• Idea of the day: Repeal the 16th Amendment, which  gives Congress the power to lay and collect taxes. Replace it with an amendment that requires each state to remit to the federal government a certain percent of its tax revenue.

• Economist Richard Rahn on the necessity of failure in the market: “When government becomes a player and tries to prevent the failure of market participants, its decisions are almost invariably corrupted by the political process.”

• Read up on Goodwin Liu, Obama’s nominee for a seat on the 9th Circuit Court of Appeals: “Liu’s confirmation would compromise the judiciary’s check on legislative overreach and push the courts not only to ratify such constitutional abominations as the individual health insurance mandate but to establish socialized health care as a legal mandate itself.”

• Nuclear arms treaty set for April. It’s a long time coming.

• Podcast: “China, Currency and Trade Demagogues” featuring Daniel J. Ikenson.

Wednesday Links is a post from Cato @ Liberty - Cato Institute Blog

Last month, I warned that the 9th Circuit Court of Appeals would soon be handing the school choice movement a legal setback. Well, it’s here.

As expected, the 9th Circuit has reinstated a lower court challenge to Arizona’s scholarship donation tax credit program. The program allows taxpayers to contribute to non-profit Scholarship Tuition Organizations (STOs) that provide financial assistance to families choosing private schools. The taxpayers can then claim a dollar for dollar credit for their donation.

While this ruling leaves the program intact for the time being, it would almost surely require the tax credit program to be amended if it is allowed to stand. Fortunately, as I noted in my earlier post, the 9th Circuit is overturned as often as a caber at the Highland Games. Its ruling is unlikely to stand if appealed to the U.S. Supreme Court.

At issue is the fact that taxpayers are free to choose the STOs to which they donate their money, and private STOs are free to set criteria for the schools at which their scholarships can be redeemed. There are thus some STOs that offer scholarships only to religious schools. This is essentially the same situation that obtains when taxpayers claim deductions for contributions to non-profit charities. The charities can legally be religious or secular, and they can infuse the services they offer with religion, or not, as they choose. The whole thing is constitutional because it is the taxpayers, not the government, that decides which charity gets their funds. This is all settled law.

To get around the fact that the legal precedents were against it, the 9th Circuit decided to do a compelling impression of Marcel Marceau, pretending to hem itself into an invisible legal box. Specifically, the 9th Circuit decided to pretend that the constitutional restrictions limiting government expenditures (as in school voucher programs) also apply to the private funds at issue under tax credit programs.

That box, of course, does not exist. No government money is spent under the tax credit program, and the tax credits are themselves available on an entirely religiously neutral basis, in scrupulous conformance with the Establishment Clause of the First Amendment.

So here’s my next legal prediction: the constitutionality of the Arizona education tax credit program will ultimately be upheld by the U.S. Supreme Court, and opponents of educational freedom will have to resort to some new ploy in their efforts to herd American families back onto the public school plantation.

9th Circuit Imitates Marcel Marceau is a post from Cato @ Liberty - Cato Institute Blog

As Adam Schaeffer notes on this blog today, education tax credits have won in court, again. This time in Arizona.

I’ve long argued that their superior resistance to court challenge is one of many reasons to favor tax credits over other approaches to school choice. But there’s one court that even credits are likely to run into trouble with: the 9th Circuit Court of Appeals.

The 9th Circuit is the most statist appellate court in the nation, and it has been sitting on an education tax credit case, Winn v. Garriott, for more than a year. For the record, I expect it to rule against the program sometime in 2009. If it does, that ruling will be appealed and almost certainly overturned by the Supreme Court of the United States.

Supporters of educational freedom should both brace themselves for this setback and also put it in perspective. The 9th Circuit is overturned more often than a caber at the Highland games.

Tax Credits, Courts, and Cabers is a post from Cato @ Liberty - Cato Institute Blog