Here’s my contribution to today’s tax day festivities: an effort to get you to think about federal taxes a little bit differently than usual. Normally, when we talk about taxes, we end up talking about percentages of people: the top 1% pay a certain amount, the bottom third pay a different amount, etc. But this is the wrong way to look at things. What we ought to be looking at is percentages of income.

via How to Think About Taxes | Mother Jones.

One of the best analysis of income taxes I have ever seen…Puts a new spin on the talking points you are always hearing. This chart says it all but go read the whole thing, Kevin has done some great work here:

Here is what he considers optimal…

And here is the actual…

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If anything, our government policies should encourage renting, not buying. Homeownership occupies a central place in the American Dream primarily because decades of policy have put it there. A recent study by Grace Wong, an economist at the Wharton School of Business, shows that, controlling for income and demographics, homeowners are no happier than renters, nor do they report lower levels of stress or higher levels of self-esteem.

And while homeownership has some social benefits—a higher level of civic engagement is one—it is costly to the economy. The economist Andrew Oswald has demonstrated that in both the United States and Europe, those places with higher homeownership rates also suffer from higher unemployment. Homeownership, Oswald found, is a more important predictor of unemployment than rates of unionization or the generosity of welfare benefits. Too often, it ties people to declining or blighted locations, and forces them into work—if they can find it—that is a poor match for their interests and abilities.

As homeownership rates have risen, our society has become less nimble: in the 1950s and 1960s, Americans were nearly twice as likely to move in a given year as they are today. Last year fewer Americans moved, as a percentage of the population, than in any year since the Census Bureau started tracking address changes, in the late 1940s. This sort of creeping rigidity in the labor market is a bad sign for the economy, particularly in a time when businesses, industries, and regions are rising and falling quickly.

via The Atlantic Online | March 2009 | How the Crash Will Reshape America | Richard Florida.

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I’ve been wondering why the impact of the financial crisis on the overall retirement “system” hasn’t gotten more attention in the media. We already knew the system was in bad shape before September 2008. According to the Fed’s Survey of Consumer Finances, in 2007, only 60.9% of households where the head of household was age 55-64 had retirement accounts . . . and their median retirement balance was $98,000. Given that the stock market has fallen by over 50% from its October 2007 peak – and that, for decades, the standard investment advice has been that stocks do better than any other asset class in the long term – we would be lucky if that median balance were more than $70,000 today.

The Bloomberg article linked to above describes the fragile state of state and local pension systems. These systems suffer from two major problems today. One is that even if they had been managed in a reasonable way, the fall in asset prices over the last year would have blown a huge hole in their long-term solvency.

via The Biggest Story of the Week « The Baseline Scenario.

Over a year ago I began to tell the folks in my office to move their money out of the stock funds and get them into interest accounts…No body listened. For the last year all of the investment advice I have seen has been to stay put in your stock funds…Oh and keep putting your new contributions there also. People get paid well to be so wrong…Thank god I didn’t listen. Thank god the country didn’t listen while George W spent his “political capital” pushing the privatization of social security. Thank god I got out of the market in December of 2007…It wasn’t much, but if I’d stayed put, it’d be a lot less and I wont be adding to it any time soon…

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