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Suspect confessed to participating in 45 murders and is implicated in 34 more, according to Nuevo León state officials.

by: Les Carpenter
Rational Nation USA
Liberty -vs- Tyranny

There is most definitely a huge gap between what proponents of low marginal tax rates argue and what the actual results of lowering said rates over the past 30 to 40 years has been. While reading the following article from The Guardian think long term effect. Many are arguing the policies of lower taxes and increased spending (much on defense and the MIC) during this time period is largely responsible for our present sorry fiscal state state of affairs. They may have a point and it is most certainly worth considering as we look to 2014 and 2016. At the very least the party of lower and lower taxes and increased spending, and we all know who that is, should rethink it's strategy for success.

In the United States, the share of total pre-tax income accruing to the top 1% has more than doubled, from less than 10% in the 1970s to over 20% today (pdf). A similar pattern is true of other English-speaking countries. Contrary to the widely-held view, however, globalisation and new technologies are not to blame. Other OECD countries, such as those in continental Europe, or Japan have seen far less concentration of income among the mega rich.

At the same time, top income tax rates on upper income earners have declined significantly since the 1970s in many OECD countries – again, particularly in English-speaking ones. For example, top marginal income tax rates in the United States or the United Kingdom were above 70% in the 1970s, before the Reagan and Thatcher revolutions drastically cut them by 40 percentage points within a decade.

At a time when most OECD countries face large deficits and debt burdens, a crucial public policy question is whether governments should tax high earners more. The potential tax revenue at stake is now very large.

For example, doubling the average US individual income tax rate on the top 1% income earners from the current 22.5% level to 45% would increase tax revenue by 2.7% of GDP per year – as much as letting all of the Bush tax cuts expire (only a small fraction of them lapsed in January 2013). But of course, this simple calculation is static: such a large increase in taxes may well affect the economic behaviour of the rich and the income they report pre-tax, the broader economy and, ultimately, the tax revenue generated. In recent research, we analyse this issue both conceptually and empirically using international evidence on top incomes and top tax rates since the 1970s.

There is a strong correlation between the reductions in top tax rates and the increases in top 1% pre-tax income shares, for the period from 1975-79 to 2004-08, across 18 OECD countries for which top income share information is available. For example, the United States experienced a 35 percentage-point reduction in its top income tax rate and a very large ten percentage-point increase in its top 1% pre-tax income share. By contrast, France or Germany saw very little change in their top tax rates and their top 1% income shares during the same period.

So, the evolution of top tax rates is a good predictor of changes in pre-tax income concentration. There are three scenarios to explain the strong response of top pre-tax incomes to top tax rates; each has very different policy implications.

First, higher top tax rates may discourage work effort and business creation among the most talented: the so-called supply-side effect. In this scenario, lower top tax rates would lead to more economic activity by the rich and hence more economic growth. If all the correlation of top income shares and top tax rates seen in the above data were due to such supply-side effects, the revenue-maximising top tax rate would be 57%. This would imply that the United States still has some leeway to increase taxes on the rich, but that the upper limit has already been reached in many European countries.

Second, higher top tax rates can increase tax avoidance. In that scenario, increasing top rates in a tax system riddled with loopholes and tax avoidance opportunities is not productive either. A better policy would be to first close loopholes so as to eliminate most tax avoidance opportunities, and only then increase top tax rates. With sufficient political will and international co-operation to enforce taxes, it is possible to eliminate most tax avoidance opportunities, which are well documented. Then, with a broad tax base offering no significant avoidance opportunities, only real supply-side responses would limit how high top tax rate can be set before becoming counter-productive.

In the third scenario, while standard economic models assume that pay reflects productivity, there are strong reasons to be sceptical, especially at the top of the income distribution where the actual economic contribution of managers working in complex organisations is particularly difficult to measure. Here, top earners might be able to partly set their own pay by bargaining harder or influencing compensation committees.

Naturally, the incentives for such "rent-seeking" are much stronger when top tax rates are low. In this scenario, cuts in top tax rates can still increase top income shares, but the increases in top 1% incomes now come at the expense of the remaining 99%. In other words, top rate cuts stimulate rent-seeking at the top but not overall economic growth – the key difference with the first, supply-side, scenario.

To tell these various scenarios apart, we need to analyse to what extent top tax rate cuts lead to higher economic growth. Again, data show that there is no correlation between cuts in top tax rates and average annual real GDP-per-capita growth since the 1970s. For example, countries that made large cuts in top tax rates, such as the United Kingdom or the United States, have not grown significantly faster than countries that did not, such as Germany or Denmark.

What that tells us is that a substantial fraction of the response of pre-tax top incomes to top tax rates may be due to increased rent-seeking at the top (that is, scenario three), rather than increased productive effort.

Naturally, cross-country comparisons are bound to be fragile; exact results vary with the specification, years, and countries. But the bottom line is that rich countries have all grown at roughly the same rate over the past 30 years – in spite of huge variations in tax policies. By our calculations about the response of top earners to top tax rate cuts being due in part to increased rent-seeking behaviour and in part to increased productive work, we find that the top tax rate could potentially be set as high as 83% (as opposed to the 57% allowed by the pure supply-side model).

Until the 1970s, policy-makers and public opinion probably considered – rightly or wrongly – that at the very top of the income ladder, pay increases reflected mostly greed rather than productive work effort. This is why governments were able to set marginal tax rates as high as 80% in the US and the UK. The Reagan/Thatcher revolution has succeeded in making such top tax rate levels "unthinkable" since then.

Now, however, we have seen decades of increasing income concentration that have brought about mediocre growth since the 1970s. And with the Great Recession that was triggered by financial sector excesses, a rethink of the Reagan and Thatcher revolutions is underway.

The United Kingdom increased its top income tax rate from 40% to 50% in 2010, in part to curb top pay excesses. In the United States, the Occupy Wall Street movement and its famous "We are the 99%" slogan also reflects a view that the top 1% has gained at the expense of the 99% – a view endorsed by our findings about the highly unequal distribution of income gains during the recovery.

In the end, the future of top tax rates depends on what the public believes about whether top pay fairly reflects productivity or whether top pay, rather unfairly, arises from rent-seeking. With higher income concentration, top earners have more economic resources to influence both social beliefs (through thinktanks and media) and policies (through lobbying), thereby creating some "reverse causality" between income inequality, perceptions, and policies.

The job of economists should be to make a top rate tax level of 80% at least "thinkable" again.

This is an updated version of an article originally published by VoxEU

While I certainly don't advocate a top marginal tax rate of 80% in the USA it certainly seems reasonable to entertain at this time a return to Clinton era rates (or slightly higher)and review the effects of an increase in say ten years or so. If at that time our nation, and the middle class is in better shape then stick with success.

Via: Memeorandum

The following chart shows quits in the retail trade industry.


Click to enlarge.

September 4, 2013
Abused Retail Staff Quits With Epic Resignation Letter [UPDATE]


See Also:
WikiTubia: Charlie the Unicorn

Source Data:
St. Louis Fed: Custom Chart

by: Les Carpenter
Rational Nation USA
Liberty -vs- Tyranny

Herman Cain

The following is an excerpt from RealClearReligion. It is concerning the allegations of sexual misconduct by Herman Cain during the 2012 presidential campaign. It seems he has been able to identify the perpetrator and organizer of what he claims were (are) fallacious allegations. Come to find out is is the DEVIL himself.

Then he speculated as to who may have orchestrated the allegations: the Devil.

"It made me realize that there was a force bigger than right," Cain said.

But that doesn't mean Cain has given up. Nowadays, Cain fights against the Evil One from the pulpit. Cain has been a member of the same Baptist church in Atlanta -- "a church in the hood" -- since he was 10, where he now serves as an associate pastor.

Cain preaches that the Devil is "determined to destroy our culture" and that "the family is at the center of our culture and the center of the family is its religious beliefs." {Read the Full Story}

Just another small example of reason existing the Republican party. Oy Vey!

Via: Memeorandum

by: Les Carpenter
Rational Nation USA
Liberty -vs- Tyranny

James Madison

Why are there no great thinkers anymore in American politics? Is is merely that we no longer notice them? A sign of the times? A result of the me first generation where the desire for and realization of instance gratification overcame long term rational self interest? Or is it just another phase in the current backwards evolution of the American electorate?

Perhaps the questions are rhetorical. However, it is certainly in the rational self interest of the people of the nation to find the answers and take the appropriate actions to correct our national trend towards the lowest common denominator.

"In framing a government which is to be administered by men over men, the
great difficulty lies in this: you must first enable the government to control
the governed; and in the next place, oblige it to control itself." -- James
Madison, Federalist No. 51

Where is the voice of reason in either political party? Perhaps most importantly when will it surface?

 

The "burgundy chapter" continues...

The following chart shows the amount spent on sewage and waste disposal construction as a percentage of wages and salaries.


Click to enlarge.



Waste not, want not


I must admit that some posts are done mostly for the puns.

Source Data:
St. Louis Fed: Custom Chart

Mexican boxer remained in coma and never recovered after being knocked out at a Saturday bout in Mexico.

Before I jump in on Week 4 progress, I want to thank everyone for your sweet comments on the HGTV Magazine feature. It wasn't totally real until I could share it with y'all and I'm still on cloud nine. Actually I'm kind of hoping that euphoria will carry me through the next few weeks because I feel like this project is growing. The list should be getting smaller at this point right? My design ADD is killing me. (catch up on previous weeks here.)

Now that the painting is done and I'm ready to get going on the meat and potatoes of the room I wanted to take this week to share some details on what will be sitting on those newly painted floors.

If you are new to LBD then I should let you know; I like a good bargain. And I love things that have a story to tell. (my furniture likes to talk almost as much as me) So when I can marry those two things and satisfy my 'thrill of the hunt' fix, then I am a happy girl.

For those that follow me on Instagram, these might look familiar but let's take a tour, shall we?


The couch. I found this beauty at Goodwill and loved it right away. Then the 'do I or don't I' debate started and I decided I would walk away and check back tomorrow. If it was still there it was meant to be. I thought about it all night and couldn't wait for the store to open the next morning. I rushed in and paid the $30. That's right. $30. I picked it up the next day in a surprise (and severe) snow storm with it hanging out of the back of my car for the 2 miles home. Zero visibility on the roads but 100% happy with my find.


The chairs. My friend and I go to an annual high school garage sale every spring and we usually come away with something great. The lines are long, we have to go super early and it is pure madness when we get in. We love it. This past spring we went and came up with a big fat nothing until we headed toward the exits. I saw these chairs and said to her that I had no more room for armchairs in my house (I have 4 extras in my basement), but don't they have great lines? And then she said the best thing a friend could say - "They are $8. Get them!" (thanks Becca). And so I did. They won't look like this the next time you see them, but they are again in excellent condition and I love their shape. And that's $8 for the PAIR by the way.


The lamps. Both were from Goodwill. Separate trips but equally ugly. :) Big plans for these. They were $8 for both.


The table. I knew I wanted something for the girls to draw and create on, but I didn't want to spend a lot since...they wold be drawing and creating on it. I saw this one at, wait for it, Goodwill, and emailed my lovely Linda to see what she thought. She assured me I could find some way to paint over that veneer and I pulled the trigger. $20. The dust was free.


The chairs. The green one was my dad's 'homework chair' growing up and the other chair has sat in my parents basement for 30 years. I come by my furniture hoarding honestly. Best part - FREE.


The coffee table. Snatched it up while at a retirement home sale with a client (they had great stuff). My monkeys girls' broke the glass top during an illegal dance party so it needs to be fixed and spruced up. She is the perfect length though and I love her height. $15.

So now the plan is take this motley crew and make them look cohesive and fresh. Less junky, more funky. Some of them have already been made over, some are still in process and some I still need to start (ugh!). Will I make it?!

- Rip up gross carpet (floor and stairs) and replace flooring
- Paint and plank walls and bookshelves
- Recover estate sale chairs - at the upholsterers 
- Create some sort of art station for the girls
- Paint chairs and table
- Repair and paint coffee table
- Create toy storage that doesn't involve the words 'pink' or 'plastic'
- Get some art on those walls
- Find rugs
- New Lighting

Karina Herrera, Lisa Hawkins and Mario Barrios

Click to enlarge.

A glass driving ceiling is a political term used to describe "the unseen, yet unbreakable barrier that keeps a society from exponentially growing the number of miles driven each year, regardless of population increases and the level of automobile advertising dollars spent."

See Also:
Glass Ceiling

Source Data:
St. Louis Fed; Custom Chart

The following chart shows how much production and nonsupervisory investment advice employees are earning compared to their used car dealer counterparts.


Click to enlarge.

Forehead. Desk. Whack. Whack. Whack.

Source Data:
BLS: Employment