Oppressive Regimes and Income Inequality

Joseph Stiglitz, a Nobel Laureate in economics, has a great essay in the latest issue of Vanity Fair explaining why excessive income inequality in the United States is a problem for everyone — rich and middle-class Americans alike.

In his essay, appropriately titled "Of the 1%, by the 1%, for the 1%," Stiglitz explains that the top 1% of American earners take in a quarter of the nation's income each year and that they control 40% of the nation's total wealth. Just 25 years ago, the top 1% took in 12% of the nation's income and held 33% of its wealth.

In Case You Missed It: Third and State Blog for Week of March 28

Senator Jeff Piccola expanding school vouchers concept to include Pennsylvanians trapped in low-performing families? A state worker stunned to learn her mid-level administrative job is no pathways to riches? A Corbett speechwriter struck with a rare illness afflicting writers of overwrought clichés?

Either it's a particularly zany news day — or it's the first of April!

In Third and State's Friday Funny, we pass on an April Fool's take on the latest un-news coming out of Harrisburg. (Our thanks to a loyal blog reader for passing this one along.)

In other news this week, we blogged about the taxes gas drillers do (or don't) pay, why the minimum wage matters, imaginative tax avoidance strategies, and much more! 

IN CASE YOU MISSED IT:

  • For much of the week, it was the Mark Price Show at Third and State. On wages, Mark explained just how much the minimum wage matters and why the failure of policymakers to peg it to growth in productivity (or even inflation) has had a wide-ranging impact on American society.
  • On jobs and unemployment, Mark blogged about imaginative tax avoidance strategies at work at General Electric.
  • And on fiscal and monetary policy, Mark wrote about the Federal Reserve's policymaking role and why it is so important to the economic recovery.
  • Finally, Michael Wood has a post on the taxes that natural gas drillers in the Marcellus Shale are (or are not) paying.

More blog posts next week. Keep us bookmarked and join the conversation!

On This April Fool's Day, All the News that Is Not Fit to Print!

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Our Friday Funny is brought to you this week by a band of joksters who have published a satirical take on the latest political and policy news out of Harrisburg. (Our thanks to a loyal blog reader who passed it on to us.)

Governor Needs a 'Vision' Check on Marcellus Shale

Governor Corbett claimed in a recent Patriot-News story that Marcellus Shale gas drillers have paid $71 million in sales taxes over the last two years as proof that the industry is paying an adequate share of taxes. It's a big number, but isn't likely accurate for a number of reasons.

Why the Federal Reserve Matters

David Leonhardt of The New York Times has an article today where he explains bias in policy making at the Federal Reserve:

One group of Fed officials and watchers worries constantly about the prospect of rising inflation, no matter what the economy is doing. Some of them are haunted by the inflation of the 1970s and worry it may return at any time. Others spend much of their time with bank executives or big investors, who generally have more to lose from high inflation than from high unemployment. There is no equivalent group — at least not one as influential — that obsesses over unemployment. Instead, the other side of the debate tends to be dominated by moderates, like Ben Bernanke, the Fed chairman, and [former Fed governor Laurence] Meyer, who sometimes worry about inflation and sometimes about unemployment. The result is a bias that can distort the Fed’s decision-making.

Imaginative Tax Avoidance At Work

I highly recommend that you spend what's remaining of your free page views reading this New York Times article detailing tax avoidance strategies at General Electric. Here is the key quote:

The company reported worldwide profits of $14.2 billion, and said $5.1 billion of the total came from its operations in the United States. Its American tax bill? None. In fact, G.E. claimed a tax benefit of $3.2 billion.

The Minimum Wage Matters

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On Thursday, the Mid-Atlantic office of the Bureau of Labor Statistics released its latest estimate of the number of workers in Pennsylvania earning at or below the current federal minimum wage of $7.25 an hour.

In Case You Missed It: Third and State Blog for Week of March 21

This week on Third and State, we blogged about Marcellus Shale trickle down economics, the Affordable Care Act's first birthday, unions and inequality, and much more!

In case you missed it:

  • On the Marcellus Shale, Mike Wood notes that trickle down economics is not helping the local communities across Pennsylvania hosting increased natural gas drilling.
  • On health care, Chris Lilienthal highlights a "consumers' hearing" in the State Capitol Rotunda on the one-year anniversary of the Affordable Care Act's passage. The hearing presented the perspective of Pennsylvanians who have benefited from the law - a perspective that was omitted from a congressional hearing on the landmark law also held at Pennsylvania's State Capitol this week.
  • On federal tax issues, Chris blogs about an interview on WHYY's Fresh Air that explained some of the accounting gimmicks that large corporations use to shelter income overseas and avoid as much as $90 billion a year in U.S. taxes.
  • On wages and income inequality, Mark Price shares research documenting that in economies where more people are covered by unions, there is less inequality.
  • Finally, Mark has this week's Friday Funny: The Daily Show's Jon Stewart takes on new governors, mean stepdads and confusion within the administration of Maine's new governor about what exactly a mural is.

More blog posts next week. Keep us bookmarked and join the conversation!

Friday Funny: The Mean Stepdad Governors

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The Daily Show's Jon Stewart takes on a number of new governors (including our own Governor Corbett) in an amusing segment that, in true Stewart fashion, is peppered with profanity. In it, he describes each of the guv's relationship with their state as going from "cool new boyfriend to psychotic stepdad" in the weeks after they took office.

Trickle Down Economics Not Helping Marcellus Shale Communities

The counties hosting the most Marcellus Shale gas drilling are showing early signs of increased economic activity, but little in the way of increased resources.

The smart people at Penn State's Cooperative Extension (which is shortsightedly cut by 50% in the Governor's 2011-12 budget proposal) looked at state tax collections by county and noticed that certain types of taxes are performing better in areas of heavy drilling activity than in the rest of the state. Based on anecdotes of filled hotel rooms, increased restaurant usage, and checks to landowners for drilling rights, it is not surprising to see an initial uptick in royalty income and sales tax receipts in those counties.

For local governments and schools hosting the activity, there are increased demands for services like education, health care, police, and emergency responders, to name a few. The problem is that these communities receive almost no benefit due to the state's tax structure.

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