Massive government subsidies to Amazon.com and other internet retailers

This piece in the WSJ explains how the government has gotten around regulations put in place to stop them from unfairly competing against private companies.

A Citigroup analysis finds each box [Amazon ships] gets a $1.46 subsidy. It’s like a gift card from Uncle Sam. . . . 

Other companies, such as UPS and FedEx , compete with the Postal Service to deliver packages. Lawmakers, to their credit, wanted a level playing field between the post office and its private competitors. The 2006 Postal Accountability and Enhancement Act made it illegal for the Postal Service to price parcel delivery below its cost.  

But with a networked business using shared buildings and employees, calculating cost can be devilishly subjective. When our postal worker delivers 10 letters and one box to our home, how should we allocate the cost of her time, her truck, and the sorting network and systems that support her? What if the letter-to-box ratio changes? 

In 2007 the Postal Service and its regulator determined that, at a minimum, 5.5% of the agency’s fixed costs must be allocated to packages and similar products. A decade later, around 25% of its revenue comes from packages, but their share of fixed costs has not kept pace. First-class mail effectively subsidizes the national network, and the packages get a free ride. An April analysis from Citigroup estimates that if costs were fairly allocated, on average parcels would cost $1.46 more to deliver. It is as if every Amazon box comes with a dollar or two stapled to the packing slip—a gift card from Uncle Sam.

For years Amazon and other companies that sold over the internet didn't pay sales taxes.  Here is a National Conference of State Legislatures report in 2014.

Main Streets all across America are looking to Washington to close a loophole that gives online-only retailers an unfair advantage over their Main Street competitors. 

This unfair advantage costs local communities jobs and tax revenue and creates significant unfairness in the marketplace for businesses and consumers alike. 

NCSL advocates for passage of e-fairness legislation because it levels the playing field for local businesses, which are the economic backbones of our communities that provide employment and tax revenue to fund vital services. As sales taxes account for over a third of revenues for most states, including over half of tax collections for six states, the inability to collect taxes that are legally owed constrains states’ options to reform their tax code elsewhere. This includes lowering tax rates or requiring states to raise certain tax rates to fund necessary government services. 

How Did We Get Here?Two Supreme Court rulings (Bellas Hess and Quill) cite concern that collecting sales tax for multiple states would be too difficult. As it is now, the Supreme Court ruled that states can only require retailers to collect state taxes in territories where they have offices or stores. 

How Is it Affecting States?States lost an estimated $23.3 billion in 2012 from being prohibited from collecting sales tax from online and catalog purchases. With nearly every state still facing budget shortfalls, this revenue could help fund police, school teachers and other much-needed programs. . . .

Fox News: Stanford law prof gets it wrong on guns: right-to-carry reduces crime, not the other way around

I have a new op-ed at Fox News on a study that has been getting a fair amount of attention over the last couple of weeks.

Would you rely almost exclusively on trends in Hawaii to predict violent crime rates in Idaho, Minnesota, Mississippi, Nebraska, and Utah?  Would you look at Illinois to predict changes in Louisiana and South Carolina?   Illinois has a drastically difference crime landscape, with half of its violent crime occurring in Chicago. 

Though it wouldn’t pass the laugh test for most people, an unpublished report making just these sorts of comparisons has been all the rage in the media.  Lead author John Donohue, a professor at Stanford Law School, makes a claim which goes against existing national research: that right-to-carry laws increase violent crime. 

The report has been covered in Newsweek, The Atlantic, Bloomberg, other national outlets and many newspapers from Newsday to the Salt Lake City Tribune.  Despite outlets such as Newsweek claiming that the report “debunks” my own research, not a single reporter has contacted me for my thoughts.  The only quotes were from gun control advocates. By contrast, those same outlets have consistently sought out critics when discussing my own research.  Apparently, politically correct results get a free pass on proper journalistic scrutiny. 

No other study by an economist, criminologist, or law professor has claimed that US violent crime rose after right-to-carry laws were adopted. 

So the game is to find states where murder rates fell relative to the states adopting right-to-carry laws, then use that as evidence of right-to-carry laws causing an increase in violent crime.  Before this researchers made an across-the-board comparison between states that changed their laws and states that haven’t changed them. 

This new study picks out just two to four states, and in many cases effectively just use Hawaii to compare with right-to-carry states.  In the cases of Idaho and Minnesota, over 96 percent of the comparison is just with Hawaii.  For Mississippi, Nebraska, and Utah, Hawaii counts for between 72 percent and 83 percent of the comparison. 

The study claims that police simply “underestimate criminality by permit holders.”  But Donohue's only evidence is two news stories from 2000 and 2007 where permit holders committed crimes.  Neither story shows any failure by police to record the incidents.  The study never mentions how large the police error rate would have to be in order to for their results to hold. . . .

The rest of the piece is available here.

Bogus concealed handgun research by Donohue, Aneja, and Weber

For those interested, the Crime Prevention Research Center has put out a summary of some of the problems with a new study from the Stanford Law School.  The discussion is available here.  A brief summary is here:

The bottom line is pretty clear: Since permit holders commit virtually no crimes, right-to-carry laws can’t increase violent crime rates.  You can’t get the 1.5 to 20 percent increases in violent crime rates that a few of their estimates claim with only thousandths of one percent of permit holders committing violent crimes.  To put it differently, states would have to be miss reporting 99%+ of crimes committed by permit holders for their results to be possible. 

The synthetic control tests where they use anything from two to four states to predict the changes in another state’s violent crime rates are extremely arbitrary.  For example, would you look almost exclusively to Hawaii to predict violent crime rate changes in Idaho, Minnesota, Mississippi, Nebraska, and Utah?  Would you look almost exclusively at Illinois to predict changing violent crime rates in South Carolina?  Remember that half of Illinois’ violent crime occurs in Chicago and an even larger majority of the changes in Illinois’ changing violent crime rate is due to Chicago. Would you look at California and New York to predict changing violent crime rates in Georgia? 

There is a reason that the vast majority of published peer-reviewed studies that use US data as this new study does find that right-to-carry laws reduce violent crime rates.