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”Shoots (News, Views and Quotes)”
– American Shareholders Association Testifies for Asbestos Litigation
Investor Group Testifies For Asbestos Litigation Reform American
Shareholders Association demonstrates the impact of litigation abuse on
shareholders and the economy.
WASHINGTON – American Shareholders Association (ASA) Executive Director
Daniel Clifton submitted written testimony to the Senate Judiciary
Committee demonstrating the devastating impact asbestos litigation has
placed on investors and the economy.
Over the past few years the number of asbestos litigation suits has
exploded due to a number of state supreme courts rulings that declared
companies were liable for asbestos-related injuries, regardless of
whether the company understood asbestos’ dangers. As a result, no longer
is the sick person being compensated for concealed evidence at the
corporate level. Rather, productive companies that have done nothing
wrong are compensating non-ill individuals. The system has become so
perverse that non-ill individuals are being paid, while sick individuals
“The asbestos litigation abuse has forced more than 60 productive and
efficient companies into bankruptcy,” said Executive Director Clifton.
“The resulting financial shock imposed by asbestos litigation has
severely restricted the country’s economic growth by reallocating $600
million away from capital investment towards lawyers, accountants, and
other bankruptcy related costs. The result is fewer jobs in the economy,
lower wages for workers, higher prices for consumers, greater risk to
workers retirement security, and depleted stock portfolios.”
These facts are confirmed by a recent study conducted by Sebago
Associates for the American Insurance Association. The Impact of
Asbestos Liabilities on Workers in Bankrupt Firms found that asbestos
related bankruptcies has led to the loss of 52,000 to 60,000 jobs in the
economy. Thus, the average worker with a 401(k) plan at a bankrupt firm
lost roughly 25 percent of their retirement plan, or an average of
$8,300, due to asbestos related litigation. The drop in 401(k) value is
equivalent to a 10 percent reduction in Social Security benefits.
“Asbestos litigation has created a death spiral for investors and
productive companies,” continued Clifton. “Bankruptcy has increased the
cost of capital for companies, while investors’ portfolio values
significantly decline. The two factors combined make it significantly
harder for companies to pull out of bankruptcy, which leads to fewer
jobs, less income growth, higher prices, and ultimately a lower standard
of living for all Americans. Without question, common sense reforms are
needed immediately to improve workers retirement security and the
The American Shareholders Association is a non-partisan, not-for-profit
organization dedicated to analyzing public tax policy from a market
perspective. To educate U.S. investors, the American Shareholder
Association analyzes legislation affecting stockholders, and reports the
public positions of elected representatives on these issues. For more
information please contact Daniel Clifton at (202) 785-0266 or by email
Above article is quoted from American Shareholders Association Press
Release March 5, 2003
– New SBSC Study Shows NYC Tobacco Tax Hike Kills Jobs, Hurts
Businesses, Reduces Revenue and Has Little Impact on Smoking
WASHINGTON – One of the nation’s leading small business advocacy groups,
the Small Business Survival Committee (SBSC), today released a 57-page
case study on the impact of New York City’s tobacco tax increase enacted
last year, which raised the cigarette tax from 8 cents per pack to $1.50
“Our findings show New York City’s tobacco tax increase has been a
complete disaster,” said SBSC President Darrell McKigney. “Almost 90 percent of small businesses that sell tobacco have been hurt by the tax increase. In return for the enormous damage inflicted on New York City small businesses, the tax increase has resulted in less than half the revenue projected for New York City, a huge net loss in New York State revenues, and put thousands of people out of work. And in spite of the stated aims of the tax increase proponents, most smokers say they aren’t consuming less. They’re just finding new sources to avoid the tax.”
Among the key findings of the SBSC study:
*88 percent of NYC stores with tobacco sales say they’ve been hurt by the tax increase. Total profits for NYC stores have decreased by an estimated $127 million.
*The NYC tax increase will result in over 10,000 lost jobs.
*The NYC tobacco tax will generate less than half the revenue projected for New York City, and will result in a net loss of $15 million to $217 million for New York State.
*53 percent of New York city smokers say they have purchased cigarettes from outside of the city more often since the tobacco tax increase. Cross-border sales, mail order, Internet, and smuggling are among the ways consumers are making tax-avoiding purchases.
*67 percent of NYC smokers say they don’t smoke any less than before the tax increase. 22 percent say they do smoke less because of the higher cost, and 7 percent say they actually smoke more now because the tax encourages them to buy in bulk.
“There are a number of states right now looking to hike tobacco taxes to
solve budget problems. I hope leaders in those states will read this
study and see that hiking tobacco taxes does tremendous harm to small
businesses and their employees, with little of the benefits promised by
proponents,” McKigney concluded.
The Small Business Survival Committee is a national nonprofit small
business advocacy group with 70,000 members.
A copy of the entire study may be downloaded at http://www.sbsc.org
”Roots (Food for Thought)”
– Tax Reform and the Politics of Stealth
The Treasury Department is undertaking a thorough study of the Federal
tax system. The point of this study is to consider whether the Bush Administration should propose to replace our income tax with a consumption tax. There is much to be said in favor of this shift, in the
abstract. Once we consider the details of political practice, however,
there is much to be said for keeping a familiar monster rather than
adopting an unknown one. We should always remember that when it comes to
tax reform, political realists invariably trump fiscal philosophers.
With respect to fiscal philosophy, the argument in favor of taxing
consumption is simple and direct. An income tax discriminates against saving. It taxes saving twice while taxing consumption only once. Suppose someone earns $50,000 and is taxed at 30 percent. That person pays $15,000 in tax and has $35,000 available for personal consumption. For someone who spends the entire $35,000 on personal consumption, tax liability is capped at $15,000.
Someone else sets aside $10,000 for saving. In the next 10 years that
saving returns $1,000 per year in interest and dividends. Each year an
additional $300 of tax is paid. What economists and accountants call the
present value of those additional tax payments is $3,000. The person who
saves $10,000 from net income will thus pay $3,000 more in tax on the
same income than the person who consumes the entire net income.
It is easy to see why most fiscal philosophers prefer consumption over
income taxation. Between two people who earn the same amount, the person
who chooses to save more will pay a higher tax. This is what is meant by
the double taxation of saving. A shift to consumption taxation can
eliminate this double taxation.
Taxation always discourages whatever is taxed. The double taxation of
saving discourages saving. Yet saving is central for economic progress. It is saving that provides the capital that makes possible the creation of new
enterprises. These new enterprises, moreover, are a particularly dynamic part of our economy. Most of the public’s attention may be placed on large, established enterprises, but the most robust dynamism within our economy has always resided with the relatively new enterprises.
We all know, however, that the devil is in the details. There are
numerous details that would have to be addressed in any major tax
reform. Those details are the province of the political realists and not
the fiscal philosophers. Any effort at tax reform will surely be much
more a monument to political realism than it will be testimony to the
musings of tax philosophers.
Above article is quoted from Public Interest Institute at Iowa Wesleyan
College, Institute Brief, February 2003 http://www.limitedgovernment.org
”Evergreen (Today’s Quote)”
“Wherever the standard of freedom and Independence has been or shall be
unfurled, there will [America’s] heart, her benedictions and her prayers
be. But she goes not abroad, in search of monster to destroy. She is the
well-wisher to the freedom and independence of all. She is the champion
and vindicator only of her own.” — John Quincy Adams, Speech to the
U.S. House of Representatives [July 4, 1821]
”’Edited by Richard O. Rowland, president of Grassroot Institute of Hawaii. He can be reached at (808) 487-4959 or by email at:”’ mailto:email@example.com ”’For more information, see its Web site at:”’ http://www.grassrootinstitute.org/