What are the unforgivable curses?

Adam Freedman, in a Sunday New York Times op-ed piece, argues that the F and S words should not be prohibited on TV. Or, at least, that "fleeting" use should be allowed, as the Supreme Court considered in FCC vs. Fox. So my question is this: what curse words are worse than the F and S words? Maybe I'm an old codger, out of touch with society and new hi-tech developments in profanity, but I can only think of one worse curse, the one with Oedipal connotations, that includes that F word anyway.

My point is that allowing the F word on prime time TV effectively allows any language. Besides, it mainly involved celebrities like Cher, Nicole Richie and Bono. They have plenty of opportunity to express themselves, using whatever language they want, in their lyrics. So this is not limiting their speech.

(Addendum added May 4) Don't forget the song "It's Easy MMMKay" from South Park the Movie. "F--- is the worst word that you can say".

Non-Surprises from Pakistan

The Taliban is declaring the truce over. After violating it by attacking Buner, and creating chaos in Dir. In other non-surprises:

President Asif Ali Zardari called for more foreign support for cash-strapped Pakistan to prevent any danger of its nuclear arsenal falling into the hands of al-Qaida and its allies.

and finally, more non-surprising information from Zardari on Osama Bin Laden

"He may be dead. But that's been said before"

The good news is that the Pakistani army seems to be making progress in Dir. Time will tell. I imagine my friend Ray will be posting in much more detail on this on his blog.

Don't believe what they say about you

cause they are probably wrong. Here's an article revealing that major league baseball scouts never thought much of pitcher Randy Johnson in high school and college. One even wrote "NO PROSPECT".

It took time, but Johnson developed into one of the dominant southpaws of the past couple of decades, if not of all time. He's a 10 time All Star, 5 time Cy Young Award winner, has pitched a no-hitter and a perfect game, and is second in history in strikeouts. Not bad for somebody with limited control and NO PROSPECT.

Somewhat Silly Symbolism

As Greg Mankiw points out, Obama looking to cut 100 million dollars from the budget is, well, pretty pointless. It's like a family making $100,000 a year digging deep to cut their spending by, da dum ... $3.

In order to feel like a significant cut (say, $1000 from that family budget, and even that is fairly small) we'd have to cut 30 billion dollars. Which is 300 times as much cutting.

More Tax Data

From the CBO. This data includes Social Security taxes and more.

CBO's most recent estimates of federal effective tax rates (taxes as a percentage of income) across household income groups for the four largest sources of federal revenues--individual income taxes, social insurance (payroll) taxes, corporate income taxes, and excise taxes--as well as the total effective rate for the four taxes combined.

One of their tables is fairly damning on income inequality, showing that the top 10% have gained 10.5% of after tax income shares ("the pie"), but 8.8% of that pie increase has gone to the top 1%. So the "semi-wealthy" haven't really gained much of the pie, only the super-wealthy.

More interesting (to me) than share of the pie is actual income. Lets see what has happened between 1979 and 2006. This data has been adjusted for inflation, which was roughly 2X in that period. Note: they adjust for household size in a way I don't really understand.

For pretax income, all quintiles are positive. The income increases are 6%, 12%, 15%, 26%, and 82%. The rich have clearly done much better, but at least everybody is positive. The top 5% has seen an increase of 133%. The disparity in the increase between the top quintile and the bottom is 82/6. which is 13.7. The disparity between the top 5% (the "rich") and the bottom quintile (the "poor") is 133/6, or 22. In other words, the rich have seen their pre-tax income increase 22 times as much as the poor.

For after tax income, the increases are all positive and more even, 11%, 18%, 21%, 32%, and 86%, with the top 5% at 142%. The two disparities are far smaller, 7.8 and 12.9. The rich have seen after-tax incomes increase less, "only" about 13 times as much as the poor.

Conclusions:

1. There has been a large increase in income disparity in the past 25 years. IMO, this is a bad thing. However, I think this has happenned worldwide, not just in the USA.
   
2. Tax policy (the infamous Reagan / Bush "tax breaks for the rich") have not added to this disparity. Current tax policies decrease the disparity numbers from 13.7 to 7.8, and from 22 to 12.9. In other words, the current tax policies reduce the disparity by about half.
3. We should, IMO, do something about income disparity. But we cannot blame the disparity on tax policy. It is pre-tax income that seems to be the problem.
   

Followup on relative Tax Rates

I wanted to followup yesterday's post and give some examples to clarify the tax rates people actually pay. Because the talking heads just don't give real data. Conservatives generally ignore social security taxes, and liberals rebut with "but you forget social security taxes" yet don't followup with the simple math to get the true total percentages. Also, I wanted to add that I do not necessarily consider Ari Fleischer agreeing with me to be a good thing.

Here is one example of three people and their (admittedly approximate) tax rates.

A poor person ("Oliver", named after Oliver Twist) earning $20,000 a year, pays 7.65% in social security and medicare taxes, which is $1530. I'll assume no federal income tax. Since it varies so much state to state, I must ignore state income and property taxes (which would likely be very low for Oliver) and sales tax (which, being regressive, would adversely affect Oliver). I'm also ignoring all tax credits.

A moderately rich person ("Professor Higgins"), earning $200,000 a year, pays roughly 2.5 times as much in federal taxes per dollar earned, 19%, which is $38,000 . In addition, Higgins would pay the maximum $6621 in Social Security Tax, and a full 1.45% medicare tax, $2900. Total taxes of $47,521, which is an effective rate of 23.8%. This ignore state taxes (Higgins may well be paying state property or income taxes) and all tax credits.

A very rich person making 2 million a year ("Warren") pays roughly 3.1 times per dollar earned, or 23.7%, which is $474,000, plus $6621 in SS and $29000 in medicare. Probably less in medicare cause some of this income is likely dividends, so I'll halve that to $15000. Total taxes of $495,621, for an effective tax rate of 24.5%. Again, ignoring state taxes etc...

When put this way, the system doesn't seem all that "progressive" in the top range. Warren pays basically the same rate (roughly 24%) as Higgins. I say raise the taxes on that Warren guy! (Fairness alert: in a very good year, I'm in that Henry Higgins range...) But seriously, it does feel that the top 1% could survive a modest tax increase. I am concerned that once the feds bump the top rates, states will follow up - Oregon is already considering an Obama-like "tax you more over $250,000" hike.

How about Higgins vs. Oliver? On the federal level, it seems fairly reasonable. If you factor in that the payouts for Social Security are progressive, my personal gut feeling is that Oliver is doing o.k. But, to test that, here is the same example, phrased two additional ways, since the exact phrasing has a psychological effect, especially where money is involved. I'm interested in how people think this affects the "fairness" aspect.

A) In a poor section of town are ten apartments, each with an Oliver. Combined, they earn $200,000, the same as Higgins. But they would pay total taxes of $15,300, roughly a third what Higgins pays.

B) In a poor section of town are thirty apartments, each with an Oliver. Combined, they earn three times what Higgins does. Yet they pay, in total, about the same taxes as Higgins.

To my mind, A still seems fair, but, for some strange reason (since it is really the exact same information), B makes me think that Higgins is getting a bit of a raw deal. How do others react?

Ari Fleischer agrees with me

In yesterday's Wall Street Journal, Ari Fleischer, former press secretary for G. W. Bush, agrees with me that Obama is proposing too much wealth redistribution. In my earlier post, I am accepting of the rich paying higher taxes, and accepting of social programs that generally benefit the poor, but I am against giving most of this money back as tax breaks to the bottom 95%. Especially in times of deficit.

Fleischer also has some updated facts on how Bush's tax cuts affected government revenues. Paraphrasing his article:

by 2005 the bottom 60% of Americans made 25.8% of the income, yet paid only 0.6% of the income taxes and only 14.3% of all payroll taxes.

If you divide the total taxes paid, 14.9%, by income, 25.8%, you get some sort of relative tax burden of 0.58. I'm going to call this figure Morgan's Relative Tax Burden, MRTB. Just to be clear, these taxes include the regressive Social Security tax.

For the "rich", the relevant numbers are that the top 10% pay 72.8% of all income taxes (I'll ignore payroll taxes for them, it would slightly increase their tax burden). What do they earn? The Tax Foundation provides this useful table, showing that the top 10% earn 47.3% of all the reported AGI. So their MRTB is 72.8%/47.3% = 1.54, slightly higher after payroll taxes. So the MRTB for the upper 10% of wage earners is nearly three times higher than that for the bottom 60%. Note that these table's figures are from 2006 and differ slightly from Ari Fleischer's figures, but the trend is very similar. Here is the MRTB for more of the upper classes of wage earners. This ignores payroll taxes, so the MRTB's are not exact, but it clearly shows that taxes in the USA are progressive. (Remember that the bottom 60% have a MRTB of 0.58, and sorry of there are extra big spaces in the table...)

	Income	Income Taxes	MRTB
Top 1%	22.06%	39.89%	1.8
Top 5%	36.66%	60.14%	1.64
Top 10%	47.43%	70.79%	1.49
Top 25%	68.16%	86.27%	1.27

I don't claim that these MRTBs are socially correct, subjectively fair, or best for the US economy. That is certainly open to debate. But it does show that the rich are objectively paying a fair share, with the top 1% paying over three times as much in MRTB as the bottom 60%, even including regressive payroll taxes.

In times of deficit, giving long term tax breaks to a majority of Americans is probably not wise fiscal policy. It is political pandering. To be fair to President Obama, G. W. Bush made the same mistake. I hope Obama is wiser.