Publications

General Motors and thousands of other companies do it, but many want to prohibit drug manufactures from advertising direct-to-consumer (DTC) because it increases costs. However, GM is the top advertiser in the country and its cars are still competitively priced. DTC advertising reaches out to people with medical conditions encouraging them to see their doctor, which leads to healthier and more informed patients.

From Congress Daily (4/5):
". . . a sharp critique of a bill offered by Sens. John McCain, R-Ariz., and Carl Levin, D-Mich., concerning corporate obligations to report stock options on tax returns. The bill is designed to make sure a company's earnings reports match tax deductions it claims to the IRS. But a paper written by analyst Alan Reynolds contends the bill would violate the principle that income should not be taxed twice. He explained that employee taxes are based on the actual earnings from stock options. Employers, on the other hand, would be forced to base deductions on the estimated value of stock options, years in advance. He challenged what he described as Levin's assertion that the costs of stock options never actually show up on a company's earnings report under current law."

Remember the old radio payola scam? Some states are doing the same thing with prescription drugs, telling drug manufacturers they must pay a "supplemental rebate" to get their drugs on the state’s Medicaid formulary. Supplemental rebates reduce the poor’s access to prescription drugs, hurting minorities most. Rebates are just one more way for politicians to extract money for government programs.

Advocates for tax reform must confront the current tax subsidy for employer-based health insurance, which distorts the market for private health insurance and penalizes those who do not obtain health insurance through an employer. The current scheme should be changed to a straightforward system of credits to empower individuals to make their own health care choices. This would eliminate the current discrimination and tear down this barrier to fundamental tax reform.

Tax reform should encourage investment in physical capital through expensing, and it should encourage investment in human capital through expensing as well. Tax reform will also remedy other areas of the tax code such as high marginal tax rates and progressive taxation that discourage people from acquiring extra skills and punish them as they deploy their talents and abilities—their human capital.

Our current tax system puts U.S. companies at a disadvantage in their efforts to compete internationally. Remedies thus far have been a hodgepodge of international tax rules that often operate at cross-purposes, create perverse incentives, and incur the ire of international trade organizations. A reformed tax code including territorial taxation would better serve the vital interests of the United States.

Complying with the current income tax code costs Americans 3 million person-years each year. This represents a deadweight loss to the economy and resources that could have been spent on otherwise productive efforts. The chief source of federal tax complexity is the income tax. Substantial reform can come only from replacing the income tax system with a consumption-based system such as the flat tax, a national retail sales tax, or a consumed income tax.

The solution to looming Social Security shortfalls is increased economic growth. Personal retirement accounts, owned by workers and invested in real assets, would prefund benefits and could provide new saving and investment critical to economic growth, provided that tax reform makes saving and investment in the U.S. more attractive. Thus the path to Social Security reform is through tax reform.

Progressive taxation was designed to reduce income disparity by disproportionately taxing upper incomes and redistributing the proceeds through the welfare state. However, over the four decades, while the share of income taxes levied on the upper tenth of incomes rose 15 percentage points, the after tax income share of the remainder of incomes declined 13 percentage points. Progressive taxation has failed to reduce the disparity of real incomes.