[The following essay is a guest post from Dan Rothschild, director of state projects and a senior fellow with the R Street Institute.]

As anyone who’s lived in a major coastal American city knows, apartment renting is about as far from an unregulated free market as you can get. Legal and regulatory stipulations govern rents and rent increases, what can and cannot be included in a lease, even what constitutes a bedroom. And while the costs and benefits of most housing policies can be debated and deliberated, it’s generally well known that housing rentals are subject to extensive regulation.

But some San Francisco tenants have recently learned that, in addition to their civil responsibilities under the law, their failure to live up to some parts of the city’s housing code may trigger harsh criminal penalties as well. To wit: tenants who have been subletting out part or all of their apartments on a short-term basis, usually through web sites like Airbnb, are finding themselves being given 72 hours to vacate their (often rent-controlled) homes.

San Francisco’s housing stock is one of the most highly regulated in the country. The city uses a number of tools to preserve affordable housing and control rents, while at the same time largely prohibiting higher buildings that would bring more units online, increasing supply and lowering prices. California’s Ellis Act provides virtually the only legal and effective means of getting tenants (especially those benefiting from rent control) out of their units — but it has the perverse incentive of causing landlords to demolish otherwise useable housing stock.

Again, the efficiency and equity ramifications of these policies can be discussed; the fact that demand curves slope downward, however, is really not up for debate.

Under San Francisco’s municipal code it may be a crime punishable by jail time to rent an apartment on a short-term basis. More importantly, it gives landlords the excuse they need to evict tenants they otherwise can’t under the city’s and state’s rigorous tenant protection laws. After all, they’re criminals!

Here’s the relevant section of the code:

Any owner who rents an apartment unit for tourist or transient use as defined in this Chapter shall be guilty of a misdemeanor. Any person convicted of a misdemeanor hereunder shall be punishable by a fine of not more than $1,000 or by imprisonment in the County Jail for a period of not more than six months, or by both. Each apartment unit rented for tourist or transient use shall constitute a separate offense.

Here lies the rub. There are certainly legitimate reasons to prohibit the short-term rental of a unit in an apartment or condo building — some people want to know who their neighbors are, and a rotating cast of people coming and going could potentially be a nuisance.

But that’s a matter for contracts and condo by-laws to sort out. If people value living in units that they can list on Airbnb or sublet to tourists when they’re on vacation, that’s a feature like a gas stove or walk-in closet that can come part-and-parcel of the rental through contractual stipulation. Similarly, if people want to live in a building where overnight guests are verboten, that’s something landlords or condo boards can adjudicate. The Coase Theorem can be a powerful tool, if the law will allow it.

The fact that, so far as I can tell, there’s no prohibition on having friends or family stay a night — or even a week — under San Francisco code, it seems that the underlying issue isn’t a legitimate concern about other tenants’ rights but an aversion to commerce. From the perspective of my neighbor, there’s no difference between letting my friend from college crash in my spare bedroom for a week or allowing someone I’ve never laid eyes on before do the same in exchange for cash.

The peer production economy is still in its infancy, and there’s a lot that needs to be worked out. Laws like those in San Francisco’s that circumvent the discovery process of markets prevent landlords, tenants, condos, homeowners, and regulators from leaning from experience and experimentation — and lock in a mediocre system that threatens to put people in jail for renting out a room.

[The following essay is a guest post from Dan Rothschild, Managing Director of the State and Local Policy Project at the Mercatus Center at George Mason University.]

As cell phone ownership has tripled in the United States over the last decade, policymakers have increasingly seen mobile devices as a cash cow. In some states, consumers now pay as much as a quarter of their cell phone bills in taxes. And while state revenues are beginning to tick back up from their low point during the recession, Medicaid costs are fast on their tails. So it’s likely that over the coming years, states will be looking to find taxes to hike or new taxes to create — all without calling them tax hikes, of course.

Policy makers may be tempted to hike taxes on cell phones, or to create (or “equalize”) taxes on untaxed (or “under taxed”) parts of wireless telephony, such as cell phone data plans or e-readers with cellular connections. As I argue in a recent issue of Mercatus on Policy, this is a bad idea for a number of reasons.

First, it’s bad economics. Having special taxes on cell phone violates the well-established principle of tax neutrality, which holds that taxes should treat all economic activities similarly. The purpose of taxes is to raise funds for necessary government services; when taxes treat different activities unequally, it distorts consumer behavior. Empirical evidence suggests that, at the margin, consumer spending on wireless service is elastic. This makes it a particularly poor choice for excise taxation.

There are two economic justifications for a tax that singles out a particular good or service for a higher tax: if it’s something that policymakers deem “sinful” (a so-called “sin tax”), or if it causes negative externalities that the tax corrects (a Pigouvian tax). In both of these cases, policymakers enact these taxes explicitly to discourage the use of the object of the tax; think cigarettes and alcohol. Neither of these rationales apply to cell phones, and (hopefully) no policymaker believes it’s a worthy policy to reduce consumer access to this technology. Nobody seriously argues that cell phones are sinful, nor that cell phones create net negative externalities.

Second, it runs counter to a number of other policy goals. On the national level, politicians are tripping over themselves to extoll the virtues of broadband internet access and its almost magical effects on everything from health outcomes to urban entrepreneurship. But taxing wireless service, which is frequently bundled with wireless broadband, runs counter to that goal (as would any attempts to “equalize” taxes between the voice and data sections of a bill by applying voice tariffs to data services). Similarly, the FCC’s universal service fund is meant to, inter alia, support telephone access in low-income and rural households. The most efficient way to increase take-up of telephony in these households is to lower the price rather than relying on notoriously inefficient subsidies.

Third, it’s a regressive tax. In all likelihood, cell phones are taxed at a higher rate because not so long ago they were seen as toys of the wealthy. This is obviously no longer the case. The marginal consumers today are largely lower-income, and high taxes keep them from adopting technologies.

On the federal level, the Wireless Tax Fairness Act would prohibit states and localities from “imposing a new discriminatory tax on cell phone services, providers, or property.” This is probably a step in the right direction, though it still leaves (from my reading) loopholes for states. For instance, states could argue that they are not imposing a new tax if they applied the same taxes on wireless voice products to wireless data products. This could allow them to easily slap monthly fees on Kindles, iPads, and other devices that use cellular networks. In many ways, this would be more pernicious than raising taxes on voice products.

The bottom line is that taxes on cell phones are inefficient, inequitable, and run counter to other public policies. They likely cost more in lost consumer welfare than they collect in revenues. There’s no reason for them, and states looking to improve their tax structure could do well by eliminating them altogether.

Read the whole thing here.