Wednesday, August 31, 2016

Reduce Inequality? Not If It Affects My Livelihood!

Most leading American universities have established “Centers for the Study of Inequality.”  Reducing inequality is one leg of the holy academic triad of diversity, sustainability, and reducing inequality.   Inequality scholars assert that the future of democracy and social justice requires reducing inequality in income, wealth, educational opportunity, health care, neighborhood safety, and so on, that harms the less well-off members of society.

Scholars disagree on the best way to reduce inequality.  One school of thought favors more progressive income and heavier wealth taxes to reduce the income and wealth of the top 1% percent of households, and redistribute the additional revenue to middle- and lower-income households in the form of lower taxes and/or more spending.  Another school wants targeted spending programs to provide greater pre-K education, smaller class sizes, higher teachers’ pay, more local health clinics, and other services to lower-income households.

Universities rely on tax-deductible gifts to pay salaries and build and maintain physical facilities. For the 2016-17 fiscal year, Stanford projects $350 million in gifts, about 6% of its projected revenue of $5.88 billion.  Stanford also has a capital budget of $4.1 billion for the three fiscal years 2016-17 through 2018-19, of which gifts are estimated to provide 21% of funding.  Harvard is in the midst of a $6.5 billion fund raising campaign.  It received $436 million in expendable gifts in 2015-16.

Gifts are tax-deductible up to certain IRS limits.  Rich donors, who are in a higher income-tax bracket than lower-income givers, receive a larger tax deduction for their gifts, thus contributing to inequality.  These are the very people that help fund (inequality) research centers.  The wealthy also fund the bulk of capital projects. Nine-figure millionaire and billionaire donors, the 0.001% and 0.0001%, are the principal source of gifts for new buildings and research facilities.

IRS Statistics of Income and Itemized Charitable Deductions

In tax year 2013, 4.81 million households filed tax returns with Adjusted Gross Income exceeding $200,000. Their itemized charitable contributions totaled $91.0 billion.  Altogether, 36.43 million household filed returns with $194.7 billion in itemized contributions.  Households with AGI exceeding $200,000 constituted 13.2% of all returns, but itemized 46.7% of total contributions.

So, those who propose higher taxes on the income and wealth of the rich are financed, in part, from the tax-deductible contributions of the rich on whom they want to impose higher taxes.  One way to achieve greater equality of income is to eliminate the tax deductibility of gifts to universities.  But the majority of scholars do not think that this is a good idea.  Wonder why?

Let’s dig a little deeper into the numbers.  Membership in the top 2% of income-earners requires an annual AGI of about $250,000.  Many full professors in leading universities fall in the top 2%, and certainly in the top 3%.  Academic stars reporting $430,000 and above in AGI are in the top 1%.  (It takes $1.9 million to join the 0.1% club.)

It’s no surprise, then, that academics that want to levy higher taxes on the rich limit their recommendation to the top 1%, not the top 2%.  But, and a very important but, they believe that any new taxes should retain the home mortgage deduction, which they utilize, and the charitable contribution, which helps pay their salaries.  Development departments in universities are concerned their scholars’ proposals to reduce inequality do not reduce gifts from the unequal rich.

Nonetheless, these professors teach students that the income and wealth of the 1% is harmful to society, but that their contributions to universities are not.  Wonder why so many students and graduates are muddle-headed?

PS.  When Robert E. Hall and I first proposed our flat tax in 1981, which eliminates charitable deductions, we got nasty comments from Stanford’s development department.  Its fund-raisers expressed concern that eliminating the tax deductibility of charitable contributions would reduce giving to Stanford.

Friday, August 26, 2016

Another Day Brings Another Batch of Republican Bigwigs Against Trump

On August 25, 2016, the Wall Street Journal released the results of a survey of 37 current and former living members (8 others did not respond to the Journal's inquiries) who served on the White House Council of Economic Advisers under 8 presidents.  Twenty served under Democrat presidents and 17 under Republicans.  Of the 8 who did not respond, 2 served Democrat presidents and 6 Republicans.

Of the 17 serving Republican presidents, 6 said they opposed Donald Trump and 11 declined to say either way.  The 6 were concerned with Trump's anti-free trade policies.  Two said they would vote for Hillary Clinton, one for Libertarian Gary Johnson, and the other 3 said they could not support Trump or Clinton.

Of those serving Democrat presidents, 13 said they supported Hillary Clinton and 7 declined to say.

The headline of the article is the message:  "Economists Who've Advised Presidents Are No Fans of Donald Trump."  It would be expected that advisers to Democrat presidents would oppose Trump. What is evidently newsworthy is that none of the CEA members under Republican presidents would state support for Trump.

Another story in the daily saga of prominent Republicans coming out against Trump.

Wednesday, August 24, 2016

Political Contributions From Stanford Faculty, Staff, and Students

Zip Code 94305 encompasses all of Stanford University.  About 40% of the faculty and high-level staff and their families inhabit (own) campus residences.  Well over 10,000 undergraduate and graduate students live in student housing on campus.

The Center for Responsive Politics reports political contributions to individual candidates, parties, and PACs, among others.  As of August 24, 2016, data are available through June 30, 2016.

For Stanford (94305), 136 individual contributions were made to Hillary Clinton during the months of May and June 2016.  (I did not add up the total amount of money contributed).

No contributions were made to Donald Trump.  To be fair, most campus Republicans did not support Trump in California's Republican primary.

Your friendly proprietor will update these numbers when data are reported for July, August, and September, and will total the dollar amounts for the last reported month prior to November 8.  

Sunday, August 14, 2016

Numbers On Political Parade

250, 600, 70, 22.  What do these numbers have in common?  These are the number of people who have signed various open letters opposing Trump and/or stating their intent to vote for Hillary Clinton. 600 historians, 250 members of the foreign policy establishment, 70 former foreign policy officials in Republican administrations, and 22 authors in National Review, to name several. More open letters are likely to appear in the remaining days before the election.

18,000, 23,000, 10,000, 15,000, 30,000.  What do these numbers have in common?  These are the size of crowds that have attended Trump rallies, many people waiting in line for hours to get in. These are the folks who want to see and hear Trump.

The mainstream media (MSM) and punditocracy give more attention and attach greater importance to signatories of the letters than they do to the hundreds of thousands of individuals who show up every month at Trump rallies.  They cite polls showing Clinton in the lead, both nationally and in key battleground states.  But her largest crowds during the campaign, apart from her acceptance speech at the Democrat National Convention, rarely exceed a thousand.

The MSM and pundits speculate that Trump's huge crowds may not show up to vote.  But these are the same people who proclaimed that he had no chance to win the Republican nomination for president from Day 1 of his campaign.

Many analysts contend that Trump's primary wins and large crowds represent a rebellion against the status quo politics of the [corrupt] ruling elite.  If so, why would any member of the Academic Political Media Industrial Complex (APMIC) think that their names on letters would sway voters to their point of view?  Rather, each new letter and list of signatories are likely to strengthen Trump's support among those disenchanted with American politics and who want a change.

Sunday, August 7, 2016

250 Members, And Counting, Of The Foreign Policy Establishment Call Donald Trump’s Vision Of Foreign Policy “strategically Reckless”

Once again, the foreign policy establishment’s Praetorian Guard, 250 members and counting, signed an open letter declaring Trump’s Vision of U.S. Foreign Policy “Strategically Reckless.”  They warn that his vision, were it to materialize, would weaken America’s alliances and erode its power.  The letter lays out nine illustrations of their concern, which you can judge for yourself.

What’s missing from the letter?  Two words.  Hillary Clinton.

Trump’s vision, the signatories assert, is "strategically reckless.”  But no mention is made of Hillary Clinton’s “actual strategic recklessness.”

For example, using an unprotected private email server to send and receive classified email according to FBI Director James Comey.”  And then repeatedly lying about it to the point where even the Washington Post gave her ”four Pinocchios.”

Encouraging the overthrow of Libyan leader Muammar Kaddafi, who had made peace with the West and dismantled his nuclear weapons program.  Libya has become a hotbed of tribal violence and a base for ISIS training and operations, which is facilitating the spread of radical Islam in North Africa.

ISIS (ISIL, Islamic State) arose as a powerful force on her watch as secretary of state.

Questionable contributions were made to the Clinton Foundation.

How about a little intellectual honesty?  Comparing his words with her deeds makes him “strategically reckless?”

The good news is that the multiple open letters of 250 here and 300 there have all been on the losing side of trying to stop Brexit and stop Trump from winning the Republican nomination.