Reaching the Die-Hards

As you know from yesterday's entry, tomorrow I'll be doing a radio "debate" on the topic of whether the law actually requires Americans to pay income tax. I have no great qualms that I'll be able to "win" this debate among the listeners who are, shall we say, even remotely rational. But let's imagine that I really want to reach out to the die-hard tax protestor crowd -- the kind of people who send me e-mails like these. These people believe that the IRS is engaged in a massive conspiracy to deceive the American public into believing they have to pay income taxes when really, legally, they don't. Which arguments, if any, might have a chance of reaching these people? Here are some possibilities:

1. My opponent just got out of prison, where he was serving time for not paying his income taxes. If there's no law that requires people to pay income taxes, what was he doing in prison?

2. I understand that people don't trust the government, including the IRS. And that's good -- some distrust of government is healthy in a democratic society. But you have to understand that we have a system of checks and balances. There are other groups that check the IRS and make sure it's telling the truth. These groups include judges, law professors, and private lawyers. And they all agree! It's not just the IRS that says you have to pay taxes. It's all the judges, all the law professors, and just about all the private lawyers. Each of these groups would have a big incentive to expose the IRS if it were lying about this. So when you see that they all agree, you can trust in that.

3. My opponent makes money peddling his anti-tax arguments over the Internet [I think this is true -- tomorrow's my opportunity to find out for sure]. Shouldn't you direct some of your distrust toward people who have a financial interest in the outcome?

Those are my best ideas for now. Of course, another important point is just showing people the law that requires them to pay income taxes. But that's too long for the radio and the die-hards seem curiously resistant to that anyway.

Any other ideas? Comments welcome.

Radio Appearance

I can hardly believe I agreed to do this, but I will be appearing on radio this weekend to debate the burning question, is there a law that requires people to pay federal income tax?

This is what comes of maintaining a website about tax protestors.

If you happen to be supremely bored from 10-11:30 am this Saturday morning (April 14), and you'd rather do almost anything else than whatever you're doing, you can listen in to the broadcast by streaming web radio here:

http://www.getonyoursoapbox.com/

The "you don't have to pay income taxes" position will be represented by Larken Rose, well-known tax protestor and convicted criminal, who just got out of prison four months ago.

This should be an informative debate -- not!

Nice Work If You Can Get It

Ford Motor Company paid its CEO Alan Mulally $39.1 million for four months work at the end of 2006. Ford lost $12.7 billion during 2006, with a disproportionate share of the loss ($5.8 billion) coming in the fourth quarter, when Mr. Mulally was in charge.

My, it must be nice to get paid almost $40 million to help your company lose almost $6 billion.

I'm not offended by high salaries per se, as long as they're determined by arm's-length negotiation. When a baseball player convinces a team to pay him multi-tens-of-millions of dollars, I know that team's owner fought the player hard and had the strongest possible interest in keeping the salary as low as possible. That's the owner's money on the line. If the player turns out to be a flop, it's the owner's fault for making a bad decision. It's not anyone else's business.

But when a public company's CEO gets paid eight figures for losing ten figures, I am aghast. The fundamental problem is that the CEO's pay is not determined by pure market forces. The CEO and the corporate board know that they are sitting on a huge pile of other people's money and that no one is really watching what they do because no one has the right incentive.

You might think that Ford stockholders would be boiling over at this kind of salary. But no stockholder has a big enough stake. I own some Ford stock through mutual fund investments (if you've got anything in an S&P 500 index fund, you do too), but I don't have anything like a substantial stake in Mulally's salary, and you don't either.

Ford has 1.8 billion shares of stock issued. Ford closed at $8.08 today, so even if you had $1 million invested in Ford stock (which would be a huge amount compared to what I have, you can be sure), you'd own a whopping 0.0069% of Ford -- less than one one-hundreth of one percent. At that rate, Mulally's salary is costing you about $2,700. That's just not that much compared to your investment. If your portfolio is so big that you've got $1 million invested in Ford stock, you're not going to be fighting hard about $2,700, especially since, if you did, the main beneficiaries would be the other shareholders who own the other 99.99% of the company.

CEOs and corporate boards like to claim that there's a tight market for CEO talent and that they have to pay these outsized salaries to get the best top management. I would believe it if the people setting the salaries had the right incentives. Instead, they're just playing with other people's money and somehow seem to have lost all sense of shame in grabbing as much of it as possible.

Tough Year at the Masters

It's the weekend, so we get to relax and think about golf.

With the third round of play almost complete, the leader at the Masters tournament is one over par. Tiger Woods's score of +3 puts him in fourth place.

I am eminently unqualified to offer an opinion about this topic -- I've been seen hitting a ball around the course, but it would be an exaggeration to call anything I do "playing golf" -- but it seems to me that Augusta is setting the course up to be too hard. The official reason for the recent course changes is that Bobby Jones meant for players to use a mid-iron or a long iron for their second shot on many holes, and today's longer distance means that many of the players were getting around the course with nothing but a driver and a wedge. So Augusta has had to lengthen and toughen many of the holes.

All very sensible, but still, the club should remember that the tournament is a show and that people want to be entertained in a certain way. Just as baseball is best when the average combined score in each game is about 9 runs, a golf tournament is best when the top players can make some (but not too many) birdies and an occasional eagle and have a decent shot at breaking par at the end of the day. The U.S. Open, of course, is famous for attempting to set up the course so that only the leader breaks par, but other tournaments shouldn't be emulating this goal. Each day's leader should be shooting about 67 or 68, with lower scores occurring on days when conditions are favorable.

Part of Masters lore is that no player has ever put together four rounds in the 60s. It's not ever going to happen if the club keeps the harsh course setup.

Lucky to be Born First

Harvard rejected 1100 students with perfect math scores on the SAT, and Yale turned down "several" applicants with perfect 2400s on the whole test, according to the New York Times.

The article gives lots of explanations, but the bottom line seems pretty simple: the population is increasing, but the number of places at elite colleges remains relatively stable. This trend can only continue. Harvard's acceptance rate was 9% -- the lowest in the school's history -- but when the population of the U.S. hits 400 million, one would have to project that the acceptance rate would dip to a little below 7%, unless the school substantially enlarges its undergraduate class.

In the long run, I'm guessing that such enlargement is not that likely. There's only so much space in Cambridge. Of course, "distance learning" could overcome that, but you would lose a substantial part of what it means to go to college if you didn't really "go" to college.

A more likely trend, I would say, is an enlargement of the set of schools that are considered elite. Sure, Harvard and Yale may stay on top for a long time, but if decades from now there are

50% more brilliant students than there are today, I would think that the set of schools that are considered elite would expand with them. Reputation is slow to change, but eventually people would notice that the brilliant students are going to a bigger group of schools than before.

You're Getting Warmer

The Supreme Court ruled yesterday that there is a "well-documented rise in global temperatures," and that the EPA, contrary to its own opinion, has the authority to regulate the emission of greenhouse gases from motor vehicles, and that the agency was also wrong is deciding that it would decline to act even if it had the legal authority to do so. In a drearily predictable 5-4 lineup, the four more liberal Justices ruled in favor of the plaintiffs, the four conservatives ruled for the agency, and Justice Kennedy cast the deciding vote for the plaintiffs.

What was particularly disappointing, from a legal theoretical point of view, was the lineup of votes on the arcane question of "standing," mentioned in this earlier post about another case. The five-Justice majority held that the state of Massachusetts had standing to challenge the EPA's actions because it stands to lose coastal land as a result of the rise in ocean levels from global warming, and that, even if better regulation of motor vehicle emissions wouldn't solve the whole problem, it could at least give the state some relief -- a pretty sensible holding, I would say. All four Justices in the minority disagreed.

Now, all the cases say that the question of standing is supposed to independent of the merits of the case. Whether you're injured by a government action, and therefore entitled to challenge it, is independent of the question of whether the action is illegal. The government might injure you by doing something perfectly legal -- Congress raising your taxes, say -- and you could challenge it, but you'd lose. Or the government could do something illegal that has no effect on you, and then you couldn't challenge it, even though, if a court could reach the merits, it could strike down the action.

So why is it that all five Justices who thought the EPA's action was illegal on the merits also thought the plaintiffs had standing to challenge it, and all four Justices who disagreed on the merits also thought the plaintiffs lacked standing? If the two questions are really independent, wouldn't one expect to find at least one Justice who thought the plaintiffs had standing, but the agency's action was lawful, or unlawful but unchallengeable because the plaintiffs had no standing?

If the two questions were completely independent, so that there was no relationship between them whatever, then the chance that a Justice who agreed with the plaintiffs on standing would also rule for them on the merits of the case would presumably be 50%. Then the odds that all five Justices who ruled for the plaintiffs on standing would also rule for them on the merits, and all four Justices who ruled against the plaintiffs on standing would also rule against them on the merits, would be 1 in 2^9, which is 1 in 512, or about 1/5 of 1%.

Hmmm. My colleague Dick Pierce wrote an article once called "Is Standing Law or Politics," in which he concluded that standing law is not law at all, but just political game-playing by judges. I'm afraid yesterday's decision provides him with more ammunition.

A Visit to Syria

House Speaker Nancy Pelosi will visit Syria this week. The White House called the trip "a really bad idea" and said that "Someone should take a step back and think about the message that it sends and the message that it sends to our allies."

Meanwhile, three Republican House members visited Syria yesterday, saying that they were following the lead of Ronald Reagan, who reached out to the Soviets during the cold war.

I guess it's OK when Republicans do it.