Category: reason

The Pennsylvania Supreme Court ruled this week that Philadelphia’s 1.5-cent-per-ounce tax on soda and other sugary beverages does not conflict with state law.

A group of city merchants and representatives of the beverage industry had challenged the so-called soda tax on the grounds that it amounts to double taxation, since consumers are already charged a state sales tax on sweetened drinks. Under Pennsylvania law, localities are not allowed to tax anything already taxed by the state. The state Supreme Court rejected that claim in a 4-2 ruling, concluding that the soda tax is applied at the wholesale level and therefore does not conflict with the state sales tax, which is charged at the final point of sale.

“The payer of the beverage tax is the distributor, or in certain circumstances, dealers, but never the purchasing consumer,” Chief Justice Thomas Saylor wrote for the majority.

That logic might hold up in the realm of law, but real-world economics show that consumers are paying both the sales tax and the soda tax, which is passed down the supply chain. The tax adds about $1 to a two-liter bottle of soda, and more than $2 to a six-pack of cans.

Consumers are responding to those new incentives by travelling outside Philadelphia to do their shopping. A report by Catalina, a market research firm, found that soda sales inside city limits have fallen by 55 percent since January 1, when the tax took effect; while sales outside the city have grown by 38 percent. That means the tax is costing not only consumers, but city businesses who have lost customers because of it—a completely predictable outcome.

And it’s not just soda sales being hit. The tax also applies to fruit juices and sports drinks.

“This duplicative tax has shown to be a financial burden for both consumers, who the tax is getting passed onto, and employers,” says Gene Barr, president of the Pennsylvania Chamber. “Taxes that single out particular industries drive customers to other areas to purchase these goods, which can lead to business closures and a loss of revenue that is difficult to overcome.”

According to Ax The Bev Tax, a coalition of city businesses, the tax has cost 1,200 jobs across various industries.

About the only people happy with the Supreme Court ruling are, predictably, the city officials who sold the tax as a way to generate $90 million for schools and pre-K programs. Mayor Jim Kenney, in a statement, said the ruling “offers renewed hope for tens of thousands of Philadelphia children and families who struggle for better lives in the face of rampant poverty.”

But the city’s plans for the soda tax money have already had to be pared back once, because the tax generated about 15 percent less revenue than expected in 2017. And as Baylen Linnekin noted last year, “spending tens of millions of dollars to expand pre-K in a city where even the most optimistic reports show city schools already fail to educate children and are routinely broke may not be the best idea.”

This week’s ruling is a reminder that legality is not the only measure of good policy. The soda tax should be reconsidered by city officials or blocked by the state legislature, which has the authority to overrule local taxes.

State lawmakers, include some Philadelphia Democrats, have opposed the tax. State Sen. Anthony Williams (D-Philadelphia) authored an amicus brief for the state Supreme Court, urging them to rule against the city.

“I don’t like a regressive tax. I don’t like it billed as it is, which is helping the poor,” Williams tells Billy Penn, a Philadelphia-based alt-news website. “No, you’re taxing the poor to help themselves.”

State Sen. Scott Wagner (R-York), this year’s Republican gubernatorial nominee, took a shot at the soda levies during a campaign event this week, calling for a state to cap the tax.

The Pennsylvania Chamber is urging state lawmakers to pass House Bill 2241, which would prohibit municipalities in Pennsylvania from imposing soda taxes.

Whether lawmakers will do anything about the tax remains to be seen. Although Pennsylvania’s legislature is technically a year-round body, the fall session in an election year is not very active, historically.

Montenegro’s foreign minister says his country is “too small” to start World War III. His comment appears two days after U.S. President Donald Trump’s suggestion that “aggressive” Montenegrins could spark a global conflict.

“We have no intentions whatsoever to start World War III, we are too small for that,” Montenegro Foreign Minister Srdjan Darmanovic tells CNN in an interview published today. “It was fun to hear about it, actually like a good joke, but we are a very peaceful nation.”

On Wednesday, Fox News host Tucker Carlson asked Trump why the United States should send forces to defend the small NATO member if it were attacked, as mandated by Article 5 of NATO’s Washington Treaty. “They may get aggressive, and congratulations, you’re in World War III,” Trump responded.

Montenegrin officials disagree. “Aggressive is a word which can’t be applied in the case of Montenegro,” Montenegrin U.N. Ambassador Milica Pejanovic-Djurisic tells The Washington Post. In a statement posted on its official website, the Montenegrin government says it is “proud” of the “history and tradition and peaceful politics that led to the position of a stabilising state in the region.”

Darmanovic, for his part, isn’t taking Trump’s words literally. “I think President Trump actually did not speak on Montenegro. He spoke on 2 percent on financing and contributing to NATO, and Montenegro was just picked up as an example—maybe because we are one of the tiniest countries in the alliance,” he said. Regardless of what Trump did or did not mean to say, the president signed a communiqué endorsing Article 5 during the NATO summit in Belgium earlier this month.

It’s unlikely that Montenegro will cause World War III, though not impossible. Montenegro joined NATO last June to the great chagrin of Russia, which supported a failed coup against the Montenegrin government in 2016. If Russia were to invade the tiny nation, the U.S. would be required to come to Montenegro’s defense, potentially sparking a massive global conflict. Again, that’s unlikely. But it wouldn’t be the first time a world war started in a small Balkan country.

Senator Mike Lee (R-Utah) sat down with Reason‘s Editor-at-Large Matt Welch to talk about the upcoming confirmation hearings for Supreme Court nominee Brett Kavanaugh, what concerns him about Trump’s tariffs and the future of criminal justice reform. Watch above or click here for full text and downloadable versions.

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Divorcing couple can’t use their frozen embryos but someone else can, says judge. A new law in Arizona says that in embryo custody disputes, decisions must be made based on which party is most likely to have them “develop to birth.” This first-of-its-kind measure—signed in April and taking effect this month—portends an expanding front on the pro-life battleground: the fight over frozen embryos.

Slate takes a look today at the law firm and group of activists trying to secure more rights for the excess embryos created as part of in vitro fertilization procedures, and to establish preferential legal treatment for parties who want to see more of them become babies. At the forefront is the Thomas More Society, which represents people in frozen-embryo custody disputes. In Slate‘s words, the group “argues that embryos should not be treated as pieces of jointly owned property because they have a right to life that supersedes an adult’s right not to reproduce.”

The Thomas More Society helped get Arizona’s new embryo law passed, in part as a response to the situation between Ruby Torres and John Joseph Terrell. After they dated for a few months, Torres was diagnosed with cancer. The couple

created seven embryos before Torres went through cancer treatment. Later, during the couple’s divorce proceedings, she said she wanted to keep the embryos for possible use since she probably couldn’t get pregnant without them. Terrell said [he] didn’t want his genetic material to be involved in Torres’ hypothetical pregnancy at all. An Arizona Superior Court judge ruled that Torres couldn’t make a baby with the embryos without Terrell’s consent.

But, the judge added, the embryos shouldn’t be destroyed—they must be donated, offered up to infertile people who can’t make embryos themselves.

From the pro-life perspective, this is the second-best outcome: The woman who wants to bring the embryos to life doesn’t get to keep them, but they still stand a chance of becoming children. For pro-choice observers, however, it’s a disturbing decision. Why should a stranger have the right to use Torres and Terrell’s embryos when neither of them approved that option? If Terrell’s argument was compelling enough for the judge to deny Torres possession of the embryos, why wasn’t it enough to keep the embryos out of a mass donation bin, forcing him to have biological children he still doesn’t want?

Embryo custody battles are increasingly coming before courts, which have ruled in both directions but typically err on the side of not allowing the fertilized eggs to be used unless both parents consent.

“Judges have often—but not always—ruled in favor of the person who does not want the embryos used,” notes The Washington Post, “sometimes ordering them destroyed, following the theory that no one should be forced to become a parent. Arizona, however, is taking the opposite approach.”

FREE MINDS

Massachusetts repeals old sex laws. It took a few hundred years, but Massachusetts legislators have finally declared it legal to have sex outside of marriage, to distribute information about abortion, and to prescribe birth control to single women. The Negating Archaic Statutes Targeting Young (NASTY) Women Act would “repeal a number of archaic laws, some dating back to the 1600s, 1700s and 1800s,” reports the Springfield Republican‘s Shira Schoenberg:

These include laws punishing adultery and fornication; criminalizing abortion and distributing information about abortion; requiring abortions be performed in a hospital; and prohibiting doctors from prescribing contraception to unmarried women.

Of course the laws aren’t enforced any longer—as Schoenberg notes, “most of the laws are unconstitutional and unenforceable under other state and federal laws.” But “this is an important moment to shore up all of our rights here in Massachusetts,” Rebecca Hart Holder, executive director of NARAL Pro-Choice Massachusetts, tells the paper, noting the possibility that the Supreme Court will overturn Roe v. Wade.

That’s the sort of stuff that makes good fundraising fodder for NARAL. But one needn’t believe we’re on the fast track to A Handmaid’s Tale to support the repeal of outdated and authoritarian laws.

The measure was approved by both houses of the Massachusetts Legislature this week and sent to Republican Gov. Charlie Baker.

FREE MARKETS

Tax all the things!

BREAKING: Trump says he’s ‘ready’ to put tariffs on all $505 billion of Chinese goods imported to the US https://t.co/jhu1dewsRK

— CNBC Now (@CNBCnow) July 20, 2018

FOLLOW-UP

No ruling on FOSTA injunction. “Judge Richard Leon of United States District Court in Washington D.C. made no ruling on [the Woodhull Freedom Foundation’s] request for a preliminary injunction” that would block enforcement of the anti-prostitution law until the case is resolved, “nor did he announce a date when he would issue a ruling,” reports AVN.

QUICK HITS

Sen. @RandPaul: “Trump derangement syndrome has officially come to the Senate. The hatred for the President is so intense that partisans would rather risk war than give diplomacy a chance.”

Full video here: https://t.co/Jk5rOpnh1i pic.twitter.com/pM4PK9RPvf

— CSPAN (@cspan) July 19, 2018

• Forbes sorts through various crypto regulation proposals.

• A win for gun rights in California.

• Rape kit backlogs are a real problem. This has nothing to do with the solution.

• On algorithms, information asymmetry, and regulation.

• “I bought the Chicagoist just to run you racist bitches out of business.”

• The Pennsylvania Supreme Court just upheld Philadelphia’s soda tax.

• Trump’s military parade is slated to cost $12 million—about double that of the South Korean “war games” the president has panned for being too “tremendously expensive.”

Cryptocurrency investors are “unsophisticated” bumpkins who wouldn’t know what money was if it hit them on their heads, Federal Reserve Chairman Jerome Powell suggested during a House Financial Services Committee hearing on Wednesday. No need to worry, however, because sophisticated folks like Rep. Brad Sherman (D-Calif.) believe Congress should “have the courage to ban cryptocurrencies” and save us from our misguided “animal spirits.”

During Powell’s semiannual testimony to Congress, Rep. Patrick McHenry (R-N.C.) turned the conversation to the subject of cryptocurrencies. At first, Powell merely echoed his comments from last November, saying cryptocurrencies are not significant enough to threaten the financial system. But then he took a cheap shot at investors who have backed cryptocurrencies like bitcoin and ethereum.

“Relatively unsophisticated investors see the asset go up in price, and they think, ‘This is great; I’ll buy this,'” Powell said. “In fact, there is no promise of that.”

All investments carry risk, and investors in any currency, stock, or bond should be aware of that. But that doesn’t make cryptocurrency investors any less sophisticated, as a group, than other kinds of investors.

That said, it’s important to understand the source of Powell’s skepticism. He derided cryptocurrency as an “investment with no promise.” Later in his testimony he said cryptocurrencies are not really currencies because they don’t “have a store of value,” have no “intrinsic value,” and are not commonly used for payments.

It’s clear that Powell, like his predecessor and many of his colleagues, believes bitcoin and its various cousins are built entirely on speculation. Driven by the Keynesian animus toward speculation, they cannot reconcile its potential with its speculative value. While cryptocurrencies lack the widespread use that defines a medium of exchange as money, their investment value encourages their use and brings us closer to a reality where bitcoin is money.

Contrary to what Powell said, cryptocurrencies already constitute a store of value, although generally not a stable one. Two Federal Reserve economists, Michael Lee and Antoine Martin, found that cryptocurrencies “provide a store of value” in “environments where trust is a problem.” Lee and Martin also pointed out that Federal Reserve notes, like cryptocurrencies, are not backed by physical commodities and have no intrinsic value.

Powell’s other comments about cryptocurrencies further illustrated his misunderstanding of their potential value. He called attention to money laundering through cryptocurrencies. There is no denying that cryptocurrencies such as bitcoin are used for less-than-legal activities, largely by virtue of their anonymity and radical decentralization. But that fact does not disqualify them as serious alternatives to the present monetary system. Nor does it mean that cryptocurrencies should be banned, as Sherman suggested. “Yes, it is true that criminals have used bitcoin,” says Norbert Michel, director of the Heritage Foundation’s Center for Data Analysis, “but it’s also true that criminals have used airplanes, computers and automobiles.”

There is an upside to Powell’s bearishness. As long as central bankers don’t believe cryptocurrencies pose a threat to the monopoly of state-sponsored fiat money, we can expect fairly lax regulation of the industry. Powell made it clear that he has no intention of pursuing jurisdiction over cryptocurrency. It’s better to have government officials mocking bitcoin than trying to regulate it out of existence.

The investigation of a San Bernardino County gang prosecutor accused of making some disturbing social-media posts has understandably become national news because of what it could imply about the county’s fair administration of justice and level of professionalism.

For those who missed the news, Deputy District Attorney Michael Selyem, the county’s top hard-core gang prosecutor, is being investigated for a Facebook post about U.S. Rep. Maxine Waters (D-Calif.): “Being a loud-mouthed c#nt in the ghetto you would think someone would have shot this bitch by now,” Selyem reportedly posted a meme of a man wearing a sombrero: “Mexican word of the day: Hide.” And after a police shooting, he reportedly wrote: “That s—bag got exactly what he deserved. … You reap what you sow. And by the way go f— yourself you liberal s—bag.”

The now-deleted posts were captured on screenshots from posts with Selyem’s name, in a report by the San Bernardino Sun.

In statements, Ramos said he is “aware of the negative comments and they do not represent” his department’s views, and emphasized the importance of having “fair, ethical and unbiased” prosecutors. After public outrage, the DA’s office placed Selyem on paid administrative leave while the department reviews the matter.

Having a top prosecutor allegedly use the worst word one could call a woman, joke about Mexicans who need to hide, and wonder why no one has shot a congresswoman suggest a much deeper problem than one of saltiness or bad imagery. This language undermines the department’s fundamental mission, which is to fairly administer justice. Prosecutors help imprison people. The stakes are high, so the system should be above reproach, writes Steven Greenhut.

View this article.

Does this movie signal the onset of Too Much ABBA? Of course not. There’s no such thing as too much ABBA, writes Kurt Loder in his latest review for Reason.

View this article.

This week, The Washington Post published an op-ed headlined “It’s not wrong to compare Trump’s America to the Holocaust.” As with similar examples of this genre, writes David Harsanyi, it’s a sickening display of moral relativism that belittles the suffering and murder of millions in the service of some shortsighted and crass partisan fearmongering.

Elsewhere, Politico published an opinion piece headlined “Putin’s Attack on the U.S. Is Our Pearl Harbor,” which demeaned the sacrifice of American service members by likening a military attack on American soil that brought us into the bloodiest war mankind has ever experienced to phishing.

In reality, Harsanyi writes, Trump’s ham-fisted, misguided, and transparent Putin-coddling is not tantamount to sedition.

View this article.

Dallas County, Texas, sheriff’s office general orders say a deputy who dies off duty will be given certain honors during his funeral, including a deputy standing watch beside his casket, an honor guard and a final call broadcasting his badge number on the radio. But Interim Sheriff Marian Brown provided none of those honors to deputy Omar Calderon, even though his widow requested them. Brown’s reason? Calderon committed suicide after battling depression. “Due to the nature of Deputy Calderon’s death, the sheriff’s department does not want to condone nor appear to glamorize suicide,” Brown said.

A new report from the Federal Election Commission reveals that Rep. Devin Nunes (R-Calif.) used money raised by a political action committee he created, New PAC, to pay for nearly $40,000 in questionable travel, lodging, dining, and entertainment expenses since 2017. According to the FEC, New PAC listed the expenditures as fundraising costs.

A Boston Celtics fan since high school, Nunes spent nearly $15,000 on tickets to see home games at TD Garden last year: $7,300 in February 2017, $5,700 in April 2017, and $1,588 in May 2017. In addition to the tickets, New PAC spent $3,594 on hotel stays during games in May 2017.

Last month, McClatchy reports, Nunes spent about $5,000 at six California wineries outside his district, about $5,000 on Gold Coast Limousine service during his winery trips, and $4,409 at a beach hotel located near the wineries. In March 2018, Nunes spent $7,229 at seven restaurants and hotels in Las Vegas. He has spent a total of $42,741 on “catering, site rentals, hotels and meals” in Las Vegas since 2013.

The expenditures on basketball games, wineries, Las Vegas trips, and other travel were all described as related to fundraising. The House Ethics Committee prohibits “personal use” of PAC money, but the rule is rarely enforced. The FEC says money that public officials raise for their own campaigns cannot be used for personal expenses, but that rule does not apply to leadership PACs like Nunes’, which are supposed to support other people’s campaigns. “For many officeholders,” the Campaign Legal Center notes, “leadership PACs have become little more than slush funds, used to subsidize an officeholder’s luxury lifestyle.”

In a statement to The Hill, the congressman’s office called the McClatchy report “yet another baseless attack” by the news service, saying “it insinuates wrongdoing while actually showing that Rep. Nunes has broken no rules and properly reported all expenses for his fundraising events, much of whose income he gives to help elect other Republicans.”

Nunes separately raised $7 million for his 2018 re-election bid, a significant jump from previous election cycles, when he usually collected $1 million to $2.5 million. McClatchy notes that “Nunes’ fame has grown enormously due to his position as House Intelligence Committee chairman, his friendly relationship with President Donald Trump and his controversial views about Department of Justice investigations.”