Monthly Archives: November 2017

What Republicans say when asked why their tax bill benefits the rich most of all

By Jeff Stein

Sen. Cory Gardner (R-Colo.), Sen. John Barrasso (R-Wyo.), Senate Majority Leader Mitch McConnell (R-Ky.), Sen. Roy Blunt (R-Mo.) and Senate Majority Whip John Cornyn (R-Tex.) speak on Capitol Hill. (Carolyn Kaster/AP)

A number of studies have made clear that the tax bill Senate Republicans are trying to pass this week offers some of its biggest rewards to wealthy Americans. The GOP’s Tax Cuts and Jobs Act would cut taxes on wealthy Americans, while raising taxes on those earning between $10,000 and $75,000 over the next decade, according to the Joint Committee on Taxation, Congress’s official scorekeeper. The Tax Policy Center found that everyone outside the top 5 percent of income earners would see a significantly smaller tax cut in both the short term and the long term.

At a time of high inequality, when many of the economy’s rewards have already flowed to the wealthy, critics of the plan say this is an unnecessary gift. The plan “provide large benefits to the wealthy but little or nothing to everyone else,” says the Center on Budget and Policy Priorities, a left-of-center think tank, citing its large corporate tax cut and reduction of the estate tax. An NBC/Wall Street Journal poll from September found that 62 percent of Americans think taxes on the wealthy should go up. Twelve percent think they should go down.

But Senate Republicans say that they are not worried that the bill would disproportionately help the wealthy — at least according to 10 interviews with Republican senators Tuesday. Here’s why:

Sen. James Lankford (R-Okla.): “Obviously, there will be more benefit for people that pay more — if you pay a lot more, and there’s any change for that, then there will be a greater difference on it . . . You have the bottom 50 percent of earners who don’t pay …read more

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‘Dear colleagues, please explain your letter to Steven Mnuchin’

By Lawrence H. Summers and Jason Furman

Treasury Secretary Steven Mnuchin, left, and National Economic Council Director Gary Cohn met with members of the Senate Finance Committee earlier this month. (Alex Wong/Getty Images)

Dear Colleagues:

You recently wrote an open letter to Treasury Secretary Steven Mnuchin quantifying the economic impact of tax reform. We are interested in and surprised by your analysis. We share your commitment to the idea that well-designed tax reform can make the economy stronger and that careful economic analysis is essential. And we know that you all share our belief that such careful analysis is well served by discussion and debate of these issues that is at least as frank and vigorous as what we are all accustomed to in the average economics seminar. To that end, we think it would be useful to lay out some of the questions we have about your analysis:

First, many members of Congress are citing growth estimates consistent with your letter to claim that the tax cuts would pay for themselves and that the legislation being considered by Congress would not add to the deficit or debt over the next decade. Your letter, however, does not say that tax cuts would pay for themselves. Would it be fair to say that you agree with Martin Feldstein (who did not sign the letter) that these tax cuts will not pay for themselves and, in fact, would add about over $1 trillion to the debt over the next decade?

Second, can you explain how the studies you cite justify the conclusions you reach? You cite three studies to justify your conclusion that the annual growth rate would rise by 0.3 to 0.4 percentage points over the next decade. But two of those studies actually appear to have estimated substantially lower growth rates — potentially as low as a 0.01 …read more

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Air pollution is making you worse at your job

By Christopher Ingraham

A man rides his bicycle across a street amid heavy haze in Fuyang, Anhui province, China, in November 2015. (Reuters)

Poor outdoor air quality is likely to have a negative impact on your job performance, even if you work indoors at a desk, according to a new working paper from researchers at Germany’s Leibniz University and the Columbia Business School.

For years, researchers have been connecting the dots between air pollution and poor job performance: In 2011, for instance, a study found that outdoor agricultural workers’ productivity declined as atmospheric ozone levels increased. A 2014 follow-up study found that indoor blue collar workers were similarly affected by levels of outdoor air pollution.

But at that point it still wasn’t clear whether those findings held for office workers too. Desk work is both indoors and far less physically strenuous than packing fruits and vegetables in a warehouse, so one might reasonably conclude that white collar workers are less vulnerable to the effects of air pollution simply because they’re not breathing in as much air.

But that’s not the case, as the latest study concludes. For the paper, Steffen Meyer and Michaela Pagel took data on stock trades made by over 100,000 private investors in Germany from 2003 to 2015, and paired it with data on air quality, weather and traffic from the closest of over 1,600 monitoring stations.

Why stock trades? “We interpret individual investor trading, an indoor activity that requires some skill and cognitive but no physical exertion, as a proxy for willingness and ability to engage in office work and thereby white-collar productivity,” Meyer and Pagel explain. The stock data is particularly useful because it allowed the researchers to measure human behavior at the individual level.

Outdoor air quality can fluctuate significantly from day-to-day. Meyer and Pagel wanted to know if …read more

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