Saturday, November 07, 2015

Imagine if Hobby Lobby had had to pay a Pigovian tax on the antiquities it purchased

The Green family has spent a reported $30 million amassing its collection, and have been under federal investigation for five years under suspicion of importing looted artifacts. One reason the investigation has gone so slowly, one must presume, is that the government doesn't have the resources to go faster.

Now imagine that the US put in place a tax on purchases of antiquities, say 10%, on the principle established long ago by economist Arthur Pigoux that the social costs that are the byproduct of some economic activities (i.e., air pollution) should be paid back by the industries involved in creating the harm. Spending $30 million in the antiquities market, whether the purchases are legitimate or not, causes social harm because the licit market is not clearly distinguishable from the illicit market and because high prices signal to looters that antiquities are desirable commodities.

10% of $30 million is $3 million, $3 million that might have helped pay for a much speedier investigation or for many other enforcement and deterrent efforts that are so sorely lacking. Without some such financing mechanism, it is chimerical to think that additional import restrictions or merely verbal commitments by governments to do more will make much of a difference. (HR 1493, I should note, is scored by the CBO as revenue neutral.)

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