Millionaire Migration and Taxation of the Elite: Evidence from Administrative Data

Source: Cristobal Young, Charles Varner, Ithai Z. Lurie, and Richard Prisinzano, American Sociological Review, Vol. 81, No. 3, June 2016
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From the abstract:
A growing number of U.S. states have adopted “millionaire taxes” on top income-earners. This increases the progressivity of state tax systems, but it raises concerns about tax flight: elites migrating from high-tax to low-tax states, draining state revenues, and undermining redistributive social policies. Are top income-earners “transitory millionaires” searching for lower-tax places to live? Or are they “embedded elites” who are reluctant to migrate away from places where they have been highly successful? This question is central to understanding the social consequences of progressive taxation. We draw on administrative tax returns for all million-dollar income-earners in the United States over 13 years, tracking the states from which millionaires file their taxes. Our dataset contains 45 million tax records and provides census-scale panel data on top income-earners. We advance two core analyses: (1) state-to-state migration of millionaires over the long-term, and (2) a sharply-focused discontinuity analysis of millionaire population along state borders. We find that millionaire tax flight is occurring, but only at the margins of statistical and socioeconomic significance.
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Press Release

American Capitalism’s Great Crisis

Source: Rana Foroohar, Time, May 12, 2016

….America’s economic problems go far beyond rich bankers, too-big-to-fail financial institutions, hedge-fund billionaires, offshore tax avoidance or any particular outrage of the moment. In fact, each of these is symptomatic of a more nefarious condition that threatens, in equal measure, the very well-off and the very poor, the red and the blue. The U.S. system of market capitalism itself is broken. That problem, and what to do about it, is at the center of my book Makers and Takers: The Rise of Finance and the Fall of American Business, a three-year research and reporting effort from which this piece is adapted….. America’s economic illness has a name: financialization. It’s an academic term for the trend by which Wall Street and its methods have come to reign supreme in America, permeating not just the financial industry but also much of American business. It includes everything from the growth in size and scope of finance and financial activity in the economy; to the rise of debt-fueled speculation over productive lending; to the ascendancy of shareholder value as the sole model for corporate governance; to the proliferation of risky, selfish thinking in both the private and public sectors; to the increasing political power of financiers and the CEOs they enrich; to the way in which a “markets know best” ideology remains the status quo. Financialization is a big, unfriendly word with broad, disconcerting implications…..

Report on the Economic Well-Being of U.S. Households in 2015

Source: Board of Governors of the Federal Reserve System, May 2016

From the press release:
American families overall reported continued mild improvement in their financial well-being in 2015 although many families were struggling financially and felt excluded from economic advancement, according to the Federal Reserve Board’s latest Report on the Economic Well-Being of U.S. Households.

The report, based on the Board’s third annual Survey of Household Economics and Decisionmaking, presents a contrasting picture of the financial well-being of U.S. families. Aggregate-level results show several signs of improvement. Sixty-nine percent of respondents said they are either “living comfortably” or “doing okay,” up 4 percentage points from 2014 and up 6 percentage points from 2013. Seventy-seven percent of non-retired adults without a disability are confident that they have the skills necessary to get the kind of job that they want now–an increase of 10 percentage points from the 2013 survey results….

The Gap: The Affordable Housing GAP Analysis 2016

Source: National Low Income Housing Coalition, 2016

From the summary:
The Gap documents a shortage of 7.2 million affordable and available rental units for the nation’s 10.4 million extremely low income (ELI) renter households, those with income at or below 30% of their area median (AMI). Three-quarters of ELI renters are severely cost-burdened, spending more than half of their income on rent and utilities.

The report calls for greater federal investment in ELI rental housing through the National Housing Trust Fund (NHTF) and other housing programs. New rental housing affordable to ELI households is nearly impossible to produce without subsidies, and today’s major federal affordable housing production programs allow rents that are too high for ELI renters to afford.

Millions of ELI renters live in housing unaffordable to them. Expanding the affordable rental supply to which these cost-burdened ELI households could move would free up their current units for other households further up the income ladder.

The Requirements of Jobs: Evidence from a Nationally Representative Survey

Source: Maury Gittleman, Kristen A. Monaco, Nicole Nestoriak, National Bureau of Economic Research (NBER), NBER Working Paper No. w22218, May 2016

From the abstract:
The Occupational Requirements Survey (ORS) is a new survey at the Bureau of Labor Statistics which collects data on the educational, cognitive, and physical requirements of jobs, as well as the environmental conditions in which the work is performed. Using pre-production data, we provide estimates of a subset of elements by broad industry and occupation and examine the relationship between the cognitive elements and measures of education and training. We exploit the overlap between ORS and the National Compensation Survey to estimate models of the returns to different occupational requirements. Finally, we examine the relationship between occupational requirements and occupational safety measures and outline potential research uses of the Occupational Requirements Survey.

Premium Subsidies, the Mandate, and Medicaid Expansion: Coverage Effects of the Affordable Care Act

Source: Molly Frean, Jonathan Gruber, Benjamin Sommers, National Bureau of Economic Research (NBER), NBER Working Paper No. w22213, April 2016
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From the abstract:
Using a combination of subsidized premiums for Marketplace coverage, an individual mandate, and expanded Medicaid eligibility, the Affordable Care Act (ACA) has significantly increased insurance coverage rates. We assessed the relative contributions to insurance changes of these different ACA provisions in the law’s first full year, using rating-area level premium data for all 50 states and microdata from the 2012-2014 American Community Survey. We employ a difference-in-difference-in-difference estimation strategy that relies on variation across income groups, areas, and years to causally identify the role of the ACA policy levers. We have four key findings. First, insurance coverage was only moderately responsive to price subsidies, but the subsidies were still large enough to raise coverage by almost one percent of the population; the coverage gains were larger in states that operated their own health insurance exchanges (as opposed to using the federal exchange). Second, the exemptions and tax penalty structure of the individual mandate had little impact on coverage decisions. Third, the law increased Medicaid coverage both among newly eligible populations and those who were previously eligible for Medicaid (the “woodwork” effect), with the latter driven predominantly by states that expanded their programs prior to 2014. Finally, there was no “crowdout” effect of expanded Medicaid on private insurance. Overall, we conclude that exchange premium subsidies produced roughly 40% of the ACA’s 2014 coverage gains, and Medicaid the other 60%, of which 2/3 occurred among previously-eligible individuals.

Growth of Income and Welfare in the U.S, 1979-2011

Source: John Komlos, NBER Working Paper No. w22211, April 2016
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From the abstract:
We estimate growth rates of real incomes in the U.S. by quintiles using the Congressional Budget Office’s (CBO) post-tax, post-transfer data as basis for the period 1979-2011. We improve upon them by including only the present value of earnings that will accrue in retirement and excluding items included in the CBO income estimates such as “corporate taxes borne by labor” that do not increase either current purchasing power or utility. We estimate a high and a low growth rate using two price indexes, the CPI and the Personal Consumption Expenditure index. The major consistent findings include what in the colloquial is referred to as the “hollowing out” of the middle class. According to these estimates, the income of the middle class 2nd and 3rd quintiles increased at a rate of between 0.1% and 0.7% per annum, i.e., barely distinguishable from zero. Even that meager rate was achieved only through substantial transfer payments. In contrast, the income of the top 1% grew at an astronomical rate of between 3.4% and 3.9% per annum during the 32-year period, reaching an average annual value of $918,000, up from $281,000 in 1979 (in 2011 dollars). Hence, the post-tax, post-transfer income of the 1% relative to the 1st quintile increased from a factor of 21 in 1979 to a factor of 51 in 2011. However, income of no other group increased substantially relative to that of the lowest quintile. Oddly, the income of even those in the 96-99 percentiles increased only from a multiple of 8.1 to a multiple of 11.3. We next estimate growth in welfare assuming diminishing marginal utility of income. A logarithmic utility function yields a growth in welfare for the middle class of roughly 0.01% to 0.07% per annum, which is indistinguishable from zero. With interdependent utility functions only the welfare of the 5th quintile experienced meaningful growth while those of the first four quintiles tend to be either negligible or even negative.

Trends in Retirement Satisfaction in the United States: Fewer Having a Great Time

Source: Sudipto Banerjee, Employee Benefit Research Institute (EBRI), EBRI Notes, Vol. 37 No. 4, April 2016

From the abstract:
Most of the existing research on overall retirement satisfaction of retirees uses single-year data and focuses on identifying and measuring the factors that may affect retirement satisfaction. However, the analysis presented in this paper uses data from the 1998-2012 rounds of the Health and Retirement Study (HRS) to illustrate longer trends in retirement satisfaction and the relationships with various other factors. The cross-sectional results in this study show that the share of respondents reporting “very satisfying” retirements dropped from 60.5 percent in 1998 to 48.6 percent in 2012. On the other hand, the share of respondents reporting “moderately satisfying” and “not at all satisfying” retirements increased from 31.7 percent to 40.9 percent and from 7.9 percent to 10.5 percent, respectively. The longitudinal results from a fixed sample observed over the 15-year period from 1998 to 2012 show similar declines in the share of respondents reporting “very satisfying” retirements and similar increases in the share of respondents reporting “moderately satisfying” retirements. This is in contrast to some of the previous research, which shows that retirement satisfaction increases with age. These trends are not limited to particular economic groups: Both the highest- and lowest-asset quartiles show similar trends. Also, people with and without pension income show similar trends in retirement satisfaction levels. As might be expected, net worth and health status are strongly correlated with retirement satisfaction. Higher net worth is associated with higher levels of satisfaction, and poorer health is associated with lower levels of satisfaction. There is no significant difference in retirement satisfaction levels between men and women. Although this study does not investigate the reasons behind the changes in retirement satisfaction levels, the reported shift in the retirement satisfaction trends raises an important question: Why is the share of very satisfied retirees dropping? Further research to answer this question might provide some important answers.

Infrastructure skills: Knowledge, tools, and training to increase opportunity

Source: Joseph Kane and Adie Tomer, Brookings institution, May 2016

From the summary:
…While the United States faces a number of different infrastructure challenges, its looming infrastructure workforce gap is perhaps one of its most significant. Throughout every region, millions of workers operate and maintain the country’s major physical assets—from its highways and railroads to its port facilities and power plants—but many are reaching the end of their careers. Relying on specialized skillsets to support long-term economic growth, a new generation of infrastructure workers will need to assume this mantle in years to come. In addition to prioritizing physical investments, national, state, and local leaders must continue exploring ways to fill these infrastructure positions, often amid constrained budgets and other pressing concerns.

As levels of poverty and inequality continue to rise, however, the time is ripe for jumpstarting these development efforts. While the federal government and a number of other national actors represent crucial partners, states and metropolitan areas are well-positioned to take the lead. Having already launched a variety of customized training initiatives, coordinated development strategies, and innovative partnerships, these regions should look to further experiment and accelerate such efforts in the future. By doing so, they can help create clearer career pathways for the country’s infrastructure workers and help them achieve greater economic opportunity…..
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Appendix
Data

Why Did The Job Cross The Road?

Source: NPR, Planet Money, Podcast, Episode 699, May 4, 2016

States across the country are at war right now. A war over jobs. They are competing with each other to get companies to move within their borders. Politicians love to call this “job creation.”

States dangle incentives like tax breaks, training programs, freshly paved roads. According to one study, states all over the country are spending $70 billion a year to “create” jobs. But is it really creating a job if it came from a few miles away across the state border?…