It appears that the General Theory is on the president's reading list once again. Given that the economy appears to be headed for a slowdown this year, the Bush Administration is considering short-term tax relief as part of an "economic stimulus" package, according to an AP story today by Martin Crutsinger:
The Bush administration, faced with a deteriorating economy and a big jump in unemployment, said Friday it was considering an economic stimulus package that might include tax cuts to ward off a recession.
On Friday, the Labor Department reported that unemployment was at a two-year high of 5 percent in December, while employers clamped down on hiring for the month. The amount of new jobs employers added to their payrolls was at a four-year low.
Officials stressed that President Bush has not decided yet to offer a proposal but was looking at a variety of options with a plan possibly being unveiled around the time of his Jan. 28 State of the Union address.
"The president is always looking at options ... always talking to people and looking at data," Commerce Secretary Carlos Gutierrez said in an interview with The Associated Press.
...
White House spokesman Tony Fratto said tax cuts were an option being considered.
Bush in his first term included a tax refund of up to $300 per person to combat the impact of the 2001 recession. Private economists said another round of tax cuts would be the best approach to get money to people who would spend it.
Some suggested a one-year tax rebate of $500 might provide a sufficient shot-in-the-arm for the economy. But they stressed that the proposal would have to be passed quickly.
The extent to which short-run fiscal stimulus packages work in stabilization has been the subject of decades of research in macroeconomics leading researchers to draw differing conclusions. But we do know that rebate checks are not free. They cost revenue and are really no different than a spending program. And most economists on both the left and right would agree that rebate checks have little long-run Laffer Curve feedback effect. Finally, there is the administrative costs of sending out over 100 million checks.
The U.S. has seen many debates over what constitutes art, especially with regard to taxpayer-funded projects. This issue has come up in other countries, as well. Any government that treats art differently from other goods or professions with regard to taxing and spending policies will face the unanswerable question, What is art?
From Vertex, Inc.'s Sales Tax State Activity Update:
Thespian Turmoil - Film Acting is Not Art According to HMRC
At issue was where to tax acting services performed in New Zealand by a UK actor and supplied to a New Zealand production company.
The actor contended that the acting services she supplied should be taxed where performed as cultural, artistic or entertainment activities under Art 9(2)(c) EC Sixth VAT Directive (now Art 52(a) Directive 2006/112/EC). ...
The position of HMRC was that the services in question were not cultural, artistic or entertainment activities because they were supplied in connection with a film. Their contention was that the services had to be interpreted in the context in which they were delivered.
Acting services supplied for a film are fundamentally different from acting services supplied for a theatre production. Since an actor providing services for a film is not performing to an audience, unlike a theatre performance, it is not a cultural, artistic or entertainment activity.
The filming of an actor's role is, instead, part of a process that may lead to a cultural, artistic or entertainment experience in the form of a finished film. As a result, the acting service should fall under Art 9(1) EC Sixth VAT Directive (now Art 43 Directive 2006/113/EC) as a basic supply of a service. ...
The VAT Tribunal ruled that there were no fundamental differences between acting for a film and acting for a theatre production. Therefore, the supply is related to a cultural, artistic or entertainment activity under Art 9(2)9C) and taxed where performed which in this case is New Zealand.
Most people would argue that a government official is not qualified to decide what should be considered art. The only way to avoid having policymakers decide what counts as art, entertainment, or culture is to remove from the tax code all special provisions relating to these activities.
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