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David Brooks, Romney/Ryan, and the Faustian Shell Game

Do you have gay friends? Colleagues? Loved ones? First things first.

Do you think women should receive equal pay for equal work? First things first.

Do you have sympathy for those who are struggling to find work? First things first.

David Brooks makes an ass out of Uma Thurman and you can tell his heart’s not in it. It’s a shame, because it’d be really nice to read the other version of this column. He frames the column as a “Guide to the Perplexed”, and buries the lede way down in the third-to-last paragraph:

You’re still deeply uncomfortable with many other Romney-Ryan proposals. But first things first. The priority in this election is to get a leader who can get Medicare costs under control.

Oh, so first things first? Okay, so the evidence that Romney/Ryan will do that–get Medicare costs under control–is hard to come by, and the evidence that they will do it without destroying one of the most beloved social programs is even more scant. It’s actually really easy to get Medicare costs under control: just stop paying the bills. I’m guessing there’s some reason that that proposal hasn’t been floated, but the Ryan budget is as close as anyone has gotten. So that’s the Faustian bargain that’s–at least ostensibly–on the table: don’t you care about your grandchildren? Then old people have to take it on the chin.

Medicare spending per capita

Which, if I’m being honest, if I thought there was a chance they could actually do it, well, it might sound appealing. Clearly they can’t, but let’s just assume they can, to ride where Brooks is leading us. Read the rest of this entry »

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Brief: rich people make more of the money, labor pays more of the taxes

So, via my friend (and rich person supporter extraordinaire) Bob Buschman, Ari Fleischer bloviates nonsensically about the rich being unfairly taxed. Buried in there is the following:

The top 20% in 1979 made 44.9% of the nation’s income and paid 55.3% of all federal taxes. Thirty years later, the top 20% made 50.8% of the nation’s income and their share of federal taxes paid had jumped to 67.9%.

And the top 1%? In 1979, this group earned 8.9% of the nation’s income and paid 14.2% of all federal taxes. In 2009, they earned 13.4% of the nation’s income but their share of the federal tax burden rose to 22.3%.

So the top 20% went from making 44.9% of income to making 50.8% of income, and the top 1%? From 8.9% of income to 13.4% of income. Fleischer’s upset that their share of the tax burden rose faster, but guess what–if they (and by they, I mean we, of course) made 100% of income, they’d pay 100% of the taxes.

Arm und Reich (flämisch 17 Jh)
Read the rest of this entry »

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Read up: Tax expenditures cost $1 trillion a year, or almost the entire deficit.

Tax expenditures are huge. What are they? Government spending disguised in tax language. They make government look smaller than it is.

Income tax expenditures added up to about 75% of the tax actually collected (Burman et al 2007), but have gone up to about 94%. I’m just doing this math in my head, but that means income tax rates are almost twice as high as they would have to be without these loopholes. Not only that, but these deductions cause a regressive shift in the tax structure.

The politics governing them are pretty straightforward: provide a tax loophole to a favored constituency and from below, your profile looks like that of a small-government conservative, axe in hand, taking apart the beast blow by blow. Meanwhile, from above, lobbyists and special interests get the bird’s-eye-view of someone well aware of who, precisely, is circling overhead, waiting to pluck that axe from the hand right before pecking out the liver.

So what to do? There’s been some political chatter, but bilateral disarmament here…well, I’m skeptical.

Read up and then write somebody, maybe:

Wikipedia has a surprisingly terse overview–someone should maybe get on this–here: http://en.wikipedia.org/wiki/Tax_expenditure, with a little more here: http://en.wikipedia.org/wiki/United_States_federal_budget#Tax_expenditures

The tax policy center has a briefing book here: http://www.taxpolicycenter.org/upload/Background/I-8TaxExpenditures.final.pdf

Burman, Geissler, and Toder have a 2007 paper in the AER proceedings that does the accounting and analysis: http://www.jstor.org/stable/10.2307/29729999

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Stupid subsidies are stupid. Economists know this. Obama’s proposed manufacturing subsidy may be good politics but it’s bad policy..

Matt Yglesias is great here. Seriously? What possible argument can there be for manufacturing subsidies?

It’s not an infant industry. It’s not clear that we have huge returns to capital in manufacturing that are being ignored by the private markets. And if we do, lowering the corporate tax rate and broadening the base is the right solution–why would we favor manufacturing jobs over other jobs? It just means less jobs.

 

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