Almost Classical

A September 2015 report from the Brookings Institute demonstrates that significant increases in top marginal tax rates would have minimal effects on both income inequality and the federal budget. This report was prepared by William G. Gale, Melissa S. Kearney, and Peter R. Orszag. It should be stressed that Orszag was Pres. Obama's director of the Office of Management and Budget and a former director of the Congressional Budget Office. Nobody can claim Orzsag is a conservative or libertarian — he is an excellent analyst. Read the report here: http://www.brookings.edu/~/media/research/files/papers/2015/09/28-taxes-inequality/would-top-income-tax-alter-income-inequality.pdf A larger hike in the top income tax rate to 50 percent would result, not surprisingly, in larger tax increases for the highest income households: an additional $6,464, on average, for households in the 95-99th percentiles of income and an additional $110,968, on average, for households in the top 1 perc...

When a scholar makes a mistake, he or she should admit it and do whatever must be done to revise the research involved. Often, mistakes teach a great deal. Also, nothing bothers me more than when a scholar won't explore challenges to his or her assumptions. Be honest, and search for the best approximation of "truth" possible. What if "austerity" doesn't withstand scholarship? For some progressives, liberals, socialists, et al, any evidence against austere budgets would be welcomed. That's why the following story has been trumpeted in left-leaning media. And they still miss some of the points. (But, that is partisanship.) The problem is, "austerity" is defined many ways. The paper at the center of this debate suggests reducing public deficits and long-term debt by quickly cutting spending and raising taxes — a combination many reject, including me, because there are no such "quick and easy" solutions to long-term fiscal imbalanc...

And now we see the Broken Windows Fallacy taken to an extreme — on CNBC of all websites. Damage From Sandy? What About Potential Economic Boost? - Asia Business News - CNBC The positive multiplier effect of reconstruction after Sandy could be as much as five times, according to Frank Holmes, CEO and CIO of money manager U.S. Global Investors. If the cost of the damages comes up to $20 billion, the economic boost in terms of spending and activity could be $100 billion, he said. Hurricane Sandy might appear to create economic activity, but such activity is not going to have the multiplier effect some theorize. At least, not based on the experiences of previous disasters. By this twisted logic, the horrible events of Sept. 11, 2001, should have been an economic boost: buildings and transit lines had to be rebuilt. Instead, the economic effects linger for many families and businesses. Sandy is just one more thing New York and New Jersey didn't need. There are many, many probl...

When Paul Krugman and other progressives talk about the risks of austerity in Europe, they are forgetting a basic fact: Europe and Japan are getting grayer and grayer. There are more retirees than young people, and that means lower and lower rates of productivity. I often cite two authors willing to confront this truth: Megan McArdle and Robert Samuelson. In the April 2012 issue of The Atlantic, McArdle bluntly assesses the issue of a graying population in the Western nations. It is a problem the United States will soon experience, too. First, a few paragraphs from the lengthy McArdle piece. You absolutely should read the entire article. (If you don't read The Atlantic, you should.) Europe's Real Crisis The Continent's problems are as much demographic as financial. They won't go away soon. By MEGAN MACROCELL  http://www.theatlantic.com/magazine/archive/2012/04/europe-8217-s-real-crisis/8915/   Italy's fertility rate has actually been inching up from it...

Political wisdom, fiscal malpractice. That would be my description for the much ballyhooed "payroll tax cut" supported by a bipartisan chorus of political leaders. The cut is good politics — and fiscal malpractice. Let's begin with some basic facts on the payroll "tax" situation: Most of us with 401K or similar retirement plans invest between 3% to 6% and employers match some portion of this contribution. That's basically how Social Security is also structured: the employee and employer contribute to the fund. The previous and supposedly standard payroll deduction for Social Security is 6.2% of your first $110,100 of income. With the "temporary" reduction, workers are contributing only 4.2% of that income to Social Security. If you are self-employed, you normally pay 12.4% to Social Security, but with the "reduction" you are paying "only" 10.4% (the employer's 6.2% plus the employee's 4.2% rates). The so-called ...