Archive for January 9, 2008

Salience and taxation

This is worth reading–Salience and Taxation: Theory and Evidence. The summary is here.

Links to Armchair Economist

Who’s linking to Armchair Economist?

French economics

According to the French, economic growth is bad. From a French textbook:

“Economic growth imposes a hectic form of life, producing overwork, stress, nervous depression, cardiovascular disease and, according to some, even the development of cancer.”

(HT: Mankiw)

Interstate commerce

Yesterday I wrote about my state, Tennessee, prohibiting people from buying cheaper smokes in neighboring states. Actually, people are permitted two cartons. This is to prohibit smuggling from low-tax states to high-tax Tennessee (in regard to our cigarette taxes).

My problem with this is my Constitution includes the following in Article I, Section 10:

No tax or duty shall be laid on articles exported from any state.

No preference shall be given by any regulation of commerce or revenue to the ports of one state over those of another: nor shall vessels bound to, or from, one state, be obliged to enter, clear or pay duties in another.

In other words, the founders recognized that trade was beneficial to the economy, so they prohibited the states from erecting trade barriers. Laws such as the one in Tennessee (and they exist in other states, I’m sure) seem to violate this principle. It is a major barrier to trade. I am prohibited from engaging in commerce in other states. I am forced to purchase high-priced goods in Tennessee. If they can do this with cigarettes, what’s to stop them from including other goods? They are creating their own little tax monopoly.

My question is: Does anyone know if this has ever been tested in court? It seems to clearly be an impediment to interstate commerce.

NBER Research

Jan. 2008 NBER Research Digest.

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