oil and natural gas were cheaper. To the extent the TVA’s home heating campaign was successful, it still squandered resources.

As for flood control, the TVA has flooded an estimated 730,000 acres—more land than the entire state of Rhode Island. Most directly affected by TVA flooding were the thousands of people forced out of their homes…

…there have been frequent reports of waste and possible corruption. According to TVA’s own inspector general, these include lucrative executive perks, cozy consulting contracts, costly building leases, and much more. The TVA spent $15 billion building nine nuclear power plants—and none of them worked. The TVA hired a former Navy admiral to fix them, but he was charged with cronyism and bad judgment. Congressional investigations followed.

But the most important reason for reining in the TVA is not waste, but the fact that the TVA has become a bastion of privilege antithetical to the principles of a free society based on the rule of law.

[F]or all practical purposes, it is a bureaucratic kingdom subject to neither public nor private controls…

It’s run by three directors, each appointed by the president to staggered nine-year terms. Although the directors are sure to be political supporters, the unusual length of their terms gives them considerable independence, and they’re not subject to constraints by investors, customers, or voters…

[F]or more than 60 years, Congress appropriated funds to cover the TVA’s losses…Although the TVA no longer receives congressional appropriations, it continues to receive large subsidies. The TVA pays none of the federal, state, and local taxes that private businesses pay. A 1993 study by Putnam, Hayes & Bartlett, a consulting firm retained by investor-owned utilities, estimated that annual cost-of-capital subsidies exceeded $1.2 billion, including the taxes that the TVA avoided. As a government-backed entity similar to Fannie Mae and Freddie Mac, the TVA can borrow money cheaper than private businesses. Currently, the TVA has about $26 billion of debt.

Moreover, the TVA doesn’t have to incur the costs of complying with myriad federal, state, and local laws. Energy consultant Dick Munson reported that the TVA is exempt from 137 federal laws, such as workplace safety and hydroelectric licensing. The TVA can set electricity rates without oversight by the Federal Energy Regulatory Commission, which has jurisdiction over private utilities. The Securities & Exchange Commission has only limited jurisdiction to oversee the TVA. On top of that, the TVA is exempt from federal antitrust laws and many federal environmental regulations. It’s also exempt from some 165 laws and regulations in Alabama and hundreds more laws and regulations in other states in which it operates. When the TVA wants to acquire more assets, it doesn’t have to haggle, because unlike private businesses, it has the power of eminent domain. More than 15,000 people were expelled from their property to make way for the TVA.

Now comes news, in something of a flying pig moment, that President Obama’s budget proposal actually calls for privatization of the TVA. But in an object lesson on the truly dismal nature of politics, the proposal is opposed by Tennessee’s two GOP senators. We suppose the pig does not really take flight until the privatization actually occurs.

Predatory Government?

Politicians and the media chose “predatory lenders” as the main villains in the U.S. housing market collapse and financial crises. Supposedly, unscrupulous actions carried out by lenders enticed borrowers in taking lower credit rated “subprime” mortgages, many of which ended up in default. New financial services regulations as well as a new financial watchdog agency were created to help prevent further “abuses”.

Given this backdrop I found this Washington Post article quite interesting:

The Obama administration is engaged in a broad push to make more home loans available to people with weaker credit, an effort that officials say will help power the economic recovery but that skeptics say could open the door to the risky lending that caused the housing crash in the first place.

President Obama’s economic advisers and outside experts say the nation’s much-celebrated housing rebound is leaving too many people behind, including young people looking to buy their first homes and individuals with credit records weakened by the recession.

In response, administration officials say they are working to get banks to lend to a wider range of borrowers by taking advantage of taxpayer-backed programs — including those offered by the Federal Housing Administration — that insure home loans against default.

Housing officials are urging the Justice Department to provide assurances to banks, which have become increasingly cautious, that they will not face legal or financial recriminations if they make loans to riskier borrowers who meet government standards but later default.

Wow.  Could it be that maybe Fannie and Freddie and the US government were the driving force behind the first round of sub-prime loans?


This is your welfare state: Yahoos revel and riot in Britain

In the first night following the news of the death of the great Margaret Thatcher, yahoos in the UK took to the streets to engage in ghoulish revelry and violent mayhem.

Hundreds took to the streets as macabre ‘Thatcher death parties’ were held late into the night across the country, organised by critics of the so-called ‘Iron Lady.’

In Brixton, south London, riot police were deployed as the crowds, which had been drinking since 5pm, started to become more aggressive smashing shop fronts and throwing paint bomb.

In Liverpool, flares and fireworks were set off outside Lime Street Station by revellers, while in Bristol, seven police officers were injured – one seriously – as violence erupted at a street party of 200 people and police were pelted with bottles, cans and rubbish…

In Bristol police were called to Chelsea Road in the Easton area of the city during the early hours of today after violence erupted at a street party to ‘celebrate’ the death of Baroness Thatcher.

Trouble flared after midnight when a rowdy 200-strong crowd refused police requests to disperse from Easton, Bristol.

Dozens of officers donned riot gear and used shields and batons as they were pelted with bottles, cans and rubbish.

Hmmm. On a weeknight, they “held parties late into the night.” Police were called “during the early hours” of the morning and “trouble flared after midnight.” On a weeknight. Here at Yet, Freedom!, our first thought was than these people cannot have jobs or classes to go to in the morning. They can’t possibly have donuts to bake at 5:00 am or an exam to sit at 9 am. And then, later in the article we are introduced to Mr. Julien Styles.

Unemployed Julian Styles, 58, who was made redundant from his factory job in 1984, said: ‘I’ve been waiting for that witch to die for 30 years.

‘Tonight is party time. I’m drinking one drink for every year I’ve been out of work.’

We wonder, just how many years has Mr. Styles been living off the labor of others? Can it really be that he has not worked since 1984, when he was only about 29 years of age? Has he really in all those years not been able to find a way to make something of himself? How sad and pathetic, and how odd that he should freely admit to being such a failure, and to the media, no less. That people are not ashamed to admit to being bums is a telling indicator of the sickness of our society.

But this is what happens when you have a welfare state that relieves citizens of the responsibility of supporting themselves. Without that basic responsibility, it frees people up to engage in irresponsible behavior, like reveling and rioting into the wee hours. Britain clearly has too many people, and in particular too many young people, with too much time on their hands.

But the worse part of the welfare state is that it robs people of ambition and hope. All those late night rioters and revelers–they must have nothing important to do in the morning. It follows that they can’t possibly have lofty goals that they’re striving hard to achieve. And when we think about that, it’s really sad, and in a way, we feel sorry for them. After all, isn’t striving to reach goals, and to overcome obstacles, what life is all about?

And why the hatred of Thatcher? She has not been in power for 22 years. Most of the rioters must be too young to even have an adult memory of her. They are merely using her as a convenient scapegoat for their own problems and failures. Mr. Styles loses his job, and instead of picking himself up and moving on, 30 years later he’s still nursing a grudge. Again, this is just sad.

One of the few Marxist tenets with which we agree is that man is shaped by his economic system. And in this regard, the economic system of the welfare state produces an underclass of people without personal responsibility, and therefore without respect for themselves. And people who don’t respect themselves will also not respect others. (Hence the vandalism.)

The welfare state is intended to achieve ‘social justice.’ Instead, it just ruins the society by breeding hopelessness and despair.