Summer Reading – Back to School Edition

It’s the end of summer, and the signs are everywhere. D.C. denizens on a night out on the town are reaching for their sweaters, and schoolkids are “asking” ChatGPT about Shakespeare. Seasons may change, but some things always stay the same. For example, Congress is a month away from a potential government shutdown because Congress hasn’t passed any spending bills. And, as Congress returns from a month-long recess, the national debt continues to grow and has now surpassed $35 trillion. Meanwhile, politicians from both sides of the aisle are as eager as ever to pass large tax increases that won’t even begin to pay for their spending habits. But, fear not. The Taxpayers Protection Alliance (TPA) has some recommendations and readings for Congress that will hopefully get them on the right track as they reconvene.

Oppose reckless tax increases that would bilk the middle class

With historically high inflation, politicians should avoid any policies that would further increase the cost of living. Sadly, that’s not how Washington, D.C. works. On August 19, NBC reported that Vice President Kamala Harris is calling for raising the corporate tax rate to 28 percent. Harris campaign spokesman James Singer claims this policy would be a “fiscally responsible way to put money back in the pockets of working people and ensure billionaires and big corporations pay their fair share.” Her campaign ignores a vast array of analysis showing that corporate taxes are passed onto consumers and workers and result in higher prices, lower wages, and less job growth. According to a 2021 overview of the empirical evidence by Tax Foundation economist Alex Durante, “The economic evidence suggests that in the long run, workers and consumers, rather than shareholders, bear a sizable share of the corporate tax burden. Reviewing some of this evidence in greater detail shows that many vulnerable
groups would likely be impacted by these corporate tax changes... a 1 percentage-point increase in the corporate tax rate increased retail prices by 0.17 percent. Combining this estimate with the wage response estimated in Fuest et al. [2018], [Baker et al. (2020)] calculated that 31 percent of the corporate tax incidence falls on consumers, 38 percent on workers, and 31 percent on shareholders." The Democrats don’t have a monopoly on harmful policies. Peterson Institute researchers Kimberly Clausing and Mary Lovely note, "In recent campaign events, former President Donald Trump mused that he might impose even higher tariffs than those he proposed earlier this campaign season [including 60 percent tariffs on products from China]. Trump’s latest statements show he’s now considering tariffs of up to 20 percent on most imports. We find that imposing a 20 percent across-the-board tariff combined with a 60 percent tariff on China would cost a typical US household in the middle of the income
distribution more than $2,600 a year. That’s up from the $1,700 loss in after-tax income that would result from his earlier plan."

Keep the Federal Trade Commission (FTC) on a short leash

Over the past few years, the FTC has made a mockery of consumer protection by far exceeding its authority and imposing higher prices through blocking mergers and intimidating companies. Antitrust investigations and enforcement expand by the day, and as a result, companies must think twice before hiring workers, adjusting prices, or doing really anything else. In the past few months, the FTC and DOJ have launched investigations against bulk discounting by grocery stores, enacted broad and costly regulations on employment contracts, and obsessed over the color of text messages. Underlying these efforts is an incoherent economic philosophy that defies common sense. In March, the National Review noted that the FTC, “is trying to argue...the U.S. is on the verge of a grocery-store monopoly. It has sued to block the merger between Kroger and Albertsons, first announced in October 2022, in a move called for by progressives such as Senator Elizabeth Warren (D., Mass.). To get a combined Kroger and
Albertsons to rise to the level of monopoly, the FTC has to define the market such that many of the places Americans buy food don’t count. Wholesale clubs such as Costco or Sam’s Club are not included. Neither are discount stores such as Aldi. Neither are premium stores such as Whole Foods. Dollar stores and e-commerce are excluded as well.” If the FTC is successful in blocking the merger, billions of dollars in planned investments will never materialize, leading to higher prices and a scarcer supply of items on the shelves for consumers. And, for every merger the FTC tries to block, the agency deters countless promising transactions from taking place.

The FTC announced a complaint and proposed order against NGL Labs, LLC, which created “NGL,” an anonymous messaging app. The FTC alleges that NGL employed deceptive means to increase its userbase and improperly solicited underage users, despite the app’s purported risks to minors. The agency seeks to require the defendants to bar underage users from their service. As Commissioner Andrew Ferguson notes in his concurring statement, this “presents a novel theory” under Section 5 of the FTC Act, the operative statutory provision. Ferguson dismantles the FTC’s implication that marketing anonymous messaging apps per se to children could constitute a Section 5 violation. To date, no internet regulatory regime “has ever proceeded on the theory that merely offering messaging services to teenagers violates the law,” he argues. “Such a theory would be in serious tension with the recognized First Amendment rights of minors as well as Congressional policy on their use of internet services.” Lawmakers
must ensure that the FTC obeys the Constitution and stops punishing innovators for making life better for consumers.

Shield taxpayers from broadband boondoggles

The federal government, states, and localities continue to insist on allocating vast sums of taxpayer dollars for broadband deployment. This is a mistake. According to the recently-released TPA report, “Government Broadband Consultants – the Big Grift,” broadband consulting services have emerged across the country at an accelerated pace following the expansion of federal funding. Congress discouraged due diligence with the federal broadband grant programs by not requiring significant matching funds by local governments in the contracts. States have partnered with consultants to develop long-range plans for how to spend the windfall they receive through the $42.5 billion federal Broadband Equity, Access, and Deployment (BEAD) Program. Despite often being touted as a silver-bullet solution to connect Americans to the internet in underserved areas, GONs have consistently failed to fulfill their promises. GONs have historically struggled to attract consumers, with a take rate below 40 percent.
Despite their historic underperformance, the federal government has continuously poured taxpayer dollars, spending more than $413 billion in funding. Consultants have jumped on this gravy train and fleeced taxpayers for millions of dollars. Federal and local officials need to put a stop to this grift.

Lawmakers have their work cut out for them as they return from August recess. Hopefully, members of Congress will put taxpayers and consumers ahead of special interests and government cronies.


BLOGS:

Monday: Global Regulators Want To Hamstring AI Innovation ([link removed])

Wednesday: The Credit Card Competition Act is Just Bad Policy ([link removed])

Thursday: Appeals Court Upholds Injunction Against Key Provision of California’s Censorial Child-Safety Law ([link removed])

Friday: Summer Reading: Back to School Edition ([link removed])

Media:

August 23, 2024: Main Street Matters podcast interviewed TPA for their episode, “Kamala Harris’s Economic Plan Will Be a Disaster for Consumers.”

August 26, 2024: WBFF Fox45 (Baltimore, MD) interviewed me about Baltimore spending $5 million to purchase Tesla electric vehicles for city use.

August 26, 2024: Inside Sources ran TPA’s op-ed, “Val Demings Must Embrace Postal Reform.”

August 27, 204: The Rutland Herald (Rutland, Vt.) ran TPA’s op-ed, “Val Demings must embrace postal reform.”

August 27, 2024: The West Virginia Gazette (Charleston, W.V.) ran TPA’s op-ed, “Val Demings must embrace USPS reform.”

August 27, 2024: The Daily Pouch ran TPA's op-ed, "UK Vape Legislation State of Play – Part 2, The Disposable Ban and Vape Taxes."

August 28, 2024: The Detroit Free Press (Detroit, Michigan.) ran TPA’s op-ed, “U.S. Postal Service must embrace reform.”

August 28, 2024: The Times Argus (Montpelier, Vt.) ran TPA’s op-ed, “Val Demings must embrace postal reform.”

August 29, 2024: WBFF Fox45 (Baltimore, MD) interviewed me about problems at the Department of Public Works.

August 29, 2024: I appeared on WBOB 600 AM (Jacksonville, Fla.) to talk about government spending and the upcoming presidential debate.

Have a great weekend!

Best,

David Williams
President
Taxpayers Protection Alliance
1101 14th Street, NW
Suite 1120
Washington, D.C. xxxxxx

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