27 September 2019   Leave a comment

I will not be posting Saturday or Sunday. I am officiating at the wedding of the son of my old college roommate, and I do not want the outside to intrude upon this joyous occasion.

The Trump Administration has placed a limit of 18,000 refugees who can legally enter the US in 2020 even though the country expects to receive about 368,000 refugee and asylum requests in that year. That number is extraordinarily low given the rapid rise of the number of people seeking refuge in the world:

” Taken together, the reduction in refugee admissions and the new restrictions on where they may resettle represent another blow to the US’s ability to aid the world’s most vulnerable populations, even as the number of refugees worldwide has soared. The number of refugees worldwide approximately doubled between 2012 and 2018 to more than 20 million, according to the UN High Commissioner for Refugees.”

The quota for refugees is the lowest in US history and signals a profound shift away from the historical values of the American people. Additionally, many of the 18,000 slots are already reserved for certain groups: ” The administration will reserve 5,000 slots for refugee persecuted on the basis of religion, and 4,000 spaces for Iraqis who assisted U.S. forces in that country. Another 1,500 refugee placements will be set aside for residents of Guatemala, El Salvador and Honduras, according to the document.”

The Federal Reserve Bank has published a very interesting study on the impact of a wealth tax. The study found that a wealth tax could actually improve efficiency in the US economy. The study is very technical, but the conclusions seem to be straightforward.

“First, an economy with wealth taxes can raise the same amount of revenue as one with capital income taxes (keeping all other tax rates constant) with less distortion. The result is a reduction in the misallocation of capital, yielding higher average wages, consumption, and welfare. Second, welfare gains are relatively evenly distributed, with newborns of all entrepreneurial ability groups preferring the wealth tax economy. The gains become smaller with age and are negative for older individuals, especially those with high wealth. Third, allowing pensions to rise with average labor income (BB reform) yields somewhat lower average welfare gains but spreads the gains to the vast majority of the population.” (p. 31)

“Overall, our analysis lends strong support to the consideration of wealth taxation as a more desirable alternative to capital income taxation, as it has the potential to improve aggregate productivity, grow the economy, reduce consumption inequality, and improve welfare for large parts of the US population.” (p. 52)

Wealth taxes are used by several countries in the world, but have never really been seriously considered in the US. Wealth taxes are subject to all sorts of tactics to reduce their impact. But they are an intriguing way to address the phenomenon of growing economic inequality in the US which is at a level greater than at any other time in the last 50 years.

Posted September 27, 2019 by vferraro1971 in World Politics

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