Kevin Hassett Spanks the Tax Policy Center

For me, Hassett’s biggest contribution to the tax debate is the notion that high corporate tax rates depress the wages of workers.

.. Because companies have stashed profits overseas, and because the U.S. tax cost of investment is so high, middle-income wage earners have suffered mightily. Hassett — and his AEI colleague Aparna Mathur — have argued for over a decade that if you want to raise wages, cut corporate tax rates.

.. “for the median household in the U.S., the top corporate marginal rate cut from 35 percent to 20 percent would boost wage growth almost four-fold.”

.. Hassett has argued that 70 percent of the benefits of lower business tax rates accrue to middle-income wage earners — in other words, Donald Trump’s middle-class base.

.. former CEA chair Glenn Hubbard recently wrote in the Wall Street Journal that too many economists fail to consider the share of the U.S. corporate tax burden borne by labor — 60 percent according to his research

.. concluded that it would boost wages by 8 percent.

.. It’s the difference between a prospering and optimistic middle class and a pessimistic middle class that lives day-to-day, paycheck-to-paycheck.

.. Trump’s tax-cut and regulatory-rollback policies are aimed directly at ending the war on business, which has dragged down the economy for nearly two decades. Let’s reward success rather than punish it.

The Health Care Cul-de-Sac

What are the biggest threats to the American Dream right now, to our unity and prosperity, our happiness and civic health?

First, an economic stagnation that we are only just now, eight years into an economic recovery, beginning to escape — a stagnation that has left median incomes roughly flat for almost a generation, encouraged populism on the left and right, and made every kind of polarization that much worse.

First, an economic stagnation that we are only just now, eight years into an economic recovery, beginning to escape — a stagnation that has left median incomes roughly flat for almost a generation, encouraged populism on the left and right, and made every kind of polarization that much worse.

.. And if the Democrats, having blown up the insurance system once to implement Obamacare, really rallied around a Bernie Sanders-style proposal to do it all over again but on a bigger scale? Then not only would 2020 be a health care election, but if the Democrat won, the next two years would be consumed by outlandish single-payer expectations.

Where would that leave our two big problems, stagnation and the social crisis?

.. But when your main challenges involve men who aren’t working, wages that aren’t rising, families that aren’t forming and communities that are collapsing, constantly overhauling health insurance is at best an indirect response, at worst a non sequitur.

.. Democrats, meanwhile, could let single-payer dreams wait (or just die) and think instead about spending that supports work and family directly. They could look at proposals for a larger earned-income tax credit, a family allowance, and let the “job guarantee” and “guaranteed basic income”factions fight things out. If they want to go big in 2020, they could run on wage subsidies and public works, not another disruptive health care vision.

.. The country has bigger problems than its insurance system. It’s time for both parties to act like it.

The False Promises in President Trump’s Tax Plan

The president’s claim also defies history. Wages have long stagnated, despite tax cuts in the 1980s and 2000s, while profits, shareholder returns and executive pay have soared. Profits, whether lifted by favorable economic conditions, by tax cuts or by both, have not translated into employee raises and have instead been used for other purposes.

One is to buy back stock, which lifts share prices and, by extension, executive compensation.

.. Following a huge one-off corporate tax cut in 2004, big piles of corporate cash were also used to pay dividends to shareholders, settle legal issues and finance severance packages for layoffs.

.. Mr. Trump has proposed cutting the top corporate rate from 35 percent to 15 percent, a point he emphasized on Wednesday despite warnings from his economic advisers that a cut that sizable would cause the deficit to explode.
.. he analysis showed that the proposed Trump tax cuts would lift after-tax income for the
  • top 1 percent of taxpayers by at least 11.5 percent (or an average annual tax cut of $175,000), compared with a barely perceptible
  • 1.3 percent for taxpayers in the middle (or $760 in average tax savings).

.. The question is how House Republicans will deal with those potential deficits. Many of them have built their reputations as fiscal hawks.

The Top 20 Percent Are the Real ‘Hoarders’ of Wealth

Richard Reeves. In his new book, Dream Hoarders, Reeves argues that the upper middle class, or the top 20 percent, is “hoarding” the American Dream.

.. Reeves first points to unequal development of human capital.

By unequal development of human capital, Reeves is talking about parenting and education. Upper middle class parents are more likely to be married, and they’re more likely to plan their pregnancies. A study at the Columbia School of Social Work found that parenting behavior, namely maternal warmth and sensitivity, to be the most important factor of the gap between upper middle class children and bottom-income quintile children. In other words, parenting behavior is more important than maternal education, family size, and race.

Furthermore, upper middle class children generally live in neighborhoods with high-performing public schools, or they attend posh private schools. Upper middle class parents can hire college admissions consultants for upwards of $5,000 to guarantee that their children attend a selective college. Not to mention that most upper middle class parents have often gone through the college admissions process themselves and can help their children succeed.

.. In order to give all children the chance to succeed, Reeves suggest that we

  • curb exclusionary zoning, especially density requirements that prevent multi-family homes from being built in wealthy areas;
  • end legacy admissions at the top colleges in America that inevitably give preference to upper middle class children; and
  • open up internships by increasing regulatory oversight and extending student financial aid to cover summertime opportunities.

.. while Absolute mobility is concerned with whether incomes increase or decrease. Over time, everyone can be better off as the economy grows. Why do we need downward mobility from the top? If everyone’s standards of living are rising, why do we need to be concerned with class status?

..  “increasing the number of smart, poor kids making it to the top of the labor market is likely to mean an improvement in quality and therefore productivity.” Upper middle class people are top influencers in society; they are politicians, pundits, broadcast journalists, and financial analysts. These people should be the most talented people in society, not just the ones lucky enough to be born to rich parents because that is best for the economy. To give one of many examples, a working paper published by the National Bureau of Economic Research determined that fund managers from low-income backgrounds perform better than those from upper middle class backgrounds.

Minnesota Federal Reserve President: If You Aren’t Raising Wages, Don’t Complain About Labor Shortages

“Are any of you planning to raise wages in the next year or two?” he asked. “Or are you just complaining that you can’t find workers and you’re not going to raise wages? I can tell you something. If you look at North Dakota in the oil boom, if you raise wages, people respond, and you can find workers.”

“If you aren’t raising wages, it just sounds like whining,” he concluded.