Dean Baker's Blog, page 99

The Tax Simplification H&R Block Won't Allow: Let the I.R.S. Do It

AP had a Fact Check on Donald Trump's promise of a simplified tax form. The piece noted that the I.R.S. has had a simplified "1040EZ" form for decades and it is not clear that the form will be any shorter or simpler with the new tax law. It did correctly point out that many fewer people will itemize their deductions, which will make filing simpler for them.

It would have been worth pointing out that the Trump administration could have made the filing process much simpler but chose not to. It...

The Median Wage for Black Workers: Why Isn't It Rising?

One of the main reasons that I and others have given for leaning on the Fed to keep interest rates down is that low unemployment disproportionately benefits those at the bottom. While we can and should try to help the disadvantaged through increased education, training, child care and other programs necessary to give them a foothold in the labor market, the easiest thing is allow them to get jobs.

When the Fed raises rates it is deliberately slowing the economy and thereby reducing the number...

George Will Argues that Amazon Needs Tax Subsidies

Yes, we know how hard it is for rich people like Jeff Bezos to get by in a free market. That is why George Will argues that taxpayers must subsidize Internet sellers by exempting them from having to collect sales taxes on out of state sales.

While Will argues that the market should decide which retailers win or lose, in fact, he is pushing a position that is 180 degrees opposite the free market one he claims. He is arguing that the state should require brick and mortar stores to collect taxes...

Limits on Tax Deductions for States and Local Taxes Are About Cutting Off Options for Progressive Policy at the State Level

Dalton Cooney argues in a Washington Post column that capping the deduction for state and local income taxes (SALT) is a good thing in a Washington Post column today. He makes the valid point that if wealthy suburbs want to tax themselves to have better schools than lower income inner city areas, there is no reason the federal government should subsidize this decision with a deduction on federal income taxes.

However, this misses the fact that the tax that is most likely to be affected by the...

The War on Pensions Continues

There has been an ongoing battle in major media outlets against public sector pensions. Papers like The New York Times and The Washington Post have regularly featured pieces telling readers that these pensions are unaffordable.

This crusade, carried on mostly in the news pages, has often taken bizarre twists. Back in 2011 the Washington Post had a front page article complaining about generous pensions that highlighted the story of former employer who was getting a pension of $520,000 a year....

Patent Monopolies Are Not Free Trade

We get that the Washington Post likes policies that redistribute income upward, but they should be able to argue the case for making the rich richer without turning logic on its head. Apparently, the paper lacks confidence in its position.

This piece also tells readers about a new initiative to promote women's businesses in Latin America:

"Among the members of the U.S. delegation was Trump’s daughter and adviser, Ivanka, who on Friday morning announced a new $150 million U.S. initiative to he...

Real Wages Are Rising for Those at the Bottom

I see my friend Jared Bernstein beat me to the punch in writing up the new data from Usual Weekly Earnings series. As he points out, the story for the median worker, those right at the middle of the income distribution, has not been good over the last year. Donald Trump doesn't seem to be making American great again for these folks.

Fortunately, there is a bit better story lower down on the income ladder, as we can see in the figure below.

Source: Bureau of Labor Statistics.

While real weekl...

Fareed Zakaria is Wrong: Republicans Supported Using Trade Deals to Redistribute Upward, not Free Trade

In a Washington Post column, Fareed Zakaria gave us yet another of the sermon about how Republicans supported "free trade" before Trump. This is of course not true.

Republicans have done little or nothing to remove the barriers that protect doctors and other highly paid professionals from foreign competition. As a result, our doctors are paid roughly twice as much on average as their counterparts in other wealthy countries, costing us roughly $90 billion a year in higher medical expenses. Thi...

More Evidence of the Skills Shortage In Top Management

We all know about the skills shortage where Harvard has to pay investment managers millions to lose the school a fortune on its endowment, Facebook can't find a CEO who can avoid compromising its customers' privacy, and restaurant managers apparently don't understand that the way to get more workers is to offer higher pay. The NYT gives us yet another article complaining about labor shortages.

The complaint is that restaurants have small profit margins and therefore can't afford to offer high...

The Post Continues to Use Its News Section to Push for the Trans-Pacific Partnership

The Post asserted that:

"[...]entering into a new TPP could unify Trump with other trading partners and put new pressure on Beijing to either allow more imports into China or risk being alienated by other Asian countries, that would now received new trade benefits as part of the deal."

Actually, the countries in the TPP will receive relatively few "new trade benefits" as a result of the TPP. Six of the other eleven countries in the pact already have trade deals with the United States, which...