I make the big time
Update: I am wrong. A reader points out a previous brief appearance.
Random Observations for Students of Economics
When an admitted al-Qaida operative planned his itinerary for a Christmas 2009 airline bombing, he considered launching the strike in the skies above Houston or Chicago, The Associated Press has learned. But tickets were too expensive, so he refocused the mission on a cheaper destination: Detroit.
Open access legal scholarship – which today appears to account for almost half of the output of law faculties – can expect to receive 50% more citations than non-open access writings of similar age from the same venue.
I am the person who wrote the chapter in the OECD report that is the basis of these figures. It is part of a report on the distribution of income to households, so it doesn’t include taxes that are not directly paid by households, since these are not included in income surveys....[T]he table also calculates the distribution of taxes for the household as whole after adjusting for the number of people in the household, so it will differ from data calculated on income tax returns which are not adjusted for household size.
As others have pointed out this measure includes all direct taxes on individuals so it includes income taxes and employee social security contributions, but not employer payroll taxes. It also doesn’t include sales taxes, but these are much heavier in most other OECD countries, and not as progressive as direct taxes, so if you added indirect taxes in through some sort of modelling it is almost certain that the USA would still have the most progressive overall tax system.
However, as the OECD report points out, progressivity is not the same as redistribution. Progressivity measures how the distribution of the tax burden is shared, while redistribution measures how much the tax system reduces inequality. Redistribution is influenced both by the progressivity of taxes and the level of taxes collected.
In fact, the US system of direct taxes actually reduces inequality more than any other country as well. But overall, the USA reduces inequality a lot less than most other countries, because the other thing that you need to take into account is what taxes get spent on.
Now the US system of social security and cash benefits reduces inequality by less than any other OECD country except Korea. The US social security system is marginally less progressive then the OECD average, but the level of spending is very low – only Mexico and Korea spend less in the OECD.
So while the US tax system is progressive and reduces inequality, the US welfare state is much less effective at reducing inequality. And because the US has a very unequal distribution of income from capital and a much wider wage distribution than many other OECD countries, it ends up as a relatively unequal country after taxes and benefits.
If you look at Nordic countries, they all have much less progressive tax systems than the USA, but they collect a lot more in taxes (including in VAT). They then spend this much higher tax revenue on social security and services, and it is this side of the equation that is most important in reducing inequality.
So the implication is not that the USA either needs to increase or reduce the progressivity of the tax system. If you want to reduce inequality, you need to increase the level of taxes collected and spend it more effectively.
"six out of seven musicals fail to recoup their investment."
in percentage terms of the change in total employment level from 2006 to 2010, jobs affected by the federal minimum wage hikes of 2007, 2008 and 2009 account for 41.8% of the total reduction in jobs seen since 2006.
If you've taken an Econ 101 course in the past decade or so, there's a good chance that somewhere on your bookshelf is a dog–earred copy of Gregory Mankiw's Principles of Economics. The Harvard professor's textbook has become a classic, thanks to its simplicity and clarity — two qualities appreciated by gawky undergrads facing first–year distractions. After all, the dismal science never looks more dismal than when there's a choice between staying in to study Keynes or going out to flirt with strangers at a party.