Posted tagged ‘taxes’

August 4, 2011

Barney Frank has written a clear, detailed and carefully reasoned explanation of why he voted against the debt ceiling bill.  It’s long enough to send most of it below the jump, but I want to highlight on the front page what my congressman had to say about our job now:

Dear Friend,

I appreciate you taking the time to let me know of your views on the debt limit.  As I will explain later, I think part of the reason that we wound up with a very unsatisfactory bill – one that I voted against – is that there was a disproportionate volume of communications from people who take a wholly negative view of virtually all government activity.  Fortunately, now that their efforts have called some fundamental values into question, a more broadly representative sector in the American public is speaking out and I think that will have a good result. [emphases added]

That is:  keep those cards and letters coming, now, through the summer, and all the way to Christmas.

There’s a lot more, all worth reading, reminding us (me) that despite the relatively negligible damage done up front by this deal, the potential remains for much worse to come.  To get Frank’s take, keep reading. (more…)

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Who’s Taxing Whom

July 19, 2011

Fair warning: what follows is a bit of a rant and contains nothing particularly new.  But the fiscal follies of our overlords are unhinging me, and as misery loves company, I hope to share my derangement.

———–

I’ve been a little obsessed with light bulbs lately, as regular readers know.  I  continue to be dumbfounded at the depth, passion, and naked-mole-rat-stupidity of the GOP drive to ensure Americans waste money on illumination.  Following a thought from one commenter, I’m bracing for the claim that bans on whaling are really an unconscionable assault on the liberty of the people to light their homes with oil lanterns.

But as I thought about the implications of the Republican House caucus’ relentless drive to undermine America’s energy security, I started to fixate on a penetrating glimpse of the obvious:  the entire GOP approach to the federal government’s fiscal policy is a vast tax hike on most Americans.

That the GOPsters approach to policy will raise the cost of living in America is, I think obvious by this point:  when you privatize public goods, by and large those goods cost more for the individual user to access.  (There is a lot of detail obscured by that blanket statement, and certainly some instances where it might be otherwise, but the health care system (about which more below) is a familiar example of the basic problem, and there are many more.)

Republicans would say, I think, that cost isn’t the issue.  Government shouldn’t pay for much that it does now and that individuals can make better choices about priorities and so on.  They’d add that government musn’t pay for that which it can’t; that, to use a cliche repeated over and over again, that the government must behave like any household would, and not spend money it doesn’t have.

That last is nonsense, of course.  I’m actually working on a next book that tells a grand story of fraud and deceit at the birth of the idea of government debt — and that tale turns on the ways that governments aren’t like households or small businesses.

For now, though, the point is that if you take the Republicans false metaphor at face value, then you see that despite the brave promises of “no new taxes,” the practical, household consequences of their actions add up to a huge stealth tax increase that differentially falls on to working people, the middle class, and the poor.

And yes, as noted above, I know I’m restating the obvious, but bear with me.  Let’s  take my lighting fixation for a spin.  Recall that the energy efficiency standards that so offend the current Republican caucus* are predicted to save each American household $50 a year.

Now back to that bill-paying session over the kitchen table Republicans are so wont to imagine.  Maybe liberty is beyond price.  Whatever it’s called though, this extra hit of four or five bucks a month would feel exactly the same as if the GOP had voted a $50/home surcharge on each of us to subsidize light bulb makers or power generators:   We wouldn’t have that money no more, and it’s by GOP choice that this increase in our burdens would such cash out of our pockets.

A latte a month may in fact be a worthy price to keep the dead hand of statism from our necks.  But what about cost of aging?  Remember the Paul Ryan plan that virtually the entire GOP congressional caucus has endorsed.  That scheme switches the cost of medical care for the elderly to those old, ill people and their families.  Now we’re not talking cups of coffee any more, mere Franklins a year; rather, we’re in the realm of beaucoup  Benjamins.

Again this is surely familiar to all here, but just as a reminder, the gap between the vouchers Ryan’s plan provides and the projected actual cost of senior’s health care is about $12,500,  according to a CBO analysis, $6,000 more than the out-of-pocket charges to be borne were Medicare left unchanged.

And is there any choice here, really, for any household that loves its grandparents (or just folks of an age that in my case is coming up rather sooner than seems plausible)?

No there is not.  We could enact the old Jewish mother light bulb joke,** but our only real options were the GOPsters to achieve their long-cherished goal of killing Medicare is to pay the freight or die faster.

Death and taxes — there’s a reason the two are such close kin, after all.

Old news, get over it — I get it.

But the point I want to make, the meme, to use a word I mistrust, or a shove to the Overton window, is that all this talk of the holding the line against taxes and so on is bullsh*t when we’re working at the level of that holy kitchen table.  There, the only thing that matters at the level of individual Americans’ bank accounts is that GOP policies raise the cost of being an American in ways that are indistinguishable from brutal, huge tax increases.

If politics is perception then it’s important to do what the Bush clan was brilliant at — take your opponents’ seeming strength and hang an anvil around its neck.  And here, as we see every day (and many posts here remind us), the GOPsters using the power of government to impose huge new costs on us all that we have in practical terms no way to avoid.  The resulting drain of our dollars is not a tax in law, of course, but the resulting holes in my wallet feel exactly the same as if it were.  And, of course, the bitter last jest is that under the Republican approach, we pay more to get less.

So I’d like to see every Democrat running, and the chattering classes as well, all raging about the GOP stealth tax on the American way of life.  I’d like to see the ads that make that connection with couples in their kitchens talking about this GOP tax assault, how cleverly it’s been disguised, how hard it bites.  I’d like to see sneering and rage and bitter remorse at the thought that any all-American family of voters was taken in by all that no-tax deceit.  I want to make it impossible for any GOP thug to hide behind Grover’s tissue of a pledge when next the polls open.

No new taxes?  Hell and death (and taxes)!  No GOPster should be allowed to say that unchallenged.

*Recall also that the standards were approved with bipartisan support in 2007 (including sponsorship by GOPster Fred Upton, currently  chairman of the  House Energy and Commerce Committee, who now fights the good fight against light bulb efficiency), and signed into law by that notorious state-socialist, George W. Bush.

**Q:  How many Jewish mothers does it take to change a light bulb?

A:  “None!  I’ll just sit here in the dark.”

Images:  Vincent van Gogh, The Potato Eaters, 1885

Rembrandt van Rijn, Portrait of an Old Jew, 1654

 

In the Integer-Based Community

June 21, 2011

I’ll give that unnamed Bush staffer credit.*  It is possible to create an alternate reality — if only for a time — given the willing complicity of all those watching (and transmitting) the useful fantasies of the powerful.  Just look at the success the Koch brothers’ subsidiary political arm, aka the GOP et al. have had in persuading so many that wealth transfers to the rich are the solution to all ills.

Hence the significance Bruce Bartlett’s entry today in The New York Times Economix Blog, in which the former Reagan, Bush I, Ron Paul and Jack Kemp policy advisor writes that, in essence, the entire Republican presidential field is lying about taxes to the American people.

He doesn’t quite put it that way — but he comes pretty close:

For years, Republicans have [said] …over and over again that taxes in the United States are exceptionally high and the primary obstacle to growth, and that a huge tax cut would do more to raise growth than any other policy.

For example, former Gov. Tim Pawlenty of Minnesota, a candidate for the Republican presidential nomination, has proposed reducing the top statutory income tax rate on individuals to 25 percent and abolishing the taxation of interest, dividends and capital gains. The Tax Policy Center estimates that this plan would reduce federal revenues by $8 trillion over the next decade.

Governor Pawlenty contends that unprecedented growth will result — to such an extent that there will actually be no revenue loss at all.

I am not picking on Governor Pawlenty; all of the candidates for the Republican presidential nomination support similar policies, and not one has criticized him for making outlandish claims.

Yup — that’s as card-carrying a conservative (per commenter wvng below) stalwart as you can get, stating as fact (which it is) that the fundamental Republican position on tax policy is “outlandish.”

__

Now this is, or ought to be obvious.

Bartlett here is actually responding to critics of an earlier post in which he made the following points:

The economic importance of statutory tax rates is blown far out of proportion by Republicans looking for ways to make taxes look high when they are quite low. And they almost never note that the statutory tax rate applies only to the last dollar earned or that the effective tax rate is substantially lower even for the richest taxpayers and largest corporations because of tax exclusions, deductions, credits and the 15 percent top rate on dividends and capital gains.

The many adjustments to income permitted by the tax code, plus alternative tax rates on the largest sources of income of the wealthy, explain why the average federal income tax rate on the 400 richest people in America was 18.11 percent in 2008, according to the Internal Revenue Service, down from 26.38 percent when these data were first calculated in 1992. Among the top 400, 7.5 percent had an average tax rate of less than 10 percent, 25 percent paid between 10 and 15 percent, and 28 percent paid between 15 and 20 percent.

The truth of the matter is that federal taxes in the United States are very low. There is no reason to believe that reducing them further will do anything to raise growth or reduce unemployment.

Remember, this is just propaganda from  your typical liberal conservative economist with longstanding ties to reliably anti-tax members of the Republican party.  Also, note, that along the way in that post Bartlett called out the conservative punditocracy as, again, liars:

Stephen Moore of The Wall Street Journal recently asserted that Democrats were trying to raise the top income tax rate to 62 percent from 35 percent. But most of the difference between these two rates is the payroll tax and state taxes that are already in existence. The rest consists largely of assuming tax increases that no one has formally proposed and that would be politically impossible to enact at the present time.

Ryan Chittum, in Columbia Journalism Review, responded with a commentary that called the Moore analysis “deeply disingenuous.”

Nevertheless, one routinely hears variations of the Moore argument from conservative commentators. By contrast, one almost never hears that total revenues are at their lowest level in two or three generations as a share of G.D.P. or that corporate tax revenues as a share of G.D.P. are the lowest among all major countries.

This is what apparantly appalled Bartlett’s readers, and this is what prompted him to … well, not defend himself, but to double down on the key point:

A typical middle-class family, on the other hand, is paying less in federal taxes than it has since 1967. Its marginal rate is also down substantially since it peaked in 1982 at 31.7 percent. The well-to-do family, too, has seen its average and marginal tax rates decline substantially.

Of course, these data do not prove that taxes are not too high. That is a subjective judgment related to issues of fairness and the value that people assign to the government benefits they receive in return. Many in the Tea Party talk as if the value of government is zero; consequently, they would probably complain about any tax level above zero.

Nevertheless, it is clear that federal taxes have not been rising and are, at least in historical terms, lower for most taxpayers than they have been since the 1960s.

There is a famous line from the history of mathematics:  “God made the integers.  All else is the work of man.”

That quote has had plenty of glosses, but let me appropriate it here to describe what Bartlett has just done.  We have real numbers about taxes.  We know what they are, and Bartlett in both of the cited posts provides handy historical references to allow any reader to trace the trajectory of those numbers.  They are facts, chunks of experience quantified, and they have autonomy:  Moore’s claim that a 35% rate is really a 62% rate is not a matter of interpretation; it’s just wrong.

But, of course — as Moore’s sin illustrates — what we do with such numbers,  the calculations we perform, the conclusions we draw from them, the interpretations we derive or force on them, why, all those are down to us.  It’s no god’s nor FSM’s fault when we turn the actual knowledge we have into fashion accessories cloaking choices too ugly to pass unadorned.

That’s what Bartlett, seemingly now irrevocably committed to the reality — or perhaps, better —  the integer-based community, is actually saying here.  To reiterate:  a leading conservative policy thinker and economist has just demonstrated that the entire Republican presidential field is talking nonsense about fundamental economic policy.  The implication couldn’t be more clear:  if these views gain direct power over US policy, WASF, even more than usual.

The question, which so far answers itself, is whether or not the media as a whole, and not just some (albeit prominent) blog-contributor, will pick up on this theme, and present the choice in 2012 as that between destructive fantasy and reality.

I live in hope, but not in expectation.

Bartlett himself demonstrates why.  This is the very last line of his post:

Those who assert that taxes are rising or are at confiscatory levels simply do not know what they are talking about.

That may be true of some — but people like Pawlenty or Romney or Gingrich, any of them, really, have no such excuse.  Pawlenty governed a state for two terms.  Romney, we are told, is a smart money man.  You get the point.  They do know what they are talking about, and they choose to divorce themselves from the facts.

These are not potential Presidents.

Factio Grandaeva Delenda Est.

*Said to be Karl Rove.

Images:  Vincent van Gogh, The Corridor at the Asylum, 1889.

Martina Schettina, Fibonacci’s Dream, 2008.

Comforting the Comfortable, Or Why Andrew Sullivan Isn’t a Reliable Guide To The Pathologies of the American Uber-Class

October 20, 2010

Over at Balloon Juice, a number of posts culminating here, and a gazillion (technical term alert) comments, have fully roasted Andrew Sullivan (and James Joyner) for their whimpering over the hurt feelings of the deserving rich.

That last link from John Cole decisively rends from limb to limb the pathetic straw men trotted out by Sullivan and Joyner.  It is not the rich that require deference for their contribution to the nation’s well being; rather, it is the working stiff who has forked over what John accurately calls “a direct transfer payment to the most well off in the country.”

I have to confess, I simply don’t understand the possible chain of reasoning that would lead someone to write as Joyner does of taxes on the rich (and remember — we are talking about a very minor increase from historically low levels of taxation), that “to confiscate it from the successful without acknowledgment of the sacrifice… is to court resentment.”

I mean, who knows where to begin:  taxation is not confiscation, nor is it a priori an evil, necessary or otherwise, as  Sullivan also proclaims.

It is the price you pay for living in a civil society.  Reasonable people expect to pay for things like the assurance their airplane will be guided safely to a landing, or that traffic lights will reliable regulate the flow of traffic at 33rd and 3rd, that hurricanes will be tracked and volcanoes monitored…and so on.

Just to hammer this point home, consider this miracle of argument from Joyner:

the meaning of confiscate is not controversial.  Merriam-Webster defines it thusly:

1 : to seize as forfeited to the public treasury
2 : to seize by or as if by authority

Surely, when the government takes my money from me on the threat of civil and/or criminal action for non-compliance, it qualifies a confiscation.   That it thinks it has better use for it than I do doesn’t change that.   Nor, even, does the necessity of the services for which the funds are expropriated.

Uh…well no.  This is as completely wrong and wrong headed as it is possible to be in such a short space.

Just to begin, here’s Joyner’s own source on the definition of the word “tax,” verb first:

1: to assess or determine judicially the amount of (costs in a court action)
2: to levy a tax on

and now the noun:

1: a: a charge usually of money imposed by authority on persons or property for public purposes

b: a sum levied on members of an organization to defray expenses

See where this is going: to confiscate is to seize; to tax is to levy.  In the context of a democracy, taxation is a collective decision; confiscation is a particular decision, which may or may not be legitimate.  In the US, the people, through their representatives decide whether to tax themselves. This is not the same thing as a confiscation, as ought to be obvious to Oxford, Harvard and West Point educated thinkers.  The failure to recognize this distinction is, I believe morally deranged and deranging.  It asserts that all attempts to levy the costs associated with securing the lives and property of 300 million people jostling cheek by jowl are at least potentially illegitimate — that’s the implication of Joyner’s “by or as if” — and of Sullivan’s witless cheerleading assent.

Down that road lies Galt’s hell.

I’m like Cole in one thing:   I keep thinking that Sullivan is smarter, or rather, for he’s clever enough, more self-reflective enough than to fall for this kind of nonsense.

But he’s not; this isn’t a new trope for him — and the ease with which he tosses off nonsense doubling down on Joyner’s use of terms like “confiscate” to describe taxation* confirms that this is just part of the essential toolkit with which he approaches the world, a romanticization of the hero (George Bush, back in the day, the lonely entrepeneur now) for whom any criticism, any constraint is anathema.

But just as it was dangerous as hell to indulge in hagiography of W, so it is to mindlessly celebrate the rich as those who will somehow withdraw all their goodness from society if we don’t make sure we tuck them up nicely, with a warm glass of milk, between their sheets of flawless felted Benjamins.

There.  I feel better.

And now…on to part two, where we can actually look at who the super rich are, and decide for ourselves whether they are owed a tongue-bath from the grateful masses.

Image:  Pieter Brueghel the Younger, “The Tax Collector” 1620-1640.

How Hard Are Fractions, Really: Elizabeth Warren Scares Her/Megan McArdle Is Always Wrong Chronicles, Cont’d.

July 28, 2010

Update: some edits to make the post read like someone without a grudge against English syntax wrote this post. Nothing substantive — a couple of cuts, a couple of verbs supplied to verbless “sentences.”

I guess I just can’t quit that Ms. McArdle.

I vowed to give myself a break from looking at the work of someone who seems to me to be trying to live up to fitness report number 12 on this list (or perhaps, better, number 4…oh hell, actually, a whole bunch of them).*

But then I read on, and I can’t help myself.

In my last post on this subject, I compared elements of her hatchet job on Warren to the techniques Andrew Breitbart uses in his war on progressives, Obama, and random African Americans who drift into his sights.

This time, it’s a little different:  McArdle is here simply trying to confuse the issue, apparently in the hopes that each bit of noise and nonsense that she can generate around Elizabeth Warren will damage her chances to become the first director of the he new Consumer Financial Protection Agency.  It’s an example of what I’ve called in the past McArdle’s monkey-in-the-zoo approach, in which she flings anything that comes to hand against the wall and hopes some fraction of it will stick..

To recap McArdle has promised the world a second part to that first post that attracted much uncomplimentary attention, but, as Susan of Texas notes it’s been a while.  In the meantime, she has outsourced the task, excerpting a Wall St. Journal op-ed of some years ago, which she presents under the title, “More Weird Metrics for Elizabeth Warren.”

What is so weird to McArdle?

Expressing tax liabilities as percentages of income.

No, really.

As in:  a single-earner family with an income of $38,700 facing a tax burden that claims 24% of that total.

As in: a two-earner family with earnings of $67,800 facing a tax burden of 33%.

Stating tax bills in this manner is apparently a dreadful sin, a willingness to mislead or a confusion about the underlying data.

Or so says the WSJ item’s author, Todd Zywicki, who in the passage quoted by McArdle complains that Elizabeth Warren and her co-author Amelia Warren Tyagi express certain items in raw dollar terms — $5,140 on car expenses for the single earner example, for example, vs. $8,000 in the two income family — but state tax liabilities only as percentages.

To Zywicki, this amounts to an obvious attempt to confound “an “apples to apples” comparison of all expenses.”

He corrects this, in his mind, by performing what he seems to regard as the utterly impenetrable magic act of performing two calculations:  .24*38,700 and .33*67,800, to yield dollar figures for the tax bills the two families in these examples owed.**

But beyond this en passant swipe at the eternal mystery that is the Wall St. Journal op-ed operation, our real concern here is McArdle.

She too, apparently, finds expressing a quantity as percentage of another, specified quantity, somehow suspect, a “weird metric.”

More, she regards this example as somehow dispositive of a systematic misuse of data, a demonstration of either Warren’s incompetence or her dishonesty.  McArdle writes,

Does it matter if we have a regulator who can use data consistently?  A lot of commenters seem angry that I would suggest it might.  As for me, I don’t know which is worse:  the notion that Elizabeth Warren understood what she was doing, or the notion that she didn’t.

My question would be, were I the publisher of The Atlantic, does it matter if we have an economics writer who can, apparently, neither read nor count?

Now that’s harsh, and I know it, but look at what happens if you read Warren’s and Tyagi’s examples in good faith, with a view to understanding what they are actually trying to say.

Well, long ago I wrote about the importance of such simple calculations as percentages to raw data in the context of Iraq War casualties.

The point there was that doing so allowed one to make comparisons across disparate bodies of data or historical examples.  If you want to understand the implications of  600,000 casualties among Iraqis, it helps to express that as a percentage of the population affected, which then allows you to compare it to, say, the deaths suffered by combatant nations in World War I or the American Civil War.  Thinking about the comparisons those enabled provided the frame for the moral of that post:  that the application of even veryy simple arithmetical/mathematical ideas to the raw experience of the world can prove enormously useful.

So, what might persuade Warren and Tyagi to present housing expenses or car costs as dollar numbers but  tax burdens as percentages?

Well, if I were to guess, it would be to make a point central to their larger argument:  that there are systematic increases in costs that accompany the increase in earnings in as you move from one income to two — but that different kinds of cost increases behave differently, have different scales of impact on the outcome for a two-earner family.

That is — increase in car costs like most family expenditures are basically linear:  if you go from one car to two, you pay a bit more in payments, insurance, and maintence, and that’s it.  If you take on a larger mortgage, the same applies and so on.  As Zywicki notes, apparently with some sense of being deceived, this results in such costs consuming a smaller percentage of the gross family income for two-earner households compared with single earner ones.***

Update:   note commenter Jim Bales analysis below.  Zwicki’s sins are worse than what I, in my haste to get this up, fully recognized; Jim does the due diligence.

But I think every sentient American knows that taxes don’t behave like housing or car payments.

In fact, I find it hard to believe –absurd, in fact — that McArdle, of all people, a self proclaimed libertarian, doesn’t grok the point Warren and Tyagi are trying to make as clearly as possible by using an expression for the tax burden faced by their two families in percentages.

After all, the book is about the two income trap.  And one of critical elements of that trap, as we all know, is that marginal tax rates go up at higher income levels.  This is, of course, something that McArdle has written about –notoriously quite recently, in her “calculatorgate” post.

In fact, in every context but the one in which she attacks Warren, McArdle grasps the implications of a progressive income tax, and she should, of course, given the fact, noted above, that every American who has ever looked at a tax table recognizes that the last dollar of income above minimum thresholds is taxed at a higher rate, a higher percentage than is the first.

So, quite the contrary to the charges leveled against them by Zwicki and McArdle:  Warren and Tyagi weren’t obscuring a fact that anyone — probably even McArdle’s calculator! — could obtain in seconds from the raw data they povided in full.  Rather, they were making the point that their own argument required in the best form they could — which, I meekly say, as the writer of this and that myself, is the essential core of an author’s job.

And that argument, the one that Warren and Tyagi developed across a couple of hundred pages, turned on explicating the fact that two incomes do not bring wealth proportional to the effort expended to acquire them.

Which is what would be understood, pretty clearly, I believe, by any reader unburdened by a willed desire not to get it.  How hard is to grasp that marginal tax rates in progressive taxation systems — which are generally pretty well expressed as percentages — act as a drag on the aspirations of two earner families?

This is not a raving radical position.

I believe I’ve heard some conservatives lament this very fact.

All of which is to say that there was nothing “weird’ about Warren and Tyagi’s metrics– unless asking a reader to do a quick bit of mental arithmetic (what’s one quarter of 39K vs. one third of 68) is somehow a malicious act by authors bent on deceit.

That McArdle might find that task daunting I find plausible, barely, given her recent trouble with long division.

But really, I know that she’s perfectly capable of handling fractions.  This is pretty clearly a case of willful misreading to a malicious end,  a baffle with bullsh*t moment.

So, with that,  I’m left here with is her own question, again rephrased for those in charge at The Atlantic. Does it matter if your “Business and Economics Editor” cannot consistently grasp the simplest of calculations, the most elementary of analyses?  Is it worse that McArdle understands what she is doing, or that she doesn’t?

*My personal favorite has always been number 2, but that’s just me.

**…Then, seemingly oblivious of the hilarity that thus ensues, Zywicki converts a number of the other quantities into percentages to make comparisons of the relative weight of different expenses possess in the two family’s budgets.  Seriously.  Oh well.  That was long ago, in a country far, far away, and besides, the kvetch is dead.

***He seems to think Warren and Tyagi are concealing this fact, as if it is beyond the ken for someone to notice that $8,000 is a smaller chunk of around 68K than roughly $5,200 is of $39,000. Truly, this just isn’t that hard.

Images:  Jan Massys, “At the Tax Collector,” 1539

The title pages to two arithmetic texts published in Germany in 1514

Galt’s Gulch: Or How the core Republican Idea is Destroying the American Way of Life

February 1, 2010

This, from the Denver Post, on the city of Colorado Springs’ discovery that taxes actually pay for things that people, you know, need and use. (h/t Atrios).

This is, among other things, what folks like Megan McArdle never seem to get — not merely that governments do things that (a) private entities won’t and or can’t and (b) that are necessary if you are, say, going to have thousands or millions of folks living in close proximity to each other, and (c)  those things that need to be paid for — by the people in common, that is to say, by government — include a bunch of stuff essential for a sound economy and any chance of achieving what is commonly thought of as the American way of life.

That is — it might be hard to quantify the contribution of adequate street lighting to GDP — but ask yourself what it would do to retail sales to have pools of darkness every thirty feet along a commercial street.

Or — it may not show up on a a monthly report of manufacturing output, but ask yourself whether the long-tail consequences of a diminished police presence in a factory district might include an impact on that district’s safety, and hence production — or if a change in fire response times could translate into altered insurance costs.

And you don’t even have to ask the speculative question about the value of investment in school facilities and in the quality of public schooling as discovered in very real dollars in the home valuations realized by property owners in the relevant districts.  That’s on that answers itself.

See e.g. this recent NBER working paper for an account of facilities spending (institutional access required for the full paper. Abstract here.) (That there is a lot of complexity in the area of the private and public economic value of education I willingly concede. But the broad picture of improved schools = higher property values appears to hold.)

It is possible, if you are a true believer, to imagine a gated world in which the “accomplished” secure for themselves all those qualities of life they seek on piece-work/piece-paid basis.  Dystopic science fiction turns on this conceit, among others.

But I’m a believer in Jane Jacobs work. And the key message of her Cities and the Wealth of Nations is that you need thriving, diverse (in every sense of the word), and ambitious cities to generate the range of activities that produce both healthy economies and polities.

To get that, you need some sense of a common stake in the civic enterprise.  You need to be willing to pay to keep the streets lit, potholes filled, police on their shifts and schools capable doing more than riding herd on the pre-unemployed.  Any society can tolerate some proportion of the unconsciously lucky in the delusion that their comfort is insulated from any external shock.  It cannot survive when that belief becomes an epidemic psychosis with an incidence >50% in one of our would-be ruling parties.

Don’t believe me?  Just ask the good, tax-averse citizens of Colorado Springs.

Image:  Wojciech Gerson, “Merchants in Danzig” 1865.

Why it helps to run the numbers…

July 23, 2008

and why it matters.

Brad DeLong reproduces a  memo from Obama campaign econ. policy director Jason Furman.   In it, Furman discusses the latest Tax Policy Center report on the true costs and beneficiaries of the Obama and the McCain tax plans.

Money quote from the TPC report:

The two candidates’ tax plans would have sharply different distributional effects. Senator McCain’s tax cuts would primarily benefit those with very high incomes, almost all of whom would receive large tax cuts that would, on average, raise their after-tax incomes by more than twice the average for all households. Many fewer households at the bottom of the income distribution would get tax cuts and those tax cuts would be small as a share of after-tax income. In marked contrast, Senator Obama offers much larger tax breaks to low- and middle-income taxpayers and would increase taxes on high-income taxpayers. The largest tax cuts, as a share of income, would go to those at the bottom of the income distribution, while taxpayers with the highest income would see their taxes rise significantly.

For extra credit and reading pleasure, see the extensive comparisons the Center made between the tax proposals as described the candidate’s advisors, and as set out in stump speeches and or campaign policy documents.

The key point there, at least as the Obama campaign would have you know, (PDF here), is that there is a $2.8 trillion gap between what the McCain advisors say the GOP nominee-apparent’s plan would cost, and what the number is in what we laughingly call the real world.

These are important numbers, and as important, they are not, in the last analysis subject to that much controversy.  That is:  while it is possible to argue a great deal about the long term economic effects of different tax policies, coming up with the immediate or even the medium term costs of different proposals is not a black art.

These are what scientists call deductions.  They are not quite facts, not yet.  But starting from a baseline of factual knowledge — the current tax code, revenues, analysis of earlier changes in tax policy and so on — it is possible to make well grounded predictions of what would happen if each candidate were able to impose the policies they now promise.

The bottom line:  well, my argument that a McCain presidency will be disastrous for scientific, technological and medical research is strengthened by this latest report.  With non-defense discretionary spending already squeezed by the disastrous Bush brew of tax cuts for the top brackets and an unfunded war, McCain’s proposed tax and spending priorities leave essentially nothing for such luxuries as advanced education, basic and applied research and all the rest.

If our investment in science lags, of course, we will suffer along every axis from national security to our ability to relieve human suffering or to uncover novel sources of human happiness (who knew the ARPANET would enable us to Twitter at each other.  Hmm.  Perhaps I should rethink that example.)

But the key here is that you cannot make this argument without the baseline numbers.  McCain can and does say that he supports research and innovation to solve such fundamental problems as America’s energy needs.  I don’t doubt that he believes it when he says it.  But such commitments are meaningless, lies in fact if not in intent, given his tax and budget policies — or else his tax promises are lies.  That’s what you can say when — and only then, you actually dig in the weeds of the data.

In this context, TPC study offers one more valuable yardstick against which to weigh all the other commitments McCain is making.  The question is will anyone (but your earnest, but rather low-profile blogger) do so?

But not to snark before time, I’m waiting.  This is my question: will the reporting on this story emphasize the actual differences between the two plans and the consquences?  Or will it focus instead on some variant of the “McCain counters Obama’s tax sally.”  That is — do the voters/audience get an account of the facts that McCain would wish to dispute, or just the dispute?  Will the story make it onto the news budget at all?

We’ll see.  As an extra credit question, I’m wondering whether Marc Ambinder will engage this at all?  He’s reproduced a lot of Scheunemann.  So how about a little domestic substance from the “Reported Blog on Politics?”  Will update as events warrant.

Image: James Gillray, “A great stream from a petty-fountain; or John Bull swamped in the flood of new – taxes,” hand colored etching, 1806.  Source:  Wikimedia Commons.