The NYT criticized the Republican tax-cutting plans. In particular, it focuses on the plan to apply a 15 percent or 25 percent corporate tax rate for all business pass-through income. This is in place of the current individual income tax rate, which could be as high as 39.6 percent.
The editorial argues that this would be a huge tax break for partners in hedge funds and real estate developers (like Donald Trump), who typically get their income through pass-through corporations. While this is true, it is only part of the story.
Allowing owners of pass-through corporations to just pay the corporate tax rate instead of the individual income tax rate would be a huge loophole that every higher paid person would rush to take advantage of. For example, a highly paid medical specialist would reorganize their business as a pass-through corporation to pay a lower tax rate. The same would be true of other professionals.
In effect, this would allow the vast majority of high-income individuals to pay a lower tax rate than school teachers or firefighters while creating an enormous tax shelter industry. This is truly awful from the standpoint of policy (increasing inequality while reducing efficiency), but if the point is to give more money to the rich, it gets the job done.
The NYT criticized the Republican tax-cutting plans. In particular, it focuses on the plan to apply a 15 percent or 25 percent corporate tax rate for all business pass-through income. This is in place of the current individual income tax rate, which could be as high as 39.6 percent.
The editorial argues that this would be a huge tax break for partners in hedge funds and real estate developers (like Donald Trump), who typically get their income through pass-through corporations. While this is true, it is only part of the story.
Allowing owners of pass-through corporations to just pay the corporate tax rate instead of the individual income tax rate would be a huge loophole that every higher paid person would rush to take advantage of. For example, a highly paid medical specialist would reorganize their business as a pass-through corporation to pay a lower tax rate. The same would be true of other professionals.
In effect, this would allow the vast majority of high-income individuals to pay a lower tax rate than school teachers or firefighters while creating an enormous tax shelter industry. This is truly awful from the standpoint of policy (increasing inequality while reducing efficiency), but if the point is to give more money to the rich, it gets the job done.
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Germany’s official measure of unemployment is constructed differently than the U.S. measure. They count people working part-time who want full-time jobs as being unemployed. In contrast, these people are counted in the United States as being employed. As a result, the official measure is not directly comparable to the U.S. measure. Fortunately, the OECD constructs a “harmonized” unemployment rate which essentially applies the U.S. methodology to the unemployment measures for other countries.
Since the OECD measure is readily available, it is difficult to see why the NYT used the German official measure in an article on growing poverty and inequality in Germany. The piece tells readers that Germany’s unemployment rate is 5.7 percent. This is the official German measure. The unemployment rate using the OECD’s harmonized measure is 3.7 percent. Since few readers are likely to be familiar with the methodology used to construct the German measure, using the 5.7 percent figure is misleading to them.
Germany’s official measure of unemployment is constructed differently than the U.S. measure. They count people working part-time who want full-time jobs as being unemployed. In contrast, these people are counted in the United States as being employed. As a result, the official measure is not directly comparable to the U.S. measure. Fortunately, the OECD constructs a “harmonized” unemployment rate which essentially applies the U.S. methodology to the unemployment measures for other countries.
Since the OECD measure is readily available, it is difficult to see why the NYT used the German official measure in an article on growing poverty and inequality in Germany. The piece tells readers that Germany’s unemployment rate is 5.7 percent. This is the official German measure. The unemployment rate using the OECD’s harmonized measure is 3.7 percent. Since few readers are likely to be familiar with the methodology used to construct the German measure, using the 5.7 percent figure is misleading to them.
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It is more than a bit bizarre that no one seems to pay any attention to the budgetary implications of the Fed’s decision to start selling off its assets. The impact is potentially fairly large in the scheme of things, possibly as much as $600 billion over the next decade. This is equal to roughly 0.5 percent of GDP. It’s pretty much the same number at stake in the various Obamacare repeal efforts.
For some reason, none, as in absolutely zero, of the news stories I have seen or heard about the asset sales mentioned its impact on the budget. It was the same story back in June when the Fed raised the issue at its meeting that month.
It’s a bit hard to understand how reporters at the New York Times, Washington Post, NPR, and elsewhere can independently decide that adding hundreds of billions of dollars to the budget deficit over the next decade is not worth mentioning. (The basic story can be found here.)
It is more than a bit bizarre that no one seems to pay any attention to the budgetary implications of the Fed’s decision to start selling off its assets. The impact is potentially fairly large in the scheme of things, possibly as much as $600 billion over the next decade. This is equal to roughly 0.5 percent of GDP. It’s pretty much the same number at stake in the various Obamacare repeal efforts.
For some reason, none, as in absolutely zero, of the news stories I have seen or heard about the asset sales mentioned its impact on the budget. It was the same story back in June when the Fed raised the issue at its meeting that month.
It’s a bit hard to understand how reporters at the New York Times, Washington Post, NPR, and elsewhere can independently decide that adding hundreds of billions of dollars to the budget deficit over the next decade is not worth mentioning. (The basic story can be found here.)
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After screaming about budget deficits throughout the Obama administration, Republicans in Congress are apparently planning to pass tax cuts that will substantially increase the budget deficit from the baseline projections. The NYT decided to help them in this effort by printing without comment their absurd claims about growth.
According to the NYT, Senator Ron Johnson, a member of the Budget Committee, said:
“Just going from 2 to 3 percent growth adds about $14 trillion of economic activity over a decade, $2 to $3 trillion of revenue to the federal government.”
This would be like saying that we would have a great baseball team if we just brought Babe Ruth, Lou Gehrig, and Jackie Robinson back to life. Presumably, the NYT would recognize that anyone who said that about baseball was either lying or seriously out of touch with reality and would point this fact out to their readers.
Similarly, the idea that we have a simple route to “just” raise the rate of annual growth from 2 to 3 percent, is equally absurd, but the NYT treated it as though it is a comment that a sane person could have honestly said. That’s great stenography, but truly awful reporting.
After screaming about budget deficits throughout the Obama administration, Republicans in Congress are apparently planning to pass tax cuts that will substantially increase the budget deficit from the baseline projections. The NYT decided to help them in this effort by printing without comment their absurd claims about growth.
According to the NYT, Senator Ron Johnson, a member of the Budget Committee, said:
“Just going from 2 to 3 percent growth adds about $14 trillion of economic activity over a decade, $2 to $3 trillion of revenue to the federal government.”
This would be like saying that we would have a great baseball team if we just brought Babe Ruth, Lou Gehrig, and Jackie Robinson back to life. Presumably, the NYT would recognize that anyone who said that about baseball was either lying or seriously out of touch with reality and would point this fact out to their readers.
Similarly, the idea that we have a simple route to “just” raise the rate of annual growth from 2 to 3 percent, is equally absurd, but the NYT treated it as though it is a comment that a sane person could have honestly said. That’s great stenography, but truly awful reporting.
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It’s good to see the NYT has diverse voices on economic issues. In his “Economic Scene” column on the economy’s supposed labor shortage, Porter argued that “raising barriers to imports — inviting retaliation from trading partners — is exactly the wrong approach.” Three days ago, the NYT had an editorial arguing strongly for increased protectionism in the form of stronger and longer copyright and patent protections. These forms of protection not only raise prices and slow growth, but they redistribute income upward, taking money from most of the population and giving it to those who stand to gain from patent and copyright protection.
It is worth noting that the assertion that the economy is now or will in the near future be suffering from a labor shortage seems dubious. Employment rates for prime-age men at all levels of educational attainment are still below their 2000 rate. That seems hard to reconcile with the view that we have a labor shortage. In the same vein, the percentage of unemployment due to people voluntarily quitting their jobs is still relatively low, suggesting that workers do not feel very secure about their labor market prospects. And, workers are still far from recovering their share of output, with the profit share still well above the pre-recession level.
For these reasons, we should be skeptical about the existence of a labor shortage. It is also worth noting that a labor shortage is 180 degrees at odds with the often asserted problem that the robots will take all the jobs.
It’s good to see the NYT has diverse voices on economic issues. In his “Economic Scene” column on the economy’s supposed labor shortage, Porter argued that “raising barriers to imports — inviting retaliation from trading partners — is exactly the wrong approach.” Three days ago, the NYT had an editorial arguing strongly for increased protectionism in the form of stronger and longer copyright and patent protections. These forms of protection not only raise prices and slow growth, but they redistribute income upward, taking money from most of the population and giving it to those who stand to gain from patent and copyright protection.
It is worth noting that the assertion that the economy is now or will in the near future be suffering from a labor shortage seems dubious. Employment rates for prime-age men at all levels of educational attainment are still below their 2000 rate. That seems hard to reconcile with the view that we have a labor shortage. In the same vein, the percentage of unemployment due to people voluntarily quitting their jobs is still relatively low, suggesting that workers do not feel very secure about their labor market prospects. And, workers are still far from recovering their share of output, with the profit share still well above the pre-recession level.
For these reasons, we should be skeptical about the existence of a labor shortage. It is also worth noting that a labor shortage is 180 degrees at odds with the often asserted problem that the robots will take all the jobs.
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Economists usually argue that it’s best to tax the things you want discourage, like cigarettes, alcohol, and gasoline, not things you want to encourage, like work. That is why it is striking that that the Washington Post could not find one economist who thought that a plan in London to tax vacant housing units is a good idea.
The only expert cited in the piece argued that the tax would have little effect on the housing market because the rich would not care if their property taxes were doubled or tripled, they would still leave units vacant. (The piece repeatedly refers to “experts” even though only one is cited by name.) This answer is striking for three reasons.
Whenever tax increases on the rich are proposed, the Washington Post and other newspapers are usually filled with assertions from economists about how it will cause to them work less, move, or take other steps to avoid the tax. Apparently for some reason a tax on vacant property is different from other taxes; the rich don’t mind paying it.
The second reason the comment is striking is that it suggests a relatively costless way for the city of London to raise money. If doubling or tripling the property tax for vacant properties won’t affect the behavior of the rich then maybe they could quadruple or quintuple the tax. Hey, if the rich don’t mind paying a tax on vacant property, why not charge them ten or twenty times the regular property tax? They won’t even notice.
The third reason is that the comment comes just before a statement telling us most vacant properties in London are owned by middle-class people, not rich people:
“Most of London’s 20,000 empty units aren’t owned by the super-rich, but by the middle and lower rungs — and studies show that most homes are empty because they are the subjects of inheritance tussles or uninhabitable or in need of repairs.”
Taxing these people on vacant units might be just the incentive they need to resolve inheritance disputes or to sell a vacant property to someone who could afford to make the repairs for it to be habitable. Of course, this works from the assumption that we actually want less vacant property.
In arguing the case against the tax, the Post even found someone was happy to live next to a building with many vacant units:
“Plus, there are upsides to living next to absentee neighbors.
“‘I would shudder to imagine if this was running at 80 percent occupancy,’ said Suruchi Shukla, a 38-year-old consultant, with her head cranked skyward at the building.”
So there you have it: a tax on vacant property wouldn’t reduce the number of vacant units, and it would be a bad thing if it did. And remember folks, this is supposed to be a news story, not an opinion piece.
Economists usually argue that it’s best to tax the things you want discourage, like cigarettes, alcohol, and gasoline, not things you want to encourage, like work. That is why it is striking that that the Washington Post could not find one economist who thought that a plan in London to tax vacant housing units is a good idea.
The only expert cited in the piece argued that the tax would have little effect on the housing market because the rich would not care if their property taxes were doubled or tripled, they would still leave units vacant. (The piece repeatedly refers to “experts” even though only one is cited by name.) This answer is striking for three reasons.
Whenever tax increases on the rich are proposed, the Washington Post and other newspapers are usually filled with assertions from economists about how it will cause to them work less, move, or take other steps to avoid the tax. Apparently for some reason a tax on vacant property is different from other taxes; the rich don’t mind paying it.
The second reason the comment is striking is that it suggests a relatively costless way for the city of London to raise money. If doubling or tripling the property tax for vacant properties won’t affect the behavior of the rich then maybe they could quadruple or quintuple the tax. Hey, if the rich don’t mind paying a tax on vacant property, why not charge them ten or twenty times the regular property tax? They won’t even notice.
The third reason is that the comment comes just before a statement telling us most vacant properties in London are owned by middle-class people, not rich people:
“Most of London’s 20,000 empty units aren’t owned by the super-rich, but by the middle and lower rungs — and studies show that most homes are empty because they are the subjects of inheritance tussles or uninhabitable or in need of repairs.”
Taxing these people on vacant units might be just the incentive they need to resolve inheritance disputes or to sell a vacant property to someone who could afford to make the repairs for it to be habitable. Of course, this works from the assumption that we actually want less vacant property.
In arguing the case against the tax, the Post even found someone was happy to live next to a building with many vacant units:
“Plus, there are upsides to living next to absentee neighbors.
“‘I would shudder to imagine if this was running at 80 percent occupancy,’ said Suruchi Shukla, a 38-year-old consultant, with her head cranked skyward at the building.”
So there you have it: a tax on vacant property wouldn’t reduce the number of vacant units, and it would be a bad thing if it did. And remember folks, this is supposed to be a news story, not an opinion piece.
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The NYT had an article on the most recent Republican plan to repeal the Affordable Care Act (ACA). It included a quote from Senator Bill Cassady, a co-sponsor of the bill:
“‘Right now, 37 percent of the revenue from the Affordable Care Act goes to Americans in four states’ — California, New York, Massachusetts and Maryland, Mr. Cassidy said. ‘That is frankly not fair.'”
If just four states getting 37 percent of the money sounds unfair to you, it might be worth keeping in mind that these four states account for more than a quarter of the country’s population and GDP. That still means that they are getting a disproportionate share of the money from the ACA, but it is not quite the same as if four small or average size states were getting 37 percent of the money.
It is also worth remembering that ACA spending accounts for roughly 1.5 percent of the total budget. Getting a disproportionate share of 1.5 percent of the total budget doesn’t seem like all that big a deal, after all southern states have historically gotten a grossly disproportionate share of the military budget.
Then we have to consider the fact that many states don’t get much money from the ACA by choice. Specifically, they have chosen not to expand Medicaid to provide more of their residents with health care insurance. They also have not done much to publicize the exchanges, which would have sent more money to their states through subsidies to moderate income people.
So this is the grave injustice that Senator Cassidy is looking to remedy and to do so he wants to have 30 million plus people lose their health care insurance, and to allow insurers to again discriminate against people based on pre-existing conditions. That may be unfortunate, but at least California, New York, Massachusetts and Maryland won’t be getting a disproportionate share of ACA spending.
The NYT had an article on the most recent Republican plan to repeal the Affordable Care Act (ACA). It included a quote from Senator Bill Cassady, a co-sponsor of the bill:
“‘Right now, 37 percent of the revenue from the Affordable Care Act goes to Americans in four states’ — California, New York, Massachusetts and Maryland, Mr. Cassidy said. ‘That is frankly not fair.'”
If just four states getting 37 percent of the money sounds unfair to you, it might be worth keeping in mind that these four states account for more than a quarter of the country’s population and GDP. That still means that they are getting a disproportionate share of the money from the ACA, but it is not quite the same as if four small or average size states were getting 37 percent of the money.
It is also worth remembering that ACA spending accounts for roughly 1.5 percent of the total budget. Getting a disproportionate share of 1.5 percent of the total budget doesn’t seem like all that big a deal, after all southern states have historically gotten a grossly disproportionate share of the military budget.
Then we have to consider the fact that many states don’t get much money from the ACA by choice. Specifically, they have chosen not to expand Medicaid to provide more of their residents with health care insurance. They also have not done much to publicize the exchanges, which would have sent more money to their states through subsidies to moderate income people.
So this is the grave injustice that Senator Cassidy is looking to remedy and to do so he wants to have 30 million plus people lose their health care insurance, and to allow insurers to again discriminate against people based on pre-existing conditions. That may be unfortunate, but at least California, New York, Massachusetts and Maryland won’t be getting a disproportionate share of ACA spending.
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Of course, the paper did not actually warn of the cheap trick the Republicans are considering. It just mentioned it in passing as though it was a serious policy proposal:
“House Republicans are considering a key change to 401(k)s as part of their tax overhaul package: Taxing the money that workers place in their savings plans upfront instead of years later when they take it out in retirement.”
The only possible rationale for taxing money when it is put into a 401(k) account rather than when it is pulled out is to change the timing of tax collections since there will be little net change in revenue over the long-term. By taxing the payments into the system, the government will collect more revenue during the 10-year horizon over which budget projections are made. However, this will be almost completely offset by lower tax collections in later years.
As policy, this makes zero sense. The point of 401(k)s is supposed to be encouraging people to save. There is much research showing that the prospect of an immediate tax saving gives strong incentive to save. This means that eliminating the immediate tax deduction will almost certainly mean less savings in 401(k)s.
There is the advantage that this change will appear to offset the lost revenue from Republican tax cuts for rich people. Unfortunately, most Post readers might not be aware of this rationale for the policy change.
Of course, the paper did not actually warn of the cheap trick the Republicans are considering. It just mentioned it in passing as though it was a serious policy proposal:
“House Republicans are considering a key change to 401(k)s as part of their tax overhaul package: Taxing the money that workers place in their savings plans upfront instead of years later when they take it out in retirement.”
The only possible rationale for taxing money when it is put into a 401(k) account rather than when it is pulled out is to change the timing of tax collections since there will be little net change in revenue over the long-term. By taxing the payments into the system, the government will collect more revenue during the 10-year horizon over which budget projections are made. However, this will be almost completely offset by lower tax collections in later years.
As policy, this makes zero sense. The point of 401(k)s is supposed to be encouraging people to save. There is much research showing that the prospect of an immediate tax saving gives strong incentive to save. This means that eliminating the immediate tax deduction will almost certainly mean less savings in 401(k)s.
There is the advantage that this change will appear to offset the lost revenue from Republican tax cuts for rich people. Unfortunately, most Post readers might not be aware of this rationale for the policy change.
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We all know how hard it is for people with advanced degrees to compete in the global economy, but how much government help do we have to give them? Apparently, whatever we give them in strong patent and copyright protections (yes folks, this is protectionism, no matter how much you like it) is not enough.
In an editorial on relations with China, the NYT offers this encouraging (to the rich) pronouncement:
“On intellectual property, now that China is putting energy into developing its own technology instead of just stealing America’s, the two could work together on stronger protections.”
Isn’t that great? We can redistribute more money to people who benefit from patent and copyright monopolies and then say it’s just unfortunate that technology leads to an upward redistribution of income. And most of our intellectual class are sufficiently s**t-for-brains to treat that as a serious argument.
And yes folks, there are alternatives to patent and copyright monopolies for financing research and creative work. But, as we all know, intellectuals have a hard time dealing with new ideas.
We all know how hard it is for people with advanced degrees to compete in the global economy, but how much government help do we have to give them? Apparently, whatever we give them in strong patent and copyright protections (yes folks, this is protectionism, no matter how much you like it) is not enough.
In an editorial on relations with China, the NYT offers this encouraging (to the rich) pronouncement:
“On intellectual property, now that China is putting energy into developing its own technology instead of just stealing America’s, the two could work together on stronger protections.”
Isn’t that great? We can redistribute more money to people who benefit from patent and copyright monopolies and then say it’s just unfortunate that technology leads to an upward redistribution of income. And most of our intellectual class are sufficiently s**t-for-brains to treat that as a serious argument.
And yes folks, there are alternatives to patent and copyright monopolies for financing research and creative work. But, as we all know, intellectuals have a hard time dealing with new ideas.
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