Tag Archives: political economy

Tax Rates

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James Pethokoukis had a piece on this at AEIdeas, but I want to focus on just a small part of it.

[W]hat would be the economic case for lower rates for the 0.1%?

Pethoukis doesn’t object to these lower rates; he just has other job-growth priorities.

I have, though, two questions in answer to this question: what would be the economic case for excluding this or that group of Americans from an otherwise general tax policy?  And the obverse: what would be the economic case for forcing inclusion of this or that group of Americans into an otherwise limited tax policy?

Fair Share

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Here, via AEIdeas, are some more data on the relative shares of income taxes members of various economic strata pay. 

The 1,400 citizens in the top one-thousandths of one per cent of income tax payers paid 30% more in taxes across the class than did the 70 million citizens in the bottom 50%.  Singling out the top 400 for special consideration, they paid 78% of the total that those in the lower half paid in aggregate.

It works out, too, to $35.6 million per Privileged One compared to $540 per Poor Downtrodden one.

It works out, too, to a tax rate of 23% for those top 400 vs 24% for those Privileged Ones vs 3.5% [sic] for the Poor Downtroddens.

But the Progressives and Democrats refuse to say what the fair share of the successful is—beyond “more.”

A Market Prediction

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Because hubris—I has it.

In an article on the future relationship of Central Banks with economies and markets, The Wall Street Journal had this datum tossed in:

…shares in the S&P 500 are currently trading at 17 times the earnings they are expected to generate during the next year, compared with a 10-year average of 14.4[.]

That’s not a very large premium; all this P/E ratio means is that, in the coming year, stock market growth will be slower than in the last couple of years (recall that I’ve written, too, about the disconnect between the stock market and the underlying economy in the last few years).  Prices will slow their rise as earnings catch up; prices won’t fall back toward earnings.

It takes a P/E above 20 for the markets to begin to approach drops in prices longer than day to day or week to week micro-corrections—otherwise recognized as noise.

Disclaimer for the legalists among you: I am not a registered or licensed advisor of any sort, nor do I play one on the radio.

The Regulation Administration

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…is in its last days, but it keeps on trying to keep in our business.  In an article for an upcoming issue of New York University Journal of Legislation & Public Policy, Secretary of the Treasury Jack Lew

made a closing argument Wednesday in defense of the financial regulatory overhaul the Obama administration engineered during the past eight years.

Among his arguments:

Mr Lew makes the case that those new entities [e.g., the Consumer Financial Protection Bureau and the Financial Stability Oversight Council] allow the government to react to new forms of consumer abuse or financial engineering.

That’s part of the problem, though. It’s these new entities that define “new forms of consumer abuse” without regard to statutory definitions passed by our elected representatives.  It’s these new entities that define new forms of financial engineering as unacceptable or not, without consideration of whether the new forms actually are good ideas.

Progressives like Lew actually think such government overreaches are features and not failures.

A regulatory regime that becomes frozen in time will by its very definition be outpaced by those that seek to arbitrage it….

Lew is carefully ignoring the fact that a regulatory regime as unaccountable and as agile as he wants one to be will by its very definition be in a position to, and will, block free market moves of which an overreaching government decides to disapprove.

It’s a failed argument for a failed régime.  It’s time for Lew to pack up and go home.

Economic Advisors

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President-Elect Donald Trump has them.

  • Larry Kudlow, the anti-Keynes, to run (maybe) the White House Council of Economic Advisers
  • Peter Navarro to Head the White House National Trade Council
  • Steve Mnuchin for Treasury Secretary
  • Wilbur Ross for Commerce Secretary
  • Linda McMahon for Administrator of the Small Business Administration
  • Gary Cohn to run the White House National Economic Council
  • Mick Mulvaney to head Office of Management and Budget
  • Rick Perry as Energy Secretary
  • Andrew Puzder for Labor secretary
  • Scott Pruitt for Administrator of the Environmental Protection Agency
  • Elaine Chao for Transportation Secretary
  • Betsy DeVos for of Education Secretary
  • Carl Icahn as special adviser on Federal regulations, a newly created and unpaid position

There’s much of Trump’s putative trade policy with which I disagree.

However, Progressive-Democrats don’t like these folks.  It’s hard to get a more ringing endorsement for an advisory team than that.