Almost Classical

History of top marginal income tax rates in the United States (Photo credit: Wikipedia ) One of more popular / infamous posts here on Almost Classical is " The 90% Tax Rate Myth ." It explores the differences between marginal and effective rates and explains that when the marginal rate was 90% or higher, the effective rate  remained relatively consistent, between 40 and 50% throughout the twentieth century. Even in most of Europe, effective rates stay close to that same range, indicating something of a natural ceiling for effective tax rates. No serious economist would propose a tax rate of five or ten percent for the highest income earners. The actual debate among economists is where tax rates produce the greatest revenues with the least detriment to risk taking and entrepreneurship. In current academic papers, the debate on the highest marginal individual tax rate ranges from 35% to 60%, with most studies finding 45% works well as an effective tax rate on the top ten...

As people debate into Lean In: Women, Work, and the Will to Lead  by Sheryl Sandberg, the topic of pay inequality often arises. President Obama has also made the issue of "fair" compensation a political issue. But, is there really a problem with inequality within the same job, or is there something else at work? Based on research, it seems that if you want to study comparisons of apples to oranges, examine the "income inequality" debate. The differences in pay are more the result of career choices than differences within identical job positions. Why Women Earn Less According to a new report (PDF) by the American Association of University Women, the man would be earning a salary of $51,300. The woman's pay would be $39,600—about 77 percent of what her male counterpart earns. The AAUW report compared the earnings of men and women just one year out of college across various sectors of the economy. The report controlled for different factors that tend to impa...

For all the discussions about what tax rates would be "fair" there is a simple element missing: state income and sales taxes. I've written that federal income tax rates weren't actually higher in terms of effective tax rates due to deductions ( The 90 Percent Tax Rate Myth ) and other factors. It's also easy to complain about the "400 richest families," but in the 1930s a mere three men owned 40% of all wealth in the United States (Carnegie, Morgan, and Rockefeller). If you wonder about concentrated wealth, buy The Men Who Built America from the History Channel. Yes, the wealthy are paying (slightly) less in federal taxes  than the historical norms. But, they are also paying much, much more to the states and local governments. How can we ignore the value of those contributions? Nine states have no tax on regular income (wages), as of this blog entry: Alaska Florida Nevada New Hampshire South Dakota Tennessee Texas Washington Wyoming —...

This column by Thomas Sowell  (http://www.tsowell.com/) has some points that need to be clarified, but the general concepts are important.  Those With Education Credentials In A Soft Field Can Breed Disaster - Investors.com First, Sowell is not  suggesting you should not be able to study whatever you want, as long as you  and your family  are paying for the degree. If the federal government (read: "taxpayers") are paying for an education, however, we need to consider promoting specific fields.  When institutions of higher learning turn out highly qualified doctors, scientists, engineers and others with skills that can raise the standard of living of a whole society and make possible a better and longer life, the benefits are obvious. What is not so obvious, but is painfully true nonetheless, is that colleges and universities can also turn out vast numbers of people with credentials, but with no marketable skills with which to fulfill ...

If you want to know the difference between the ruling class and the rest of us: Obama's Ohio visit points to jobs divide between public, private sector - CSMonitor.com "Republicans have more private sector employment, with 63 percent of households citing at least one members privately employed, compared with 46 percent for Democrats." From an article on the Reason website: Sixty-three percent of "the rich," those in the top 15 income segment (annual income greater than $100,000) are government employees. Among those in the top 1 percent of income($500,000 annually), 85 percent are private-sector. Bureau of Labor Statistics report reveals as of 2010 government workers earn an average of 44 percent more than similar private-sector workers and over 66 percent greater benefits. California taxpayers are already paying pensions of over $100,000 a year to more than 12,000 former government workers… Something is wrong with a system that pays the "ruling class...