Tuesday, August 15, 2017

CBO’s Budget and Economic Outlook: 2017 to 2027

From Congressional Budget Office, "CBO’s Budget and Economic Outlook: 2017 to 2027," August 15, 2017, Presentation by Sam Papenfuss, Deputy Assistant Director for CBO’s Budget Analysis Division, at the National Association of State Auditors, Comptrollers and Treasurers annual conference:

Thursday, August 10, 2017

NY And Other Large Metropolitan Areas Have Highest Wage Inequality: Map

From MarketWatch, "Why there’s so much inequality in big U.S. cities" by Jillian Berman:
Run through a list of some of the most populated metropolitan areas in the country — New York City, San Francisco, Houston, Chicago — and they all have something in common besides their size. They’re extremely unequal.

In all of these cities, wages for workers in the top 10% of earners are six to seven times those of workers in the bottom 10%, according to a report published Thursday by the Federal Reserve Bank of New York. While income inequality has been ticking up nationally since the 1980s, it’s now particularly pronounced in large metropolitan areas, according to the New York Fed.

“Larger metropolitan areas tend to be more unequal than smaller metropolitan areas and that was not always true,” Jaison Abel, a research officer at the New York Fed, told reporters Thursday.

Map of US Metropolitan Wage Inequality
Source: MarketWatch

Monday, August 7, 2017

Consumption Inequality Much Lower Than Income Inequality

From MarketWatch, "Is inequality getting worse? That depends how you measure it" by Steve Goldstein:
Consumption inequality hasn’t grown as much as income inequality

Chart Of Consumption Inequality Versus Income Inequality
Source: MarketWatch

Bruce Meyer of the University of Chicago and James Sullivan of the University of Notre Dame argue that consumption, rather than income, should be examined. Using income to measure inequality is a problem for a few reasons. For one, it’s measured before tax, it’s not person weighted (a family with one person is measured the same as one with six people) and it may underrepresent the impact of government transfers. Income measures also don’t capture consumption out of financial wealth as well as durables such as housing and cars.

Consumption, they say, may be a better way to measure well being, since it better reflects disparities in access to credit or accumulation of assets. Consumption also is more closely associated with other measures of poverty than income is.
Research paper abstract:

"Consumption and Income Inequality in the U.S. Since the 1960s" by Bruce D. Meyer, James X. Sullivan, NBER Working Paper No. 23655, Issued in August 2017:
Official income inequality statistics indicate a sharp rise in inequality over the past five decades. These statistics do not accurately reflect inequality because income is poorly measured, particularly in the tails of the distribution, and current income differs from permanent income, failing to capture the consumption paid for through borrowing and dissaving and the consumption of durables such as houses and cars. We examine income inequality between 1963 and 2014 using the Current Population Survey and consumption inequality between 1960 and 2014 using the Consumer Expenditure Survey. We construct improved measures of consumption, focusing on its well-measured components that are reported at a high and stable rate relative to national accounts. While overall income inequality (as measured by the 90/10 ratio) rose over the past five decades, the rise in overall consumption inequality was small. The patterns for the two measures differ by decade, and they moved in opposite directions after 2006. Income inequality rose in both the top and bottom halves of the distribution, but increases in consumption inequality are only evident in the top half. The differences are also concentrated in single parent families and single individuals. Although changing demographics can account for some of the changes in consumption inequality, they account for little of the changes in income inequality. Consumption smoothing cannot explain the differences between income and consumption at the very bottom, but the declining quality of income data can. Asset price changes likely account for some of the differences between the measures in recent years for the top half of the distribution.

Charitable Deductions Are Disincentives To Social Responsibility.

My published comment to The Wall Street Journal, "Charities Coax Lawmakers to Rethink Tax Plan: Nonprofits pitch idea of ‘universal’ tax deduction for charitable contributions, which would likely decline if Congress were to double standard deduction" by Richard Rubin:
Charitable deductions are disincentives to community and social responsibility.

Charitable deductions focus on organizational structure and not compassionate actions. If I invite and feed a poor person in my house on Thanksgiving, the tax deduction is not available. If I donate food or money to a food bank or church that feeds the same person, I get a deduction.

If I grocery shop or cook a meal for a needy, ill senior in my neighborhood, no deduction. If I donate to an organization that has volunteers who do the same thing, I get a deduction.

The required organizational structures add a middle layer of inefficiency and bureaucracy, which reduces the effectiveness, timeliness, and value of charitable giving.

When there is suffering, such as an earthquake, we do not need tax deductions to motivate us to send money, food, etc.

Eliminate charitable deductions. If the government takes too much money so we cannot donate as much as we like to charities, fight for lower taxes.
See my very similar, earlier post on this blog, "The Problem With Charitable Tax Deductions."

Thursday, August 3, 2017

Ten Countries Use Merit-Based (Points-Based) Immigration Systems

From Federation for American Immigration Reform, "Merit-Based Immigration Systems", Fact Sheet | March 2017:
Merit-based immigration systems are in use in the following countries:
  • Australia[4]
  • Austria[5]
  • Canada[6]
  • Denmark[7]
  • Germany[8]
  • Hong Kong[9]
  • Japan[10]
  • New Zealand[11]
  • South Korea[12]
  • United Kingdom[13]
[4] Australian Skilled Migration Program https://www.border.gov.au/Trav/Work/Skil
[6] Canadian Federal Skilled Worker Program http://www.cic.gc.ca/english/immigrate/skilled/apply-factors.asp  Quebec
[7] Danish Fast Track and Positive List Migration Schemes https://www.nyidanmark.dk/en-us/coming_to_dk/work/work.htm
[8] Germany recently implemented a limited, merit-based immigration scheme for “Highly-Qualified Workers” http://www.bamf.de/EN/Migration/Arbeiten/BuergerDrittstaat/Hochqualifizierte/hochqualifizierte-node.html
[10] Japanese Points-Based Preferential Immigration Treatment for Highly Skilled Foreign Professionals http://www.immi-moj.go.jp/newimmiact_3/en/