Paper Corresponding to David Cay Johnston's Free Lunch
Guidelines
1) In light of the massive federal budget deficit and the California state budget shortfall, spending cuts and tax increases will be the order of the day for most taxpayers in California. In his book Free Lunch David Cay Johnston argues that subsidies for businesses and, in general, the wealthy result in economic inefficiency and economic pollution. This, in turn, causes more economic hardhip for middle class Americans who have to take on more of the tax burden and will have fewer opportunites as a result of the increased tax burden and decreased government spending.
2) Using David Cay Johnston's Free Lunch and any other resources at your disposal, build your case for how subsidies work and judge whether these miscarriages of economic justice are the result of greedy individuals who recognize how to tilt government expenditures to their advantage or are the result of a lethargic and easily duped government bureacracy and its sloppy policy-making.
a) you may choose to use examples that illustrate inequities in the tax system. Some examples from Johnston's book include:
i) subsidies for recreational land use development
ii) subsidies for punitive damages as a result of railroad negligence
iii) subsidies for companies to move operations overseas so that they can offset the cost of their taxes with the foreign tax credit
iv) the sale of public space (like parks) and subsidies for sports teams
v) subsidies for shipbuilders
vi) subsidies for manufacturing plants through eminent domain
vi) subsidies for retail establishments
vii) appropriation earmarks derived by lobbyists
viii) subsidies in the proliferation of alarm systems
ix) subsidies in title insurance
x) homeowner tax breaks in the form of interest deduction
xi) subsidies in electricity deregulation
xii) executive retirement tax benefits
xii) subsidies for changing non-profit health organizations into for-profit health maintenance organizations
xiii) subsidies for pharmaceutical companies through the Medicare prescription drug plan
xiv) subsidies in deregulated hedge funds
xv) subsidies in backdating stock options for executives
3) In the conclusion try to come to terms with the assertion made by many business owners whom Johnston interviewed for Free Lunch that
if the rules allow them to take subsidies then there is nothing wrong with doing so.
OR
discuss whether you think David Cay Johnston's moral appeal in Free Lunch is outdated and will not have any real appeal for Americans who are much more pragmatic
4) 1200 words
website for David Cay Johnston's Free Lunch
Read portions of the book at Google Books