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Vol. 4, No. 4 Summer 2

NEWSLINKIDEASANDUPDATESONPUBLICPOLICY

NEWSLINKTHEBEACONHILL INSTITUTE

AT SUFFOLK UNIVERSITY

FThe case of the missing workersWhy lowering the Mass. income tax rate to 5% would help

continued on page 5

or years, economists have

known that jobs and taxesare related. Lower taxes

help create new jobs. InMassachusetts, cutting the income tax rate

from the current 5.85% to 5% by 2003, as

proposed in the November 2000 ballot ini-tiative, would put 93,000 workers into jobs,

according to the Beacon Hill Institute.Good news? Youd think so.

There is the prospect of bringing about anexpansion in the economy through an emi-

nently affordable tax cut. But the skepticsamong us will raise doubts, not only aboutthe feasibility of this expansion, but also

about its desirability.Skepticism springs from the fact

that the Massachusetts economy, like then a t i o n a l

economy, is al-ready undergo-ing an unprec-

edented expan-sion. In May, the

Bay States un-e m p l o y m e n t

rate was 2.5%, anall-time low.Since the last re-

cession in 1991,the state has

added 506,000 new jobs, with 67,900 ofthose coming since May 1999.

Help-wanted ads everywhere

In 1999, job vacancy rates were

8.6% for skilled production workers, 8.4%for managers, 7.6% for technicians, 5.4% for

scientists and engineers and 4.8% for otheremployees. About 6.2% or 24,000 jobs at

high-tech companies went unfilled.With so few unemployed work-

ers and so many unfilled jobs, someone

might ask, Why should we want to create evenmore jobs for Massachusetts? The answer is that

its not just job openings at issue here. Itsfilled jobs,which is to say worker placements, that the pro-

posed tax cut will make possible.This is important because of the nature of

the current economic expansion, which has broughtabout a restructuring of the state economy, frommanufacturing to knowledge-based. Technical

progress, originating largely in the informationrevolution, has increased personal wealth, labor

productivity and the demand for skilled workers.This works to the advantage of states like

Massachusetts, which have excellent educationalinstitutions and a skilled, educated workforce.However, it works to the disadvantage of states

like Massachusetts whose competitiveness is atrisk because of high living costs and taxes.

The adventof the footloose

and fickle techiesand dot-com busi-nesses should

serve as a wakeupcall. A worker or

business investorwith a choice be-

tween Massachu-setts, with its highcost of living and

high tax rate and, say, Texas, with its lower cost of

living and no state income tax, wont give Massa-chusetts an automatic Yes.

Yes, Massachusetts advantage as an

education center strengthens its role in the neweconomy. Occupations requiring a bachelor sdegree or more will soon account for 47% of

all new jobs. Another 10% will require anassociates degree or a certificate. But Massa-

chusetts has, ironically, the most to lose if work-ers and firms start moving their very mobile

intellectual capital to states that offer a friend-lier business and tax climate.

t first, he thought it wpart of the movie, A C

Action. Just weeks earl James Knott, owner

Riverdale Mills Corpotion, had agreed to allow producers of

Hollywood film starring John Travoltshoot scenes for the movie at Northbridge, MA company. But w

took place on November 7, 1997 was fiction. It was real life.

I was sitting at my desk whesaw a man wearing a black jacket with P

LICE written across the back, recKnott. Minutes later, 21 U.S. Environmtal Protection Agency law enforcem

officers were swarming over the firmoffice suites.

I went into the lobby and manother man who said, Im looking

James M. Knott, Sr.Knott demanded to see a sea

warrant. The agent reportedly said, I w

leave you a copy when we are througBut Knott was insistent. You are not

AJAMES M. KNOTT

continued on page

Takingon theEPA


2/8

NewsLink is published quarterlyby the Beacon Hill Institute for Pub-lic Policy Research at Suffolk Uni-versity. The Beacon Hill Institute fo-cuses on federal, state and local eco-nomic policies as they affect citizensand businesses, particularly in Mas-sachusetts. The institute uses state-of-the-art statistical, mathematicaland econometric methods to pro-vide timely and readable analyses

that help voters, policy makers andopinion leaders understand todaysleading public policy issues.

PUBLISHERDAVID G. TUERCKEXECUTIVEDIRECTOR

PRODUCTIONELLEN F. FOLEYDIRECTOROFCOMMUNICATIONS

EDITOR

FRANK CONTEPUBLICATIONSEDITOR

(ISSN 1094-0707)

2000 Beacon Hill Institute forPublic Policy Research, SuffolkUniversity, 8 Ashburton Place,Boston, MA 02108-2770. Voice,(617) 573-8750; fax, (617) 720-4272;e-mail, [email protected]; website, http://www.beaconhill.org.

PAGE 2 / SUMMER2000

BEACON HILL INSTITUTE

From the Executive Director

David G. Tuerck

F O R M O R E I N F O R M A T I O N

C A L L 6 1 7 - 5 7 3 - 8 3 0 2

he MBTA has finally decided

upon a modest fare increase.Its critics notably the

Conservation Law Foundation,a public interest group, along with various

special pleaders raise a host of objections.Essentially, critics argue that the T shouldntraise fares because it is not doing enough now

to serve its passengers. Buses are late andcrowded. Facilities are poor. And transfers are

expensive. Moreover, they say, the Ts methodof raising fares is unfair, putting too high a

burden on commuter rail users, on the onehand, and low-income users, on the other.

What the critics are really saying

amounts to the following: We are entitled toinexpensive and high quality public transpor-

tation, and we expect state taxpayers to

provide it for us.State taxpayers are already doingtheir share, to say the least. Taxpayers arefooting 80% of the bill for the MBTA. Riders

pay for only 17% of the cost of their ride. It isabsolutely reasonable to shift more of the

burden from taxpayers to users.The Beacon Hill Institute has long

supported a fare increase. The currentincrease wont solve the MBTAs financial

Tproblems, but its a reasonable start andlong overdue.

Baby UI: The benefit that rocks the cradle

The great economist Adam Smithonce wrote, There is no art which one

government sooner learns of another thanthat of draining money from the pockets of

the people. Weve long maintained thatgovernment surpluses, whether at the federalor state level, are not a sign of fiscal strength.

They are the result of forecasting errors thatgovernment turns to its advantage by

drumming up new ways to spend. Whereverthe money goes into the rainy day fund, the

unemployment trust fund or the welfarereserve fund elected officials always seemto come up with a plan to spend the money

rather than return it to the taxpayers.

Over the years, weve heard theargument that we cant cut the unemploy-ment tax levied upon employers because it

would drain reserves needed for an economicdownturn. Last June, with unemploymentfunds brimming with surplus money,

President Clinton revised regulations thatpermit states to use their UI funds for

parental leave. Oddly, no one thought to callthe baby UI a risky scheme.

But most states, includingMassachusetts, are rejecting the idea.

Recently Governor Cellucci vetoed aplan that would have tapped the states

unemployment fund to create newbaby unemployment benefits for

parents. To blunt criticism, he offered atax credit to companies that offer babyUI plans.

The only sure way to fend offschemes like baby UI is to cut tax rates,

in this instance, the unemploymentinsurance tax rate, to a level that

prevents surpluses from accumulatingin the first place. Only then willgovernment go on to learn arts more

becoming of statesmen than drainingthe pockets of other people.


3/8

NEWSLINK

PAGE 3 / SUMMER2000

Tuerck: Universal health carewould make Massachusetts less healthy

n July, BHI Executive Direc-tor David Tuerck addressed

100 members of the Ameri-

can Legislative ExchangeCouncils Task Force on Health and Hu-

man Services during ALEC's 2000 AnnualMeeting in San Diego. His presentation,

Universal Health Care: Bad Medicine for Mas-

sachusetts, described four Massachusetts

universal health care scenarios and theircosts to the Com-monwealth.

The fourschemes are:

A single-payer

system, similar tothat in place inCanada and Eu-

rope, under whichthe state would provide health insurance

for all residents. Mandated health care, under

which (a) employers would be required toprovide health insurance to all employeesthrough the current private insurance sys-

tem and (b) the state would cover unem-ployed uninsured residents through Medicaid.

Pooled health insurance, underwhich the state would provide health in-

surance for all uninsured residents. High-risk pooled health insur-

ance, under which the state would provide

health insurance only for the uninsuredand uninsurable.

Of these, the most costly and eco-nomically damaging is the single-payer

system. According to BHIs analysis, asingle-payer system would compel thestate to raise the personal income tax by

173%. The result would be the loss of

917,000 jobs one-fifth the state labor force and $45 billion in payrolls.

Mandated health care would add

almost a billion dollars to employer healthcare costs and require the state to raise anadditional $223 million in tax revenue. The

result: a loss of 45,000 jobs and a $4.3-billionreduction in payrolls.

The cost to Massachusetts of in-suring all uninsured residents would be

about $1.6 billion. Because of the rise inthe income tax necessitated by this change,

I

there would be 172,000 fewer jobs and $11

billion in reduced payrolls.The least burdensome system for

Massachusetts would be high-risk pooledhealth insurance, requiring the state to

raise $285 million in new revenue, with aconsequent loss of 25,500 jobs and $1.62

billion in payrolls.

A forthcoming Beacon Hill Institutestudy will detail these estimates. T h i s

summer, the Massa-chusetts legislature

passed and GovernorCellucci signed a Pa-tients Bill of Rights

that guarantees that

all HMOs providethe same protectionsto all members. A

November 2000 bal-lot initiative would go further, establishinga state Health Care Council to review and

recommend legislation for a health care sys-tem that insures comprehensive, high qual-

ity health care coverage for all Massachu-setts residents. If passed, the ballot initia-

tive could lead to the adoption of some formof universal health insurance.

Media MentionsDavid Tuercks editorial, Taxpayers c

be counted on to use their savingswisely, appeared in the Boston HeraldSeptember 5.

The August 14 edition of the Boston Glob

cited BHI: Community leaders sound oon whether MBTA hikes are fair. David

Tuerck appeared on WBZ radio on Aug10 discussing MBTA funding. The Bosto

Herald covered BHI on June 22, Critics

MBTAs fare pitch.

David Tuerck appeared on New EnglanCable News, July 7, 2000, to discuss the

tax cut proposal.

David Tuercks opinion editorial, Lobb

ists dont need legal assistance funding,appeared in the July 39 edition ofMassHigh Tech. Lawyers or lobbyists for thepoor? appeared inMetroWest Daily New

on June 28. Massachusetts Lawyers Weeklpublished John Tuercks article, LegalAssistance Funding: Really an Unmet

Need? on June 26.

Massachusetts News, July 2000 edition, ciBHI in the article, Poverty Lawyers Ge

Money by Misleading: Trying to TripleTheir Budget.

Jeff Jacoby mention BHI in his June 29 B

ton Globe column, Our sour milk policy

Make them listen!

Contributions of all sizes from individuals, foundations andcorporations support the Beacon Hill Institute.

Yes, I want to support the Beacon Hill Institute. I enclose

my check for $_________

Name (please print) ______________________________________________________

Address _________________________________________________________________

City, State, Zip ___________________________________________________________

Phone _____________________ Fax ______________________________________Please make checks payable to Beacon Hill Institute at Suffolk University.

All contributions are tax deductible under section 501(c)(3) of the IRS code,

as gifts to Suffolk University.Beacon Hill Institute, Suffolk University,

8 Ashburton Place, Boston, MA 02108-2770.

A single-payer system

would compel the state

to raise the personalincome tax by 173%.


4/8PAGE 4 / SUMMER2000


ing to do anything until you show me the

warrant. The agent produced the warrantwhich asserted probable cause that RMC

was dumping acidic water into the public

sewer system. The warrant was based on asampling of wastewater from a nearby

manhole taken on October 21.Knott was perplexed. He consid-

ered himself a good corporate neighbor.RMC employs environmentally safe, cut-

ting edge technology in themanufacture of wire mesh andemploys 150 people. The mesh

is used for lobster traps, prisongates and as flooring for chicken

coops. His products are also

used in horticulture and to con-trol erosion.After reading the war-

rant, Knott concluded that some-

one had committed perjury in ob-taining it. He told the official,

You may proceed with your in-spection. But Knott would not

permit the charges to go unan-swered.

The EPA team then went about in-

terrogating and videotaping RMCs employ-ees. When they were finished, they took

away thousands of documents, some con-taining trade secrets. "More than 95% of the

paperwork hauled away had nothing to dowith wastewater treatment," says Knott.

The wastewater RMC releasedhad to pass through a treatment system thatensured that acidity remained within legal

levels. Knott was being charged with dis-mantling the filtering systems, allowing

acid levels to exceed legal limits.Knotts water had been tested

twice. The October 21 test, taken withouthis representative present, had showed that

the acidity levels were illegally high. A sec-ond test had showed acidity levels to bewithin allowable limits. The warrant had

been issues based solely on the Octo-ber 21 results.

In the months that followed, Knotttried to convince federal agents that thesamplings were wrong. Finally, on July 17,

1998, a third inspection was carried out.This showed the amount of acidity mov-

ing into the sewer system to be within ac-ceptable limits.

Nevertheless, on August 28, 1998, agrand jury indicted Knott and RMC, charging

the defendants with two counts of violatingthe Clean Water Act. Knott faced a six-year

prison sentence and a $1.5 million fine if con-victed. In announcing the indictment, U.S. At-

torney Donald Stern strongly implied that

RMC chose to violate our environmentallaws by releasing acidic water into the adja-

cent Blackstone River.Knotts reputation was tarnished: his

credit now suffered because of concerns re-lated to potential fines. He was forced to spend

large sums of money mounting a legal defense.And he was forced to devote long hours de-fending himself against evidence that he knew

was fabricated.As part of his defense, Knotts law-

yers demanded that the original paperworkfor the first test (on which the warrant had

been based) be examined by professionalhandwriting experts. The conclusion: theoriginal numbers had been altered.

Someone had changed one of the log-book entries from a seven to a four and changed

a series of sevens to twos, says Knott. A read-ing of seven indicates acidic neutrality.

During a five-hour pre-trial hear-ing, Knott and his lawyers highlighted the

discrepancies in the sampling results filedby the EPA.

The tide turns

After this, the tide began to turn. On

February 16, 1999, a federal judge suppressedthe sampling results, finding that the EPA hadviolated Knotts Fourth Amendment rights by

sampling wastewater without a representativeof the company present. On April 23, 1999,

the U.S. Attorney dropped the case, citing alack of evidence. One month later, a federal

judge dismissed the indictment.An internal review by the Depart-

ment of Justice found that a warrant forthe July 1998 search had omitted certain

facts about the samplings at manholes nearthe plant.

End of the story? For the govern-

ment, yes. Not so for Knott. He never foundout how and why the case came about in

the first place, but he believed that the gov-ernment should be held accountable for the

damage it had inflicted on him and on hiscompany. He therefore filed a countersuit

to recover the legal expenses thatRMC had incurred.

This July, a federal judge

ruled that the U.S. governmentmust reimburse Knott for nearly

$69,000 in legal fees incurred in acase that turned out to be both

flimsy and capricious. He alsoruled that the EPA had harassedKnott and failed to reveal evidence

that would have cleared him.The ruling was a victory

for the rule of law, civil liberty andproperty rights. It was also a rare

victory for the so-called HydeAmendment, which allows an ex-

onerated defendant to recover legal fees if

the case brought against him is vexatious,frivolous and in bad faith.

The dismissal of the case in 1999and Julys rulings arent enough for Knott,

an Army veteran who takes his constitutionalrights seriously. On August 8, in an effort toreign in the EPA, Knott filed a $13 million

suit under the Federal Tort Claims Act.The EPA has never filed felony

criminal charges for such trivial infractions,comments Paul Kamenar, Washington Legal

Foundations Senior Executive Counsel.Even cases of serious pollution are handledin administrative and civil proceedings.

Knott, however, isnt surprised by

the EPAs overreaction. This runs through-out the bureaucracy, he says. I think a lotof people would just be willing to reach a fi-

nancial settlement with them, but not me.James Knott refuses to let the gov-

ernment off the hook. Striking a blow

against unreasonable searches and seizures,he is now seeking to tame a leviathan that

he sees as out of control, out of touch and athreat to liberty.

Riverdale-EPAcontinued from page 1

Riverdale Mills Corporation in Northbridge, MA


5/8




BHI builds five STAMP models

0

5

10

15

20

25

Ratio of Exports to GSP

1997

1993

Source: Department of Commerce and the Bureau of Economic Analysis

MD NC MA TX CA WA

2.2 2.5

4.7

6.06.6

7.9 7.9

9.4

8.0

10.0

20.1

18.4

1993- 1997

Massachusetts & High Tech States

Just how important are exports to a stateseconomy? Judging from the mainstream press,

one would think that globalization and interna-

tional trade are the most dominant elements

accounting for growth in a states economy. But

even with the passage of NAFTA and other free

trade agreements, the overwhelming portion of a

states economy depends on sales within the U.S

This should come as no surprise. According to

John Micklethwait and Adrian Wooldridge, autho

ofA Future Perfect, (see review page 7), people

are more likely to trade with their fellow nationals

than with foreign countries. In Europe, they notepeople are six times more likely to trade within

their own borders than with other nations that

make up the European Union. The most recently

available Gross State Product statistics bear this

out for the U.S. Massachusetts, which has

emphasized its high tech sector and foreign

trade, increased its ratio of exports to GSP by

only 1.3 percentage points between 1993 and

1997.

High-tech states: Still trading with ourselves

D

uring the summer, the Bea-

con Hill Institute completedand delivered f ive new

State Tax Analysis Model ingProgram (STAMP) models.C a l i f o r n i a -STAMP, constructed for the

Pacific Research Institute in San Francisco,allows users there to measure the effects

on employment, capital stock, wage rates,and tax revenue of a variety of changes inCalifornias state and local taxes.

BHI performed initial simulationsto determine the effects of lowering the

state income tax, reducing the sales taxand abolishing the motor fuels tax. Elimi-

nating the states motor fuels tax, for ex-

ample, would, in the first year, increaseemployment by about 311,000 and payroll

payments by more than $11 billion, while re-linquishing almost $2.3 billion in tax revenue.

This would make California a lessexpensive, and thus a more attractive

place in which to live.In August, BHI delivered four

STAMP models to the Heritage Founda-

tion: Arizona, Michigan, New York andPennsylvania. The project is part of aBeacon Hill Institute/Heritage Founda-

tion strategic partnership to examinehow nat ional

economic con-dit ions and

state and fed-eral policychanges affect

state economies.Heritages Cen-

ter for DataAnalysis con-

ducts research on the effects of public policychanges in the 50 states.

STAMP is a computer represen-tation of a states economy. Designed forpolicy makers and analys ts, STAMP can

be used to simulate the effects of changesin state tax policy on jobs, wages, capi-

tal spending, tax revenue and other eco-nomic indicators. STAMP is dynamic, isfounded on archetypical economic prin-

ciples and employs state-of-the-art sta-

tistical and econometric methods.STAMPs previously deve

oped are: Massachusetts-STAM

New Jersey-STAMP, Ohio-STAMPOklahoma-STAMPTexas-STAMP anVirginia-STAMP.

Said BHI ExecutivDirector Davi

Tuerck, There arnow 11 STAMP mod

els. We wont reuntil we are able tprovide tax analys

for every state in the country.

"We won't rest until we

are able to provide

STAMP analysis to the

rest of the country."

California among new models



NEWSLINK

Where is Robert Peel when you need him?A Future Perfect: The Challenge and Hidden Promise of Globalization

John Micklethwait and Adrian Woolridge, Times Business -Random House, 2000, 368 pages. Reviewed by Frank Con

Globalization is givingbirth to an economythat is closer to theclassical theoretical

model of capitalism.

A

s an article of faith, most

economists believe that glo-balization, free trade and in-

tegrated markets create farmore benefits than costs for consumers andproducers. For example, a Berliner can

choose to eat Moroccan food, read the New

York Times on the Internet and visit Paris

without much fuss about currency exchangerates or passports. The British can prevail

in Hollywood as actors, screenwriters andcostume designers, creating a communityof exiles that can support several cricket

teams. And the cocoa and coffee farmers ofthe Ivory Coast, once captives of middle-

men, can now use cell phones to check priceson Londons commodity markets to get a

better deal.Over the course of the last quarter

century, the much-maligned phenomenon

known as globalization has removed barri-ers, enabled easier access to credit, dis-

ciplined governments, increased con-sumer choice and vastly improved

the standard of living for peoplearound the world. It also has not so incidentally increased

personal freedom for mil-

lions. What globalizationhas not had is an enthu-siastic cadre of defend-

ers willing to jumpinto the fray

whether in Seattleor elsewhere. Towit, supporters

intellectualand other-

wise haveceded the debate to a

backlashing Seattle slew of

left and right. This class of inter-national cosmocrats is too busy creating

wealth to enter the gritty battle of politicsand policy. This poses a major problem.

In this threatening specter of glo-bal change, Ross Perot, Pat Buchanan and

Ralph Nader have all fanned sentiment overhomespun goods, lost jobs, environmentaldoom and vast multinational conspiracies.

And the public is sympathetic. In a Busi-ness Week poll, 52% of those surveyed ex-

press sympathy for anti-World Trade Orga-

nization protesters. Slightly more believe that free

trade is bad for the American worker.

The economic and political conse-quences of silence are far reaching. Global capi-talism hands great power to the individual and

in turn strikes a telling blow for the principles ofclassical liberalism: freetrade, limited government

and free movement.Nations still matter.

In A Future Per-fect, John Micklethwait

and Adrian Wooldridge,of Britains The Economist,have chosen not to remain

silent: Globalization ishelping to give birth to an

economy that is closer tothe classical theoretical model of capitalism, un-

der which rational individuals pursue their in-terests in the light of perfect information, rela-tively free from government and geographical ob-

stacles. It is also helping to create a societythat is closer to the model in which

power lies increasingly in thehands of individuals

rather than govern-ment and [in] which

people are free to pursuethe good life wherever

they find it.

The authors suggestthat the so-called losers in this

economic upheaval should usu-ally blame things other than glo-

balization for their plight. Most

likely its outdated governments orclosed societies. For example, Third

World nations would gain substantial ac-cess to new markets if First World nations

removed restrictions and tariffs.Ironically, the authors base their case on

deflating some of the exaggerated claims made

by supporters and opponents alike: that global-ization leads to bigness; that it ushers in global

brand names like Coke and Mercedes at the ex-pense of diversity; that it has repealed the busi-

ness cycle; that free trade is a zero-sum game andthat distance and geography have been van-quished by the Internet.

In this gilded age, nations still matter.Canadian provinces exchange 12 times as many

goods and services with each other as they trade

with U.S. states. Countries in the Europ

Union may talk of a unified market b

people are still six times more likely to trawith fellow countrymen. If the Japangave up buying everything American,

U.S. would only lose 1% of its GDP.An easy my

to debunk is the n

tion that globalition is a zero su

game. Simply pglobalization ma

the American pbigger. Now in efffor six yea

NAFTA has ntaken a toll

American joAmerican workers arent in direct comp

tion with Mexican workers. Becauseproduct sharing between the two natiothe U.S. stands to benefit as Mexico expan

trade with other nations.In the final analysis Micklethw

and Wooldridge ratify both Adam Smitprinciple of the division of labor and Dav

Ricardos principle of comparative advtage. Trade continues to best alloc

the resources to the nation that can bemploy them.

For most of the 20th century, ideals of free trade have rarely been artilated. John Maynard Keynes turned ou

be a lukewarm supporter, reserving a sspot for homespun goods. Presid

Clinton, according to the authors, cowedpolitical concerns about fair trade, spe

not only half-heartedly but has failedcome up with one memorable phrase on subject. The authors role model for pr

elytizing the free trade gospel lived in 19th century. In 1846, Sir Robert Peel a

his Conservative government repealed notorious Corn Laws, tariffs that protec

wealthy farmers at the expense of consuers. Peels support cost him his party, bthousands of people contributed their p

nies to build memorials to him.

A Future Perfect is a tribute to P

and a clarion call to free traders everywhe


8/8

ACONHILLINSTITUTE

FFOLKUNIVERSITY

ASHBURTONPLACE

STON,MA02108-2770

In Point of Fact

NONPROFITORGANIZATION

U.S.POSTAGE

PAID

BOSTONMA

PERMIT#18443

ot keeping up with the Joneses;

Charitable giving lags behind

growth in wealth

Charitable giving grew faster than

the economy last year, although it did not quitekeep pace with the tremendous accumulation in

wealth. The ebullient stock market and the pros-

perous economy helped drive donations to char-ity up nearly $16 billion, to $190.2 billion, 9.1%higher than in 1998 and well ahead of the 5.7%growth in GDP. Despite last years gains, the

growth in giving appears not to have kept up withthe growth in wealth.Karen W. Arenson,New York Times, May 25, 2000.

Cool Britannia gets hot under the collar

over gas taxes

On Aug. 1, across Britain, an estimated [6.75 mil-

lion] car drivers, fed up with paying around 4($6) a gallon for gas, heeded [an] unprecedented

boycott call. A British Treasury spokesman con-firmed that 75 to 80% of the price of a British gal-

lon of petrol is tax. Through most of the 1990s,Conservative and Labour governments alike haveadded roughly 5% each year to the price of gas,

citing environmental reasons. The boost in rev-enue has increased funding for government

health, education, and social programs, whichnow are heavily dependent on gas taxes. Ac-

cording to the governments recent Family Ex-penditure Survey of 18,000 households, the cost

of running a car is now the most expensiveitem in the domestic budget for the average

British family.Alexander MacLeod, Christian Science Moni-

tor, August 7, 2000.

Juicing up cranberry pricesFederal limits on this falls cranberry crop willhelp reduce a berry surplus and over time

could increase the price local growers get fortheir fruit. With the country awash in cranber-ries, the government has decided to force farm-

ers to cut production or dump about 15% oftheir crops this fall to winnow the surplus.

Thats enough to make 40 million gallons ofcranberry juice cocktail.Greg Gatlin, Boston Herald, July 7, 2000.

Made in Massachusetts: Web Tax Collecting

Internet taxes are unfair, argue e-commercecompanies. With 7,500 state and local tax ju-

risdictions nationwide, just determining the ap-plicable online sales tax would be far too bur-

densome. Better find a new argument, saysDaniel Sullivan, CEO of the Salem, MA com-pany, Taxware International. His firm devel-

ops software that can calculate e-commtaxes. Merchants log on, send basic infor

tion and Taxware matches zip codes againdatabase of local tax figures, working out

numbers and reporting the transaction toappropriate authorities We can calcuany tax, anywhere in the United Stat

Sullivan says.Evan Ratliff, Wired, July 2000.

Tennessee turns back income tax proposa

Tennesseeans may want to be number when it comes to sending a football teamthe Super Bowl or a man to the White Ho

but theres one area where they dont mbeing in last place. Paying taxes. Tenne

has one of the lowest tax burdens in thetion. Only New Hampshire ranks lower,

not for long. Revenues are expected tocrease when New Hampshire resolveschool funding issue with a new tax and T

nessee will drop to 50th in the percentagpersonal income to taxes. Despite effort

the Governor and lawmakers who want totroduce an income tax, the state budget w

passed this year without new taxes.Flo Conner, Boston Globe, June 25, 2000

N

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