One of the myths that the Cato Institute and the right wing in general likes to push is that taxes are too high in the United States. That we’re on the wrong side of the Laffer Curve. Have you heard of the Laffer Curve? Pardon me while I do a quick explanation.
The Laffer Curve (courtesy of Lawrence Khoo)
The theory is based on the idea that if people are taxed at 100% of their income, they won’t work any more than required because they don’t see any additional benefit to their work. Because of that, tax revenue is $0. If you lower the tax rate, then people have some incentive, and tax revenue goes up significantly.
If not used properly, the logic leads to the absurd proposition that the government lowers the tax rate to 0%, then government revenue is maximized. This is obviously not true either. Where the tipping point is can’t be determined exactly, but the best current research puts the optimal (for government revenue) tax rate at somewhere between 60% and 80%. If tax rates are lower than that, lowering them even more results in less revenue to pay for government programs.
This argument was actually made and a big part of pushing through the Bush tax cuts in the early part of the last decade. If we cut our tax rate, we’ll actually have more tax revenue because it will spur the economy so much that people will be working hard and making so much more money that the taxes on that extra growth will make up for the money we would have gotten in higher taxes.
The argument didn’t hold water then, and it doesn’t now. That’s because effective tax rates were well on the left side of that curve, and are even more on the left side of it now. Sometimes in debates, Republicans put out scare figures that we have the highest taxes in the world. It’s just not true. The United States is a low tax country already. We’re not a tax haven, like the Grand Caymans, but taxes are pretty damn low.
As a share of GDP, we’re near the bottom of industrialized countries in total taxes:
General Government Receipts as a Share of GDP (chart from CBPP.org)
The taxes of the people subject to the highest tax rates are effectively very very low.
Effective federal tax rates on wealthy people (chart from CBPP.org)
Here’s the nominal tax rates the wealthiest pay. Even the highest rates that a person could pay on a part of their income are lower than at any time since the 1930s.
Top Marginal Tax Rates, 1916-2010 (graph from VisualizingEconomics.com)
I’m not arguing here that rich people don’t pay their fair share. That’s for another rant. The point of this is that those rates are way to the left of the peak of the Laffer Curve. Now there’s possibly an argument that rich people will spur more economic activity with the money than the government would, but I don’t think that’s proven.
The next time a Republican tells you taxes are too high, ask them some questions. Ask them to define too high. Ask them what the criteria are for too high. Ask them what the economic goal is for lowering taxes. Because it looks to me like our taxes are pretty lenient.
Pardon me, but I’m about to go on kind of a wonky rant. I’ve been mulling a post on the Federal budget for a few days, but something just sent me over the edge to righteous pissed off about it. The following article from the A.P. is what got me riled up:
Much will be revealed at midweek, when the House and Senate are expected to vote on a budget for the remainder of this fiscal year and Obama reveals his plan to reduce the deficit, in part by scaling back programs for seniors and the poor.
The A.P. item is based on an appearance by David Plouffe on Meet The Press this morning. David Plouffe is an advisor to the President, and his appearance is to grease the wheels for President Obama’s budget proposal later this week. The A.P. may be making a bit more of Plouffe’s words than ought to be taken. Here’s the relevant part:
Video:
Transcript:
So we’ve had a lot of savings in health care, we have to do more. So you’re going to have to look at Medicare and Medicaid and see what kind of savings you can get. First, squeezing them out of the system before you squeeze seniors. Secondly, on Social Security, what he said is that is not a driver right now of significant costs, but in the process of sitting down and talking about our spending and our programs, if there can be a discussion about how to strengthen Social Security in the future, he’s eager to have that discussion.
I really hope this doesn’t mean what the A.P. thinks it means. Sadly, they may be right.
The problem with the federal budget is actually really small right now, though it gets bigger down the road. You may have heard that the deficit is the largest it’s ever been. That’s only correct if inflation is not taken into account. A better measure is the deficit as a percentage of gross domestic product, a figure that currently is about 10%. We ran a much bigger deficit during World War II, and we’re currently only running a deficit about twice as high as when Ronald Reagan was in office. ( I am not going to get into whether Bush or Obama is responsible for this level, but the answer is George W. Bush.)
US Deficit as a Percentage of GDP
Now, even that 10% of GDP may seem high because the U.S. has only exceeded that twice before, but we also have to consider interest rates. The Prime Rate was 15.25% when Reagan took office, and 8.75% when he left office. It got as high as 21.5% and dropped as low as 8% in 1987, but during the Reagan administration it was usually well above 10%. This rate was 7.25% when Obama took office, and now stands at 3.25%. That’s not what the government pays in interest, but it does show the general idea. The current cost to borrow money is less than half what it was at the lowest point during the Reagan administration. It is amazingly cheap to borrow money right now.
That’s why the current deficit is really not much of a problem.
Long term, we do have a problem with our deficits. No, not with Social Security. That actually doesn’t have an issue until the late 2030s, and will require a fairly small change to fix. Our long term problem is with Medicare and Medicaid. And the problem isn’t that we have too generous of benefits. The problem is that health care is too expensive in the U.S. Western Europe has much better health outcomes than we do, for about half the cost and much less hassle.
Health Care Costs as a percentage of GDP
If we paid the same as other developed countries, we wouldn’t have a long term deficit. The problem is that we’re spending recklessly. The problem is that we give too much money to doctors, insurance companies, drug companies, and the like. That’s why the Affordable Care Act (a.k.a. RomneyCare or ObamaCare), even without a public option, was good for us. It has a number of controls that bring down costs. It doesn’t eliminate the problem, but it does remove a big chunk of our future deficit.
The Republicans introduced a budget plan last week that goes the wrong way. It repeals the A.C.A. and pretty much also eliminates Medicare and Medicaid. It eliminates the deficit long term by shifting health care costs to individuals. That would be fine, and in fact preferable, if health care costs were predictable for individuals. But they aren’t, so when you get sick, or A.L.S., you have to pay for everything yourself or hope that your insurance company will. Remember, health insurance companies make money by not insuring people with health problems.
The Republican plan, which thankfully doesn’t have a chance of passing in anything like it’s current form, has all sorts of problems that I may blog about later. But how it handles Medicare is its defining set of terms.
So now Barack Obama has agreed to find ways to save money in Medicare and Medicaid. The problem with that is that the only way to save money and not hurt individuals is to double down on the A.C.A. Introduce the public option or nationalize health care or the like. In other words, more not less socialized medicine. I’d be fine with that personally. But you know that hasn’t a chance of passing either. Obama loves compromise, and since the direction of compromise is the wrong direction on this issue, it means more health care costs will be shifted to individuals.
None of either of those plans (the Republican one or the possible Obama one) will affect health care costs overall. Just that born by the government. The Market works to control costs in many goods, but not health care. If it did, we wouldn’t have health care inflation outpacing regular inflation for the last 30 years. There’s many reasons for this, such as health insurance adverse selection, lack of bargaining power, inability to control health care needs, and more.
The upshot of all this is that it looks like we’re going to do something we don’t need to do right now, reduce the deficit, in a way that hurts everyone but the really rich and that doesn’t actually solve the underlying problem. We’ve got a center-right President moving rightward when he should be getting more progressive. And the Obama-istas wonder why the base that gave him the nomination in 2008 isn’t so thrilled with him. Sure he’s better than McCain would have been. But it’s hard to stay excited for someone who’s selling point is well, you could have that idiot over there.
I’ll probably write more about the budget compromise that was passed last week for 2011. It moved the wrong direction too.
[Staffan de Mistura, the top U.N. envoy in Afghanistan,] spoke in a somber tone as he described how three U.N. staff members and four Nepalese guards were killed Friday when the protesters stormed their compound in the normally peaceful city of Mazar-i-Sharif. He placed direct blame on those who burned a copy of the Muslim holy book in Gainesville, Florida, last month, stoking anti-foreign sentiment that already was on the rise after nearly a decade of war in Afghanistan.
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President Hamid Karzai publicly condemned the March 20 Quran burning, leading some to blame him for triggering the protests. De Mistura, however, blamed the person who torched the holy book.
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“Freedom of speech does not mean freedom of offending culture, religion or traditions,” de Mistura said. “Those who entered our building were actually furiously angry about the issue about the Quran. There was nothing political there.”
I beg to differ Mr. de Mistura, that’s exactly what freedom of speech is. It is the right to piss people off by opening my mouth. It is the right to gore sacred cows. It is legal sanction to disagree about anything. Every day I run across speech that pisses me off. Every day I run into speech that offends me. Some of it is religious. Listening to Oral Roberts, or Jimmy Swaggart, or any number of other preachers, dead and alive, offends me. People proclaiming that I must have a personal relationship with a great sky-father offends me greatly. Seeing people write screeds about hippy-dippy Chinese herbs curing cancer offends me. Some of it is political. I get pissed off every day listening to the lies that the Republican/Tea Party spews. It’s not just that I disagree. Listening to Glen Beck offends me. Seeing someone write about their admiration for Glen Beck makes me want to lock people up for our own good.
And I suck it up because that’s the price I pay for being able to say the opposite. If I get to say that science is true, then someone else gets to be an idiot. If I get to say that Glen Beck is an idiot, then he gets the right to deny reality and say he’s not an idiot. Even if I’m offended. Even if it pains me to know something is misfiring between people’s ears and there’s no known medical cure. I have to live with it. That’s exactly what freedom of speech is.
The cure for bad speech (however one defines it) is not closing it down, but speaking. Tell people the truth. Convince them. Get grand rallies of people who agree. Be angry! Stomp your feet! Burn people in effigy. Be offensive with your own speech if you want. I fully support the right of abortion protesters to hoist posters of bloody fetuses and for people to march with signs that say God Hates Fags!. Go for it! If someone else’s speech convinces people and mine doesn’t then either I have an incorrect position, or I am not a convincing speaker.
What isn’t a moral response to speech is to torch a building and kill people. Period.
The people who should be blamed for the killings are the people who torched and killed.
Honey with a Honey Bee Beard (CC By-Nd Writ3Click Fotos)
The pastor, the Rev. Terry Jones, had threatened to destroy a copy of Islam’s holy book last year but initially backed down. On Friday he said Islam and its followers, not his church’s burning of the Quran, were responsible for the killings.
And you sir, are an idiot. Just because you have the right to burn something that someone else considers sacred, doesn’t mean it’s not offensive. Common human decency means that I do not walk up to every Christian I meet and tell them they are an idiot for believing in fairy tales. I don’t wander the streets with signs proclaiming that blacks are drug users, because it’s wrong and offensive.
I still have a moral obligation to speak correctly. The law cannot and should not judge speech. Your god, or your sense of morality, should. If your god tells you that burning other god’s books will elevate your god, then perhaps you have an over-controlling thin-skinned god who’s about as worthless as your average Republican. Seriously, if I can take being contradicted in public, then your supposedly all-powerful god will survive it.
I still have a social obligation to speak civilly though sometimes civility can or should be abrogated in order to speak effectively. When a speaker crosses the line to disrespect, speakers ought not disclaim responsibility for the effects of that speech, when those effects were what the speaker was specifically trying to create. Deliberately offending people, then saying it’s their fault they were offended is douchebaggery. You have a part in this. Own up to it. You broke your social obligation, and perhaps it was necessary. Nevertheless, you are not an innocent bystander.
Responsibility is not an either/or proposition. Neither is responsibility a pie that gets cut into pieces and apportioned out. Both killers and speakers were links in the chain that resulted in a number of dead people. Mr. Jones is responsible for a piece in the chain from bad speech, and should be punished in the way that bad speech is punished, with more speech. Denouncements. Protests. Being attributed an idiot. The people who conducted the executions should be punished with prison because they killed. But all of them are responsible.
Well, the Wisconsin Republicans have found a way to strip collective bargaining rights from government employees over the objections of the Democrats. They’ve managed to set union legal rights back by 5 to 10 decades in the state. That’s awful. And I have nothing good to say about it.
But…
It’s not the end of the world. Really.
Striking miners parade, Latrobe, PA
Unions once had no bargaining rights, and they managed to do a lot, and obtain those rights to boot. They can do it again. It would be hard. If the members of the union really act in concert, they can do it. They can strike. It may be illegal, but they can do it. They can do their jobs by the book. Politically, the Republicans are not likely to win re-election or even defeat a fair number of their recall elections because Wisconsinites support unions generally. What I’ve read indicates a lot of buyer’s remorse.
If Egyptians and Libyans and 100 years ago union members can face down guns, public employees in Wisconsin can fight back and win against stuff that’s much less threatening. But it’ll be ugly.
The match today was a lot more entertaining than Friday’s match. The Sounders started their second string guys. Unlike the first string guys, they controlled the ball a lot better. On Friday it felt like we would inevitably turn the ball over before we could get down the field. We had a lot of chances then, but they came from our mids taking the ball away. Today, Friberg had some really good passes and through balls. He worked really well with Michael Tetteh on the left side. Both of them really impressed me. As for the other new guys, Servando Carrasco played solidly, though not spectacularly. O’Brian White on the other hand, seemed like he was really out of step. His timing was really off. He was not in the right place for winning headers. He missed passes from the wing that were as if they expected him to be somewhere else.
What was bad though, shockingly, was our defense. Supposedly that’s our deepest area. For the most part they played well. I wasn’t cringing every time the Whitecaps attacked. I knew they could handle them and they did. But they had three unforced errors that led to goals for the Whitecaps. Tyson Wahl inexplicably didn’t handle a back pass and it dropped onto the feet of the other team. The guys sitting behind me thought it was Boss’ fault there for not coming out. I don’t think he had a chance though. Two on the goal keeper means he’s gonna lose no matter what he does. The second he mishandled what should have been a clean snatch. The third Ianni failed to clear the ball.
I love Montano’s enthusiasm. I really hope they keep him over Pat Noonan. Noonan doesn’t add a lot to the team skill wise anymore. I think he’s actually somewhat better than Montano at this point, but he has no upside. Montano has a huge upside, and obviously loves to play.
I wish we could have seen Mauro Rosales play. I’d like to see for myself if he’s any good.
I went to the preseason Cascadia Summit match between the Sounders and the Timbers last night. Thank you to Calissa for accompanying me. I’m really anticipating the season, although unfortunately I won’t make the opener versus the Galaxy on the 15th. Would have been nice to see all three of Juan Pablo Angel, David Beckham, and Landon Donovan.
The match last night? No so pretty. My impression from the stands was that the Sounders have not improved on their problems from last year.
Passing. The Sounders couldn’t pass to save their lives. Even simple passes kept being sent too far in front of or too far behind their intended recipients. Long passes were invariably intercepted. That might be the result of playing on a small pitch where there isn’t a lot of separation in space. However, the Timbers got some long passes in just fine. Short passes were often directly to the feet of the Timbers. I think the longest passing sequence was maybe 6 or 7 touches.
Ball control. Also awful. When passes were on target, the recipient couldn’t control it, a Timber would swoop in and take it away. When our center backs knocks balls in the air down, the ball wouldn’t fall to us. They couldn’t get it out of the final third, and they couldn’t get it to a Sounder.
Finishing. The shots taken were rarely on frame unless they were softly hit. Fernandez somehow managed to take a shot from 4 yards out that went 10 feet over the top of the goal. There had already been a foul called, so it wouldn’t have counted. You can have a shot defended from that range, but you really shouldn’t miss over the top. I’m a big fan of testing the keeper. If you don’t have an open shot, hit it hard on frame and make the keeper work. Then someone can swoop in and get rebound shots or get a corner. We had a lot of corner kicks in the match, but not from saved shots.
On the plus side, our defense was actually pretty good despite giving up two goals. Portland’s Kenny Cooper looks really pretty good, but Parke and Hurtado were up to the task. Alonso was a hustling monster as always. Montero worked his butt off too. That’s an improvement over his first year or so when he didn’t always keep playing when he lost the ball.
I have tickets to the Whitecaps match on Sunday. I’m looking forward to that. The games are fun even when we don’t play well. (Well, except for that Galaxy game last year where the Sounders just gave up.)
Opinions and analysis are the product of armchair coaching by an unqualified amateur. This is worth exactly how much you paid for it.
Over the last year or so, Matt Mullenweg, Automattic (his company), and a coterie of bloggers who develop the WordPress platform have been claiming WordPress is a content management system.
I gotta call bullshit on that.
What they’ve done is build a back end (if you use the right plugins) that can be used to create content.
What WordPress can’t do right now, so far as I can tell, is deliver the content. So far, I’ve seen only one plugin that lets you do layout, Carrington Build ($499). I’ve seen no plugins that let you display generic meta-data. Lots and lots that let you create generic meta-data. But every single one that I’ve seen requires that user modify code in a theme to display the information.
To illustrate: let’s say I want to build a book review web site in WordPress. Now let’s say I want to have an index of reviews where all reviews of a certain author are displayed, sorted by author using a standard name sort (surname, given name). Really not easily done without writing code.
I have any number of plugins that allow me to add that author information. None so far for displaying it. Not without writing code.
And I’m pretty sure that moving the created data from one plugin to another would be a complete pain in the ass, because there’s no standard format for storing that.
I so wish the Drupal user interface were comprehensible. (Maybe it is now, I haven’t looked at it in a year plus.)
King (then Prince) Abdullah of Jordan appears in a 1996 episode of Star Trek: Voyager
A few days ago N.P.R. news analyst appeared on Fox News where he commented that he worries whenever he sees Muslims:
when I get on the plane, I got to tell you, if I see people who are in Muslim garb and I think, you know, they are identifying themselves first and foremost as Muslims, I get worried. I get nervous.
– NPR Ends Williams’ Contract After Muslim Remarks
As noted by the story title, N.P.R. let Williams go after he made those remarks. There’s been a hue (sp?) and cry over this firing, many considering it unfair. As stated by N.P.R., Williams’ contract with N.P.R. requires him to adhere to N.P.R.’s policy on speaking even when he speaks elsewhere. He’s not allowed to do partisan speeches, for instance. N.P.R. wouldn’t approve of expressing irrational fear of Muslims on their network, so he’s not allowed to do it on Fox News either. So they fired him.
Juan Williams has a long history of going beyond what he’s allowed to do by his contract. This is important in my assessment.
I think it’s legitimate to argue that the punishment did not fit the crime. I disagree. But it’s a legitimate argument. Because of his long history of violating N.P.R. policy, this incident is a last straw situation. It’s unfortunate that Juan Williams lost a platform to speak (it is a form of censorship), but I think it is entirely within N.P.R.’s prerogatives.
In the end, Juan Williams suffers very little harm from it anyway, which is unfortunate. He immediately received a $3 million deal from Fox News, so he’s hardly getting screwed over.
One (of many) of the irrational beliefs Juan Williams holds is that someone can tell what a Muslim looks like by his/her Muslim garb. I think you’d be surprised. Muslim women do not all wear burkas. Muslim men do not all wear robes or beards. An anonymous (so far as I know) blogger started a new blog today that is simply titled Pictures of Muslims Wearing Things. It aims to post pictures of Muslims wearing all sorts of clothes. Now perhaps you will look at it and think, Well obviously that’s a Muslim, I can tell. But I think most people will be surprised by how they look. Muslim garb is hardly what people think.
Initiative Measure No. 1107 concerns reversing certain 2010 amendments to state tax laws. The measure would end sales tax on candy; end temporary sales tax on some bottled water; end temporary excise taxes on carbonated beverages; and reduce tax rates for certain food processors.
I’m in favor of sin taxes if I agree that the items being taxed are sins. It’s simple economics: tax the things you don’t want to happen. When the price goes up, people do them less. It’s the principle behind cap-and-trade and carbon taxes. It’s the principle behind congestion tolls. It’s possible to raise such taxes too high. When a thriving black market in the item comes around, then you know the taxes are too high.
I’m all for taxing candy and soft drinks. There exist relatively cheap, relatively healthier alternatives that people can buy instead, if they want to avoid the tax. If you can’t go without your Coke Zero, pony up.
The soft drink industry has spent something like $16 million to pass this. The advertising campaign says it’s all about the taxes on grocery items that were included in the tax for technical reasons. a) the taxes on those items are around $4 million. The beverage industry could have donated the $16 million to grocery manufacturers 4 times over, and we wouldn’t have a need for the initiative (if even that’s a concern). b) The opponents of the tax could have crafted the initiative to repeal just the grocery tax part, but they did not. Their arguments hold little weight with me because of this.
Initiative Measure No. 1100 concerns liquor (beer, wine and spirits). The measure would close state liquor stores; authorize sale, distribution, and importation of spirits by private parties; and repeal certain requirements that govern the business operations of beer and wine distributers and producers.
Initiative Measure No. 1105 concerns liquor (beer, wine and spirits). The measure would close all state liquor stores and license private parties to sell or distribute spirits. It would revise laws concerning regulation, taxation and government revenues from distribution and sale of spirits.
The state government should not be operating private retail stores absent some important reason. The fact that Washington State does is (I assume) a vestige of the repeal of Prohibition, combined with a large amount of inertia. It does make getting liquor for minors somewhat more difficult, but not exactly because security at these stores is tight. They do have a better record at refusing sales to minors. But I think the real reason state liquor stores do better is that they aren’t so busy and there aren’t too many of them. The stores have a high markup, and limited selection. As some bars have noted, they cannot get some liquors for their businesses and service is not good.
There are two initiatives on the ballot that would get the state out of the liquor selling business. If both pass, how things will shake out will be anyone’s guess.
I-1100 is the Costco sponsored initiative. It removes a lot of the regulation on liquor sales as well as getting the state out of it. Places that have a license to sell beer and wine could get a liquor sales license, and the state would be limited in what it could regulate with regards to liquor sales. The key part for Costco is that it eliminates the current three tier system: manufacturer, distributor and retailer. As a retailer, they could skip the distributor and go straight to the manufacturer. The measure retains the current taxes on liquor.
I-1105 requires the state to close its stores, but retains more of the regulatory framework. The three-tier system would remain in place. Retailers must by from distributors. And distributors cannot offer better prices to one customer that to another, though they could offer volume discounts. Costco doesn’t like it, because they would like to negotiate lower prices directly from manufacturers that aren’t available to other retailers. The WSLCB would create a new license for retailers and establish the rules for it. For instance, they refrain from issuing new licenses in areas that are saturated with liquor sellers. The measure would remove most taxes on liquor sales (not sure about sales taxes) and direct the WSLCB to propose a new tax to the legislature.
I will be voting for I-1105 and against I-1100. While I think anti-drinking goes too far sometimes (like freaking out over restaurants that allow patrons to drink in their sidewalk seating), the fact that liquor is intoxicating means we should be exercising some discretion in how we sell it. I-1100 doesn’t allow for that. For instance, I-1105 could allow the WSLCB to require that liquor be sold in separated areas from other goods, while I-1100 does not. I’m not so keen on the requirement for three tiers, though I do like the requirement that distributors offer uniform prices. I’m agnostic toward the tax change. It comes down to the ability to regulate liquor retailers.
