Sorry America, Your Taxes Aren’t High

Ben Steverman: “The Organization for Economic Cooperation and Development analyzed how 35 countries tax wage-earners, making it possible to compare tax burdens across the world’s biggest economies. Each year, the OECD measures what it calls the “tax wedge,” the gap between what a worker gets paid and what they actually spend or save. Included are income taxes, payroll taxes, and any tax credits or rebates that supplement worker income. Excluded are the countless other ways that governments levy taxes, such as sales and value-added taxes, property taxes, and taxes on investment income and gains.”

“Guess who came out at the top of the list? No. Not the U.S. At the top are Belgium and France, while workers in Chile and New Zealand are taxed the least. America is in the bottom third.”

Insurance Regulators Are Panicked About Obamacare’s Future

Sarah Kliff: “There is an acronym you should get ready to hear a lot in coming weeks and months: CSR. It stands for cost-sharing reductions, which the federal government pays to health insurers to lower cost sharing (things like deductibles and copays, for example) for the poorest Obamacare enrollees. Last year, the federal government paid out $7 billion through this program.”

“Long story short: The Trump administration has to decide whether it will continue to defend these CSRs — or if it will concede to the House’s case (that the administration doesn’t have authority to make these payments) and end a multibillion-dollar Obamacare funding source.”

“Insurers are desperate to know what happens to these Obamacare payments. Before deciding to enter markets or what premiums to charge they want to know if this $7 billion fund will stick around.”

Trump Finds His Niche: Fixing Problems That No Longer Exist

Matt O’Brien: “President Trump has finally found an economic issue that’s not too complicated for him to do something about. That’s stopping China from manipulating its currency that it hasn’t been manipulating for the past two years.”

“It’s not that Chinese companies have stopped earning so many dollars. They haven’t. It’s that now they don’t want to turn those dollars into yuan, and would rather keep them offshore. China’s recent slowdown — that’s what 6.6 percent growth is for them — has scared people into moving as much money as they can out of the country in case things get worse. It’s a vicious circle where all this money leaving puts pressure on the yuan to weaken, which makes even more people rush to pull their money out before it loses any more value, and so on, and so on.”

“Beijing, for its part, has tried to put an end to this by manipulating its currency in reverse.”

“China isn’t manipulating its currency, and all Trump had to do was nothing. Success!”

Why So Many Americans Are Saying Goodbye to Cities

Derek Thompson: “Net domestic migration to New York City metro area (which includes the five boroughs plus slivers of New Jersey and Pennsylvania) is down by a whopping 900,000 people since 2010. That means that, since 2010, almost a million more people have left New York for somewhere else in America than have moved to New York from another U.S. metro—more than any other metro in the country. This is the ‘fleeing’ that the Post finds so ‘alarming.’ But the New York metro has also netted about 850,000 international migrants since 2010. That number is also tops among all metros—more than Miami, Los Angeles, and San Francisco, combined.”

“…that’s the story of New York City, today. It is an extremely popular first-stop for immigrants. It is also a popular destination for young, upwardly mobile Millennials who have graduated from top colleges and don’t yet have families with children. But since it’s expensive, chaotic, and mostly lawn-free, it’s not a great place for middle class families who dream of an affordable house, car, and yard.”

“In this regard, New York is a microcosm of the American city. Population growth in big cities has now shrunk for five consecutive years, according to Jed Kolko, an economist and writer. While well-educated Millennials without children have concentrated in a handful of expensive liberal cities, the rest of the country is slowly fanning out to the sunny suburbs.”

All Those Warnings About the National Debt May Understate the Problem

Eric Pianin: “The CBO outlook paints a fairly grim picture, but a well-known spending watchdog says the national debt may be in even worse shape. A new analysis by the Committee for a Responsible Federal Budget finds that given the right set of policies and economic circumstances, the debt could actually rise as high as 225 percent of GDP over the next three decades.”

Consumer Confidence Is Soaring Among Americans—Especially Richer Americans

Quartz: “US consumer confidence is at at a 16-year high, surpassing the levels reached before the 2008 financial crisis and rivaling the heady days of the dot-com boom. But not everybody is feeling equally buoyant.”

While people in all income groups have grown more optimistic since 2009, only higher-income consumers have surpassed the confidence levels registered before the financial crisis. Last month, confidence among Americans with a household income above $50,000 surged ahead of pre-financial crisis highs. Households that make less than that have yet to recover all that lost ground.”

The Last Thing America Needs Is More Roads

Henry Grabar: “Roads and bridges. That singsong phrase is a well-worn exhortation to common sense and consensus, an expression designed to summon us, like Christmas morning church bells, from the trenches of partisan warfare. (Also, if you say it three times fast, a concrete-industry lobbyist picks up your dinner tab.)”

“There’s just one problem: America does not need more roads, suspended or otherwise. The rural population, after three decades of declining growth, started shrinking in 2010. In America’s metro areas, where more than 4 in 5 Americans live, the road network has been expanding faster than population growth since 1980. That has created an unprecedented maintenance crisis, in addition to facilitating sprawl, harming the environment, undermining Main Street commerce, and draining local budgets.”

Want to See How America Is Changing? Property Taxes Hold the Answer

Andrea Riquier: “Americans paid nearly $300 billion in property taxes in 2016 – but as with everything in real estate, it’s all about location. Yet property taxes don’t just tell a story about local and regional housing markets – they also show how the country is changing.”

“Americans are fleeing areas with higher property taxes, making housing markets and local finances more stagnant in those areas. And even an influx of younger people into the urban areas that anchor those areas, like the Northeast and Midwest, isn’t enough to offset the exodus to low-tax areas like the Southeast and West.”

A Trump Crack Down On Legal Marijuana Would Hurt State Budgets

“If the Trump administration ends legal marijuana sales in America, an idea Attorney General Jeff Sessions supports, states collectively could lose billions of dollars in tax revenue. It’s another example of states making fiscal decisions only to have them potentially upended by the federal government,” Richard Auxier writes for the Tax Policy Center.

“The federal government taking a possible revenue tool off the table, even as it proposes cuts in federal support for states, would be unfortunate for states considering marijuana taxes and possibly financially devastating for states already planning spending that assumes those tax dollars continue.”

President Trump Should Make the Power Grid Great Again

Robert Knake: “The average American endures upwards of six hours per year without electricity. That puts the United States in the bottom category of the developed world with Portugal and Lithuania. Singapore, Germany, Japan and Denmark have close to zero down time. Urban Chinese experience less than half the downtime of an average American. It’s also a 285 percent increase since 1982, when the Department of Energy began collecting the data.”

“While power may be available 99.5 percent of the time, the economic losses from these outages are estimated at $150 billion per year. That figure puts it on par with the lower end of estimates for cybercrime.”

“And yet, despite this relatively poor level of reliability, U.S. electricity does not come cheap at an average of $0.18 per kilowatt hour. And, while there are signs that despite White House support for burning more coal, a renewable energy future is here to stay. U.S. power remains some of the dirtiest in the world. In a study of 34 countries developed countries, the United States came in 26th for the dirtiest power.”

“The United States cannot be great again unless the infrastructure that supports its economy is also great. Right now, the United States is not a leader when it comes to the reliability, cost, or environmental impact of its aging power system.”

What Financial Markets Can Teach Us About Managing Climate Risks

Michael Greenstone: “Last week, President Trump signed an executive order about climate change that runs counter to this insight from financial markets. The headlines rightly highlighted the dismantling of climate policies like the Clean Power Plan. But buried in the details is an administrative tweak to the most important climate measurement in the federal government’s climate toolbox: the social cost of carbon.”

“Before the executive order, the social cost of carbon was set at about $40 per metric ton of carbon released. Under the executive order, President Trump appears to be putting us on a path toward valuing climate damages at much less — possibly less than $5 per metric ton of carbon.”

“A concept known as the discount rate makes it possible to translate future damages into their present value… When discounting future costs, the markets tell us to choose a discount rate that matches the risk profile of the investment. So if the risk acts like a tax on the economy (e.g., it reduces G.D.P. by a fixed percentage), a higher discount rate like the stock market’s average annual return of 5 percent would be justified. But if the risk is potentially disruptive, like a severe recession or worse, then markets point to a lower discount rate, perhaps like gold’s annual average return or even lower… In this way, financial markets tell us that spending a little extra now as insurance to protect against potentially disruptive risk is a wise strategy. This lesson was most recently illustrated during the Great Recession.”