Today in the WSJ, Lazear recommends one hundred percent deduction for investment spending by businesses. It isn’t a bad idea but his main argument, that and a flat tax will give a nice boost to the economy is uninspired because he does not sort out the benefit of the two proposals.
There are two reasons why this is an OK idea but there are better ones around. First, there is the technical problem. Investment spending must be defined. It is always more difficult than expected to nail down an important item on tax returns. Because it will be a one hundred percent deduction there will be lots of work to make transactions into such spending so there won’t be much savings on the cost of preparing tax returns.
Second, it reduces the probability that really neat ideas like elimination of corporate taxes or making fringe benefits part of gross income. Realistically, there will only be one or a couple of big changes approved. How do you trade-off importance with likelihood of passage? We don’t see this as really important or really likely to pass. If it were the one bill to come up for a vote we would support it if there were no other choices.
One positive impact would be the impact on flow-through entities like partnerships. They would reap the benefits of the deduction even if the corporate tax was eliminated.
It is not a bad idea but MWG can’t be excited about it. Trade-offs always matter.
MWG has often been a member of the university budget committee over the past 15 or more years. During that period I have seen members that are perplexed as to why the university does not get more political support. Our school is highly ranked with several outstanding programs but public funding has been declining and salary packages have been nonexistent during the last decade.
There is more than one reason but a major reason is the behavior of the faculty and staff. It is not just us but faculty often bully students and others and put themselves in the worst possible light. Over 40 years ago a friend of my was in ROTC at our school and every so often it was uniform day for ROTC. If uniform day and a certain class coincided he could be sure that he would get a full serving of humility administered by the faculty member.
Some years later but still years ago faculty members addressed our graduating seniors. On one fine day the speaker made a comment about Africa. It was interpreted in a particularly convoluted way to suggest that there was a hint of racism as blacks live in Africa (do not write to tell me that folks living in Africa should be called African-Americans-I’m not about to torture English). Drawing and quartering was narrowly avoided by a particularly public apology. Near the same time another faculty speaker complained about folks that listed to Fox News. In a quick sentence or two he was able to insult audience and the academy. To think that students and faculty are so fragile to be permanently damaged by opposing views is a particularly strange view of a university. To think that opposing views never have validity, well …. Nothing was ever said of the second incident although faculty speakers ended shortly thereafter.
Recently there have been high profile rejections of Ayaan Hirsi Ali at Brandeis University and Condi Rice at Minnesota and Rutgers. In our neck of the woods there was an instructor that sent out an unprofessional email. Recently it reappeared as front page news in the local paper as the university community seems to be supporting the faculty member. The faculty member in question decided to throw in an insult for her charges, that they were too fragile to handle her comments. Her comment shows a lack of understanding of the folks that have complained and a tin ear.
If our university considers itself in a battle of public opinion, suicide is not a good option. it is not a matter of being obsequious to the holders of the purse strings but of holding our colleagues to high standards. Perhaps we could start to separate ourselves from the bullies at other schools by inviting Ayaan and Condi to speak. MWG must decide if this goes public at the last meeting this year.
MWG got a survey from our congress critter (D) asking “What would you like Congress to work on this year?” Whether it is a D or R these lists are always unhelpful because they have leading questions. The fifth one combined irony and chutzpah in wonderful combination to reveal the following.
Continue improving our health care system
Fortunately, MWG wasn’t drinking anything at the time. We didn’t have time to clean up after the spit take.