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Since 2006, as my real income has fallen by 25%:

  • I have paid about $45,000 in property taxes to our local communities and school districts
  • I have paid over $50,000 in state income taxes
  • I have paid over $110,000 in federal income taxes
  • I have paid over (via not just my share, but the real incidence) $200,000 in payroll taxes
  • I estimate that I’ve paid over $35,000 in sales taxes (likely higher)
  • I’ve driven myself about 150,000 miles. My cars have averaged about 25 miles per gallon. This means I’ve burned 6,000 gallons of gasoline in my car (ignore my snow blowers and lawn mowers and chain saws). At about 43 cents per gallon on average excise taxes at state and local level, I’ve paid over $2,500 in gasoline taxes.

This says nothing about how much higher my costs are due to regulations. Environmental regulations are though to cost 3% of GDP per year, or about $1,400 per person per year, so one can only wonder what the real costs of regulation are, and what the embedded excise taxes are that I pay on things over and above sales taxes. For example, I drink something like 200 pints of beer per year. at about a nickel per beer, this is another $10 in taxes per year. And so it goes.

So, a lower bound estimate for what I’ve paid in taxes, during a time when my real income has “stagnated” and actually fallen by 25% is $465,000. I would note that I am nowhere near the top 1% of income nor do I have any legitimate prospects of reaching that airy ground. I would note that we have two children who do not go to “free” government schools. We probably claim as little a share of government “benefits” as does any family in our situation, which is to say, none – just whatever our share of “public goods” we are getting from our government such as use of some roads, shares of national defense, drug safety, food safety, and so on. Given my affinity for competition protecting me and providing almost any of the things that I could ever imagine wanting, despite you wanting to claim that I get SOME benefits from the FDA, USDA and so on, I do not believe I would voluntarily pay anything near what I pay them to have the services they deliver me delivered to me – I am pretty confident Wegmans and Tylenol and everyone in between would have a strong incentive not to kill me.

Note, my wife resumed working three years ago and these figures do not include any of her obligations.

  1. Does anyone believe that I have received anything close to $465,000 of real, actual, benefits for this $465,000? Even assuming that as part of civil society half of this should be transferred to others, how much of my $465,000 do you really believe ended up helping people who need it? Compare that to what you think I personally do to help people that need it (it may be nothing, by the way).
  2. Think about ANY amazingly awesome government program that has happened in the last 9 years or that may end up coming down the pipe in the next 9 years. Do you think that any of those programs have delivered even a tiny miniscule fraction of $465,000 of value? For example, take ObamaCare. Its proponents believe that my premiums will fall by $2,5000 per year or some such nonsense. Of course my premiums are higher today than they were when the ACA was passed, but maybe they would have been $2,500 higher. Who knows? In any case, compare that $2,500 per year in “savings” with the annual taxes I am paying … it’s nowhere close. How many of you would pay $50,000 per year to save $2,500?
  3. Think about ANY of the awesome government programs that have been passed or will be passed in the future. Compare how much ANY of them could possibly change the life of me and my family as compared to even a ONE TIME reduction in my taxes. Imagine I’d been given a one-year reprieve in taxes – something in the $50,000 range. What would I be able to do with $50,000? We could save it and pay for both of our kids to go to a government university 12 years from now. We could replace every single window in our house, insulate every wall in our house, replace the old heating system in our house, and purchase some serious exercise equipment for our house. How life changing would that money be for our family as compared to anything our overlords do for us?
  4. Imagine I had not been taxed at all during the last 9 years. And imagine that I had the cash today and put it in the stock market. What would it be worth by the time I am 70 years old? If the market returns on average what it has since 2006, then I’d end up with just about $8 million from the tax savings alone. About half of that would be from the foregone social security taxes – do you think $4 million would be enough to provide for my retirement and elderly health care? How do you think that compares to what the overlords will have waiting for me when I am 70? Remember, this is assuming that I’ll pick up and keep paying taxes between now and then.

I am so very thankful for all of the wonderful things our government has done for me over these past 9 years, it has really made the “pain” of my lower real wages so much easier to bear.

Since 2006, my nominal wage has fallen by a total of 6.5% or about 0.8% per year compounded. I would note that my compensation has probably remained flat.

The average price level has increased by about 18% over this time period. Therefore, my real wage today is about 25% lower than it was in 2006.

Without my commentary on what is “causing” this or my feelings about it, note that:

  1. My wages are not falling because some rich dudes are refusing to share with me
  2. My falling wages say nothing at about whether or not I am happier or sadder today than I was in 2006
  3. You can learn nothing at all from this information about what has happened to my wealth over this time period (on the one hand, we’ve been saving a larger chunk of our lower earnings, but on the other hand, we lost a HUGE pile of money due to the burst of the housing bubble, willingly by the way).
  4. My ta x and regulatory burdens are higher today, when I am 25% poorer, than when I was 25% richer.
  5. You can learn nothing about either my on the job productivity or my off-the-job productivity, as an individual, from this observation.

Lots more to say, just thought I’d “share”this info with you during this season of sharing.

Who wants to bet?

Another “scientific” claim is that global warming and our profilgate selves will cause us to run out of chocolate.

We won’t. My prediction is not only will be not run out, but global chocolate prices 30 years from now will be lower than they are today, and more people will be able to obtain chocoloate, should they want it, 30 years from now than do today. Of course this assumes our health consciousness does not get in the way, or better yet that the nutrition nannies don’t ban the stuff before that time comes.

About the only useful contribution I can make to the immigration question, at this point is to lament one thing about the current proceedings. While this is all great political controversy and surely educational for those folks who worry about precedent and the limits of constitutional authority and what the original intent was and what Reagan or Bush did or did not do, what the entire conversation at the moment seems to be missing is an examination of what economists know about the impacts of immigration in America.

What better time would there be to have economists, who seem to have something useful to say about this topic, to be heard? We have written on the impacts of immigration on high-skilled employment and wages; we have written about the impacts of immigration on low-skilled employment and wages; we have written about the impacts of immigration on crime; we have written on the success of immigrant children and their descendants economically and on other aspects of assimilation. Yet we see almost nothing about this. I won’t cover all of that here, I bet most Americans would be very surprised to learn what those literatures have to say.

On another note, back to the political angle, I do believe that Coyote is onto something (again) here:

Imagine a Republican President who is opposed to the minimum wage.  The Executive branch is tasked with enforcing that law, so wold the folks defending the President’s methods also argue hat the government can issue permits to 5 million businesses allowing them to  ignore labor law?  Or emissions standards?  Or insider trading laws?

People are just being blinded by what they rightly see as a positive goal (helping millions of people) if they fail to see that the President issuing licenses to not be prosecuted for certain crimes is a huge new precedent.  Proprietorial discretion is supposed to be used to avoid patent unfairness in certain cases (e.g. the situation in Colorado with conflicting state and Federal laws on marijuana).  It is not meant to be a veto power for the President over any law on the books.  But I can tell you one thing — it is going to be seen by future Presidents as just this.  Presidents and parties change, and for those of you swearing this is a totally legal, normal, fully-precedented action, be aware that the next time 5 million wavers are issued, it may well be for a law you DO want enforced.  Then what?

Tax Riddle, or Not?

I have read dozens of times, and have even espoused the view myself, that the American electorate gets ill at the idea of the government directly taxing THEM. Sure, when taxes are proposed on “other people” like “the rich” the electorate does not seem to have a problem with it, but when we are talking about anything other than redistributive policy, people turn green at the thought that higher taxes to us are a potential solution to a problem like global warming. As a result, the political process responds to this in a very sensible way – when it needs to enact policies that are required to raise the costs of some action, the politicians design a program that masks the tax increase. This is bad first because it will be more costly politically and economically to structure policy this way, and of course secondly because it undermines faith in the transparency and legitimacy of democratic political institutions. A simple illustration is that if there is ever going to be movement on climate change, then it would have to be something like a carbon permit system, or the executive using his authority to simply regulate on his own.

But if this is the case, and I really do think it is true, then how come we really do not see the opposite? If people are so, so, so, so sick of taxes, then how come politicians are not falling all over themselves to shower tax breaks and tax rate cuts and tax credits and tax deductions all over the American voter? One possible theory is that they have already exhausted all possible ways of doing this … which you might actually believe if you look at the distribution of who pays taxes. The “rich” pay the lions’ share of taxes already and the rest of us pay little. I happen to not think this resolves the paradox and that there are simpler answers. Let’s see your thoughts down in the comments.

As usual, my colleague Steve Landsburg provides spot on and clear-headed analysis of the Gruber-Gate “scandal” … here is a bit:

If the voters favor a law that says all drivers must be licensed, but oppose a law that says nobody without a license is allowed to drive, then I don’t think it’s immoral to propose the first law instead of the second. That’s basically all Gruber did. I would prefer that he had tried to point out the inconsistency, but Gruber is under no obligation to live by my preferences.

Earlier in the piece, he reminds us of a little basic economics:

1) Our tax system subsidizes employer-provided health insurance. That’s dumb. Pretty much all economists agree that it’s dumb.

2) On the other hand, it’s politically hard to eliminate a subsidy once people get used to it.
3) In 2008, we had an election. The candidates were named Barack Obama and John McCain. Exactly one of those candidates took the politically courageous step of proposing to eliminate the subsidies (and replace them with other subsidies, far more sensibly designed). The other candidate took the low road, leaping to the defense of subsidies he had to know were indefensible, playing to the crowd, and staking all on what could reasonably be called “the stupidity of the American voter” (though I myself would prefer to call it “the inattentiveness of the American voter”). That candidate won in a landslide.

Do read the rest.

I’m running off to my environmental economics class, so can’t spend time on this. But if we are nominating pieces of journalism in economics for the “top 10″ worst articles of the year, this would surely be a candidate. A little sliver:

Because lists of “repetitive loss” properties are maintained by cities and counties, rather than federal authorities, Wetlands Watch had a hard time getting comprehensive data. But where numbers were available — in Norfolk, Virginia Beach, Chesapeake, Hampton and Portsmouth – Wetlands Watch found nearly 3,000 properties awaiting funding. Local flood managers told the group it costs between $75,000 and $250,000 either to raise a home and protect it from the tides, or to acquire it so the homeowner can move out. Which means that in just five Virginia jurisdictions, the study says, it would cost more than $430 million to protect the homes that have already been damaged.

And that’s just “repetitive loss” properties, a specific category of homes insured by the National Flood Insurance Program that have sustained at least $1,000 in damage twice in a 10-year period. Many more homes are not covered by flood insurance. And many additional homes are likely to sustain damage in the future, if the seas rise, as predicted, by a meter or more on the East Coast over the next century.

One’s mind can only wonder at how surprising it must be for people who own homes on storm ravaged coasts that there is a possibility their home might be flooded or swept out to sea. One’s mind can only wonder why private insurance does or does not exist here and what the premiums are here. One’s mind can only wonder why, after centuries of sea level rise, that people who choose to live near the coast somehow forgot that they should worry about it, and that now, only now, after the 5th IPCC report, we are awakened to the possibility that the water levels where we live might continue to rise. One can only wonder why, as the worst case of the article states, dealing with over a trillion dollars of flood protection over a 100 year period is some sort of incredible challenge. And one’s mind can only wonder at the feebleness of thought (or rather, the bully instinct) that articulates that it is some sort of shared responsibility for me, living in Rochester, to support people with beachfront cottages.

The most regular question I get from students who actually care about their education is why we tend to see so much bad policy, particularly if it is widely understood that messing with (nonexternality) prices is such a bad idea and industrial planning is such a bad idea. I typically stumble saying something to the effect of we know best what NOT to do but that is not as satisfying as positive proscriptions as far as policy goes. People would probably be offended if I said what I actually believed which is that the entire premise of the question is faulty. I’d be accused of “do nothingism” or some version of “extreme conservatism” to which I certainly do not adhere. But in the spirit of providing an answer, I definitely have one single law that should be followed in the construction of good public policy. This law is definitely a necessary condition. Your mileage may vary on whether it is sufficient. That law is:


Do I believe that such a rule would ever be followed? Of course not. But you’ve asked me, so that’s the best I can offer. Think through the implications for a bit and hopefully we will discuss more in future posts.

And to switch gears mildly to Grubergate, perhaps this new paper is of some relevance (it may also be of use to those who follow the absurdity of the climate change conspiracy debates – google Lewandowsky to learn more):

Do I Think BLS Data are BS? The Consequences of Conspiracy Theories

Katherine Levine Einstein & David Glick
Political Behavior, forthcoming

While the willingness of people to believe unfounded and conspiratorial explanations of events is fascinating and troubling, few have addressed the broader impacts of the dissemination of conspiracy claims. We use survey experiments to assess whether realistic exposure to a conspiracy claim affects conspiracy beliefs and trust in government. These experiments yield interesting and potentially surprising results. We discover that respondents who are asked whether they believe in a conspiracy claim after reading a specific allegation actually report lower beliefs than those not exposed to the specific claim. Turning to trust in government, we find that exposure to a conspiracy claim has a potent negative effect on trust in government services and institutions including those unconnected to the allegations. Moreover, and consistent with our belief experiment, we find that first asking whether people believe in the conspiracy mitigates the negative trust effects. Combining these findings suggests that conspiracy exposure increases conspiracy beliefs and reduces trust, but that asking about beliefs prompts additional thinking about the claims which softens and/or reverses the exposure’s effect on beliefs and trust.

Here, without my comments.

This is annoying and frustrating and a problem. But it’s also not a completely broken website, either. This year, people do seem to be able to sign up for health plans — something they were unable to do on last year’s launch day.

So, several years into the “law” and a year after the first enrollment period, and a website is working. Hoorah.

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