The Reality of Tax Rates and Actual Revenue

A great new find this week, eEconomics!  No that isn't a typo, it is the title for David Angelo's YouTube channel.  "Regular economics with a modern digital edge."

In his third show here he points out that 1959's 90% tax bracket brought in less than the 2007 bracket of 35% by 1.2.6% of GDP.

Anyone who digs into this more than 30 seconds will find that the income tax rates people commonly talk about don't even begin to factor in on billionaires.  A lot is made of Warren Buffet paying so little, and recently Mitt Romney as well, they don't "earn" money - instead they get "capital gains."  D'oh!  Simply raising the tax bracket to 90% encourages more people who have money to restructure their "work" so they don't pay more money out.

Louis Basenese shows how this went over in England recently in Another Tax Myth Bites the Dust.

On April 6, 2010, the top income tax rate in the U.K. jumped from 40% to 50%. The result? The number of people declaring incomes of more than one million pounds plummeted from 16,000 to 6,000, according to The Telegraph.

Fast-forward to 2012, and U.K. Chancellor, George Osborne, announced that the top rate would be reduced to 45% in April 2013.

Surprise, surprise! “Since the announcement, the number of people declaring annual incomes of more than one million pounds has risen to 10,000,” The Telegraph adds.

And let's finish with Veronique De Rugy's chart showing the last four decades of tax revenue being flat regardless of the TMR being near 50%, 30% or somewhere in between.

Happy Thanksgiving

An economic perspective on Thanksgiving, with a rather funny narrator.

Share your thoughts on community assets and shared workloads.

Informed Consumers and Lower Health Care Costs

 Recently Paul Krugman touted drug costs under Medicaid as a big win as compared to the hobbled  Medicare Part D which is run by private insurors.

"Last year a government study compared the prices that Medicaid paid for brand-name drugs with those paid by Medicare Part D — also a government program, but one run through private insurance companies, and explicitly forbidden from using its power in the market to bargain for lower prices. The conclusion: Medicaid pays almost a third less on average."

One thing missing in the medical market is the price tag.  We see direct pricing on everything we need: housing, food, automobiles.  Everyone manages to select from cable TV, satellite service and phone company options by listed prices on their entertainment channels and options.  Yet few people are engaged in comparing prices when it comes to something as important as medical care.  Why is this?

Reason TV brings us a view on what can happen to costs when the consumer gets pricing ahead of time, even if insurance is not involved.

Free market supporters obviously point to the Surgery Center of Oklahoma and Medibid as a direction to investigate.  Paul Krugman favors more control from above and less personal involvement.  It is for your own good after all...

Annie Wilkes administers Dr. Krugman's prescription for fair prices

Salt In The Wound For Those Affected By Hurricane Sandy

We last brought up the economic aspect of natural disasters back in May, this week Reason.TV brings us word on why there is a gas shortage after Hurricane Sandy wrecked havoc in New Jersey and New York states. 

Politicians with good intentions trying to make price controls work proves too tempting for some.  It is pretty safe to say that stores would indeed charge more for gas since delivery trucks and fuel storage were also affected by Sandy's destruction.  Trucks coming from farther away simply add more to the cost.  But would customers be paying twice as much?  If stores could charge more would they have more incentive to refill their tanks?

Learn Liberty has this quick study on the ways price bumps can be beneficial during tough times.

DO NOT VOTE

P. J. O'Rourke wrote Don't Vote It Just Encourages The Bastards and in the next week we'll re-elect some, toss a few out and at the same time add a fresh batch.

Two years ago he stated "We lost that election, because almost every political contest yesterday was won by a politician. In a couple of cases angry nuts won, which is an improvement over politicians.  But it's just no good enough."
Here's a clip of him speaking on the topic and his vision for what would make a better political situation: Kill, Screw, Marry.  Economic freedom via the Free Market.  "Wrong rights" which kill freedom and what political power is verses freedom.
http://www.c-spanvideo.org/program/296475-1

John Stossel did a segment featuring The Myth of the Rational Voter author Bryan Caplan: Don't Know?  Don't Vote!

Now I hope our followers are rational and vote wisely if they do vote... just remember that you're encouraging those bastards.  ;)  I'm sure you have connected the power of voting to how it relates to economics so share this with your friends who may not have made that connection yet and start the conversation next time you see them!