There was a micro-story in the news this week about a new tax imposed on tanning salons. The 10% tax is supposed to generate $2.7 billion over ten years to help pay for the Obama health care legislation. Why tax tanning salons? Because tanning is related to skin cancer, so it ought to be discouraged by taxation. Everyone knows that whatever is taxed is discouraged, right? But when the revenues from the tax are calculated, the assumption is that there will be no effect, so revenues will be reaped as if no one is deterred. That’s the way tax revenues are usually calculated, which explains why there are usually shortfalls. These days, having computers and such, revenues ought to projected taking tax avoidance into account.

I think it is possible for government to compete fairly with private enterprise, although I cannot think of an instance where it has happened. When the question is posed, what first comes to mind are subsidies by taxpayers to the government operation. That’s true, but there are also issues of access to and the cost of capital, costs of building market share, equatable rules of competition, and the risk of failure. All of these factors must be taken into account when considering if there is level playing field. I’m here to help.

This week I went to a presentation on “Stimulus Opportunities for Small Business,” one of a series around the country slated to run through next February. One might think that talking about stimulus opportunities a year after passage might be too late, but not to worry, the stimulus rollout will take years. In fact, we were told that the the plan not designed to have an immediate impact, but rather to accrue slowly over time.

My method in building the spread sheet was to begin each year with the balance from the previous year, adjust the balance with investment gains or losses, and finally add the contributions for the year. … The stock market provided more excitement than Treasury Bills. The $216K in contributions grew steadily to be worth $613K at the start of 2009. The stock investments lost a heart-stopping plunge from $1,740K last year, but nonetheless still had $1,093 at year end. So despite the worst market year in the 45 year period, the stock investment was still 78% ahead of Treasuries.

The purpose of minimum wage laws is to attempt to force employers to subsidize low wage workers. This attempt fails because there are alternatives to paying the low-wage worker. One is to simply eliminate that business. The other is to automate the job, replacing the unprofitable low-wage labor with machinery and skilled labor that turns a profit.

Is the current financial crisis the result of too little regulation? People asking that question often seem to suppose the total quantity of regulation at issue. If more regulation were always better, then North Korea should have one of the best economies in the world, because surely it is among the most regulated. If it is not that the maximum amount of regulation is best, then it may be that an intermediate quantity produces an optimum. Perhaps too little regulation allows chaos and too much produces strangulation, so that in between there is just the right amount.