Think tanks wrap-up II

Nov. 21, 2002 at 12:54 AM
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WASHINGTON, Nov. 20 (UPI) -- The UPI think tank wrap-up is a daily digest covering opinion pieces, reactions to recent news events and position statements released by various think tanks. This is the second of two wrap-ups for Nov. 20.

The Center for Strategic and International Studies

WASHINGTON -- Homeland Security Department: Strong leadership trumps processes; Department initiates bioterror defense

CSIS analysts made the following statements Wednesday regarding the passage of the Homeland Security Dept. legislation:

-- Phil Anderson, senior fellow, CSIS International Security Program.

"The establishment of the Department of Homeland Security represents not the end but the beginning of a process that may take years to complete. In the near term, unifying 22 federal agencies in one department -- creating a synergy of effort to more effectively address an uncertain future on the home front -- will depend far more on strong capable leadership than on management processes and procedures."

-- Mary DeRosa, senior fellow, CSIS Technology and Public Policy Program.

"One of the new department's most important functions will be to act as a nerve center to receive, collate, and analyze intelligence related to homeland security. It will take strong leadership from the Department and the White House to ensure that the new department receives the information it needs from other agencies -- particularly the FBI and CIA -- to do this job well. If it loses the turf war over information, the Department will fail in its critical intelligence function."

-- Anne Solomon, senior adviser, CSIS Biotechnology Project.

"The DHS legislation creates leadership, accountability and the initial bureaucratic components of a desperately needed comprehensive bioterrorism defense strategy. The national medicine chest now lacks essential diagnostic tools, vaccines and therapeutics to wage an effective defense against bioterrorism. The development of countermeasures requires an alliance of the government, the scientific research community and the big biotech and pharmaceutical firms who bring to the table essential expertise in product development and manufacture. Critics of liability protections for pharmaceutical firms need to consider the complexities of the process of anti bioterror product development and approvals. Demonizing pharma may well slow the process of developing effective bioterrorism countermeasures and leave us with little more than generic Prozac to rely on in the event of an attack."

CSIS notes that these are the views of the individuals cited, not of CSIS, which does not take policy positions.

The Reason Foundation

LOS ANGELES -- Spoiling Things for the GOP

By Brian Doherty

The Republican Party and right-wing solons are finally beginning to notice the Libertarian Party, if a New York Times op-ed by National Review writer John Miller is any indication.

Miller notes that there is strong reason to believe that the LP has "spoiled" what would have been GOP victories in a Senate race in each of the past three elections: Nevada in 1998, Washington in 2000, and South Dakota this year. And unusually successful Libertarian gubernatorial candidate Ed Thompson in Wisconsin probably helped ensure victory for incumbent Democrat Jim Doyle.

Miller accuses the LP of "serving, in effect, as Democratic Party operatives." Miller is savvy enough to note that "Libertarian voters are not merely Republicans with an eccentric streak" and that they "tend to support gay rights and open borders" and "oppose the drug war and hawkish foreign policies," but he still thinks they mostly lean GOP and owe it to the polity to vote that way.

Miller isn't the only person who feels this way about strongly ideological third parties and their effect on the Big Boys; shouts of "Blame him, he voted for Nader" continue to dog many Greens during this second Bush regime. Even the LP itself doesn't entirely deny pursuing the GOP-killer strategy that Miller decries.

But such spoiler complaints, whether from Democrats who think they should own the votes of Greens or Republicans who think free market libertarians are their rightful vassals, ignore that there are good reasons why Greens or Libertarians should want to flee the major party fief. The candidates of the major parties, with their usual scrum for the center, just don't offer what the ideologically consistent want.

If GOP partisans really wonder why the LP is beginning to cost them victories, they need look no farther than any given daily paper. A Republican-dominated federal government is giving us more federal land grabs, secret arrests, restrictions on political speech, and increased pushes for even wider-scale ability to do warrantless searches of phone and Internet lines.

The libertarian-minded have very little reason to feel any loyalty to the Republicans, despite the GOP's pretensions to being the party of free markets and limited government. If the Republicans want to stop outsiders "spoiling" their victories, they need to acknowledge that--and do something about it.

(Brian Doherty is an associate editor of Reason magazine.)

The Cato Institute

Internet Tax: The New OPEC for Politicians

By Veronique de Rugy

Fearful that they might be missing a chance to collect more taxes, bureaucrats from 31 states recently met in Chicago to create a new system for taxing Internet purchases. They claim they are trying to simplify their respective sales taxes. But state governments actually are banding together to create a tax cartel that would not only lead to higher taxes but also would be a flagrant violation of the Constitution.

Thanks to a Supreme Court decision (Quill vs. North Dakota), states can collect sales tax on purchases made over the Internet only if the retailer has a physical presence in that state. If the vendor lacks such a "nexus," which is typically the case for Internet stores, a book purchase from a local retailer, for example, ends up being subjected to the applicable state and local sales tax, while the same purchase made by a resident in Virginia through the Internet to a Washington-based company is effectively exempt.

Many state governments technically oblige consumers to remit a "use" tax on out-of-state purchases, but these levies are so unpopular that they are seldom enforced.

There also is a federal moratorium that prevents states from coming up with new special and discriminatory taxes for e-commerce, but it will expire at the end of 2003. State tax officials are offering to homogenize their tax jurisdictions to gain permission from Congress to tax all purchases made over the Internet, and in particular to collect taxes from sales from companies located in other states.

The state politicians call this proposal the Streamlined Sales Tax Project. It should be called the "OPEC for politicians." Amazingly, some of the politicians claim that taxpayers would be better off after the cartel is created. Utah Gov. Mike Leavitt, a key leader in the states' effort, says, "It will dramatically improve the morass that currently exists."

It is a fact that America's sales-and-use tax system, with 7,500 state and local taxing jurisdictions across the nation, is complex and cumbersome to businesses. But what really bothers state officials is that the arrangement makes it difficult for "remote" retailers, such as mail order companies and e-commerce companies, to calculate, collect, and remit sales taxes to different states and local government.

And this is where the Streamlined Sales Tax skim becomes clear. Leavitt's relentless criticism of the unfairness of the existing sales-tax regime is just a veil to mask government's endless craving for more taxes. This project is really about creating more sources of revenue for the states by allowing them to start taxing income earned outside of the borders of their state.

If Leavitt's pro-tax forces have it their way, going back to our previous example, Virginia would be able to collect taxes from the Washington-based book retailer. Never mind, of course, that the company that is being taxed has no voice in the tax-and-spending decision made by Virginia and that the company never benefits the public services Virginia provides with those tax dollars.

Make no mistake: Under the cover of the SSTP, states and local governments are asking Congress to lift the restriction that forbids them to tax extraterritorial income earned by remote sellers. The extension of sales-and-use taxes to out-of-state sales, no matter how simplified and harmonized, represents a huge threat to taxpayers and economic prosperity.

The states involved want to create a tax cartel to allow them to impose taxes on firms that do not have a physical presence in the state, which means those companies would pay taxes to that state but would not consume public services. And that equals taxation without representation. Further, some states, such as California, would have the power to tax consumers who reside in other states, thus infringing on state sovereignty. Taxpayers would be the big losers because the new lack of competition between states would mean the end of any constraint to increase taxes.

It should go without saying that states, as sovereign entities, should have control over their tax policy. Tax harmonization and tax cartel are not the answer to the Internet tax debate. Taxpayers would be the big losers of this sordid game and freedom and economic growth would be permanently damaged. For the sake of American taxpayers the Streamlined Sales Tax Project should be defeated and tax competition should be protected.

(Veronique de Rugy is a fiscal policy analyst with the Cato Institute.)

The Acton Institute

(The Acton Institute works to promote a free and virtuous society characterized by individual liberty and sustained by religious principles. Its goal is to help build prosperity and progress on a foundation of religious liberty, economic freedom, and personal moral responsibility.)

GRAND RAPIDS, Mich.-- Open borders please the palate

By Phillip W. De Vous

It's now official -- New York's borders are open. Italians, Germans, French, South Eastern Australians, Portuguese and even Californians, may come to New York free from unnecessary obstacles and burdensome financial penalties. One can even use the Internet to contact them and invite one, or all, into your home.

Wasn't this always the case? Isn't such freedom of movement celebrated in the national icon of Ellis Island--the celebrated port of entry for generations of people new to America? Well yes, unless you happened to be an out of state Port, Merlot, Chianti, Cabernet Sauvignon, or Shiraz purchased over the Internet. From Napa Valley to the Rhone River, the great cry of freedom has been heard!

In a Nov. 12 decision, Judge Richard Berman of the United States District Court for the Southern District of New York issued a ruling declaring New York state's laws barring interstate direct shipment of wine into the state was unconstitutional. Judge Berman's ruling indicated in clear terms that the state of New York could not discriminate against out-of-state wineries who want to ship to in-state customers. New York state wineries were under no such restrictions in their business with out-of-state customers.

Specifically, Judge Berman's ruling took issue with the trade protectionism embodied in New York's Alcohol Beverage Control Law, or ABC Law. He stated, "Defendants contend (unconvincingly) that New York's ABC Law 'erects no barrier to the flow of goods and imposes no burden on interstate commerce...The evidence here demonstrates, upon summary judgment, that the exceptions to the ABC Law provide an impermissible economic benefit and (protection) to only in-state interests--but also that there are nondiscriminatory alternatives available. Indeed, the defendants explicitly concede the exceptions were intended to be protectionist."

While this minor legal victory may seem trivial in the grand scheme of things, it is both a real and symbolic victory for free trade, expanded commerce, and for justice. Now vintners may compete for the business of New York consumers on a level playing field. Protectionism in any form, whether it is wine, wood, or steel, is economically counterproductive for business and consumers alike.

For businesses, protectionism attempts to establish and incentivize monopolies, favoring one business to the exclusion of another. Legislation that bestows special favors on businesses via protectionist policies undermines the rule of law and creates an injustice by treating competing parties in an unequal fashion. Such protectionist policies attempt to bestow market share, rather than allow producers to earn it by providing superior products.

Consumers bear the costs of protectionist economic policies in the form of increased prices and restricted choices. While not all wines are created equal, it will now be up to consumers in New York to decide which, where, and from whom they will purchase their wine.

The other important policy implication for this decision is that it is a victory for the ever-widening world of Internet commerce. As many governors and regulatory agencies around the country are drawing up plans to regulate Internet commerce, this decision sends a forceful signal that protectionist polices are difficult to justify to contemporary consumers.

Internet shopping is increasingly popular among consumers due to the wider range of choices available and the resulting lower costs that increased competition provides. The expanded commerce Internet sales provide for vintners and consumers will be a boon, not a bane, to the winemaking industry and discerning connoisseurs everywhere.

The battle to open the borders to out-of-state grapes has been hard fought. While this decision is far from a blanket amnesty for all undocumented vintages, it seems to be step in the right direction. Judge Berman's decision to strike down such restrictive anti-trade policies has created an open border policy that is truly pleasing to the palate.

(Phillip W. De Vous is the public policy manager of the Acton Institute.)

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