Don't Quit Your Day Job…

Many debates revolve around the fact that both within group skill levels (as in amongst high school graduates or college graduates, for example) and between group skill levels (comparing high school to college graduates) income disparity has been increasing. This fact has been politicized many times and is used as a catch-all method to support almost any policy: why we need more of a welfare state, why we need less of a welfare state or a higher minimum wage, why we need more funding (or less) for public education, why we need higher or lower taxes, more progressive taxes, et cetera. I am not going to speculate on the need to change this trend or its best method but simply to offer an explanation… Most large socioeconomic phenomena such as these do not have a single solution, so consider this article to contain one of many explanations.

One of my readers shared an interesting chart with me, so here I am to share it with you! Read (follow?) on for…. a visual guide to the midterm elections.

Charitable contributions are an important part of the American political system and the American tax code. In this article, Cameron Daniels questions whether the tax exemption for charitable contributions is a good policy decision.

What did we learn? What surprised us? Well, the Republican wave was a real phenomenon, as we saw yesterday. CNN is projecting at this hour Republicans having 243 seats in the House of Representatives, vs. 192 Democratic seats (64 flips from Republican to Democratic). The Senate is too close to call in Alaska, Colorado, and Washington. Alaska’s Senator will caucus Republican whether Joe Miller or Lisa Murkowski wins. Assuming the Democratic Senate candidate in Washington or Colorado wins, Democrats will hold 52 seats in the Senate.

Live blogging for the midterm 2010 elections. Keep refreshing! 5-10 minute updates.

We figured we’d weigh in before the elections, just to get some of the estimates from various spots on paper as to what happens in the upcoming elections. The Senate is currently composed of 57 Democratic Party, 2 Independents caucusing with the Democratic Party, and 41 Republican Party Members. The House of Representatives is composed of 255 members of the Democratic Party, and 178 Republican Party Members. Republicans need to gain 10 seats to control the Senate, and the Vice President breaks ties in the chamber. Republicans need to gain 39 seats to control the House of Representatives.

The incidence of a tax (who truly pays for it) is very significant in welfare analysis. Cameron Daniels analyzes this concept using the real life example of gas prices.

I recently posted on the ‘Bush Tax Cuts’, however, as Dr. Mark Perry points out, another way of looking at the Bush tax law is the ‘Bush tax hike’! Compared to the top marginal rate under Bush I and Reagan, the Bush II tax ‘cuts’ had a higher marginal tax rate on the highest bracket. In fact, as one of Dr. Perry’s commentators points out, the 2011 retirement of the Bush tax law could be considered another ‘Bush Tax Hike’ – as President Bush was the one who put an expiration date on the law.

Fresh off of Secretary of State Hillary Clinton’s classic quote to the Brookings Institute, “The rich are not paying their fair share”, it’s nice to see a few publications with proof that thought may be a little wacky. The Congressional Budget Office released a timely report they named “Average Federal Taxes by Income Group”. What does that report show? Strangely, that the share of the burden of taxation for the rich in this country has actually been increasing. Shocking, I know, with all of the quotes you can find to the contrary. Let’s take a look…

What’s grown faster than inflation the last 40 years? No, not medical expenses. What’s grown faster than that? You guessed it (from the title of this post) – education costs increased almost 1000% from 1978 to 2008, compared to about 300% in the generally price level as measured by consumer inflation. Yes, inflation is one of the categories of spending which is increasing at an off-the-chart-rate.