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Tuesday, November 15, 2011

What environmental reasons justify sacrifice?

I can only think of four fundamental environmental rationales off hand.  Email or leave a comment if you think of more.  
  1. Global warming 
    1. This really just duplicates the following reasons, but is potentially so important that it deserves its own category.
  2. Reduce resource extraction to preserve nonrenewables for future generations? 
  3. Reduce toxic pollution (poisons by ingestion or breathing)? 
  4. Wellbeing of other species?

Wednesday, November 9, 2011

People like tax expenditures much better than explicit expenditures

The Monkey Cage:
We presented survey respondents with a description of a federal housing program, after which they were asked to rate their approval of the program on a seven-point scale.  About half of respondents received a description of the real-life Home Mortgage Interest Deduction:
“We’re going to ask you your opinion on a government program intended to help Americans afford to own homes. Under this program, individuals who take out a mortgage to buy a home are eligible to deduct the monthly mortgage interest from their taxable income, thereby reducing their tax burden. The total savings for individuals under this program are estimated to be $94 billion for fiscal year 2011.”
The other half of the respondents were shown a description that differed in two respects: first, the words “eligible to deduct the monthly mortgage interest from their taxable income, thereby reducing their tax burden” were replaced with “eligible for a grant from the federal government to help them afford the monthly payment;” second, the words “The total savings for individuals under this program…” are replaced with “The total government expenditures to individuals under this program…” We believe these contrasts in language were reasonable given the way these types of programs are often framed by elites. 
The effect of this manipulation of delivery mechanism is displayed in this bar graph, which displays the percentage of respondents in each treatment group who expressed at least some approval of the program.  The effect is considerable, as support drops by about 24% when the program is described as a grant.

The effect of this manipulation was especially pronounced for conservatives.  Conservatives appear to be just as willing as liberals to support a government program, provided that it is delivered through the tax code, but less willing to support this program when described as a “grant.”
Why the preference?  The authors hypothesize that it is partly due to "a lack of understanding about ... tax expenditures"  or " perhaps it’s about the beneficiaries; Americans may look more generously upon “taxpayers” than they do upon other potential recipients of policy benefits."

Saturday, November 5, 2011

Age Dependent Taxation

Horizontal or vertical equity?  Matthew Weinzierl:
age-dependent taxes... the idea of making the tax rate contingent upon the age of the tax payer. ...the administratively simple reform of age dependence can make the tax system substantially more efficient and more equitable...:
  • Age-dependent marginal tax rates are tailored to the distribution of income at each age. To see why, note that a 25-year-old earning $100,000 is higher in his or her age-specific income distribution than is a 45-year-old earning $100,000. Furthermore, these two workers are likely to have a different lifetime earnings path. We therefore ought to tax them differently.
  • Age-dependent average tax rates can help individuals transfer earnings across the lifecycle when private borrowing and saving is restricted.
  • Age dependence yields a large welfare gain by reducing distortions (lower marginal tax rates) and by making possible more redistribution.
See working paper (PDF)

When Privitization INCREASES Expenses!

Good Magazine highlights a new POGO study which finds that government outsourcing often increases costs rather than decreasing them. 

A new study by the Project On Government Oversight revealed that contractors earn 1.83 times more than public employees, and more than twice the compensation paid in the private sector for comparable services.
While the federal workforce has remained steady at about 2 million people since 1999, the contractor workforce increased from 4.4 million to 7.6 million in 2005, costing approximately $320 billion a year. In 33 of 35 occupational classifications, paying government employees would be cheaper than hiring a contractor.
POGO points to two main reasons for the huge waste. One is the steady drumbeat of small- and anti-government rhetoric from the right, which has resulted in the creation of a “shadow government” in which contractors perform services once handled by public employees at far greater cost—which, ironically enough, increases the size of the federal budget.
The second reason is that the government is ill-prepared to negotiate market-rate fees because it does not manage data about payments and processing or maintain clear standards about occupational specialties and justifying outsourcing. There’s also the issue of no-bid contracts and other shady paths for companies to find lucrative arrangements working for the government.