At The Hill Jerry Haar jumps heedlessly into a thorny subject—do the rich actually not pay their “fair share” in taxes?

Progressives often assert that wealthy individuals and corporations do not pay their fair share in taxes and therefore that tax rates on these upper-income people and companies should be increased.

But is it true that the rich and big companies do not pay their fair share?

A recent Internal Revenue Service (IRS) survey found that 95 percent of Americans believe it is everyone’s civic duty to pay their fair share of taxes. They also believe the current system is unfair, largely benefitting big business and rich people. But the truth is American business pays 93 percent of the nation’s taxes, and the top 1 percent pay over one-third of income taxes.

Let’s disaggregate the subject a bit, starting with corporations. Whatever you think a corporation’s “fair share” of taxes, however high the rate you impose, it will not fall on the corporation, as Mr. Haar observes:

In actuality, corporate taxes are paid by shareholders, workers and consumers, with a substantial share passed on through retail prices or lower wages. As economist Scott Lincicome points out, this can result in lower investment and economic growth, thus reducing wages and living standards, less innovation and lower productivity. An OECD study of major taxes and their impact on economic growth and real wages found that corporate taxes were the most harmful.

That’s not controversial. It is common knowledge among economists. If you want the corporate income tax to fall on the corporation itself, you will need to change more than the marginal tax rate. IMO such a notion is unworkable not to mention politically impossible.

Onwards to the personal income tax. I think there’s a reasonable conversation to be had about actual effective tax rates for individuals when all federal taxes are considered. In terms of effective tax rates everyone who is paid wages, whether a salary or by the hour, and earns less than $142,000 pays about 20% in federal taxes. That’s Social Security tax (FICA) plus Medicare tax combined. $142,000 is the present FICA max, the level above which FICA is not levied. Personal income taxes are on top of that. In the U. S. the average single worker without children pays about 28% in federal taxes (the average married worker with one income and two children pays 14%) compared with OECD average of 35% (24%). Even that is not really an apples-to-apples comparison for a variety of reasons include that just about every other OECD country has a VAT and most don’t have state taxes on top of federal taxes.

The key point is that the U. S. federal tax system is slightly (repeat slightly) regressive because of Social Security and Medicare taxes. Most European tax systems are much more regressive than ours because of VAT.

Our system is even more regressive when you recognize that workers who earn more than $142,000 don’t have FICA taken on it. That lowers their effective tax rates quite a bit. Translation: workers in the top 1% of income earners pay considerably lower than 14% and genuinely rich taxpayers even lower.

Now we get to the question of what is “fair”?

I’ve expressed my own view on taxes many times in the past. I think FICA, the Medicare tax, and personal and corporate income taxes should be abolished and replaced by a prebated VAT. Progressivity could be ensured by the size and incidence of the prebates. To my eye the second best alternative would be 1) levying FICA on all wage income and 2) a prebated flat rate tax on income with progressivity ensured by the size and incidence of the prebates.

Neither of my preferred approaches have the slightest chance of being enacted into law because either one would take Congress out of the equation, removing its main power which is to give tax breaks to the individuals and organizations it favors while imposing taxes on the disfavored.

So we’re left to squabble over what’s a “fair share”? Nobody really gives a damn. They just know that you can’t get blood out of a stone.

It’s always nice to be recognized even if it is, as is the case in this editorial in the Las Vegas Review-Journal as an object lesson:

Illinois provides a case study for why Nevada’s elected officials should pursue pension reform sooner rather than later.

The Illinois Policy Institute published some shocking research last month on the state’s education system. For every dollar the state government spends on education, 39 cents goes toward pensions. In 2000, just 12 percent went to pensions. In 2000, spending on teacher pensions was $640 million. Today, it’s $5.8 billion. That’s a ninefold increase.

Non-pension spending increased too but at a much slower rate. It didn’t even double.

Every dollar that goes toward pensions is a dollar that doesn’t go toward hiring teachers or lowering taxes. Most teachers, presumably, would prefer to see that money in their regular paycheck, too. Further compounding the problem is that significant portions of these payments are paying off previously incurred debts. The current students have less because previous generations didn’t set aside enough money to pay for their promises.

Nevada’s pension situation isn’t as bad as Illinois, which is perhaps the country’s leading fiscal basketcase and is the poster child for what happens when public employee unions have the key to the public fisc. But that doesn’t mean everything is rosy in the Silver State.

Over the last 20 years the number of students enrolled in Illinois has declined from 1% to 4% per year even as spending per student enrolled has increased sharply. The state’s teacher pension obligation has increased more than tenfold over the same period.

The math is pretty simple. Fewer people in the state, rising obligations, failure of elected officials to fund pensions fully, sharply increasing spending per taxpayer. It will require an amendment to the state’s constitution to correct the situation and politicians understand they won’t keep their jobs if they do what’s necessary.

In the event that you didn’t see the commentary I’ve embedded from CBS Sunday Morning this morning I wanted to share it with you. It evoked a flood of thoughts in me.

First, I am very proud of what this young man has accomplished.

Second, although thought, cognitive development, language, reason, and literacy are not all the same thing, they are interrelated things. Language and literacy foster cognitive development. Not all languages do so in the same way and the sort of cognitive development any given language fosters depends somewhat on the language. That is not to say that some languages are “better” than others. It is possible to express any concept in any human language. But languages are different. It’s harder to express some concepts in some languages. The cost involved does not categorically prevent speakers of any given language from comprehending certain concepts but it may disincline them from thinking such thoughts. For those keeping score at home that is the “weak Sapir-Whorf hypothesis” with which I tend to agree as opposed to the “strong Sapir-Whorf hypothesis” with which I strongly disagree.

And there’s an intimate relationship between literacy and reason. By “literacy” I do not mean the ability to puzzle out words on a page. I mean deriving information from the words written on a page. I am concerned about literacy declining in our culture in favor of more visual methods of deriving and exchanging information. That may have some advantages but improving the level of reasoned discourse is not one of them.

Finally, don’t judge a book by its cover.

I was prepared to agree with David Shribman’s take on contemporary developments in the Pittsburgh Post-Gazette but I couldn’t get past my disagreement with him about the relative importance of COVID-19 in the scheme of things:

In the past century, the United States has lived through several hinges of history.

World War II changed the role of women in American life, transformed the nation into a global superpower, created a baby boom and a mass consumer culture and — no one says everything changes — failed to redeem the “Double V” victory that the Pittsburgh Courier, the indispensable Black newspaper, yearned for: broad victory for freedom overseas and broad freedom at home.

The combination of the Vietnam era, the youth rebellion and the Watergate scandal produced a national skepticism of authority and institutions that we live with today. Though the Trump rebellion might be ascribed by historians to the age of disruption begun in the high-tech age, do not forget that the 45th president was born in the first year of the baby boom, and that he ingested that sense of rebellion in his youth.

The implications of the COVID-19 virus cannot be overstated. By month’s end, the American death toll may reach 700,000, about 12% more than in the Civil War, the deadliest conflict in our history.

The Civil War split the country, shattered families, altered economic relationships and created a new kind of politics that arguably dominated American politics for a century. (It was only in the late 1960s that there were cracks in the Democratic Solid South, an immutable force in politics that assisted military mobilization in the years leading to World War II but resisted racial integration in the years following World War II.)

That is what is called in the trade an “invidious comparison”. Not to diminish the hurt and harm of COVID-19 but the difference between 750,000 deaths in a population of 35 million people and the same number of deaths in a population nearly ten times that is simply enormous. That’s especially true since those who died in the American Civil War were disproportionately men, men were very needed by their families for economic support, and there was little or no social safety net. There’s simply no comparison between the misery caused by the Civil War and that caused by COVID-19.

The question we should ask is how cardinal a moment was the Spanish flu epidemic in U. S. history? That is widely thought (with some controversy) to have brought 650,000 deaths in a population of 110 million, a much more comparable situation. I would submit that it was almost completely unimportant.

At this point I think it’s just too early to tell how persistent or pervasive the undermining of confidence in American institutions. I think that regardless of ideology or political affiliation we should be able to agree that a broad swathe of American institutions have not exactly covered themselves in glory during the pandemic. But for goodness sake the pandemic is no Civil War. I don’t even think it’s a World War II.

Truly there is nothing new under the sun. In a piece at Persuasion Jonathan Haidt attributes the “democracy recession” to “monomania”, an irrational focus on a single aspect of things rather than on the whole. After a parable of the nature of these competing “monomanias” he asserts the following:

1. Monomania makes groups illiberal.

   In theory, one could be a liberal monomaniac—obsessed with a celebrity or an intellectual paradigm but perfectly willing to let everyone else have their own obsessions, or no obsessions. But moral and political monomaniacs generally travel in self-policing groups, and these groups are rarely liberal according to either of the two Oxford definitions. If you and your friends believe that everything is about power, and that the world is divided into the powerful people (who oppress others) and the powerless (who are oppressed), then you have a moral obligation to do something about it—all the time.

2. Monomania makes groups stupid.

   In a 2009 TEDx talk titled “Be suspicious of simple stories” the economist Tyler Cowen warned that stories impose a structure on events that distorts them and blinds us to the distortion. He was particularly concerned about moralistic stories that divide the world into good and evil. He proposed that “as a simple rule of thumb, just imagine that every time you’re telling a good versus evil story, you’re basically lowering your IQ by ten points or more.”

Begin radicalized with respect to something, as was pointed out sixty years ago, means you are predisposed to interpret every experience in light of whatever it is you have been radicalized on, e.g. sex, race, power, inequality, the right to bear arms, etc.

Or, said another way, monomania, radicalism, what’s the difference?

I was completely ignorant of the notion of “water markets” for allocating the water of the Colorado River or the Walton family’s role in that promotion until I read this article by Scott Patterson in the Wall Street Journal on the subject:

The first-ever official shortage on the Colorado River has intensified a debate over how to provide water for 40 million people across the Southwest and irrigate fields of thirsty crops like wheat, cotton and alfalfa.

Few voices outside government are more influential than that of the Walton family, billionaire heirs to the Walmart Inc. fortune, who have long advocated water markets as a key part to solving the region’s woes. But some environmental groups say the Waltons drown out other, nonmarket approaches.

A Wall Street Journal analysis shows that a charitable foundation controlled by the Waltons, the Walton Family Foundation, has given about $200 million over the past decade to a variety of advocacy groups, universities and media outlets involved in the river. No other donor comes close. Two federal officials once affiliated with the foundation have been named to key Biden administration posts overseeing the river.

Putting a monetary value on water has raised concerns among those who benefit from guaranteed access to water and those who believe markets benefit investors while hurting farmers and the poor. Water markets in Australia have been blamed for helping dry up waterways due to overuse by a handful of wealthy farmers and investors.

“Any time that the water starts becoming more valuable than the land, you end up with the possibility of outside speculators,” said Andrew Mueller, general manager of the Colorado River District, a public planning and policy agency that oversees water use in western Colorado. Mr. Mueller said his state has been seeing continued interest in agricultural water and lands by outside investment groups.

While it may be an efficient method of allocating a scarce resource, I can’t help but wonder if it would actually comprise an efficient way of misallocating the resource.

I also wonder about the mechanics of such a market: who would set the price (auction?) and regulate the distribution. Would the inefficiency from the administration of these markets, especially graft, overwhelm their benefits? I don’t have any fixed ideas on these subject and I’m willing to learn.

As I’ve said before I think that the underlying problem is too many people for the available water and states that are far too dependent on real estate development. Unless the costs of water that is being more efficiently allocated make their way into the pockets of developers and politicians I’m skeptical that a water market will actually address the underlying problem.

In a post at RealClearEnergy Jane Marsh reminds us that one of the most attractive alternatives to natural gas, renewable natural gas (RNG) also known as “bio-gas”, does not actually reduce carbon emissions, pointing to some of the same factors I have mentioned here:

Transitioning away from fossil fuel uses toward biogas also requires mass construction projects. The building industry accounts for nearly 38% of all greenhouse gas emissions. Increasing air pollution by adopting RNG decreases its sustainability.

Biogas also promotes waste production. When companies produce renewable energy from disposed organic matter, individuals will continue creating food waste and other ecologically degrading materials. America can support the clean electric grid using emissionless energy sources instead of biogas.

There aren’t many emissionless energy sources suitable for baseline power generation. Illinois has one of the lowest reliances on fossil fuels for power generation of any state, largely because of our historic reliance on nuclear power.

This seems like a good time to remind ourselves of Lincoln’s Lyceum Address of 1838:

There is no grievance that is a fit object of redress by mob law. In any case that arises, as for instance, the promulgation of abolitionism, one of two positions is necessarily true; that is, the thing is right within itself, and therefore deserves the protection of all law and all good citizens; or, it is wrong, and therefore proper to be prohibited by legal enactments; and in neither case, is the interposition of mob law, either necessary, justifiable, or excusable.

But, it may be asked, why suppose danger to our political institutions? Have we not preserved them for more than fifty years? And why may we not for fifty times as long?

We hope there is no sufficient reason. We hope all dangers may be overcome; but to conclude that no danger may ever arise, would itself be extremely dangerous. There are now, and will hereafter be, many causes, dangerous in their tendency, which have not existed heretofore; and which are not too insignificant to merit attention. That our government should have been maintained in its original form from its establishment until now, is not much to be wondered at. It had many props to support it through that period, which now are decayed, and crumbled away. Through that period, it was felt by all, to be an undecided experiment; now, it is understood to be a successful one.–Then, all that sought celebrity and fame, and distinction, expected to find them in the success of that experiment. Their all was staked upon it:– their destiny was inseparably linked with it. Their ambition aspired to display before an admiring world, a practical demonstration of the truth of a proposition, which had hitherto been considered, at best no better, than problematical; namely, the capability of a people to govern themselves. If they succeeded, they were to be immortalized; their names were to be transferred to counties and cities, and rivers and mountains; and to be revered and sung, and toasted through all time. If they failed, they were to be called knaves and fools, and fanatics for a fleeting hour; then to sink and be forgotten. They succeeded. The experiment is successful; and thousands have won their deathless names in making it so. But the game is caught; and I believe it is true, that with the catching, end the pleasures of the chase. This field of glory is harvested, and the crop is already appropriated. But new reapers will arise, and they, too, will seek a field. It is to deny, what the history of the world tells us is true, to suppose that men of ambition and talents will not continue to spring up amongst us. And, when they do, they will as naturally seek the gratification of their ruling passion, as others have so done before them. The question then, is, can that gratification be found in supporting and maintaining an edifice that has been erected by others? Most certainly it cannot. Many great and good men sufficiently qualified for any task they should undertake, may ever be found, whose ambition would inspire to nothing beyond a seat in Congress, a gubernatorial or a presidential chair; but such belong not to the family of the lion, or the tribe of the eagle. What! think you these places would satisfy an Alexander, a Caesar, or a Napoleon?–Never! Towering genius distains a beaten path. It seeks regions hitherto unexplored.–It sees no distinction in adding story to story, upon the monuments of fame, erected to the memory of others. It denies that it is glory enough to serve under any chief. It scorns to tread in the footsteps of any predecessor, however illustrious. It thirsts and burns for distinction; and, if possible, it will have it, whether at the expense of emancipating slaves, or enslaving freemen. Is it unreasonable then to expect, that some man possessed of the loftiest genius, coupled with ambition sufficient to push it to its utmost stretch, will at some time, spring up among us? And when such a one does, it will require the people to be united with each other, attached to the government and laws, and generally intelligent, to successfully frustrate his designs.

Distinction will be his paramount object, and although he would as willingly, perhaps more so, acquire it by doing good as harm; yet, that opportunity being past, and nothing left to be done in the way of building up, he would set boldly to the task of pulling down.

Here, then, is a probable case, highly dangerous, and such a one as could not have well existed heretofore.

Another reason which once was; but which, to the same extent, is now no more, has done much in maintaining our institutions thus far. I mean the powerful influence which the interesting scenes of the revolution had upon the passions of the people as distinguished from their judgment. By this influence, the jealousy, envy, and avarice, incident to our nature, and so common to a state of peace, prosperity, and conscious strength, were, for the time, in a great measure smothered and rendered inactive; while the deep-rooted principles of hate, and the powerful motive of revenge, instead of being turned against each other, were directed exclusively against the British nation. And thus, from the force of circumstances, the basest principles of our nature, were either made to lie dormant, or to become the active agents in the advancement of the noblest cause–that of establishing and maintaining civil and religious liberty.

But this state of feeling must fade, is fading, has faded, with the circumstances that produced it.

I do not mean to say, that the scenes of the revolution are now or ever will be entirely forgotten; but that like every thing else, they must fade upon the memory of the world, and grow more and more dim by the lapse of time. In history, we hope, they will be read of, and recounted, so long as the bible shall be read;– but even granting that they will, their influence cannot be what it heretofore has been. Even then, they cannot be so universally known, nor so vividly felt, as they were by the generation just gone to rest. At the close of that struggle, nearly every adult male had been a participator in some of its scenes. The consequence was, that of those scenes, in the form of a husband, a father, a son or brother, a living history was to be found in every family– a history bearing the indubitable testimonies of its own authenticity, in the limbs mangled, in the scars of wounds received, in the midst of the very scenes related–a history, too, that could be read and understood alike by all, the wise and the ignorant, the learned and the unlearned.–But those histories are gone. They can be read no more forever. They were a fortress of strength; but, what invading foeman could never do, the silent artillery of time has done; the leveling of its walls. They are gone.–They were a forest of giant oaks; but the all-resistless hurricane has swept over them, and left only, here and there, a lonely trunk, despoiled of its verdure, shorn of its foliage; unshading and unshaded, to murmur in a few gentle breezes, and to combat with its mutilated limbs, a few more ruder storms, then to sink, and be no more.

They were the pillars of the temple of liberty; and now, that they have crumbled away, that temple must fall, unless we, their descendants, supply their places with other pillars, hewn from the solid quarry of sober reason. Passion has helped us; but can do so no more. It will in future be our enemy. Reason, cold, calculating, unimpassioned reason, must furnish all the materials for our future support and defence.–Let those materials be moulded into general intelligence, sound morality, and in particular, a reverence for the constitution and laws: and, that we improved to the last; that we remained free to the last; that we revered his name to the last; that, during his long sleep, we permitted no hostile foot to pass over or desecrate his resting place; shall be that which to learn the last trump shall awaken our WASHINGTON.

Upon these let the proud fabric of freedom rest, as the rock of its basis; and as truly as has been said of the only greater institution, “the gates of hell shall not prevail against it.”

I don’t know about you but I find a bit of resonance with the present day in that.

What’s the gravest problem presently afflicting K-12 education? I wouldn’t have guessed it but apparently it’s a shortage of bus drivers if this post by Zachary Crockett at The Hustle can be credited:

The shortage is quickly becoming a national crisis:

• In Texas, teachers and basketball coaches are being asked to drive buses before school
• In Pennsylvania, some districts are paying families $300/mo to voluntarily opt out of bus pickups.
• In New York, officials have launched a multi-agency recruitment effort targeted at 500k+ drivers with commercial licenses.

What’s driving this trend?

The Hustle talked to nearly a dozen bus drivers, school officials, and trade groups to find out.

Apparently the factors include that the market is dominated by a limited number of providers, bus drivers tend to be older and, consequently, at greater risk of contracting COVID-19, the pay is low, the schedules lousy, and, increasingly, districts and private providers are in competition with Amazon for the same drivers.

I have a bit of trouble understanding the source of this problem. I never took a schoolbus to school a day in my life—I either walked the mile to school or, when I went to high school (seven miles from home), took public transport. I would think that walking to school should be the preferred solution for all sorts of reasons. According to the post 55% of kids take a schoolbus. Why is that?