Sep 07 2016

Folkraed: A New Approach to Government – The Second Problem With the Way Things Are: Bad Voters

Category: books,economics,government,history,law,policy,politics,rightsJames @ 8:20 am

Last post we talked about problems with our politicians, but most voters aren’t any better. In fact, they’re often worse. Most politicians at least know something about the major issues of the day; most voters don’t.

Economists say that voters’ ignorance is rational: because each persons’ vote has such a small marginal impact on an election result, it doesn’t make sense to spend much time learning about the candidates or issues. What makes sense for each voter to do on an individual level, though, has disastrous consequences in the aggregate. The result is collective stupidity.

And rational ignorance isn’t the only problem—natural ignorance is too. Some people are dumber than others, yet everyone’s vote counts the same. Many good, sensible policies can’t be enacted because ignorant voters misunderstand them and oppose them on spurious grounds, often because the media and the entertainment industry have warped popular perceptions about what is right and true. Elected representatives thus sometimes can’t do what makes the most sense because ignorant constituents will vote them out of office if they do.

Surveys since the 1950s have consistently shown that most Anericans are poorly informed about basic, important civic facts about our country, government, and political situation. A majority of Americans were unable to answer sixty percent of such basic questions. Astoundingly, a majority of Americans didn’t know the answers to questions about

definitions of key terms such as liberal, conservative, primary elections, or the bill of rights; knowledge of many individual and collective rights guaranteed by the Constitution; the names or issue stands of most public officials below the level of president or governor; candidate and party stands on many important issues of the day; key social conditions such as the unemployment rate or the percentage of the public living in poverty or without health insurance; how much of the federal budget is spent on defense, foreign aid, or social welfare; and so on.*

Defenders of our current system may ask, isn’t having a republican form of government designed to solve this problem? We elect representatives who can inform themselves about the issues and vote for what would be best for us, so what difference does it make if voters are ill-informed? A lot, actually. How can an ill-informed citizen know how to pick the best representative in the first place? Indeed, research shows that people’s

political knowledge seems to increase citizens’ ability to consistently connect their policy views to their evaluations of public officials and political parties, as well as to their political behavior. For example, more-informed citizens are more likely to identify with the political party, approve of the performance of office holders, and vote for candidates whose policy stands are most consistent with their own views.**

Moreover, the better-informed demonsttate good citizenship beyond just choosing the optimal candidate or political party. Professor Michael X. Delli Carpini explained that

the larger literature strongly suggeststhat informed citizens are “better” citizens in a number of ways. Specifically, research has found that more-informed citizens are more accepting of democratic norms such as political tolerance; are more efficacious about politics; are more likely to be interested in, follow, and discuss politics; and are more likely to participate in politics in a variety of ways, including voting, working for a political party,and attending local community meetings. Research also suggests that more-informed citizens are more likely to have opinions about the pressing issues of the day, are more likely to hold stable
opinions over time, are more likely to hold opinions that are ideologically consistent with each other, and are less likely to change their opinions in the face of new but tangential or misleading information but more likely to change in the face of new relevant or compelling information.***

Beyond rational ignorance and basic stupidity, other voters vote against the public welfare act not out of ignorance, but out of naked self-interest, voting for benefits for themselves at the expense of their fellow citizens and future generations. The Baby Boomers have turned this into an art form.

To fix our system, we need voters who are informed, engaged, and public-spirited, rather than ignorant, apathetic, and selfish.

*Michael X. Delli Carpini, “An overview of the state of citizens’ knowledge about politics,” in M. S. McKinney, L. L. Kaid, D. G. Bystrom,  and D. B. Carlin (Eds.), Communicating politics: Engaging the public in democratic life, pp. 29-30, http://repository.upenn.edu/asc_papers/53

**Same, p. 35 (citations omitted).

*** Same (citations omitted).


Jul 14 2016

Folkraed: A New Approach to Government – Introduction

Category: books,economics,government,history,law,policy,politicsJames @ 10:45 pm

Many of us feel like something is going wrong. We feel a deep and growing unease we are moving in the wrong direction, that we’re becoming strangers in our own country. This series of blog posts is an extended essay that explains what is going wrong in the United States and what we can do about it.

But first you must realize that the solution won’t come from going back to the way things were. The past is behind us. Things will never be the way they used to be. But we can learn from the past. We can adapt and take from what worked before to make new solutions that fit our present circumstances.

As this series progresses, I may tweak my planned structure a bit, but roughly speaking it will start with a series of 12 posts each dealing with one of our current problems, followed by 12 more posts giving solutions. Finally, there will be some concluding posts discussing a few overlapping ways of implementing the solutions. When the series is all done, I’ll revise and compile it into a short book of about 100 pages.

It may be surprising that a written work about how to solve the most pressing political problems of our day wouldn’t be longer. But, more often than not, correct explanations and solutions are concise. Occam was on to something. And brevity has the added benefit of making this work more accessible and widely read. I provide footnotes for readers who want to explore these ideas in greater depth. If needed, and time permitting, I may follow up with a longer, more academic book that explores these ideas in more detail.

In this essay series, I am frequently critical of various institutions and actors in our political system. My intent is not to single out specific individuals who work within that system for criticism. In fact, I have worked in, or worked closely with people in, all three branches of government. The vast majority are decent, honorable people trying to do the right thing, as they see it. They are no different from the rest of us, and most of us would act the same way if we were in their position. The problem with our current system is not that it is run by bad people, but that the system has serious flaws that bring out the worst in us and encourage counterproductive behavior. The problem is not some nefarious cabal or conspiracy undermining our country, but rather that the incentives in our system lead to pathological results, in spite of all the good people working within it.

This essay might give the impression that I believe our government is terrible and irredeemably broken. On the contrary, our system is quite good. I feel lucky to have been born an American. I think we have one of, if not the best, systems of government in the world. If you look at the full scope of human history, I think you’d be hard pressed to find a better time or place to live than the United States in the 21st century.

But that doesn’t mean we shouldn’t work to make it better. It is not wrong to strive for improvement. Sometimes improvement for everyone only comes when the best strive for better. We have a long traditon of this in the United States. In colonial times, our ancestors enjoyed one of the highest standards of living in the entire world, better than those in England and most other countries.* Even taxes were lower in the 13 Colonies than they were in England. In 1765, per capita tax burdens in the American colonies were 25 to 50 times lower than they were in Great Britain and 6.5 to 13 times lower than they were in Ireland.** Taxes were seven times higher for Americans after independence than they had been under the British.***

From a purely economic perspective, taxation without representation was actually working pretty well for the colonists. But, we are not rational economic robots, seeking to maximize our prosperity at the expense of all our principles, and neither were the Colonists.  Things were good in the colonies, economically speaking, but the political system was unfair and rigged against them—it was taking away more and more of their power to govern their own affairs and transferring it to unaccountable elites in far-off London.

The system was unfair and could have been—should have been—better, so our ancestors fought to make it so. As one of the Minutemen who fought at the first battle at Lexington said, the colonists didn’t fight because of taxes or repression but because “we always had governed ourselves and always meant to. They didn’t mean we should.”*** The colonists fought to keep their right to govern themselves, because the British had been trying to take it away. And what they did set in motion a revolution in governance across the world. Ever since, the government they fought to establish has been an example to the world showing the way to freedom and prosperity. Let us seek to set that example for the world once again.

The next post will discuss the first problem with our system, a bad way of selecting our politicians.

* Jeremy Atack and Peter Passell, A New Economic View of American History: from Colonial Times to 1940, 2d ed., 1994, p. 50 (“[C]olonists in 1775 enjoyed a . . . standard of living . . . [that] made them among the richest in the world at the time . . . . This is borne out in the estimates of the height of Americans fighting in the French and Indian War [often used by econonic historians as a proxy for economic well being, given the relationship of diet to height]. At five feet eight inches, colonists were much taller than those in lower classes who had stayed behind in England rather than risk all in a transatlantic adventure, suggesting few, if any, serious dietary and nutritional deficiencies.” Americans have always been willing to take risks to improve their lot in life, even since the beginning.)

**Atack and Passell, p. 68

***Stanley Lebergott, The Americans, 1984, p. 40

**** As quoted in Lebergott, p. 39.


Oct 31 2011

Not Too Big to Fail

Category: economics,government,policyJames @ 9:00 am

What does it really mean for an institution to be too big to fail? The idea is that some banks and companies are so big and integral to the national economy that if they fail, it will cause disastrous ripple effects for the economy and cause a wave of bankrupt corporations and failed banks.

Proponents of this idea of “too big to fail” argue that the only solution available to government is to bail out distressed institutions which are too big to fail. Critics of this idea argue that the failure of these institutions would not be as disastrous as claimed.

This talk about "too big to fail" is probably nothing new to you. It certainly isn’t new to me. Like most people, I’ve been uncomfortable and angry about the huge amounts of money the government poured into failing institutions. I’ve never done much about it, because at the end of the day none of us average citizens have much say in this debate or in the resulting government policies. If you’re not a politician, government regulator, or bank executive, your opinion on the issue doesn’t count for much. After much thought about the issue, though, I’ve concluded that this doesn’t mean we’re powerless to influence the future of these big institutions, and I think that there are good reasons for us to exercise our power to change them.

The bailouts given out by the United States government were mostly done under the Troubled Asset Relief Program (TARP). The U.S. Treasury has spent over $200,000,000,000 ($200 billion) bailing out banks,1 and another $100,000,000,000 bailing out other institutions (such as AIG and the automotive industry).2

If they are too big to fail, then they are too big

Whether or not the TARP recipients were really too big to fail, something needs to be done. If these institutions are not really too big to fail, then it means their lobbyists are too powerful. It means that these institutions managed to fool the U.S. government into offering a huge unneeded bailout. If they managed to fool the government so badly, then we must make these banks smaller to ensure the health and vitality of our democracy.

But even if the banks really were too big to fail and TARP was a necessary program, we still need to make the TARP recipients smaller. When institutions become so big that they can rely on the government to immunize them from the consequences of their leaders’ bad decisions and stupid risks, we have a big problem. You don’t have to be an economist or social scientist to understand that programs like TARP will encourage executives at big banks to take bigger risks than they otherwise would – if the bank succeeds, it will reap the benefits (and the executives will get their bonuses), and if it fails, then the U.S. taxpayer will cover the loss.

Mervyn King, the Governor of the Bank of England (somewhat akin to the Chairman of the Federal Reserve in the United States), very aptly summarized the problem:

If some banks are thought to be too big to fail, then . . . they are too big. It is not sensible to allow large banks to combine high street retail banking with risky investment banking or funding strategies, and then provide an implicit state guarantee against failure.3

Part of the beauty of a properly functioning market economy is that competition prunes out the loser institutions. Poorly managed businesses will naturally fail, and the resources being put into those businesses can be freed up to be used more productively elsewhere. Nothing should be too big to fail. Failure is essential to the orderly functioning of the economy: poorly-run institutions should fail to make room for well-functioning institutions to succeed.

A Solution

It thus does not matter whether the banks were too big to fail or not. Either way, they are too big. When presented with situations like this, most people just say “someone should do something about that” and then ignore the problem. But politicians and government regulators have been completely unwilling to take drastic action, such as breaking up the big banks (which is what Alan Greenspan suggested4) or taking other less drastic steps to address the problem. If “someone” is going to do something about it, it has to be you and me!

But what can average citizens do? Here’s my solution: take your money out of the big banks. The only reason the big banks are so big is because people keep their money there. If lots of us started closing our accounts at the big banks and depositing our money somewhere else, the banks would get smaller.

Not Too Big

Let’s make sure that no banks is ever again too big to fail. The easiest way to determine whether an institution falls into that the “too big to fail” category is to see whether they received TARP funds. Each bank that received TARP funds had to fulfill the U.S. government’s TARP participation criteria. This means the government believed that the institution was too big to fail. And each bank that accepted TARP funds also implicitly acknowledged its belief that it was too big to fail. So if you want to stop banks form being too big to fail, here is all you need to do:

1. Find out if your bank received TARP funds. To find out, you can search for it here or look on this list. If you didn’t find your bank on the list, it is very possible that it still received TARP funds. A lot of smaller “local” banks are actually owned by larger bank holding corporations. For example, National Bank of Arizona is not really an Arizona bank. It is owned by Zions Bancorporation,5 which is the 34th largest bank in the United States, with over $51 billion in assets.6 You can quickly find out if your bank is subsidiary of a bigger bank holding company by doing a quick search on Google or Wikipedia (or even easier, just call your bank to ask).

2. If your bank is a TARP recipient, close your account with your bank. Make it very clear to them when you are closing the account that you are closing your account because the bank was a TARP recipient and that you are trying to do your part to shrink the size of the the bank to make sure that it will not be too big to fail, and thus a threat to our national economy (and, potentially, our political system). Be pleasant, but firm, and make it clear that you are not withdrawing your money to penalize or attack the bank, but out of a sense of civic duty to protect our national economy and the integrity of our system of government.

3. Third, deposit your money in a small community bank or into a credit union (these were the types of institutions that avoided making the risky loans that caused the financial crisis in the first place – we should reward theirresponsibility). Some people have claimed that having these big mega banks is good for the economy because they can achieve economies of scale. Well, credit unions consistently have better interest rates and lower fees than the big banks,7 so it seems like their small size hasn’t really been an obstacle to their efficient functioning so far.

4. The big banks derive a lot of their revenue from credit card use. If you have a credit card that has been issued by a bank that accepted TARP funds, consider canceling it and getting a card from a smaller institution. If you are worried about whether canceling the card will affect your credit score, then just stop using that card and start using a card from a small institution.

Addendum: this is not about anger

I started writing this post a few months ago, but never quite got it polished and ready to post. Since then, the Occupy Wall Street (“OWS”) movement has taken off, and along with it, a movement to penalize big banks by encouraging people to take their money out of the big banks and put it into credit unions. The people involved in this movement are explicit that they are motivated by their anger with the banks and the feelings that the big banks are acting unjustly. Anger against your fellow citizens (even if they are bank shareholders and executives) is a terrible way to motivate and sustain a political movement. Anger leads to irrationality. Anger divides communities and sets people against each other (for example, just look at the “53%” movement which has already formed in opposition to OWS).

The OWS crowd have even set up a Facebook event encouraging people to take their money out of the big banks all on the same day. If they’re actually successful in creating a mass movement, it is a recipe for starting a run on the banks. A run on the banks would just create a second financial collapse.

Let me be clear: what I’m advocating is not motivated by any animus for big banks, or by any desire to hurt them or penalize them. Like I said before, many big banks are actually bank holding companies that own a number of subsidiaries. Other banks are the product of growth or many acquisitions of smaller banks. We need a gradual and sustained movement to show the banks that, if things stay as they are, people will continue to withdraw their money. We don’t want all of the big banks to collapse – we want them to get smaller. A gradual and growing movement will give the big banks time to shrink in an orderly fashion, hopefully by spinning of their subsidiaries or by splitting themselves into smaller independent units.

This is about us normal citizens rationally taking actions to get the result our leaders have failed to seek, to make sure our country’s economy stays healthy and robust. Don’t take your money out of your bank because you’re mad. Take your money out because it’s the right thing to do to make sure that we never have a set of banks that are so big they can demand hundreds of billions of bailout dollars to survive.

If, like me, you’re concerned about the state of our economy, and the risks of continuing to have giant banks that can demand government largess to help them continue to operate, but don’t feel terribly sympathetic to the Occupy Wall Street movement, please help spread the word. You can do something to help our country without becoming an unproductive Angry Protester.




Footnotes


Oct 16 2011

The 99 Percent of Americans Who are Rich Fatcats

Category: economics,government,politicsJames @ 9:00 am

The Occupy Wall Street (“OWS”) movement has been building up steam. The press has been mentioning it more and more. A popular slogan shouted at OWS is “we are the 99,” implying that the top 1% of Americans have been exploiting the rest of us. Along with that slogan, there is a popular blog / Internt meme called “We Are the 99 Percent” in which people hold up hand written signs describing their struggles since the economic crash.

I must say that I completely agree that Wall Street, the big banks, the government, and greedy CEOs are huge problems, and that their misdeeds have tremendously hurt millions of people and plunged our country into terrible economic problems. I really feel for those who are hurting because of others’ mistakes. I really want the malfeasors to be held accountable.

But from what little I’ve read on the “we are the 99 Percent” blog, it seems like most of the people submitting their stories are complaining because they made poor life choices, and now they’re in a rough spot because the economy tanked. From what I’ve seen of the OWS protesters, I get the same impression. They don’t seem to be really suffering, and most of them seem to be doing relatively well. How many of the protesters at Wall Street have expensive Mac laptops, iPhones, pricey monthly cell phone contracts, and flat screen TVs at home connected up to a full cable tv package? Everything I’ve seen indicates that a significant percentage of OWS-types enjoy many of these perks of the upper-middle-class lifestyle. They hardly seem like people who are really poor.

And even the poorest five percent of Americans are still richer than 70% of the rest of the world. What does that mean? It means that The poorest five percent of our fellow Americans have incomes that would make them upper middle class in most of the world.

Like the OWS protesters, I worry about poverty and inequality, but I worry about REAL poverty and inequality– like people who don’t have clean water to drink and who live in huts with dirt floors. I worry about people who have to helplessly watch their children die of dehydration caused by a bad case of diarrhea (which kills millions of kids in the developing world).

By global standards, nearly all of us Americans are rich fatcats who are skimming undeserved wealth off the top. Nearly all of those OWS protesters are part of the 99 percent of Americans who enjoy unprecedented wealth and prosperity (by global standards). If those protesters really care about inequality and exploitation of the poor, they would look in the mirror and realize that, on a global scale, each of them is guilty as well. It’s easy for them to complain about all the rich people above them on the pyramid, but they don’t seem very willing to recognize the life of undeserved privilege (undeserved, at least, when you evaluated their lifestyles by the same standards they use to evaluate the merits of others’ wealth) that each of them already enjoys compared to the vast majority of humanity who sit below them on the income pyramid. If they don’t want to be hypocrites — if they really want all of the rich to held accountable and forced into a life like all of the “average” people in the world — they should each sell all their fancy first world toys, give the proceeds to the poor, and devote themselves to a lifetime of backbreaking manual labor doing subsistence farming on a small plot of land, or go live in a shantytown in New Delhi or Lagos.


Jul 13 2011

Why Don’t Brazilians Emigrate?

What is the most commonly-spoken language in South America? If you said Spanish, you’re wrong. It’s Portuguese. Portuguese is the unexpected winner (unexpected, at least, in most Americans’ minds) because Brazil is such a big country (bigger than the continental United States). Brazil is the fifth most populous country in the world, with a population of nearly 200 million (only China, India, the United States, and Indonesia have bigger populations).1 In 2007 the U.S. Census Bureau estimated, however, that only about 250,000 Brazilians were living in the United States.2

This means that about .13% of Brazilians have emigrated to the United States. Compared to other similar countries, this is a small number. For example, there are about 135,000 Argentines living in the United States,3 out of a total Argentine population of about 40 million4 and there are about 70,000 Chileans living in the United States,5 out of a total Chilean population of 17 million.6 This means that about .34% of Argentines and about .41% of Chileans live in the United States. The proportion of Argentines in the United States is thus over two and a half times greater than the proportion of Brazilians and the proportion of Chileans in the United States is more than three times greater. So why don’t Brazilians emigrate as much as other Latin Americans? This post gives my completely anecdotal explanations.

My observations are based on my family background and personal experience. My mother is Brazilian and immigrated to the United States when she was in her 20s. Out of the eight children in her family, she and only one sister have come to the U.S., while the other six siblings have stayed in Brazil. In my own personal experience, I have lived in Brazil as an adult, speak Portuguese, and minored in Latin American studies as an undergraduate. Here are my explanations for the relative rarity of Brazilian migration to the United States:

1. Internal migration. Brazil is a large continental country with a growing economy and increasing opportunities. The big cities of in the relatively wealthy state of São Paulo (it it were its own country, the state of São Paulo would be the 16th-largest economy in the world7) are inundated with immigrants from the Northeast of Brazil seeking jobs and better opportunities. It is far easier to migrate within your own country (and thus avoid the necessity of learning another language and adapting to a new culture).

2. Opportunities are available for the ambitious. My mother’s family was relatively poor when she was a child (they even lived in a dirt-floor house for a while). Even though Brazil’s growth has been inconsistent over the last 40 years, the general trend has been upward over that time. For those who are ambitious and smart, there are good opportunities for a prosperous life in Brazil. It is not as easy for the poor in Brazil to escape their poverty, but it is possible. In spite of their humble background, all of my mom’s siblings are solidly middle class and enjoy good lives in Brazil. I don’t think any of my Brazilian aunts and uncles or cousins would ever consider leaving — they have everything they need in their own country.

3. Sentimentality. Brazilians are much more openly affectionate and devoted to their relationships with friends and family than most Americans and they would see the separation as a huge drawback.

4. Patriotism and national pride. Brazilians are proud of their country, its potential for greatness, and its achievements (just ask a Brazilian who invented the airplane — they will vehemently deny that it was the Wright brothers, but instead insist that it was a Brazilian named Santos Dumont). They don’t want to leave and give up something to which they feel so much attachment and pride.

5. The lack of a large Brazilian diaspora. It is easier to emigrate when you are going to a place that already has living there a large group of your fellow countryman who speak your language and can help you adapt to your new country. The lack of many large Brazilian migrant communities in the United States makes it more difficult to immigrate. In the places where there is an established Brazilian community — Massachusetts (which has its roots in early-20th century Portuguese cod fisherman who immigrated there first), New Jersey, and Miami — there are plenty of new Brazilian immigrants.

(As an interesting aside: there was a 2005 Brazilian novela (daily nighttime serialized TV show) which was set in Florida and dramatized the plight of immigrants in Brazil. The novela was called “América.” Even though the novela portrayed a generally negative view of illegal immigration and of life in the United States, illegal immigration from Brazil to the United States temporarily skyrocketed as a result of the novela. Perhaps another explanation is that the lack of immigration is because of a lack of general knowledge about potential options to immigrate. The United States is close to Mexico and Central America, so knowledge about options for migration is easier for citizens of those countries, and the cultural and linguistic ties they have with Spanish speaking countries in South America perhaps makes that knowledge more widespread in places like Argentina and Chile than in Brazil.)

This post was based on a comment I left here.

 

 

Footnotes


Apr 17 2011

What If Everyone Paid the Same Taxes as You?

Category: economics,government,law,taxesJames @ 5:54 pm

The U.S. government has provided an interesting tool1 that tries to show you where your tax dollars are spent. You just put in the amount of Social Security, Medicare, and income taxes you paid, and it shows how much of that money will go to different government programs and expenditures.

Over at Econlog Arnold Kling points out2 that for most of us, the calculator makes it look like most we get a bargain in government programs and benefits for a relatively small amount of taxes paid. Kling suggests a more interesting calculator would be one that calculates how much money the government would have if everyone paid the same amount of taxes that you pay.

Progressive taxation means that people with higher incomes also pay higher tax rates3 About 150 million individuals file tax returns every year.4 The budget for 2010 estimated that total government revenue would be $2.381 trillion. This averages out to about $15,900 in revenue for each tax return filed. If you paid less than that in federal taxes (including Social Security, Medicare, and income taxes) this year, then that means you’re getting a good deal because someone else is paying more.5 Now, there are good justifications for having a progressive taxation system. The marginal utility of each additional dollar decreases as a person’s income increases. Moreover, the wealthy owe their good fortune to being able to live and work in the United States, so it makes sense that they give something back.

I’m not trying to argue for or against a progressive tax system. I just think it is interesting for each of us to realize how our tax system is structured and how our taxes compare to what other Americans pay.

To that end, I’ve accepted Arnold Kling’s invitation and I’ve created a very basic calculator to let each of you get an idea of what the government’s revenue and deficit would be like if every taxpayer paid the same amount of taxes that you do. All you need to do is enter into the first box the total amount that you paid in taxes for 2010 and then hit enter (make sure to include in that total income taxes and also Social Security and Medicare taxes). The calculator will then show how much total government revenue would decrease, what the total deficit would be, and the percentage the deficit would increase if everyone paid the same amount of taxes that you did in 2010. The government’s tax calculator says that a family of four with a total income of $80,000 would pay $9,983 in taxes this year, so $9,983 is set as the default starting number for the calculator.


Tax Comparison Calculator:

[price-calc variation=tax]

 

For comparison, here are the actual 2010 budget numbers:

Total Revenue: $2,381 billion
Total Expenditures: $3,552 billion
Total Deficit: $1,171 billion6

Some caveats: this calculator is pretty basic, so it’s only going to give you a ballpark figure. The calculator assumes that the government’s only source of revenue is individual taxpayers paying Social Security, Medicare and income taxes. In reality, the government has other sources of revenue including payroll taxes from employers and corporate income tax, so the calculator’s numbers are overestimates (in other words, if everyone really did pay the same taxes as you did, the deficit wouldn’t go up as much as the calculator shows). Since the vast majority of government revenue comes from individuals, however, these numbers work for each of us to get a ballpark idea of the progressive nature of our tax system, how our taxes compare to the average amounts paid, and the general trends of what would happen if everyone paid the sames taxes that you do.

 

 

Footnotes

3 The top one percent of wage earners pay a little less than 40 percent of all income taxes, and a little under 30 percent of all federal taxes. http://econlog.econlib.org/archives/2011/04/david_cay_johns.html

5 To compare your taxes to the averages I’m quoting, you would need to include Social Security, Meidcare and income taxes. I know that the government has other sources of revenue, including payroll taxes from employers and corporate income tax, so the $15,900 figure overestimates the actual average amounts paid by individual taxpayers, but since the vast majority of government revenue comes from individuals, these numbers work for each of us to get a ballpark idea of how our taxes compare to the average.