a service of NPRI

September 26, 2006 
Vol. 2, No. 14

Also in this issue:

States could be overwhelmed by health care burden

New study undermines argument for death tax

Dealers sue Wynn
over tips plan

Builders dropping
options on land

Minimum wage increases mean costly mandate on citizens AND employers

Bill coming due for years of U.S. inflation, profligacy

Reid: The man who would
be Senate majority leaders

Another NEA bigwig convicted


Stop taxing inflation

Voodoo debt and
the coming recession

Socialist Man in
the Big Easy

New York Times gets
chemical plant security wrong


from NPRI:

Helping the Poor -- or helping the Mob?

Bad paragraph in ‘minimum wage’ scheme would increase Nevada corruption

EVen most union households disapprove of unions, a Harris poll found last year.

It’s long been known that most working adults rate unions negatively. That figure’s now at 69 percent, according to this August 2005 survey.

But the actual negativity of union members themselves on unions—up to 61 percent now—is something that never makes the news. Yet, of all people, it’s rank-and-file union folks who have the greatest first-hand, practical experience of the realities of “organized labor.”





Stop taxing inflation

By Philip Kerpen
New York Sun

The old fight over indexing the basis for the capital gains tax is starting up again, and this is shaping up to be the best chance ever to finally end the unfair tax on inflationary gains.

Legislation sponsored by Reps. Mike Pence of Indiana and Eric Cantor of Virginia, H.R. 6057, would use the Gross Domestic Product implicit price deflator to index the capital gains tax basis for inflation, ending one of the most egregious practices of our tax system.

Perhaps more encouraging, it may be possible for the president to introduce indexing administratively, without the passage of any legislation.

The capital gains tax is currently applied to the difference between the sale price of an asset and its acquisition price, adjusting for any capital improvements, but not for inflation. Because there is no inflation adjustment, for a long-held asset, the capital gains tax is largely an inflation tax. When the government levies a tax on assets that have depreciated in real terms, it is actually confiscating assets, which is a violation of basic principles of fairness..


Voodoo debt and the coming recession

With debt piled high, the declining economy will soon turn into a bobsled ride to tears.

By Bill Fleckenstein
MSM Money

The eyes tend to glaze over at the mention of "collateralized debt obligations" (CDOs) and "credit default swaps" (CDSs).

It's understandable. These financial instruments -- the glue that has held together the speculation in housing finance and the housing ATM -- have proved somewhat incomprehensible, even to the professionals. That's why I referred to them as "financial dark matter" in my column two weeks ago. (Special thanks to my friend Jim Grant for having gotten me up to speed on this subject in his past two issues of Grant's Interest Rate Observer.)


Subsidizing sloth

Socialist Man in the Big Easy

By Vedran Vuk
Ludwig von
Mises Institute

Marxists long theorized that communism would bring about the new socialist man. Through communist programs, man would turn his sole purpose to laboring and struggling for the greater good of the collective.

Through socialist policies and redistribution, New Orleans has raised from its ruin a new socialist man. However, instead of working for the collective, this risen New Orleans man does not work at all. He does not live for the collective but lives at the expense of the collective. This reality is drastically different from what Marxists had in mind when referring to the man created from socialism.

To a person with common sense, this seems like an obvious outcome. If you give money to those who stay unemployed, you are not teaching them to work. Rather, you are teaching them how to survive without working.


The Left
New York Times gets chemical plant security wrong

CEI Open Market

Why do liberals always assume that the solution to every problem is regulation and yet more regulation? That’s the thrust of an editorial in yesterday’s New York Times that whines: “Congress still has done nothing to protect Americans from a terrorist attack on chemical plants.”

It assumes that Congress has some magical answer to the issue members refuse to employ because of chemical industry lobbying. It also wrongly claims that nothing has been done to protect these plants.


WHY BusinessNevada

Justices of Juice

Nevada’s high court proclaims
itself above the law

By Steven Miller

Early this month the Nevada Supreme Court attempted to put behind it the well-deserved infamy it earned from its 2003 decisions in Guinn v. Legislature.

Unfortunately, attentive reading of the court’s recent decision on PISTOL — the “People’s Initiative to Stop the Taking of Our Land” — reveals a court majority that remains as infected with black-robe fever as ever.

Indeed, considered from the standpoint of America’s Founders, Nevada’s high court continues to militantly insist on getting its constitutional priorities exactly backwards.


State waste
States could be overwhelmed by health care burden

Government negotiators ignored long-term financial costs of their actions

By Bob Porterfield
Associated Press

The bill is coming due for years of generous benefits bestowed upon the nation's public employees, and it's a stunner: hundreds of billions of dollars over the next three decades.

California will almost certainly owe more than any other state, threatening to bankrupt local governments and all but guaranteeing cuts in services like education and public safety, say observers.

These staggering numbers are coming to light because of new accounting rules issued by the Government Accounting Standards Board. They require public agencies to disclose the future cost of health care and other benefits - such as dental, vision and life insurance - promised to retirees alongside traditional pensions:


Class warfare
New study undermines argument for death tax

National Center
for Policy Analysis

DALLAS -- As Congress continues debate over reduction and possible elimination of the estate tax, a new study from the National Center for Policy Analysis (NCPA) undermines the chief argument made by proponents of the tax – that estate taxation prevents the concentration of wealth in the hands of financial dynasties.

The report shows that the contribution of inheritances to the distribution of wealth in the U.S. is surprisingly small.


Gratuity grab
Dealers sue Wynn over tips plan

Retain nationally
prominent labor lawyer

By Arnold M. Knightly
Las Vegas Business Press

Two dealers at Wynn Las Vegas have stepped forward as the named plaintiffs in a class-action lawsuit filed in Clark County District Court on Sept. 13.

The suit seeks damages for compensation lost under the new tip-sharing arrangements, which gave casino supervisors a share of dealers' tips.


Builders dropping
options on land

Soft market forces layoffs,
adjustment of strategies

By Brian Wargo
InBusiness Las Vegas

In a sign the housing market continues to soften, Las Vegas Valley homebuilders are backing out of land deals as home sales remain sluggish.

Centex Homes, which has trimmed its staff by layoffs and voluntary resignations, announced Sept. 14 that it has relinquished various options on land holdings.”


Southern Nevada Index
of Leading Economic Indicators

(click for larger chart)

Minimum wage increases mean costly mandate on citizens AND employers

Employment Policy Institute

In recent years, the movement to increases minimum wage has been active in states across the country.

Advocates of these wage hikes argue that the increases will help low-income families escape poverty. While this argument is emotionally compelling, it ignores the unintended consequences that the proposed increase would create—such as job loss among the most vulnerable employees and displacement of low-skilled adults by wealthy teens.

Even worse, the mandated increase overwhelmingly confers its benefits on employees who are not poor, while those who are bear a disproportionate share of the costs.


Minimum wage?
Minimum sense!

Nevada Policy
Research Institute

In 1998, Washington voters approved an AFL-CIO initiative that raised that state's minimum wage and tied it to changes in the federal Consumer Price Index.

Here in Nevada, AFL-CIO representatives testifying before the Legislature last spring cited the Washington law as a model for what the State of Nevada should do—in order to “fight poverty.”

Really? The fact is, the Washington law CREATED poverty—exactly as opponents within the business community had warned!


The Dollar
Bill coming due for years
of US inflation, profligacy

As rates climb, American
foreign debt begins to bite

By Mark Whitehouse
Wall Street Journal

Over the past several years, Americans and their government enjoyed one of the best deals in international finance: They borrowed trillions of dollars from abroad to buy flat-panel TVs, build homes and fight wars, but as those borrowings mounted, the nation's payments on its net foreign debt barely budged.

Now, however, that debt is coming home to roost.

[continued] This article will be available to non-subscribers of the Online Journal for up to seven days after it is e-mailed.

The man who would
be majority leader

Harry Reid voting record
found 'not-so-moderate'

Human Events

Were Senate Minority Leader Harry Reid (D.-Nev.) to become majority leader after the November election, he would fall naturally into a line of bitterly partisan and decidedly left-wing Democratic leaders running back through Tom Daschle (S.D.), George Mitchell (Maine) to Robert Byrd (W.Va.).

Like Daschle before him, Reid is a Western Democrat who came to his leadership post pretending to represent the “moderate” wing of the Democratic Party.

Some Democrats hoped he would help improve their party’s image in Red States, where their support has been eroding since the 1960s.


Another NEA
bigwig convicted

NEA executive committee member
pleads 'no contest' to corruption

Canton Repository

NEA Executive Committee member Michael Billirakis pled no contest to an ethics violation arising from abuse of his position on the board of the Ohio State Teachers Retirement System. The plea deal resulted in a suspended jail sentence, a $250 fine, one year probation, 60 hours of community service, and $275 in restitution for accepting Broadway play tickets that were supplied by a firm that had business before the retirement board.

Billirakis was charged last month with two counts of conflict of interest and two counts of filing a false disclosure statement by the Ohio Ethics Commission. He is one of three officers of NEA affiliates convicted of accepting gifts from firms who had business with the retirement system board.


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