More Rent Seeking — National Style
Rent seeking has been a major topic around here recently. I don’t need to provide links — if you’re reading this on the main page of the blog, you can just scroll down a bit for some excellent posts. Now we are going to do a little bit more rent seeking as a nation, by charging international visitors without visas (I guess this means residents of Windsor going to Detroit for a Red Wings game) a new $10 fee that will be used to market the United States internationally. Basically, it will be a national version of what just about every city (including St. Louis and [probably] Kansas City) does with hotel taxes: charge an extra fee and use it to promote the local travel industry. I think we can admit that there are plenty of worse examples of rent seeking than this, but it still entails private enterprise using the government and taxation in order to benefit one sector of the economy at someone else’s expense. (It makes it a lot easier to do this if the expense is borne by someone who does not live here.)
Now, I want to get into their numbers:
The association says the U.S. welcomed 2.4 million fewer overseas visitors last year than in 2000. And that, the group says, has cost it an estimated $509 billion in total spending and $32 billion in direct tax receipts.
We can presume that 2.4 million is for one year, and $509 billion is for 10 years. Taking 2.4 million a year for 10 years, and dividing that into the total spending amount, yields an average amount spent per visitor of just more than $21,000. This article states that the average spending per visitor is $4,500. I don’t think I believe the number put out with the bill signing, but the alternative would be to accuse the PR and lobbying group behind this effort of inflating their numbers. And we all know that would never happen. …
EU countries, for instance, do not require Visas, nor would countries like Australia. Assessing some type of non-Visa fee would simply run the risk of these costs being passed along to US citizens travelling to these countries. If you don’t believe there is direct reciprocity, look at Brazil, which increased the fee for US citizens obtaining a Visa to 4-5x more than any other country’s visitors immediately after we required Brazilians to get Visas to the US. It just becomes a vicious circle.
The only good thing, if you can call it that, is that if this fee is charged at the time of ticket purchase it is simply an economic cost issue, and doesn’t include incremental “soft” costs for actually obtaining a Visa to travel, which if you have never done so is not a fun experience.
As someone living abroad I can assure you that many citizens of EU countries go out of their way NOT to travel to the US these days as the hassle of our entry & exit process has become quite burdensome and frankly, insulting to many of them. My company has a stated preference for not holding global gatherings in the US for this reason. I find myself apologizing for their treatment by the US quite often, which is a shame.
Comment by Mike — March 8, 2010 @ 7:22 a.m.