Tax-Return Mayhem to Follow

With a wealth tax, would every taxpayer need to report the value of his net worth?

Letter to The WSJ. 

"Your editorial “The Harris Wealth Tax vs. Mark Cuban” (Oct. 26) leaves out one important element of the “billionaire minimum tax,” and it isn’t that $100 million is a bit short of a billion dollars. It’s that every taxpayer might need to report the value of his net worth on his tax return each year, so the IRS will know that the billionaires’ tax doesn’t apply. Will this also require a valuation by an IRS-approved expert for nonpublicly traded assets? The whole idea is ridiculous.

Clark M. Blackman II, C.F.A.

Cypress, Texas"

The Education Terminator Tries to Kill a School Choice Program in Nebraska

Teachers unions won’t stop until any alternative to their education monopoly is killed

WSJ editorial. 

"Regarding school choice for children, teachers unions are best understood as Terminators, as in the movie series. They are relentless, and they won’t stop until any alternative to their education monopoly is killed. The latest example is Nebraska, where unions are pushing a ballot measure to repeal a modest K-12 scholarship program.

In April the state Legislature passed a $10 million a year scholarship program to help students who attend private school with education expenses. More than 5,000 students applied for the program in the roughly one month that applications were open, according to Jeremy Ekeler, executive director of Opportunity Scholarships of Nebraska, the nonprofit that administers the scholarships.

Even this is too much competition for the union monopoly. The union-backed Support Our Schools Nebraska managed to put Referendum 435 on the ballot, and voters next week can choose to “repeal” or “retain” the program.

The group is trying to scare voters into believing the scholarships will drain money from public schools. That ignores the principle that parents should be able to send their tax dollars to the school they’d prefer. But it’s also silly given the small cost.

“K-12 schools received about $4.7 billion in taxpayer funds,” state Sen. Dave Murman noted in a statement this spring. Since 2023, “we have additionally appropriated over $1.6 billion for our public schools.” The $10 million program is about 0.2% of education funding.

Meanwhile, another state scholarship program is about to expire, thanks to a similar union attack. In 2023 lawmakers created a $25 million tax-credit scholarship, the state’s first for K-12 students. After Support Our Schools collected signatures to put a repeal measure on the November ballot, the Legislature passed the April bill to replace the tax credits with the smaller $10 million program.

The new law sunsets the tax-credit program at the end of this month, but the sunset provision isn’t on the ballot for repeal—meaning that if the new law is repealed, the tax-credit scholarships still expire.

About 1,500 students currently use the tax-credit program, and no doubt many would like to use the new scholarships. Mr. Ekeler testified in a public hearing last week that about half of these recipients have household income below 213% of the federal poverty level, the measure used to determine eligibility for the Children’s Health Insurance Program. Some 40% are nonwhite and 11.5% have special needs. The average scholarship is $1,700.

For Sierra Shouse, a single mother in Nebraska, the scholarship program has “positively impacted my son’s education and character and his confidence” and “been a weight off of my shoulders,” she testified at the state Capitol. “I do not have the financial resources to be able to send my children to the school I think they deserve to be at.”

Sorry, Ms. Shouse. The union says your choice for your son must be terminated."

Harvard’s Antisemitism Problem

A lawsuit spotlights the school’s failure to discipline campus offenders

WSJ editorial. 

"The antisemitism that engulfed college campuses last spring is now working its way through the courts. Parents and alumni who care about the degraded integrity of their institutions might want to follow the cases.

One to watch is against Harvard in federal district court in Massachusetts. The suit alleges the school has tolerated antisemitic conduct on campus despite a non-discrimination policy that is rigorously enforced for other legally protected groups. The student plaintiffs say Harvard’s inadequate effort to protect Jewish students violates Title VI of the 1964 Civil Rights Act.

The case was brought with the help of the Brandeis Center for Human Rights Under Law and Jewish Americans for Fairness in Education. The complaint describes examples of antisemitism on campus and Harvard’s reluctance to discipline offenders.

The details are troubling. Last spring two Harvard students assaulted a Jewish business-school student walking across campus. The assault, in which one student hit the Jewish student across the neck, was caught on video. The alleged assailants, Elom Tettey-Tamaklo and Ibrahim Bharmal, were charged with assault and battery by the Suffolk County district attorney. Their arraignment hearing was postponed for the third time this week.

Despite the charges and video evidence, Harvard let the students remain on campus without disciplinary action, beyond the temporary removal of Mr. Tettey-Tamaklo as a freshman proctor. Former Harvard President Claudine Gay, who lost her job after disastrous Congressional testimony on Harvard’s response to antisemitism, said school policy is to await the result of a criminal investigation before taking disciplinary action.

That’s a strange policy since any number of events on campus might require discipline without the courts being involved. In any case, the complaint charges, Harvard has thwarted the criminal investigation whose resolution it claims to be awaiting.

Assistant Suffolk County DA Ursula Knight has said “Harvard police essentially refused to investigate.” The Boston Globe reported Monday that Ms. Knight says her assault investigation is being repeatedly delayed. “The Commonwealth’s in this position,” she said, “only because Harvard has not done their job.”

In a second incident cited in the complaint, Jewish students at the Kennedy School in the spring proposed a project related to their Jewish identity and democracy in Israel. Classmates objected that the idea of a “Jewish democracy” was “offensive” and posed in a class photo wearing keffiyehs. Professor Marshall Ganz likened the existence of a Jewish state to “white supremacy” and told students that linking “Jewish” and democracy “creates an unsafe space.”

The real unsafe space is Harvard for Jews. When the school commissioned an outside investigation of the incident, the report concluded that the students faced “a hostile learning environment” that “denigrated” them “on the basis of their Israeli national origin and Jewish ethnicity and ancestry.” Harvard says it has taken “personnel action” but hasn’t elaborated. It issued no public reprimand or discipline.

The standard for a Title VI violation is “deliberate indifference” to a hostile educational environment. Harvard says it hasn’t been indifferent as it brought in outside investigators on the Ganz case and is waiting for the criminal case to conclude. The school says complaints about the pace of the school’s reprimands for the student attackers don’t rise to the legal standard of indifference.

That’s a dubious defense of callous administrative behavior. As for the legal standard, bring on discovery when the plaintiffs will get access to emails and Harvard’s internal decision-making process. Stay tuned."

ICE’s ‘Non-Detained’ Aren’t All Home Free

Many are in federal, state or local jails. Many will be deported once their sentences end

Letter to The WSJ. 

"Texas Republican Rep. Tony Gonzales paints a frightening picture in his op-ed “Criminal Migrants Run Free in My District” (Oct. 22), but his argument relies on a misreading of government data. In a letter to Mr. Gonzales last month, Immigration and Customs Enforcement reported that 662,566 noncitizens with criminal histories were on its national docket. The congressman’s claim that “approximately 647,000” of those noncitizens “weren’t detained,” however, is false.

The ICE letter notes that 647,572 noncitizens are on the agency’s “non-detained” docket. “Non-detained,” in this context, doesn’t mean those people aren’t detained—it means they aren’t in ICE detention. Many on the non-detained docket are in federal, state or local jails. Many will be deported once their sentences end. Despite the heightened attention given to ICE’s non-detained docket, the issue isn’t new. The data “includes individuals who entered the country over the past 40 years or more,” according to the Department of Homeland Security.

Fiona Harrigan

Associate editor, Reason"

How to Build on Trump’s Tax Success

The expiration of Trump’s tax cuts next year gives Congress the chance to write an even more pro-growth code

By Kevin Brady and Douglas Holtz-Eakin. Excerpts:

"From 1960 to 2000, per capita gross domestic product rose 2.3% annually. Since then, it has downshifted to 1.4%."

"On average the TCJA [The 2017 Tax Cuts and Jobs Act] stimulated U.S. investment by 20%. Every $1 cut in corporate taxes increases economic production by an estimated 44 cents. Workers saw a 9% increase in inflation-adjusted earnings between Jan. 1, 2018, and Dec. 31, 2020—the fastest growth since the government began publishing data in 1979."

"They created Section 199A—or what they called the 20 Percent Small Business Tax Deduction—which allows pass-through owners to deduct 20% of their business’s income. This deduction reduced the effective tax rate to 80% of the statutory tax rate, supported 2.6 million jobs, raised employee compensation by $161 billion and added $325 billion to output."

Climate Coercion Meets Washington State Voters

Two ballot measures would roll back rules that raise energy prices

WSJ editorial. 

"Progressive climate dreams tend to crash and burn when voters are confronted with their real costs. That collision is playing out in Washington state this year in a pair of ballot measures that would repeal extreme climate policies.

Prop. 2066 would strike down large parts of rules designed to cripple natural-gas use by consumers. The first rule by the state Building Code Council in 2023 made it cost-prohibitive to put natural-gas appliances in new buildings. The Building Industry Association of Washington says the rule will raise the cost of a single-family home with gas appliances by $15,000-$20,000.

The ballot measure would also push back against a March law that lets Washington’s largest natural gas and electricity provider, Puget Sound Energy (PSE), shift the costs of meeting the state’s climate goals onto consumers. It also mandated that PSE by Jan. 1, 2027 file a plan to “achieve all cost-effective electrification of end uses currently served by natural gas.”

Both climate measures reveal the animus of the left to any fossil fuels, even natural gas that is reducing CO2 emissions as it replaces coal. Washington state contributes a mere 1.5% of all U.S. emissions, and the rules would have no effect on the climate.

But they would punish Washington residents already hurt by rising prices. Prop. 2066 attracted the second most signatures of any initiative petition in state history. An October poll by Cascade PBS and Elway Research found 51% of registered voters supported the initiative while 28% opposed it.

The second ballot initiative, Prop. 2117, would repeal the state’s carbon credit system and stop state agencies from implementing future cap-and-trade programs. Implemented in January 2023, the current system aims to reduce greenhouse gas emissions on a radical schedule that requires a 95% cut below 1990 levels by 2050. Businesses that emit more than 25,000 metric tons of carbon a year are covered. They can purchase a diminishing supply of credits in quarterly auctions—the most recent of which had a price of $29.88 per credit.

The cap-and-trade auctions provided a $2 billion windfall for politicians, which explains why opponents of Prop. 2117 have poured more than $16 million into fighting it. But as in California, cap-and-trade is raising energy costs for consumers. In January the Association of Washington Businesses estimated that the program has raised the price of gasoline by $0.45 a gallon. Average Washington gas prices are the fourth highest in the nation at $4.05 a gallon.

Supporters of Prop. 2117 are being greatly outspent, and the Cascade PBS/Elway poll found it trailing 46%-31%. But the rest were undecided, and Washington voters have rejected costly climate measures in the past. They shot down ballot initiatives to create a carbon tax in 2016and an emissions fee in 2018.

Lawmakers in Olympia are living in an energy fantasy land in which they pretend they can bend the world’s climate at little cost. They’re deceiving the public on both counts. The state’s energy use is likely to double in 20 years, and that probably underestimates demand from artificial intelligence. Voters can send a message about reality by passing both ballot measures."

The Data Don’t Lie, and Tariffs Don’t Work

Economic freedom produced the economic miracle of the 19th century—and it can do so again

Letter to The WSJ. 

"In responding to our op-ed “No, Tariffs Don’t Fuel Growth” (Oct. 17), Robert Lighthizer has a big problem. His protectionist policies were put to the test starting in the middle of 2018, and they failed even on their own terms. The economic growth rate slumped in 2019, exactly as the Congressional Budget Office predicted. Manufacturing employment as a share of total nonfarm employment continued to decline. The promised reduction in the trade deficit didn’t happen. Evidence has consistently shown that the wages paid to workers whose jobs were “saved or created” by recent tariffs are only one-tenth the cost the tariffs have imposed on the economy.

Desperate for evidence that protectionism can generate prosperity, something it failed to do in the 20th and 21st centuries, Mr. Lighthizer and other protectionists claim that tariffs in the 19th century caused the American economic miracle. Left out of their story is that the federal government couldn’t tax income prior to 1913 and an excise tax on whiskey caused a rebellion. Tariffs were the dominant source of federal revenues for the entire 19th century, funding more than three-quarters of the federal government. Mr. Lighthizer says he doesn’t want to argue about data because in the 19th century the economy grew faster when tariffs were falling.

Economic freedom, not protective tariffs, produced the economic miracle of the 19th century. If we will give it a chance in the 21st century, it will do it again.

Phil Gramm and Prof. Donald Boudreaux"