Friday, March 29, 2013

Opinion: Best of the Web Today: This Space for Rent

In a story produced jointly with NPR, ProPublica.org, that new tax-exempt investigative-journalism outfit, puts forward what sounds like a smart proposal for improving the efficiency of the federal government:

Imagine filing your income taxes in five minutes--and for free. You'd open up a pre-filled return, see what the government thinks you owe, make any needed changes and be done. The miserable annual IRS shuffle, gone.It's already a reality in Denmark, Sweden and Spain. The government-prepared return would estimate your taxes using information your employer and bank already send it. Advocates say tens of millions of taxpayers could use such a system each year, saving them a collective $2 billion and 225 million hours in prep costs and time, according to one estimate.The idea, known as "return-free filing," would be a voluntary alternative to hiring a tax preparer or using commercial tax software. The concept has been around for decades and has been endorsed by both President Ronald Reagan and a campaigning President Obama."This is not some pie-in-the-sky that's never been done before," said William Gale, co-director of the Urban-Brookings Tax Policy Center. "It's doable, feasible, implementable, and at a relatively low cost."So why hasn't it become a reality?

For two reasons, as it turns out. There is a plausible public-spirited argument against it and a venal interest group working to thwart it.

The ProPub story focuses on the latter, as will this column. But let's give the former its due: Grover Norquist of Americans for Tax reform, argues that "the IRS invites a conflict of interest by adding 'tax preparer' to its role as 'tax collector.'�" He thinks the agency would systematically err on the side of overestimating taxes due, so that it would be "a near-certainty that everyone's taxes will rise."

It's a pertinent concern, though we'd say the tax increase would likely be regressive rather than across-the-board. "Return-free filing would not be available to everyone," ProPub reports. "It's best"--meaning worst, if Norquist is right--"for the slice of taxpayers with straightforward returns who don't itemize or claim various credits." These tend to be taxpayers with relatively low levels of both income and wealth.

The primary villain of the piece is identified right in the headline: "How the Maker of TurboTax Fought Free, Simple Tax Filing." Intuit has spent $11.5 million lobbying Congress over the past five years, some of it on "two bills, both of which died, that would have allowed many taxpayers to file pre-filled returns for free" and on two other bills "that would have barred the Treasury Department .�.�. from initiating return-free filing." (H&R Block, an Intuit competitor, apparently has also lobbied on at least one related bill, but shrewdly declined to talk to ProPub.)

Intuit offers its own high-minded arguments for opposing the idea. It echoes Norquist's warning about higher tax collections and also asserts that government-completed returns would curtail "citizen participation in the taxation process." These arguments may have merit, but one is inclined to discount them given the company's manifest self-interest in maximizing its potential customer base.

It's an interesting story, and ProPub deserves a laurel for its reporting. But several darts are due for the childlike Manichaeism of its narrative. Here it is, simplified only slightly: White-hatted government heroes try to help people. Black-hatted corporate villain hires evil lobbyists to thwart the effort. (The implicit conclusion: In steps mild-mannered reporter Liz Day--her very name connotes sunshine!--to Expose the Truth, and everyone lives happily ever after.)

Let's assume for the sake of argument that return-free filing is a good idea and that Norquist's concerns either are unwarranted or can be obviated. In that case it makes sense to fault Intuit for its self-interested opposition to legislation that would be in the public interest. It is still far too simplistic, however, to regard Intuit as the villain and members of Congress as heroes or victims.

Intuit is engaging in a perfectly normal activity that economists call rent-seeking. "People are said to seek rents when they try to obtain benefits for themselves through the political arena," Stanford's David Henderson explains in the Concise Encyclopedia of Economics. "They typically do so by getting a subsidy for a good they produce or for being in a particular class of people, by getting a tariff on a good they produce, or by getting a special regulation that hampers their competitors." (Henderson argues that "privilege seeking" would be "a much better term.")

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Rent-seeking behavior would be futile if government did not assert the power to grant the privileges sought. The TurboTax business wouldn't even exist if Congress had not seen fit to enact a tax code too complicated for most people to navigate. Of course many of those complications were established for high-minded reasons: to ensure that the rich pay their "fair share" and the poor are rewarded for taking low-wage jobs; to encourage homeownership, investment, contributions to charity and so forth. If Congress is a hero in this tale, it is a tragic one, for Intuit's influence was made possible by Congress's own actions.

The more powerful the government is, the more complicated it gets, and the more opportunities there are for rent-seeking. Consider this example, from the Associated Press:

Applying for benefits under President Barack Obama's health care overhaul could be as daunting as doing your taxes.The government's draft application runs 15 pages for a three-person family. An outline of the online version has 21 steps, some with additional questions.�.�.�.At least three major federal agencies, including the IRS, will scrutinize your application. Checking your identity, income and citizenship is supposed to happen in real time, if you apply online.�.�.�.Once you're finished with the money part, actually picking a health plan will require additional steps, plus a basic understanding of insurance jargon.And it's a mandate, not a suggestion.

Sounds like a business opportunity for Intuit, doesn't it?

When Congress was considering ObamaCare three years ago, journalists largely cheerled. (For a particularly egregious example, see this October 2010 column featuring Mark Halperin.) The government white-hats were going to provide free medical care for everyone! Oh, there was some talk about how the black-hatted insurance and drug companies were hiring lobbyists to cut dirty deals, but again that fit in to a broader narrative of government good guys vs. business baddies.

There's another important element of this basic journalistic narrative: the means by which the bad guys have their way with the good guys and hurt the public. In ProPub's TurboTax story, it's "lobbying." In other stories it might be "campaign contributions." In the Constitution, these are known respectively as petitioning the government for redress of grievances and freedom of speech. Both are among the rights guaranteed in the First Amendment.

Well, this is curious, isn't it? A staple of journalism--a profession that lives and breathes by the First Amendment--is attacking corporations for exercising their First Amendment rights. There is an argument--or a reflexive claim, anyway--on the ideological left that corporations have no constitutional rights. But journalists can't make that claim with a straight face. Almost all of them do their work under the aegis of a corporation, whether a nonprofit like ProPublica or a business that at least aspires to make a profit like the New York Times Co.

As we've noted many times, many media corporations, including the New York Times Co., take the position that corporations should not have First Amendment rights--but they make an exception for media corporations. No wonder journalists don't inform the public--or, quite possibly, themselves--about rent seeking. Their employers depend on it.

That Word Doesn't Mean What You Think It Means Georgia journalism prof Cynthia Tucker isn't impressed with Ben Carson, a black physician who wowed conservatives by giving a speech critical of President Obama at the National Prayer Breakfast--with Obama in the audience. In a CNN.com piece, Tucker writes:

Like giddy teenagers, Republican activists have fallen for another charming, personable and accomplished black conservative. Dr. Ben Carson is the newest object of their crush, which was born of a desperate need to attract more black men and women as high-profile standard-bearers.You can't blame Republican loyalists for swooning over the doc, a renowned surgeon who rose from poverty to head pediatric neurosurgery at Baltimore's famed Johns Hopkins Hospital.

Question 1: How exactly does Republicans' behavior toward Carson differ from Democrats' behavior toward Barack Obama in, say, 2004-10?

Tucker continues:

If wooing voters of color were simply a matter of finding an attractive black face with an inspiring personal story and an impressive resume, Carson would be hard to beat.But black voters tend to be more discerning than that.�.�.�.One of the reasons is that Carson doesn't seem to know black Americans' political values very well. In his most recent book--a political tract called "America the Beautiful: Rediscovering What Made This Nation Great"--he writes: "Many African-Americans voted for Obama simply because he was a black man and not because they resonated philosophically with his policies." In fact, black voters have been increasingly allied with the Democratic Party since the 1960s when Lyndon Johnson pushed through significant civil rights legislation. Al Gore received about 95% of the black vote in 2000, John Kerry about 93% in 2004.

Black turnout was up significantly in 2008 and 2012 compared with previous years, and Obama's race probably had something to do with that. But Tucker is correct that the level of Obama's support among blacks was a function of his party more than his race.

But that leads us to Question 2: Is "discerning" really the right word to describe a voting bloc that so nearly approaches unanimity in its support for one party?

John Roberts Was Right

  • "If you tell a child that somebody has to be their [sic] friend, I suppose you can force the child to say this is my friend, but it changes the definition of what it means to be a friend."--Chief Justice John Roberts, Hollingsworth v. Perry oral arguments, March�26
  • "Man Accused of Using Gasoline to Set Friend on Fire"--headline, News-Gazette, (Champaign-Urbana, Ill.), March�26

Fox Butterfield, Is That You?

  • "Procter & Gamble .�.�. reported a federal tax burden in 1969 that was 40 percent of its total profits, a typical rate in those days. More than four decades later, P&G is a very different company, with operations that span the globe. It also reports paying a very different portion of its profits in federal taxes: 15 percent. .�.�. Most of the 30 companies listed on the .�.�. Dow Jones industrial average, have seen a dramatically smaller percentage of their profits go to U.S. coffers over time, even as their share prices have driven the Dow to an all-time high."--Jia Lynn Yang, Washington Post, March�27
  • "Despite making enormous strides professionally and financially, almost half of American women fear becoming bag ladies, even many of those earning six-figure salaries, according to a new survey."--Walter Hamilton, Los Angeles Times website, March�27

Other Than That, the Story Was Accurate "An earlier version of this post questioned how the argument against Proposition 8 could be taken seriously. Rather, it is the argument in favor of the proposition that is questionable."--Los Angeles Times website, March�26

Metaphor Alert "Richard Feldman, the former NRA lobbyist who now advocates universal background checks, said Obama's mistake was seeking gun control reforms that are too broad. .�.�. 'If you're all over the board, you're as strong as your weakest link. Drop your weakest link. Put your best foot forward. I'd always rather go back to Congress as a winner and ask for more later,' he said. "Anyone in Washington that doesn't know how to play the game puts themselves at a disadvantage for winning the game. The NRA knows how to win the game for their side. They've proved it on the defense or the offense.'�"--Politico.com, March�27

We Blame George W. Bush "Shoes Blamed for Fire at Tsukasa of Tokyo"--headline, Patch.com (Vernon Hills, Ill.), March�26

What Happens When the Choom Gang Gets the Munchies "Justices, Citing Ban on Unreasonable Searches, Limit Use of Drug-Sniffing Dogs"--headline, New York Times, March�27

Still Crazy After All These Years "The Ghost of Paul Simon Haunts Obama"--headline, NationalJournal.com, March�26

Mr. Bad Example

  • "Biden Advises Shooting Shotgun Through Door"--headline, U.S. News & World Report website, Feb.�28
  • "Biden Blasts Republicans at Event With House Democrats"--headline, CNN.com, March�24

Doesn't Have the Same Ring as 'And That's the Way It Is' "NBC Anchor: I'm Gay, I'm Pregnant and I'm Marrying My Partner"--headline, Washington Times, March�27

Is There Anyone He Can't Crush? "Poll: Christie Still Crushes Buono in N.J. Race"--headline, NationalJournal.com, March�26

At Their Age, Wouldn't You? "Justices Seem Ready to Take It Slow on Marriage Issue"--headline, Blog of Legal Times, March�26

And After She Ate From the Tree of Knowledge "First Woman Is Chosen to Lead Secret Service"--headline, New York Times, March�27

Hard to Believe Money Launderers Still Use Checks "Fed Orders Citigroup to Improve Money Laundering Checks"--headline, Reuters, March�26

So Much for the War on Drugs "Dan Carpenter: Public Schools Take Blow From Indiana Supreme Court"--headline, Indianapolis Star, March�27

Shortest Books Ever Written "Kim Kardashian Pregnancy Weight Fat-Shaming: Why You Really Should Care"--headline, Puffington Host, March�26

But Why Would Anybody Be a Well? "Lincoln, Neb., Bests All Cities in Wellbeing in 2012"--headline, Gallup.com, March�26

The Veterinarian Says He's Comin', but You Gotta Pay Him Cash "Eagles on the Mend After Scavenging Euthanized Horses"--headline, Seattle Times, March�27

Questions Nobody Is Asking "What Kind of Men Go to Prostitutes?"--headline, LiveScience.com, March�25

Look Out Below!

  • "Rhode Island City Drops Cussing Cockatoo Case"--headline, Associated Press, March�27
  • "Ahmadinejad Roadshow: Pitching His Political Heir"--headline, Associated Press, March�27

It's Always in the Last Place You Look "Men and Boys Behaving Badly: Where Are Their Fathers?"--headline, Puffington Host, March�26

Too Much Information

  • "Chris Christie: I'll Keep 'Firm Grip' on Prince Harry During Royal Visit"--headline, Guardian website (London), March�26
  • "Gay Marriage Without the Robes"--headline, Puffington Host, March�27

Someone Set Up Us the Bomb "Force Lose Hooker Charles for the Season"--headline, RugbyWeek.com, March�26

News You Can Use

  • "Resisting Change Can Hinder Your Progress"--headline, Albany (Ga.) Herald, March�25
  • "Holidaymakers Advised to Take Back-Up Cash as Cyprus' Banks Prepare to Reopen"--headline, Daily Mail (London), March�26

Bottom Stories of the Day "Poll: Anger at D.C. on the Rise"--headline, Politico.com, March�27

Some Things Money Can't Buy This story from the Puffington Host is priceless:

The reorganized Obama campaign, now called Organizing for Action, is jumping into the New York state legislative effort, pushed by Gov. Andrew Cuomo (D), to pass campaign finance reform that would include public financing of candidates.

Yes, the new champion of "campaign finance reform" is the same 501(c)(4) corporation that is renting out the president for a cool half-million dollars.

Wait, it gets better. Here's the concluding paragraph from the PuffHo piece:

Common Cause also cheered the OFA's step in a somewhat double-edged statement. "Organizing for Action's involvement in New York is great news," Common Cause President Bob Edgar said, adding that he hoped the announcement "is a precursor to a national drive for reforms like public financing and full disclosure of campaign donations to campaigns, PACs and the politically active and tax-exempt 'social welfare' organizations that have emerged since the Citizens United decision."

Since Common Cause is itself a 501(c)(4) corporation, we'd say that statement is triple- or quadruple-edged.

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(Carol Muller helps compile Best of the Web Today. Thanks to Miguel Rakiewicz, Steve Howe, William Thode, Brian Warner, John Williamson, Eric Jensen, Kevin Hisel, Scott Hill, Campbell Sasser, Dan Goldstein, Ryan Baker, John Bobek, Terry Holmes, Mark Kellner, Bob Wukitsch, James Benenson, Len Haynes, Pete Yarbro, Irene DeBlasio, Stefan Sharkansky, Howie Menard, Mark Finkelstein, Todd Crampton, Terry Holmes, Chris Green and Nick Kasoff. If you have a tip, write us at opinionjournal@wsj.com, and please include the URL.)

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