John Irons's Blog


Economic News, Data and Analysis

I’m with Len

I agree with Len Burman on this one – the gain from a gas tax holiday would likely go to refining companies, not consumers.
(Econ 101 students: be sure to prep yourselves for final exam questions analyzing the impact of the tax holiday; if I were still teaching, I’d be sure to pose a question or two…)

Gas-tax holiday among McCain’s plans for economy
Dems say cuts ‘will bankrupt our government’
By Kathy Kiely
PITTSBURGH — Presidential candidate John McCain on Tuesday proposed sweeping tax cuts to jump-start the economy, including a summer-long gas-tax holiday starting Memorial Day.
One concern: the possible impact of a tax moratorium on the federal highway trust fund, which is supported by the 18.4-cent-a-gallon tax on gasoline. The American Road & Transportation Builders Association estimates that the gas-tax holiday could blow a $9 billion hole in the highway construction budget and threaten 310,000 jobs.
A USA TODAY analysis showed that McCain’s gas-tax proposal could save motorists $6.8 billion in taxes during the summer. Len Burman of the non-partisan Urban Institute said the money won’t necessarily go back to consumers. Refineries already are running high to meet summertime gasoline needs, Burman said, so if demand for gas increases, so will prices. He said that means “a huge windfall for refiners,” not consumers.

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Your economy needs you!

Was on CNN today talking about what you should do with your stimulus check… some thoughts…
DO! Go out to dinner.
And make it a restaurant that serves locally-grown food. Your rebate will boost the need for waiters, cooks, and other employees. Your money will then be recycled directly back into the economy.
DON’T! Go see a movie.
Adding one more ticket sale will not result in many more employees or more movies being made in the short run. It will add to the box-office take, and perhaps lead to more movies down the road, but that’s years from now.
DO! Home Repair
Been putting off fixing that leaky faucet, sweeping the chimney, or replacing that inefficient AC? By doing those repairs now, you will keep repairmen, construction workers, and other trades people working and recycle those dollars back into the economy.
DON’T! Stock up on essentials
You may boost the economy this month, but you’ll reduce demand next month as you work thorough your supplies.
DO! Be a tourist in your own town
Go to the local museum, mini-golf course, local restaurants, and get a massage.
DON’T! Buy a ticket to Rome or go on a road trip.
With the dollar at record lows, fuel prices at record highs, it’s better to spend money close to home than to spend it abroad or on gas.
DO! Drink a micro-brew or Bud.
DON’T! Drink wine from abroad.

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Event Tomorrow

Come see me in real life…

EPI’s Agenda for Shared Prosperity

Investing in U.S. Infrastructure
April 29, 2008
9:30 AM – 12:00 PM
An Agenda for Shared Prosperity forum
Tuesday, April 29, 2008
9:30 AM-Noon
EPI, 1333 H Street, NW; East Tower, Suite 300, Washington, DC
[See below to RSVP]
In a time of economic weakness, public investments in our nation’s infrastructure can provide short-term stimulus while also building the foundation for long-term economic growth. The Economic Policy Institute will sponsor a timely forum on Investing in U.S. Infrastructure to address critically needed federal investments in infrastructure, including transportation, school buildings, and information networks.
Please join the Economic Policy Institute’s Agenda for Shared Prosperity and Gov. Edward Rendell and others for a lively discussion of policy strategies to invest in physical infrastructure.
Registration & Breakfast
9:30-10:00 AM
Keynote & Discussion
10:00-10:30 AM

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Minor redesign

A minor redesign is in the works. The banner ads posed a problem with the old layout…

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Corporate tax declines and U.S. inequality

Snapshot on the share of taxes from various sources…

Corporate tax declines and U.S. inequality

Over the last 60 years, the U.S. tax code has dramatically shifted away from corporate taxes and toward taxes on individuals, especially through the payroll tax, the financing backbone of Social Security and Medicare. In the 1950s, the corporate income tax brought in, on average, one of every four dollars in federal tax revenues. By the 2000s, however, it raised just one of every 10 tax dollars.
The shrinking share of corporate taxes was made up by an increase in payroll taxes to fund social insurance and retirement programs. Excise and other taxes–such as fuel taxes, phone taxes, etc.–shrank as well over the last 60 years, while the individual federal income tax rose slightly, from an average of 43% of total federal revenue in the 1950s to 46% in the 2000s (see chart).

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The Check Is in the Mail

From a couple years ago…

The Check Is in the Mail

OK, I admit it. I like doing my taxes. This annual ritual gives me the chance to sit down and reflect on the financial year that just passed and to think about my family’s financial future. Tax time reminds me to spend a bit less and put a bit more into savings.
Filing your taxes is also one of the few common experiences that virtually all Americans share, and complaining about tax day and the IRS — in a somewhat perverse way — brings all of us closer together.

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Collectors Cost IRS More Than They Raise

I’ve said this before… the use of private debt collectors is a bad idea…

Collectors Cost IRS More Than They Raise –

The Internal Revenue Service expects to lose more than $37 million by using private debt collectors to pursue tax scofflaws through a program that has outraged consumers and led to charges on Capitol Hill that the agency is wasting money for work that IRS agents could do more effectively.
Since 2006, the agency has used three companies to go after a $1 billion slice of the nation’s unpaid taxes. Despite aggressive collection tactics, the companies have rounded up only $49 million, little more than half of what it has cost the IRS to implement the program. The debt collectors have pocketed commissions of up to 24 percent.

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New banners

Regular readers will notice new banners top and right. They should soon be populated with something more than Ad Council filler… to Launch Business and Finance Blog Network – to Launch Business and Finance Blog Network
03.24.08, 9:37 AM ET
Today, home page for the world’s business leaders, announced the creation of a Business and Finance Blog Network, comprised of a community of pre-screened, influential business and financial blogs.
The Blog Network’s content will focus on senior business decision makers and high-net-worth investors. Topics will be relevant to the banking, trading, hedge fund management, affluent investing, and senior business decision-making communities. Participation in the network is by invitation only, and all blogs are vetted by editors for appropriate content, and to ensure that they are in keeping with the Forbes editorial brand.
The network will allow advertisers to target a highly engaged, exclusive niche audience of senior business decision makers and affluent investors easily and effectively. Four hundred-plus blogs have already joined the network, with many more expected to sign on before the official launch in the next few weeks.

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Middle class grow fearful about their prospects

I don’t think the unease cited in the Pew report is just because of the recession. The latest recovery (since 2001) seems to be one of the worst, and maybe the worst, of the post WWII era.

Middle class grow fearful about their prospects – Stocks & economy-

The survey by the Pew Research Center, a Washington-based research organization, paints a mixed picture for the 53 percent of adults in the country who define themselves as “middle class,” with household incomes ranging from below $40,000 to more than $100,000.
It found that a majority of Americans said they have not progressed in the past five years. One in four, or 25 percent, said their economic situation had not improved, while 31 percent said they had fallen backward. Those numbers together are the highest since the survey question was first asked in 1964. Among the middle class, 54 percent said they had made no progress (26 percent) or fallen back (28 percent).

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