Archive for November, 2012

Political Influence on Taxes

30 November 2012

Some interesting graphs today from the NYT:

How the US Tax Burden Has Changed

There’s clearly more variability in the top two income groups, and the most in the top income group.  My intuition tells me this is probably due to the increased influence on the political process that folks at the top have.  One would think that the tax uncertainty can’t be good over the long haul.

Another argument for federally-funded elections?

I have yet to see analysis in the popular press that talks about what taxes would have to look like, given our present level of entitlements and a reasonable defense budget, to generate surpluses in expansions and deficits in recession (based an understanding of what kind of stimulus is typically needed).  Shouldn’t this be the start of the conversation?

Strange Incentives

23 November 2012

The NY Times reports from the budget negotiations that Washington is considering keeping the top marginal rates at 35 percent, but for higher-income folks making that rate apply to all income, just not the marginal dollar earned:

Seeking Ways to Raise Taxes but Leave Tax Rate As Is

This strikes me as pure sophistry.  And it would seem that it also sets up perverse incentives for some range of income, essentially shifting a family’s budget constraint down at the margin where the 35 percent rate applies to all income rather than just on the marginal dollar.

Tax revenue needs to be raised.  Some combination of eliminating certain deductions and changing the marginal rate on those earning over a particular threshold would seem to be the way to do so without creating perverse disincentives.   Treating investment income as regular income would also seem to be a way to level the playing field a bit.

But it would be nice if Congress would at least try being honest with what they’re doing rather than relying on some trick to say they didn’t raise taxes when in fact they did.

Election Observations

6 November 2012

On election eve, I thought a fitting return to my blog might be a few thoughts about the US electoral process and how it is obviously broken.   While Electoral College is inherently undemocratic, the influence of vast sums of money and the potential for vote tallying fraud have pushed the system to the breaking point.  So a few thoughts on how we might improve things:

1)  Eliminate the electoral college.  Or, encourage states to sign on to the National Interstate Popular Vote Compact, in which states agree to have their electors split in the percentage of the national popular vote, rather than in a winner-take-all system.  Living in Ohio this electoral cycle has been interesting, but also hellish — we get at least 3 or 4 robo calls per day.  Why should voters in Ohio have so much influence?

2) Federally fund Presidential, Senate, and House elections.  The Citizens United decision makes a mockery of democracy.   Allow individuals to voluntarily contribute to an election fund (similar to the check-off item on income tax forms), to reduce the burden on the Federal government, but otherwise eliminate all individual and corporate contributions.    Set limits of $750 million for presidential candidates, and then develop a formula for Senate and House elections that takes into account population and geographic area.    That is — totally level the playing field, and attempt to eliminate the undue influence of people like the Koch brothers and (admittedly) unions.  Politicians with a serious interest in governing should like this because it would free them from having to fundraise constantly.

3) Have voting for federal elections be run at the federal level.  Voting machinery and standards for counting should be uniform across all states.   Have machinery and software approved by an independent and bi-partisan panel of computer scientists, etc.  The machinery should be designed so that it provides easy methods of verification and recount.  The procedure for reporting the final tabulation should be standardized across states and local jurisdictions.  The machinery and software should be such that it can be used for state and local-level elections, but the software should be reloaded for each federal election.

4) I don’t believe there is widespread voter fraud, but… introduce a national ID card and make it easy and cheap to acquire.  Require this card to be shown when voting.  The national ID system seems to function well in Germany and other European countries.  I do not see why such a system here would not also work.

So a variety of proposals… I don’t think the whole package would meet with 100% approval from most liberals or conservatives, nor 100% of Democrats or Republicans….  But something needs to be done to restore faith in the democratic process and to focus politicians on the issues of government and not politics.  Only then will we find some degree of bipartisanship that will help us solve the massive economic problems that still plague us.