Contrarian Economics – Page 2 – The Moral Healthcare Blog

Immigrants Contributed An Estimated $115.2 Billion More To The Medicare Trust Fund Than They Took Out In 2002–09

Many immigrants in the United States are working-age taxpayers; few are elderly beneficiaries of Medicare. This demographic profile suggests that immigrants may be disproportionately subsidizing the Medicare Trust Fund, which supports payments to hospitals and institutions under Medicare Part A. For immigrants and others, we tabulated Trust Fund contributions and withdrawals (that is, Trust Fund expenditures on their behalf) using multiple years of data from the Current Population Survey and the Medical Expenditure Panel Survey. In 2009 immigrants made 14.7 percent of Trust Fund contributions but accounted for only 7.9 percent of its expenditures—a net surplus of $13.8 billion. In contrast, US-born people generated a $30.9 billion deficit. Immigrants generated surpluses of $11.1–$17.2 billion per year between 2002 and 2009, resulting in a cumulative surplus of $115.2 billion. Most of the surplus from immigrants was contributed by noncitizens and was a result of the high proportion of working-age taxpayers in this group. Policies that restrict immigration may deplete Medicare’s financial resources.

Immigrants Contributed An Estimated $115.2 Billion More To The Medicare Trust Fund Than They Took Out In 2002–09

Newsroom – Organisation for Economic Co-operation and Development

The tax burden is measured by the ‘tax wedge as a percentage of total labour costs’ – or the total taxes paid by employees and employers, minus family benefits received, divided by the total labour costs of the employer. Taxing Wages also breaks down the tax burden between personal income taxes (PIT), including tax credits, and employee and employer Social Security Contributions (SSC)

Key Taxing Wages results in 2011 included:

The highest tax wedges for single workers without children who are earning the average wage in their country were observed in Belgium (55.5%), Germany (49.8%) and Hungary and France (49.4%). The lowest tax wedges on the same basis were in Chile (7%), Mexico (16.2%) and New Zealand (15.9%) The average for OECD countries was 35.3%. (See Table 1)
The average overall tax wedge, for those earning the average wage, increased by 0.3 percentage points between 2010 and 2011. This was largely due to PIT. Of the 26 countries where the tax wedge rose, in 18 the PIT wedge also rose, most notably in Ireland (+3.8 percentage points), Hungary (+2.4 percentage points) and Portugal (+1.4 percentage points). Falls in the overall tax burden were also primarily due to PIT changes – the largest decrease was in New Zealand where the tax wedge fell by 1.1 percentage points due to changes in the income tax rates in 2011.
The United States was the main exception to the rule. The overall tax wedge fell by 0.9 percentage points in 2011, due to a decrease in employee social security contributions which outweighed an increase in income taxes resulting from the expiry of the temporary “Making Work Pay” non-wastable tax credit.
The highest tax wedges for one-earner families with two children at the average wage were 42.3% for France, 40.3% for Belgium and 38.6% for Italy. New Zealand had the smallest tax wedge for these families (-1.2%), followed by Chile (7%), Ireland (7.1%) and Switzerland (8.4%). The average for OECD countries was 25.4%. (See Table 2).
Single people in Hungary faced the biggest increase in the tax burden, but families with children enjoyed the biggest reduction due to a reform of the child tax relief scheme that changed from a tax credit to a more advantageous tax allowance in 2011.

In all OECD countries except Mexico and Chile, the tax wedge for families with children is lower than that for single individuals without children. The differences are particularly large in the Czech Republic, Luxembourg, Belgium, Germany, Hungary, Ireland, New Zealand and Slovenia.

Government investment needed in new economies – latimes.com

For more than three decades American venture capitalists have concentrated their activities and earned their returns in a very small number of industrial domains. In booms and in slumps, in bull markets and in bear markets, the information and communications technology and biomedical sectors together have consistently accounted for 80% of venture capital investment.

Why has it been in the world of information technology and, secondarily, biomedicine that venture capitalists have been successful? In brief: Only in these sectors did the state invest at sufficient scale in scientific research and in its translation to working technology. In over 40 years as a working venture capitalist, I learned that my colleagues and I and the entrepreneurs whom we backed were all dancing on a platform constructed by the federal government.

Let’s focus on information and communications technology. National funding of the basic research that enabled the IT revolution was overwhelmingly provided by the Defense Department. The Soviet threat, crystallized in the years after 1945 and amplified by the Korean War in 1950 and the launch of Sputnik in 1957, was the context for the U.S. military‘s massive commitment to renewing its wartime role as the principal financier of technical research and the principal customer for the products that generated.

The scale of research and development funding was substantial. For 25 years through 1978, federal sources accounted for more than 50% of national R&D expenditures and exceeded the R&D expenditures of the other governments in the Organization for Economic Cooperation and Development combined. From microelectronics and semiconductor devices through computer hardware and software and on to the Internet, development of all of the components of digital information and communications technology reflected state policies for R&D and procurement.

There is a larger lesson here. Over some 250 years, economic growth has been driven by successive processes of trial and error and error and error: upstream exercises in research and invention, and downstream experiments in exploiting the new economic space opened by innovation. Each of these activities necessarily generates much waste along the way, such as dead-end research programs, useless inventions and failed commercial ventures. In between, the innovations that have repeatedly transformed the architecture of the market economy, from canals to the Internet, have required massive investments to construct networks whose value in use could not be imagined at the outset of deployment.

At every stage, the innovation economy depends on sources of funding decoupled from concern for economic return. As economists have long recognized, such funding will not be delivered by competitive markets. Only an active state in pursuit of politically legitimate missions — national development, national security, conquering disease — can play the required role.

Thus, from the Erie Canal to the Internet by way of the transcontinental railroads and the Interstate Highway System, the American state has played a strategic role in the deployment of the transformational technologies that have created a succession of “new economies.” In disregard of this history, forces have been at work for a generation to delegitimize the state as an economic actor — even as the next new economy can already be defined in broad strokes.

Hurricane Sandy: beware of America’s disaster capitalists | Naomi Klein | Comment is free | The Guardian

The prize for shameless disaster capitalism, however, surely goes to rightwing economist Russell S Sobel, writing in a New York Times online forum. Sobel suggested that, in hard-hit areas, Federal Emergency Management Agency (Fema) should create “free-trade zones – in which all normal regulations, licensing and taxes [are] suspended”. This corporate free-for-all would, apparently, “better provide the goods and services victims need”.

Yes, that’s right: this catastrophe, very likely created by climate change – a crisis born of the colossal regulatory failure to prevent corporations from treating the atmosphere as their open sewer – is just one more opportunity for further deregulation. And the fact that this storm has demonstrated that poor and working-class people are far more vulnerable to the climate crisis shows that this is clearly the right moment to strip those people of what few labour protections they have left, as well as to privatise the meagre public services available to them. Most of all, when faced with an extraordinarily costly crisis born of corporate greed, hand out tax holidays to corporations.

The flurry of attempts to use Sandy’s destructive power as a cash grab is just the latest chapter in the very long story I have called the The Shock Doctrine. And it is but the tiniest glimpse into the ways large corporations are seeking to reap enormous profits from climate chaos.

One example: between 2008 and 2010, at least 261 patents were filed or issued relating to “climate-ready” crops – seeds supposedly able to withstand extreme conditions such as droughts and floods; of these patents close to 80% were controlled by just six agribusiness giants, including Monsanto and Syngenta. With history as our teacher, we know that small farmers will go into debt trying to buy these new miracle seeds, and that many will lose their land.

The Best of CBPP Graphs: Guideposts on the Road Back to Factville | Jared Bernstein | On the Economy

A nice collection of graphics, including this great one, from CBPP courtesy of Jared Bernstein…

How Much Do People Pay in Taxes?

How Much Do People Pay in Federal Taxes? | pgpf.org

These top two graphics do NOT include state and local sales tax, nor property taxes, both of which tend to be very regressive, stacking onto the left sides of these graphs very significantly. Scroll down for TOTAL tax burden.

Effective tax rates: individual income and payroll taxes combined
Percent of cash income

SOURCE: TPC, Table T12‐0018 Effective Federal Tax Rates by Cash Income Percentile; 2011, February 2012. Compiled by PGPF.
NOTE: *Individual income tax rates for the lowest and second lowest quintiles are negative and are netted against the payroll tax rate. A quintile is one fifth of the population. Calculations assume that employees also pay the employer portion of payroll taxes in the form ofreduced wages. The breaks are (in 2011 dollars): 20% $16,812; 40% $33,542; 60% $59,486; 80% $103,465; 90% $163,173; 95%$210,998; 99% $532,613; 99.9% $2,178,886.

Effective tax rates: income, payroll, corporate and estate taxes combined
Percent of cash income

SOURCE: TPC, Table T12‐0018 Effective Federal Tax Rates by Cash Income Percentile; 2011, February 2012. Compiled by PGPF.
NOTE: *Individual income tax rates for the lowest and second lowest quintiles are negative and are netted against the payroll tax rate. A quintile is one fifth of the population. Calculations assume that employees also pay the employer portion of payroll taxes in the form ofreduced wages. The breaks are (in 2011 dollars): 20% $16,812; 40% $33,542; 60% $59,486; 80% $103,465; 90% $163,173; 95% $210,998; 99% $532,613; 99.9% $2,178,886.

Total tax burden, from the Center for Tax Justice, via the NY Times Economix Blog:

Federal individual income tax rates for married couples, filing jointly, 2012

Taxable Income		Marginal Tax Rate	Income Tax Owed
Over	But not over	Marginal Tax Rate	Income Tax Owed
$0	$17,400	10%	10% of taxable income
$17,400	$70,700	15%	10% x $17,400 = $1,740 plus 15% x income over $17,400
$70,700	$142,700	25%	$1,740 + 15% x (70,700 ‐17,400) = $9,735 plus 25% x income over $70,700
$142,700	$217,450	28%	$9,735 + 25% x (142,700 ‐ 70,700) = $27,735 plus 28% x income over $142,217
$217,450	$388,350	33%	$ 27,735 + 28% x ( 217,450 ‐ 142,700) = $ 48,665 plus 33% x income over $217,450
$388,350		35%	$48,665 + (388,350 – 217,450) = $105,062 plus 35% x income above $388,350

SOURCE: Joint Committee on Taxation, Overview Of The Federal Tax System As In Effect For 2012 (JCX 18‐12), February 24, 2012.

But note that these tax rates, particularly the top marginal rate are incredibly low in historical context, as are the tax burden on the wealthiest:

A 20-Year Low in U.S. Carbon Emissions – NYTimes.com

For everyone with those yard signs saying “Stop the war on coal – fire Obama”

The war on coal is being fought by basic economics – cheaper, more efficient natural gas is kicking coal’s butt. Obama has nothing to do wiuth it and neither would Romney.

Energy-related carbon dioxide emissions in the United States from January through March were the lowest of any recorded for the first quarter of the year since 1992, the federal Energy Information Administration reports.

The agency attributed the decline to a combination of three factors: a mild winter, reduced demand for gasoline and, most significant, a drop in coal-fired electricity generation because of historically low natural gas prices. Whether emissions will continue to drop or begin to rise again, however, remains to be seen, experts said Friday.

“While this is a positive step, we shouldn’t just say, ‘Oh, we’ve got plenty of natural gas, we can just switch to that, problem solved,’ and move on,” said Jay Apt, the director of the Carnegie Mellon Electricity Industry Center, who was not involved in compiling the study.

Carbon dioxide emissions from energy consumption totaled 1.34 billion metric tons in the first quarter, down nearly 8 percent from a year earlier, the Energy Information Administration said.

Although natural gas is a more efficient fossil fuel than coal, burning it still produces carbon dioxide emissions. One of its strengths is that it produces more kilowatts of power than the equivalent amount of coal and it provides more energy for each carbon dioxide molecule emitted into the atmosphere. This so-called carbon efficiency is a crucial factor that allows scientists to project carbon dioxide emissions, with more efficient energy sources contributing less to climate change than the more inefficient sources.

Coal-fired electric power generation puts out about twice the amount of carbon dioxide — around 2,000 pounds for every megawatt hour generated — than electricity generated by burning natural gas. But that is still about 1,100 pounds per megawatt hour for electricity from natural gas. Scientists suggest the United States needs to reduce emissions to around 350 to 400 pounds per megawatt hour to stabilize atmospheric concentrations.

The extraction of large natural gas deposits in the Marcellus Shale has contributed to the rise of inexpensive natural gas, causing prices to decline in the last four years and making it a far cheaper option than burning coal. In 2005, coal accounted for half of all electricity generated in the country. But the embrace of natural gas, which now accounts for about 30 percent of electricity generation, has caused coal’s share to retreat to 34 percent, a 40-year low.

Additionally…

A November 2010 EIA report on power plant operating costs — the latest data available — found that a typical coal-fired plant costs $2,800 to $3,200/kilowatt of generation capacity, while a modern natural gas-fired plant costs around $1,000/kilowatt.

Combine significantly cheaper fuel costs and leaner operating costs, and electricity from a convention coal fired plant costs 9.5 cents/per kilowatt hour to produce, compared with 6.6 cents at a conventional modern gas plant, according to EIA’s Energy Outlook 2011.

——————-

Of the nation’s 600 coal-fired power plants — roughly 44 percent of U.S. power generation capacity — most are in the Midwest, with Ohio, Indiana, Pennsylvania and Illinois home to half of them. Some of those states also happen to be home to the Marcellus shale formation.

The attraction of natural gas comes at a time many coal-fired plants have reached the end of their life span.

According to DB Climate Advisors and the Electric Power Research Institute, an industry lab and think tank, nearly 60gw of coal-fired generation assets are antiquated, some of it up to 80 years old.

“They should have been put out of their misery long ago,” says DB’s Fulton.

What if Medicare’s drug benefit was more like the VA’s? | The Incidental Economist

Medicare’s inability to negotiate program-wide prices and tighten plan formularies is in stark contrast to the VA, which negotiates directly with drug manufacturers and is not bound by the same formulary rules as Part D plans. That’s why the VA has been able to implement a national formulary more restrictive than those of Medicare plans and obtains lower drug prices. If Medicare plans could implement VA-like formularies and obtain commensurately lower prices, our paper shows that enough could be saved to compensate beneficiaries for the loss of choice, with savings to spare.

To repeat, the key findings are:

The VA pays 40% less than Medicare plans for prescription drugs.
Medicare plans cover about 85% of the most popular 200 drugs on average (ranging from a low of 68% to a high of 93%).
The VA’s national formulary includes 59% of the most popular 200 drugs.
If Medicare obtained the same drug prices as the VA, it would save $510 per beneficiary per year or a total of $14 billion per year (2009 prices).
If Medicare plans tightened formularies to the level of generosity available from the VA (59% of top 200 drugs covered), beneficiaries would lose $405 of value per year associated with the loss of choice of drugs. (The right way to interpret this is that the average beneficiary would be precisely indifferent between the loss of drug choice and $405 dollars in cash.)
Because the savings ($510 per beneficiary) exceeds the loss of value to beneficiaries ($405), they could, in principle, be made whole with $105 left over (= $510 – $405).