Chart of the day– take two

Good day for charts.  Via Ezra:



Not a lot of question of who stands to benefit the most from extending Bush’s tax policies.

Take your light bulbs with the house?

Jon Chait has a nice post on how libertarian predictions of doom and gloom due to government regulation always seem to be overblown and ultimately, empirically disproven.  Case in point– light bulbs:

Ferguson’s article simply assumed that the higher energy efficiency standards would result in CFL bulbs, the technology then available, taking over the market. He was correct that CFL bulbs had drawbacks that many consumers didn’t like. But guess what happened? The market adjusted…

Right-wingers extol the powers of the marketplace — except when it comes to responding to regulation, when the market becomes a pitiful, helpless infant. Every new regulation, from banning child labor to regulating pollution, has brought hysterical predictions of economic mayhem from the right. They keep failing to come to fruition. Conservatives can’t seem to imagine that the market can respond to reasonable direction efficiently.

The market has adjusted by leading to LED light bulbs that are better and more affordable than predicted just a few years ago:

Today’s New York Times reports:

This week, Home Depot fired a new marketing salvo in what is expected to be a broader national effort to get home customers to adopt LED lighting.

The retail giant began selling one of the light bulbs in its highly energy-efficient lineupat a surprisingly affordable price of just under $20 online. Bricks-and-mortar stores will follow in September.

While $20 hardly sounds like a deal at first blush, such bulbs are expected to last as long as 30 years. Not long ago, such bulbs were not expected by most experts to cost less than $30 until 2012. …

Still, a lot of money for a light bulb, of course.  Put that all through your house and that’s a lot of money in light bulbs.  Right now, when people move to a new house, they typically take their washer/dryer with them (and sometimes the fridge, depending upon the tradition of the area).  You’re not going to want to fill up your new home with $20 light bulbs if you’re moving in a few years.  Or if you do, you’re probably taking them to the new house with you.  Save incandescents for putting in homes that are just being shown?  Selling point on those little real estate sheets– “comes with complete set of new LED bulbs!”  I do wonder.  Then again, at this rate, maybe they’ll only be a buck or two in 10 years.

Chart of the Day

From Nate Silver at 538, but I found it at Big Steve’s, so he gets credit:

I know things have been changing, but just looking, I was really amazed at the pace of change in recent year– really pretty astounding (there’s surely a political science article in there).  There’s not actually a data point down in 1990 when I started college, but extrapolating, it’s clear that support was surely under 20%.   In contrast, the students I am teaching next week are entering college in a world where this is a 50-50 issue.  That’s one hell of a dramatic change in what is still is a pretty short period of time.  Back in my college days, talking about homosexuality was something hardly ever done without discomfort or mocking.  Now it’s just a regular part of social and political dialog.  When I was a student the idea that gays would get married would have struck me as absolutely crazy.  If I were entering college today, I’ve no doubt I’d be an ardent supporter.  Anyway, if I were an opponent of same sex marriage I’d find this graph very depressing.  There really is no doubt where this issue is going.

Flat tax

One of the more interesting discussions I had at my reunion last week was with an old friend who’s quite the successful financial analyst and hard-core libertarian.  He was perfectly willing to give ground on how fortunate he had been to achieve his present station in life (accepted the role of fortune in his family, upbringing, education, etc.), but he works awfully hard (much too hard, I would say) and was quite dismayed at the idea that he should be penalized, i.e., pay higher tax rates, than those who don’t work as hard.  I was intrigued that he gave so much ground where many libertarians would not, but felt so strongly in opposition to progressive tax rates.  It’s not like the idea of a progressive rate structure is some crazy, irrational liberal guilt approach to policy.  Rather, the marginal value to the individual of $1 is much less when that person makes $100,000/year than when they make $10,000/year.  Thus, it is more efficient to tax higher incomes at higher rates.  Obviously, my friend supports the flat tax.  It reminded me of this persuasive rebuttal of such in the American Prospect a few years ago:

The commonly stated benefits of flat tax plans are “fairness,” simplicity, and economic growth. These are plans that are usually proposed by conservatives, which might suggest to a cynical person that there is something extra for the conservatives in these plans. And there is: flat taxes would, on the whole, benefit the richest.

A simple thought experiment shows this to be the case. Suppose we replaced the current mildly graduated marginal income tax rates in the United States with the average tax rate, and then applied this average to all income groups except the poorest. Suppose we did this while holding government expenditures constant. Who would pay less under the flat tax scheme, and who would pay more? Even with all deductibles abolished (except for the basic one such plans allow) it is pretty clear that the wealthiest would benefit and the middle class would suffer. Is this part of the fairness that flat-tax believers are always touting?…

The most appealing aspect of flat-income tax schemes is undoubtedly their simplicity. Wouldn’t it be wonderful to be able to do the taxes in five minutes flat? Wouldn’t it be great to get rid of the vast bureaucracy that is the Internal Revenue Service? Of course. But simplifying the tax system is not linked to the use of flat taxes except through the advertising efforts of the conservatives. There is nothing to stop us from simplifying the current tax structure by removing all deductibles and by closing all loopholes while retaining a set of progressive tax rates. It is not the progression of the income taxes that cause the complications so deplored by the flat-taxers.

Not only are flat taxes not the only means to simplification, they are not the only way to collect taxes from the rich more efficiently. Closing the tax loopholes would work at least as well while having the advantage (for the rest of us) of larger tax payments from the wealthy.

Not that our progressive tax structure is going anywhere any time soon.  In fact, I think the evidence is quite strong that it’s not progressive enough (a post for later this week).  I’m not sure of any good polling data on this (not that I’d actually trust polls on the nature of tax rates), but I do suspect that a pretty solid majority favors progressive taxation (though, I also suspect highly susceptible to question wording effects).  I’ll try and look before my next post.  Until then, just remember that the flat tax is most definitely not all its cracked up to be.

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