Tag Archives: political economy

Income Taxes and Retirement Savings

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Professor Benjamin Harris (Kellogg School of Management) made a case for redoing our 401(k) retirement savings system.  He had several good points, too: the tax break today compared to the taxes due on withdrawal during retirement’s usually lower tax rate is irrelevant to those whose current income is low enough to go untaxed or not taxed much.  Contributions are tax deductions vs tax credits equal to a portion of contributions.  The whole system is complex from a tax-figuring perspective (what are the tax brackets in play for a particular saver, what taxes will be in play when the saver retires, how will investments perform in the interim).

Overlooked, though, is a larger alternative, even if it is a more difficult alternative to achieve.  It’s far from impossible to achieve; this year’s tax reform and cuts represent a major step in this direction.

The whole complexity of the tax question, along with most of the tax question itself, would disappear with a low, flat income tax rate.

Exxon’s Carbon Tax

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Exxon Mobil Corp is throwing $1 million at the move to produce a national carbon tax.

Exxon’s move is an attempt to manage what it sees as the risk of a similar movement in the US, in ways that it hopes will simplify requirements on its industry….
Exxon sees a carbon tax as an alternative to patchwork regulations, putting one cost on all carbon emitters nationwide, eliminating regulatory uncertainty….

On the contrary, Exxon is looking for short-term competitive political advantage at the expense of long-term economic—real—advantage.  That’s unfortunate.

It’s also unfortunate because, leaving aside the question of whether a carbon tax even would work as claimed, the scheme is based on the false premise that increasing atmospheric CO2 somehow is bad.  Atmospheric CO2 is, in fact, critical—as in can’t live without it—plant food.  In addition to that small fact, ice core samples from both ends of the earth—Greenland and Antarctica—reaching back 400,000 years indicate that rising atmospheric CO2, far from being a harbinger of bad warming to come, lags planetary warming by several hundred years.  The rise confirms that a cold planet is warming out of its Ice Age, and life is recovering and exhaling increasing amounts of CO2 into the atmosphere.

The Dangers of Welfare

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These are illustrated by a Letter to the Editor in Friday’s Wall Street Journal.  The letter-writer wrote of a pay raise his company gave its employees and a bit of Panic of 2008 history:

Despite high unemployment rates [during the Panic], we still struggled to find well-qualified employees. We were competing against the federal government’s repeatedly extended subsidy for unemployment programs. We interviewed dozens of people who flatly told us they were only interviewing to obtain another log entry to remain qualified for unemployment benefits, and that they didn’t need to work for us when they could get paid almost the same to not work at all—for 52 weeks or more.

This is one contributor to an abominably slow recovery.

Doing Business with the PRC

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The People’s Republic of China is stepping up their corporate espionage.

Starting November 1, police officers will have the authority to physically inspect businesses and remotely access corporate networks to check for potential security loopholes, according to the regulations released Sunday by the Public Security Ministry. Police will also be authorized to copy information and inspect records that “may endanger national security, public safety, and social order,” the rules said.

And

The new regulations also reinforce requirements on censorship and surveillance laid out in the cybersecurity law.

And to steal company secrets and classified information, and to plant malware for future use.

This is just one more reason for businesses to stop doing business with PRC companies or inside the PRC.  Lose market share?  What’s the cost of having all your secrets stolen, PRC domestic companies set up in competition based on those secrets, and then you, having been milked dry, being tossed aside?

What’s the cost to the security of your home country?  Oh, wait—that’s that patriotism that companies like Alphabet so deprecate.

College?

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I’ve written before about whether college is for everyone.

Some empirical evidence appears in a Wall Street Journal piece about last week’s unemployment number.

Peerfit Inc is growing, adding 80 staffers to its original 20 in just the last year and increasing their wages 5%-10% in the same period.  CEO Ed Buckley has noted the difficulty in finding “good people.”  Then he added this kicker:

When we first started, everyone we were hiring had a four-year college degree.  Now the skill set [of vocational hires] is sometimes even sharper than their counterparts coming out with a four-year college degree.

Hmm….