August 03, 2004

Why California Taxed Us at 9.3 pc

WE NOTE WITH DISPLEASURE this excerpt, via Meg McArdle, from a story in The Wall Street Journal about Internet crime:

Come September, Mr. Fawrup will be on a new antifraud beat. He's been reassigned to a unit in Commerce, Calif., that investigates people who try to redeem empty cans, bottles and plastic from out of state. The project director of the high-tech crimes task force, Lt. Rick Craigo, says Mr. Fawrup will be replaced. But both men agree their numbers are still too few to catch most Internet evildoers. Says Mr. Fawrup: "I've been able to do so little."

Now, we know readers will think we're upset California treats Beverage Can Fraud as a Public Scourge -- but we're actually not all that mad. We have learned that people have allegedly conducted some significant fraud over the years -- such as this reported $3 million fraud a few years back. Yes, you read that right -- $3 million! Clearly, with potential profits like that, policing is warranted.

What does annoy us, though, is that California had to do things its way -- which is to say it fouled things up immensely -- when it created the law in the first place. A system like Michigan's would have been far smarter. With that system, one takes one's bottles back to any store and redeems them for cash.

The advantages to Michigan's system are clear.

First, all retailers collect the deposits -- we assume they make money on the recyclable material, and we imagine as a whole retailers get to keep any overage that occurs because some folks throw the recyclables out.

Second, it turns the recyclables into a valuable alternative currency. We can assure readers that when we were in school, back at Ann Arbor, empty Coke cans were as good as money.

Finally, though, it cuts down on fraud -- scofflaws are caught when they do stupid things, such as spend three hours at an automatic collection site. Also, retailers can set limits on how much one redeems at any one time (e.g. $10) and an alert shop clerk can keep an eye out for Ohio cans or some such. The end results are that the regular police deal with any lawbreakers, there are no costly special police agencies, and the state does not lose out on revenue. That means in Michigan, folks like Mr Fawrup can deal with the really bad criminals, and people don't get infuriated with their Government's incompetence.

Posted by Benjamin Kepple at August 3, 2004 11:40 PM | TrackBack