Drugs, Malls, Taxes potpourri (2017)

Judge Jim Gray is a former drug prosecutor who, at one time, held the record for the biggest U.S. bust. He was a Republican appointee to the Orange County judiciary, and has been a Libertarian Vice-Presidential candidate. Recommended reading: his Why Our Drug Laws Have Failed. I agree with him about de-criminalizing drugs, and use many of his talking points in coming to that conclusion. On the other hand, he wants a "balanced budget"...so we part company there.

From Bloomberg: Big Data Predicts the Death of the Mall. As stated in class, any reduction of local sales tax revenues, the only source of discretionary revenue for local governments since Proposition 13, could prove to be a serious problem. Look for local politicans to push for austerity that ignores the big subsidies discussed in our Land Use Planning class. This austerity wilol also pointedly ignore any inefficiencies in policing, prosecuting and jailing populations (70% of local budgets, says Ann) that are disproportionately poor and people of color (as described in our Prison class). Instead, we must hassle or hospitalize the homeless, and reduce public sector pensions and any de-fund diversion programs other than incarcerating the troublesome populations.

One reason for a little skepticism about the Bloomberg article: In it, computer guys ("Big Data") project that online commerce is going to win any competition against brick-and-mortar stores. There could be a little self-serving bias in their conclusions. On the other hand, Radio Shack's big box experiment ("Incredible Universe") and Radio Shack itself, Sears, K-Mart have felt the sting of online competition. Big box stores may be big, but their margins are incredibly thin.

Income Tax:

First, since 1975, U.S. income tax has included credits even for those who pay no income tax. From the IRS: "To qualify, you must meet certain requirements and file a tax return, even if you do not owe any tax or are not required to file."

Meanwhile, (from Fair) fear, not Debt keeps government from spending more freely on education and infrastructure "[Federal] debt service is [currently] less than 1.0 percent of GDP (net of interest rebated by the Fed), compared to over 3.0 percent in the 1990s."

And...the source of this graphic:

is the Institute on Taxation and Economic Policy (see the link above). FYI, tineye.com is a way to search for images, rather than text.

From Bloomberg: Washington’s Biggest Mystery: What’s in the Republican Tax Plan?

So...It may be hard to be too specific in saying what's proposed, exactly. But secrecy about what the repeal contained didn't stop the Congressional Budget Office from projecting how many would lose healthcare with the proposed Obamacare repeal.

More Trump Tax Trickery from David Cay Johnston: No, You Won’t Be Getting A $2,000 Child Tax Credit Check

...and as predicted: GOP Doesn’t Seem To Hate Debt So Much Now That It Wants A Tax Cut

Meanwhile, back in California: "The only proven way to improve an economy is to reduce the top marginal tax brackets" -- said Congressman Tom McClintock (on the radio). This statement is evidence of McClintock's allegiance to the "trickle down" theory of taxation. What it says is that if you un-tax the rich, their tax windfall will "trickle down" to improve lower brackets' income.

Trickle down is the "voodoo economics" tax advice Reagan followed in the 1980's, reducing the top brackets by half in the progressive income tax. Less well publicized: Between Reagan and Bush 41, payroll taxes increased eightfold.  (Source for that last statement: Ravi Batra's Greenspan's Fraud).

Proving that unintended self-parody can't be beat, McClintock went on to complain that we were so far beyond "American Greatness" that higher education now charges high tuition but used to be free in California. The parody? Reagan was governor of California and eliminated free college tuition at state schools. FYI, Germany offers free university tuition even for foreigners. Sweden pays even high schoolers to attend school (see here).

Meanwhile, to fact check McClintocks contention that reducing taxes on the top brackets produces better a economy, here are the images of GDP growth over the years. To see these, Google "u.s. gdp growth by year" then go to the Images tab.

First, GDP growth out of the Great Depression:

Note that '36-'37 is when FDR was persuaded to abandon "pump priming" in favor of austerity. A massive public works project called "World War II" finally pulled the U.S. out of the Great Depression. The top marginal tax rate was 95% in 1944.

Here's a look at a longer stretch of GDP growth, graphed:



Notice that the really big swings occur coming out of the Great Depression for the New Deal and World War II, and the post-war slump occured when government spending declined--as detailed in the previous graph. (Just what Keynesian economics says!)

In contrast, the well-marketed "Morning in America" (the Wall St. Journal's description of the Reagan recovery) produced by Reagan's tax cuts in the '80s looks like a roughly average business cycle recovery. It included a dramatic increase in national "debt," marked by lower-than-average capital investment, say Paul Krugman in Peddling Prosperity.

Completely off-topic: Check out the "Education Reform" initiatives real agenda. (Hat tip, Duane Campbell)