Raising an extra dollar of business income tax revenue costs the Ontario economy $1.66

By Ergete Ferede, Professor of Economics at MacEwan University. From The Fraser Institute.

How Costly Are Corporate Income Taxes in the Short Run?

• Corporate income tax (CIT) is an important source of revenue for Canadian provinces, and governments often increase CIT rates to address budgetary pressures.
• Higher CIT rates can reduce productivity and discourage investment and business activity, creating broader economic costs beyond the revenue generated. The marginal cost of public funds (MCPF) helps assess these trade-offs by measuring the economic cost of generating an additional dollar of tax revenue.
• This study estimates the short-run MCPF for provincial CIT in four major provinces: British Columbia, Alberta, Ontario, and Quebec. The analysis first focuses on investigating how sensitive the CIT base is to changes in tax rates.
• Results show that a one percentage-point increase in the CIT rate reduces the tax base by 4.82% in British Columbia, 4.00% in Alberta, 3.47% in Ontario, and 3.10% in Quebec.
• Using these estimates, the study then computes the short-run MCPF as follows: 2.37 for British Columbia, 1.47 for Alberta, 1.66 for Ontario, and 1.55 for Quebec. This suggests that raising one additional dollar of CIT revenue costs the economy $2.37 in British Columbia, $1.47 in Alberta, $1.66 in Ontario, and $1.55 in Quebec. The results highlight significant differences across provinces, with British Columbia facing the highest economic cost.
• A key policy message is that a higher CIT rate can be an inefficient way to raise revenue. Policy makers should weigh these economic costs against fiscal needs and long‑term goals such as improving investment, productivity, and growth. Greater reliance on less distortionary taxes may reduce economic costs while supporting fiscal sustainability.

The Failed Promise of Housing First

Housing First has failed to improve health outcomes, or save taxpayer money, but has significantly increased public expenditures for the homeless

By Christopher J. Calton of The Independent Institute. 

"In October, the San Francisco Chronicle shared the story of Austin Draper, a homeless fentanyl addict who has been hospitalized several times for endocarditis, a heart condition that is often caused by intravenous drug use. Only 35 years old, Draper has already undergone open-heart surgery to install a pacemaker. “The cost of his [medical] care likely exceeds $1 million,” the Chronicle reports, “though Austin, who is on Medi-Cal, hasn’t paid anything.”

Draper is a beneficiary of California’s Housing First policy for homelessness. He was placed in permanent-supportive housing, which indefinitely subsidizes his rent and imposes no constraints on his drug use. Although he is no longer living on the streets, his addiction continues to land him in the hospital, always at the taxpayer’s expense.

Ironically, Draper’s tragedy is reminiscent of a New Yorker article titled “Million-Dollar Murray,” written by Malcom Gladwell in 2006 to promote Housing First. Murray Barr was a chronically homeless alcoholic whose addiction repeatedly landed him in the hospital, leaving taxpayers on the hook for more than $1 million in medical bills. “It would probably have been cheaper to give him a full-time nurse and his own apartment,” Gladwell argued.

Gladwell sold the idea that Housing First would not only reduce chronic homelessness, but the cost of placing people in permanent-supportive housing would be offset by savings on medical costs and other services. Twenty years later, Austin Draper’s story suggests that subsidized housing would likely have done nothing to ameliorate Murray Barr’s underlying problems.

An extensive 2018 study, in fact, found that with the exception of HIV/AIDS patients, permanent-supportive housing failed to produce any discernible changes in health outcomes or healthcare costs. Nonetheless, the authors assert that stable housing generally improves health outcomes because it “provides a platform from which other physical, mental, and social concerns can begin to be addressed.”

This idea, known as “Platform Theory,” is common among Housing First apologists, but its logic crumbles in the context of Housing First. A failure to adequately address mental illness and substance abuse is what landed many chronically homeless persons on the streets to begin with, so it hardly stands to reason that housing alone will provide the impetus for them to finally seek the care they need.

As Draper illustrates, permanent-supportive housing residents rarely pursue treatment without direct intervention. He knows that substance abuse is the source of his medical woes, but he continues to refuse recovery services, as is his prerogative under Housing First guidelines. His city’s devotion to platform theory has produced disastrous outcomes, with 30 percent of San Francisco’s overdose deaths occurring in permanent-supportive housing.

Contrary to Gladwell’s expectations, Housing First has failed to improve health outcomes or save taxpayer money. Instead, it has significantly increased public expenditures for the homeless. California’s Legislative Analyst’s Office recently reported that the state has spent more than $37 billion on housing and homelessness programs over the past five years. Of course, people might gladly accept Housing First’s high price tag if it fulfilled its promise of reducing chronic homelessness. Yet in California, the chronically homeless population has ballooned from less than 49,000 in 2020 to more than 66,000 in 2025.

Gladwell’s main point in “Million-Dollar Murray” was that most people who experience homelessness do so only briefly, while the chronically homeless minority consume the lion’s share of resources. Under Housing First, the formula has changed. Today, the bulk of homelessness spending goes to permanent-supportive housing, whose residents are no longer counted as homeless.

San Francisco alone spends three-quarters of a billion dollars per year fighting homelessness, but 60 percent of the budget goes to people like Austin Draper. In other words, the city’s 13,000 permanent housing beds draw resources away from the more than 8,000 people still living on the streets, rendering homelessness more common and more chronic.

If Million-Dollar Murray represented the promises of Housing First, Million-Dollar Draper reflects its failures."

How Much Has Shale Gas Saved U.S. Consumers?

By Alex Tabarrok.

"Every US president since Nixon has called for freeing the US from ‘dependence on foreign oil’ (within ten years!). Every president has failed. Fracking, however, has delivered the goods. Fracking has reduced the price of energy, reduced net emissions of greenhouse gases and turned the US into an energy exporter.

In How Much Has Shale Gas Saved U.S. Consumers? Lucas Davis compare LNG prices in the US ($5.3 Mcf), Europe ($14.4 Mcf) and Japan ($16.1 Mcf) to offer some plausible back of the envelope calculations:

Advances in hydraulic fracturing and horizontal drilling caused U.S. natural gas production to increase significantly, and the U.S. went from being a net importer of natural gas to being the world’s largest exporter. This paper calculates how much shale gas has saved U.S. natural gas consumers. Using price differences between the United States, Europe and Japan, we calculate that U.S. natural gas consumers have saved $4.5-$5.3 trillion between 2007 and 2025, equivalent to $237-$276 billion annually. Access to low-price U.S. natural gas has been particularly valuable during major supply shocks such as the war in Ukraine, and the benefits of shale gas have been experienced broadly across sectors and states."

Anne O. Krueger on market failures, government failures and incentive

From David Henderson.

"Some of these arguments about the market assume that if there are market failures, then whatever the government will do will be better. Maybe the market failures are huge, but that does not persuade me that government failures will not automatically be as huge. That’s the part that’s wrong. I still think that when you’re talking about lots of economic activities, you want to just look at incentives. If there’s something wrong with the market, get the incentives right. Giving bureaucrats the incentive to regulate is not the incentive that will work best in most cases."

Can De-Regulation of Branch Banking Improve Capital Allocation?

Evidence from the Great Depression

From Jeffrey Miron.

"The Great Depression led to dramatic increases in bank regulation.

One study looks at an instance of bank deregulation during this period: state-level sanctioning of

bank branching, which allowed banks to operate multiple offices within a state. … [S]tates with extensive branching in 1940 … experienced long-run gains in manufacturing productivity.

The study also

assessed the role of capital reallocation using bank and branch-level balance sheet data from 1937. … Branch offices located in capital-constrained counties … were twice as likely to receive funding on net from other banks and branches than comparable stand-alone banks in the same areas.

In addition, the new

branch networks improved capital allocation by directing funds to where they were most scarce, a function that stand-alone banks could not perform.

All in all, these

findings provide evidence that the institutional structure of branching—rather than simply expanded banking access—improved capital allocation and integrated financial markets to fuel manufacturing productivity growth, especially in underserved areas."

How a Scientific Cartel Protects Fraudsters and Rakes in Billions of Taxpayer Dollars

Corrupt scientists rarely face accountability. The real victims are everyone else. 

From Reason. Excerpts:

"Sylvain Lesné, a neuroscientist at the University of Minnesota, published a paper in Nature in 2006 claiming to identify a specific amyloid beta protein assembly as the direct cause of memory impairment in Alzheimer's. This reinvigorated the amyloid hypothesis at a moment when skepticism about it was ramping up. The National Institutes of Health (NIH) devoted $1.6 billion to projects that mention amyloids in 2022 alone, nearly half of all federal Alzheimer's funding that year. Lesné was a star.

But there were rumblings. Numerous amyloid drugs made it to trials with billions invested by pharmaceutical companies. They failed repeatedly. A question arose in the pharmaceutical community: How can this be right? How can the trials keep failing if the underlying research is correct? 

In 2022, the Vanderbilt neuroscientist Matthew Schrag uncovered evidence that images in Lesné's paper had been manipulated. Science magazine found more than 20 suspect papers by Lesné, with over 70 instances of possible image tampering. Nature retracted the paper in June 2024. Every author except Lesné signed the retraction. Lesné himself resigned from his tenured position at the University of Minnesota on March 1, 2025, three years after his fraud was exposed.

More news and details trickled out over time. Charles Piller's 2025 book Doctored talks about the Amyloid Mafia, a nickname for a network that had prioritized novelty over replication and marginalized dissenters for decades. Anyone questioning the amyloid gospel was pushed out and watched their funding vanish."

"Lesné resigned, but was still rich. None of his grant money was clawed back. The system that was supposed to catch this—peer review, university compliance, journal editorial boards—failed repeatedly for years.

Lesné was not a lone bad apple. The rot and corruption of academic research are systemic and structural. Daniele Fanelli's 2009 meta-analysis of survey data in PLOS One showed that approximately 2 percent of scientists self-reported fabrication or falsification—and 14 percent reported witnessing it in colleagues. Self-reports mark the floor, not the ceiling.

J.B. Carlisle's 2021 paper, "False individual patient data and zombie randomised controlled trials submitted to Anaesthesia," showed that out of 153 trials with individual patient data available, 44 percent had untrustworthy data and 26 percent were zombie trials animated entirely by false data. In a 2025 PNAS study, researchers estimated that the number of fraudulent publications is doubling every 1.5 years, while legitimate publications double every 15.

At least 400,000 papers published from 2000 through 2022 showed signs of coming from paper mills. Former BMJ editor Richard Smith asked, "Is it time to assume health research is fraudulent until proven otherwise?" A 2015 Lancet comment by Richard Horton put it bluntly: "Much of the scientific literature, perhaps half, may simply be untrue."

"The peer review process helps enable this fraud. The economist Bruce Yandle called it the "Bootleggers and Baptists" phenomenon: A group with strongly held moral beliefs will end up working with people interested in exploiting it financially. Self-righteous gatekeepers say peer review is required for integrity. As a byproduct, the publishing oligopoly extracts billions in profit by charging for access to taxpayer-funded research. Paper mills have become a shadow market worth, by one conservative estimate cited by Nature, hundreds of millions of dollars per year by publishing any slop they get their hands on, knowing that researchers desperate to publish would rather cheat than starve and that sociopaths would happily buy authorship with a credit card."

"The Food and Drug Administration Amendments Act of 2007 legally required public posting of clinical trial results on ClinicalTrials.gov. A 2015 New England Journal of Medicine analysis showed only 13.4 percent compliance in reporting summary results within the required 12-month window. The government has the authority to fine violators up to $10,000 per day; it could have collected $25 billion according to a 2015 STAT investigation. But it collected essentially nothing, because the agency doesn't want to fight the powerful institutions it regulates."    

More capitalist countries have lower income inequality

Tweet from Vlad Tarko. 

"More capitalist countries have lower income inequality, not higher. High income inequality is caused by cronyism which goes hand in hand with highly regulated markets. Welfare states also lower inequality, but you need free markets wealth to have generous welfare states."

 

"You can't derive causality from raw data. Those scatter plots are just a description of reality. If your causal picture of the world makes you expect the opposite patterns, you should re-evaluate. The cronyism comment is an alternate causal theory that fits the pattern.

In any case, if you think I'm deriving my whole world view from a few scatter plots, that's a very uncharitable interpretation. No, that's not what I'm doing. While, yes, empirical evidence is very important. Too many people have theories that are intuitive but flat out wrong.

The correlations on the upper-left and lower-right are actually quite strong. The other two less so, which further enhances the point! 1 Size of govt weakly correlated with equality, unless in rich country. 2 Even in rich countries, capitalism doesn't increase inequality."