Archive for November 14, 2007

Tear down this wall

November 14, 2007 by Tom Armstrong.

One of my favorite speeches.

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Lincoln versus the Constitution

November 14, 2007 by Tom Armstrong.

Thomas DiLorenzo, in this video (1.5 hours), discusses Lincoln Vs. the Constitution. If you’ve never read any of his work on Lincoln, allow me to summarize:

This video and his work discusses how Lincoln freed the salves and, in the pursuit to save the union, enslaved his public and posterity to an intrusive, overbearing state dedicated to subverting the Constitution and supressing self government.

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Economics Education

November 14, 2007 by Tom Armstrong.

If there are any economics teachers (high school) reading, check out this great site for materials to use in the classroom.

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Government responsible for our happiness?

November 14, 2007 by Tom Armstrong.

Rich Karlgaard has something to say at his Forbes blog.

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Wizard of politics

November 14, 2007 by Tom Armstrong.

I’m sure you’ve read or heard this interpretation of The Wizard of Oz before (I believe Mankiw even has it in one of his textbooks): The Wizard of Oz is an allegory about U.S. monetary policy in the late 19th century.

This article, which first appeared in the WSJ in 2006, shed a little more light on the topic for me.

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Income Mobility

November 14, 2007 by Tom Armstrong.

Here is the complete income mobility study from the Treasury Department, released yesterday. I linked to the summary in the WSJ yesterday.

Here is the study. For those short on time, here is a summary:

The key findings of this study include:

• There was considerable income mobility of individuals in the U.S. economy during the 1996 through 2005 period with roughly half of taxpayers who began in the bottom quintile moving up to a higher income group within 10 years.

• About 55 percent of taxpayers moved to a different income quintile within 10 years.

• Among those with the very highest incomes in 1996 – the top 1/100 of 1 percent – only 25 percent remained in this group in 2005. Moreover, the median real income of these taxpayers declined over this period.

• The degree of mobility among income groups is unchanged from the prior decade (1987 through 1996).

• Economic growth resulted in rising incomes for most taxpayers over the period from 1996 to 2005. Median incomes of all taxpayers increased by 24 percent after adjusting for inflation. The real incomes of two-thirds of all taxpayers increased over this period. In addition, the median incomes of those initially in the lower income groups increased more than the median incomes of those initially in the higher income groups.

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Our Voluntary Tax Code

November 14, 2007 by Tom Armstrong.

From an opinion in today’s WSJ, which begins:

Should we stop worrying and learn to love the “mother of all tax reform plans” put forward by House Ways and Means Committee Chairman Charles Rangel of New York?

The bill would raise taxes by $3.5 trillion over the coming decade, according to Louisiana Republican Rep. James McCrery, a committee colleague of Mr. Rangel’s, making it the largest tax increase in history. There has been so much concern that such a tax increase would hurt financial incentives that drive economic growth that House Speaker Nancy Pelosi distanced herself from Mr. Rangel’s plan almost as soon as he announced it.

But fear not. As Mr. Rangel wrote on this page two weeks ago, his bill would “restore a sense of equity and fairness that is critical to the success of our voluntary tax system.” That’s right, he called our tax system “voluntary.” That means we don’t have to worry about the incentive effects, since we won’t actually have to pay any of that $3.5 trillion — unless we want to.

So when April 15 comes around, I encourage you to be like Herman Melville’s Bartleby and say: “I prefer not to.” But wait. By April 15 you’ll already have paid, since taxes are involuntarily withheld from your paycheck. Nothing can be done about that, even if you don’t volunteer to file a tax return. And if you don’t file a return, you’ll find yourself involuntarily in jail.

The author concludes:

Mr. Rangel should also bear in mind that taxes on labor income are voluntary in the sense that one can choose not to pay them by choosing not to earn any labor income — that is, by not working. All the rich need to do in order to make true Mr. Rangel’s characterization of our tax system is to retire to their yachts, rather than continue to contribute to the economy by running hedge funds or doing private equity deals.

When that happens, Mr. Rangel will get a lesson in supply-side economics he’ll never forget. Some say that the Laffer Curve is wrong, and that tax cuts don’t result in higher tax revenues. But when America’s most productive workers stop working — even a little bit — in reaction to the incentive effects of the “mother of all tax reform plans,” they’ll see that the Laffer Curve was right after all, and that it can cut both ways. Involuntary tax hikes result in voluntarily lower tax revenues.

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