For about a century, economic inequality has been measured on a scale, from zero to one, known as the Gini index and named after an Italian statistician, Corrado Gini, who devised it in 1912, when he was twenty-eight and the chair of statistics at the University of Cagliari. If all the income in the world were earned by one person and everyone else earned nothing, the world would have a Gini index of one. If everyone in the world earned exactly the same income, the world would have a Gini index of zero. The United States Census Bureau has been using Gini’s measurement to calculate income inequality in America since 1947. Between 1947 and 1968, the U.S. Gini index dropped to .386, the lowest ever recorded. Then it began to climb.
The Federal Reserve is preparing to consider interest rate hikes "on a meeting-by-meeting basis," Fed Chair Janet Yellen told a congressional committee on Tuesday, a subtle shift of emphasis that helps lay the groundwork for the Fed's first rate hike since 2006. In remarks to the Senate Banking Committee, Yellen described how the Fed's rate-setting policy committee will likely proceed in coming months - first by removing the word "patient" in describing its approach to rate hikes, then entering a phase in which rate hikes are possible at any meeting. That approach could open the door to an interest rate increase as early as June, though investors interpreted Yellen's testimony overall as likely indicating a later date for liftoff.
Local bankers are joining the fight against a congressional proposal to audit the U.S. Federal Reserve's policy decisions, with more expected to lobby against the bill if it gains traction in Washington. The audit of the Fed bill, championed by Rand Paul of Kentucky, a Republican Senator and likely presidential candidate, would encourage interference from lawmakers into the central bank’s monetary policy discussions. A similar Fed audit bill passed the House of Representatives late last year and a hearing on Fed transparency is expected to be formally called by the Senate banking committee, according to people familiar with the matter.
Democrats on the Senate Banking committee on Wednesday voiced opposition to a bill that would expose the U.S. Federal Reserve to a full government audit. The support from Democrats shows they are starting to form a united front against Republican-led efforts to open the Fed's internal discussions of interest rate and other policy matters to the public. Republicans say the Fed needs greater transparency after it gained too much power during the financial crisis. Fed officials say exposing policy discussions to public scrutiny would increase political pressure on the independent government body.
The Obama administration on Tuesday said it saw room for compromise with Congress on a potential overhaul of the business tax code, but a top Republican lawmaker said the two sides remained at loggerheads over taxes on small businesses. Treasury Secretary Jack Lew appeared before lawmakers to explain the White House budget proposal that would raise taxes on the wealthy and create new taxes on international companies to increase spending in areas like highways and education.
Grover Norquist—the president of Americans for Tax Reform and the man who for decades has served as conservatives' leading anti-tax zealot —had seemingly found his ideal politician in Kansas Gov. Sam Brownback. After Brownback was elected governor in 2010, he went on a mission to eradicate his state's income tax—slashing rates across the board in two rounds of cuts and setting rates to drop further over the coming years—eventually to zero if everything clicked in place. Norquist loved it. He visited Topeka in 2013 to show his support during Brownback's State of the State address. In an interview with National Review a year ago, Norquist touted Brownback as a strong contender for the 2016 presidential nomination.
Those who earn the least pay the most in nearly every state across America. Or rather, the poorest citizens pay the highest proportion of their incomes to local and state governments—twice as much in fact, as the top one percent. And this regressive system, this inversion of the idea that taxes should be linked in part to a citizen’s ability to pay, tells us a lot about how we talk about fairness today. Often when people say “taxes”, they mean the federal income tax. When Mitt Romney said that “47 percent” of people would vote for President Obama “no matter what,” he was referring to the 47 percent of Americans who paid no federal income taxes in 2011. Some of those people were retired, and most of the others paid payroll taxes for Medicare and Social Security.
The Federal Reserve on Wednesday said the U.S. economy was expanding "at a solid pace" as it largely looked through weakness overseas in a signal that it remains on track to raise interest rates later this year. The U.S. central bank repeated it would be "patient" in deciding when to raise benchmark borrowing costs from zero, where they have been stuck since late-2008. However, after a two-day meeting, policymakers struck an upbeat tone on the U.S. economy's prospects and held to their view that energy-led weakness in inflation would dissipate.
In his State of the Union address on Tuesday, President Obama will propose reforms to the tax code that make it dramatically more progressive — with higher taxes for very wealthy individuals and enormous banks, and lower taxes for a range of middle- and working-class families — according to a White House official who provided Vox details of the plan. Obama will call for three different tax hikes, all on the wealthy, counterbalanced by four different tax cuts. The idea is that the changes would be revenue-neutral. The proposal also features some significant changes to the way IRAs work, which would result in higher taxes for a few very wealthy people and lower taxes for many classes of workers who currently lack access to tax-subsidized retirement accounts.
President Barack Obama's State of the Union address will propose closing multibillion-dollar tax loopholes used by the wealthiest Americans, imposing a fee on big financial firms and then using the revenue to benefit the middle class, senior administration officials said on Saturday. Obama's annual address to a joint session of Congress on Tuesday night will continue his theme of income equality, and the administration is optimistic it will find some bipartisan support in the Republican-dominated House of Representatives and Senate.
President Barack Obama will use his State of the Union address Tuesday night to stake out a populist vision of tax reform and new middle-class benefits — and practically dare Republicans to say no. The message: Wage stagnation? Obama’s on it. And if Republicans say no — especially to catchy-sounding ideas like getting rid of the “trust fund loophole” — they can explain it to voters in 2016. The White House announced a package of initiatives Saturday to create new and expanded tax credits for the middle class, including a new tax break for two-earner families and a tripling of the child tax credit, and pay for it through a big increase in capital gains taxes and a hefty fee to discourage risky borrowing by big banks.
When Janet Yellen, the chair of the Federal Reserve, took the podium last Wednesday for her quarterly press conference, reporters repeatedly asked how the recent drop in oil prices—and subsequent fall in inflation—will affect the Fed’s policymaking. “Can you also speak to the downdraft we're seeing in inflation now?” the Wall Street Journal’s Jon Hilsenrath asked. A few minutes later, Steve Mufson, of the Washington Post, said, “I was just hoping you could go into a little more detail about the oil effect. Even though you see it as transitory, does that give you a little more room to keep rates low in the next few months?”
On Wednesday in the New York Times, Jonathan Weisman offered a gloomy forecast for the year ahead in Washington and its potential effects on the economy. “[A] dark cloud is threatening to return to otherwise clearing economic skies: fiscal and policy uncertainty,” he writes. Weisman cites a number of legislative deadlines that Congress faces next year. But those deadlines aren’t what’s causing this return of fiscal uncertainty. That blame falls squarely on the Republican Party.
Elsewhere on this site, Eric Posner argues that conservatives should celebrate President Obama’s immigration actions because they “may modify political norms that control what the president can do.” The idea, which will be familiar to everyone following the contretemps surrounding Obama’s immigration policy, is that Republicans will eventually be able to marshall the same powers Obama is asserting to more conservative ends.
The richest Americans hold more of the nation’s wealth than they have in almost a century. What do they spend it on? As you might expect, personal jets, giant yachts, works of art, and luxury penthouses. And also on politics. In fact, their political spending has been growing faster than their spending on anything else. It’s been growing even faster than their wealth.
Eight days before Kansas Gov. Sam Brownback may lose re-election thanks to the disastrous consequences of his deep tax cuts, the Wall Street Journal has published an apologia for Brownback’s supply side experiment. And if you’re willing to suspend your faculties of observation and critical thinking, you just may find it persuasive. You know you’re in for a real doozy when Allysia Finley, a member of the Journal’s editorial board and the piece’s author, begins by comparing Brownback’s tax cuts with the 19th-century struggle against slavery. “During the 1850s,” Finley writes “Kansas turned into a battleground for a proxy war between abolitionists and slavery supporters. Today, Kansas has become the flash point in another national debate, this one over government’s role in promoting growth.
One federal judge has allowed a voter ID law to take effect in Wisconsin. Another is now contemplating whether to do the same in Texas. Defenders of these laws, which exist in some form in 34 states, insist that requiring people to show government-issued identification at the polls will reduce fraud—and that it will do so without imposing unfair burdens or discouraging people from voting. In North Carolina, for example, Republican Governor Pat McCrory wrote an op-ed boasting that the measures fight fraud “at no cost” to voters. It’s not surprising that McCrory and like-minded conservatives make such arguments.
I was in Seattle, Washington, recently, to congratulate union and community organizers who helped Seattle enact the first $15 per hour minimum wage in the country. Other cities and states should follow Seattle’s example. Contrary to the dire predictions of opponents, the hike won’t cost Seattle jobs. In fact, it will put more money into the hands of low-wage workers who are likely to spend almost all of it in the vicinity. That will create jobs. Conservatives believe the economy functions better if the rich have more money and everyone else has less. But they’re wrong. It’s just the opposite.
Derek Jeter is about to retire at age 40 after an illustrious career as Captain of the New York Yankees. He started in 1992, and his salary for this final season was $12 million. That brings his career earnings above $265 million. That’s not bad, even when you consider all the taxes he’s paying. So why is there talk of taxes on all the ‘gifts’ Jeter is collecting? Reports say Jeter may owe $16,000 in taxes on his farewell gifts including golf clubs, wine, vacation packages, cowboys boots and a kayak. Jeter received about $33,000 in gifts from other teams. The Cincinnati Reds gave him framed jerseys autographed by the team’s two captains and photos of the day Jeter was named captain.
It'll take Derek Jeter two innings of work to pay taxes that may be due on gifts the retiring New York Yankees’ captain received during his farewell tour. Jeter, who was paid $12 million this season and more than $265 million in his career, will owe about $16,000 in state and federal taxes on the gifts, which included golf clubs, wine, vacation packages, two sets of cowboys boots and a kayak, according to Rob Raiola, a certified public accountant who specializes in sports and entertainment.