A symposium on business tax reform

Source: Alan Auerbach, Martin Feldstein, Gita Gopinath, and James Hines, Brookings Papers on Economic Activity (BPEA), September 7, 2017

The U.S. corporate tax rate is one of the highest in the world and much has been made about the prospects of corporate tax reform in 2017. Both House Republicans and President Trump have released their visions of changes to corporate taxes. But what would these proposals mean for the economy? Are they targeting the aspects of the tax code that need changing?

At the Fall 2017 Brookings Papers on Economic Activity conference, leading tax policy experts discussed these issues among others, including:

Alan Auerbach, of the University of California, Berkeley, attempts to demystify the Destination-Based Cash-Flow Tax (DBCFT), which he says is poorly understood by many in government, the business community, and economics.

Martin Feldstein, of Harvard University, argues the coming year offers the opportunity to fix problems of the corporate tax system that accumulated over many decades and suggests five areas for improvement.

Gita Gopinath, of Harvard University, examines the macroeconomic effects of a border-adjustment tax and looks at whether its possible for a border adjustment tax to be revenue neutral.

James Hines, of the University of Michigan, looks at the U.S. corporate tax rate, which is the highest among OECD countries, and finds that despite significant deductions and exclusions, the rate places high burdens on U.S. businesses.

Where have all the workers gone? An inquiry into the decline of the U.S. labor force participation rate

Source: Alan B. Krueger, Brookings Papers on Economic Activity (BPEA), BPEA Conference Drafts, August 26, 2017

From the summary:
The increase in opioid prescriptions from 1999 to 2015 could account for about 20 percent of the observed decline in men’s labor force participation (LFP) during that same period.

In “Where have all the workers gone? An inquiry into the decline of the U.S. labor force participation rate” (PDF), Princeton University’s Alan Krueger examines the labor force implications of the opioid epidemic on a local and national level.

Pension Plan Types and Financial Literacy in Later Life

Source: Yang Li, Jeffrey A Burr, Edward Alan Miller, The Gerontologist, Advance Articles, September 9, 2017
(subscription required)

From the abstract:
Background and Objectives:
The ongoing shift from defined benefit (DB) to defined contribution (DC) pension plans means that middle-aged and older adults are increasingly being called upon to manage their own fiscal security in retirement. Yet, half of older Americans are financially illiterate, lacking the knowledge and skills to manage financial resources. This study investigates whether pension plan types are associated with varying levels of financial literacy among older Americans.

Research Design and Methods:
Cross-sectional analyses of the 2010 Health and Retirement Study (HRS) (n = 1,281) using logistic and linear regression models were employed to investigate the association between different pension plans and multiple indicators of financial literacy. The potential moderating effect of gender was also examined.

Results:
Respondents with DC plans, with or without additional DB plans, were more likely to correctly answer various financial literacy questions, in comparison with respondents with DB plans only. Men with both DC and DB plans scored significantly higher on the financial literacy index than women with both types of plans, relative to respondents with DB plans only.

Discussion and Implications:
Middle-aged and older adults, who are incentivized by participation in DC plans to manage financial resources and decide where to invest pension funds, tend to self-educate to improve financial knowledge and skills, thereby resulting in greater financial literacy. This finding suggests that traditional financial education programs may not be the only means of achieving financial literacy. Further consideration should be given to providing older adults with continued, long-term exposure to financial decision-making opportunities.

Is it Time to End Labor Preemption?

Source: Sharon Block and Benjamin Sachs, On Labor Blog, September 11, 2017

Serious thinking about labor law reform seems to be coalescing around a few themes. One of these is the possibility of allowing state and local intervention into the rules of union organizing and collective bargaining. Pursuing that goal would mean reconsidering the preemptive effect of federal labor law.
This theme was clearly reflected in our Labor Day opinion writing wrap up. Newsweek published Sharon’s op-ed in which she argued that the debate over bold labor law reform has to include consideration of preemption rules. The New York Times ran an op-ed by Brishen Rogers and Willy Forbath in which they recommended that the NLRA be amended to allow state and local governments to legislate new models of collective bargaining above the floor of the NLRA. Moshe Marvit made the case in the American Prospect that the Supreme Court should revisit its precedent regarding NLRA preemption in order to allow more experimentation at the state and local level.

Will the Supreme Court Ignore Pleading Rules in Janus?

Source: Andrew Strom, On Labor blog, September 7, 2017

Many Court watchers think it is a foregone conclusion that the Supreme Court will grant the cert petition in Janus v. AFSCME, and then overturn the forty-year old decision in Abood v. Detroit Board of Education. While I’m not willing to bet against that, it’s worth noting that to reach that result the Court would need to ignore a series of recent cases requiring plaintiffs to plead facts rather than conclusory assertions….

….In recent years, the Supreme Court has made it easier for defendants in lawsuits to file motions to dismiss. In two cases, Bell Atlantic Corp. v. Twombly, and Ashcroft v. Iqbal, the Court has stated that to survive a motion to dismiss “threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice.” The Court has further explained that “[w]hile legal conclusions can provide the framework of a complaint, they must be supported by factual allegations.” When workers have sued their employers, lower courts have often relied on Twombly and Iqbal to dismiss the workers’ claims without allowing any discovery….

….When public employees have sued their employers, the Supreme Court has been quick to assert that it does not want to “constitutionalize the employee grievance.” Yet this seems to be exactly what Janus is asking the Court to do. Janus complains that he does not want to fund AFSCME’s actions as the bargaining agent for him and his fellow employees. But, undoubtedly the great bulk of any agency fees he objects to are spent on those very same employee grievances that the Court has said it does not want to “constitutionalize.” At a minimum, the Court should not allow conclusory pleadings in a bare-bones complaint to form the basis for a decision overturning long-settled law…..

Iowa Labor Collection To Digitize 1,200 Oral Histories

Source: Sarah Boden, Iowa Public Radio, September 4, 2017

More than 1,200 interviews documenting Iowa’s labor history are set to be digitized and will be available online sometime next year, making the Iowa Labor Collection one of the most comprehensive labor oral history achieves in the nation. Coal mining, meat packing, and tire and rubber manufacturing were all important industries that drew people away from farms and into Iowa’s cities during the 20th century. That’s according to Mary Bennett, the special collections coordinator at the State historical Society of Iowa, who says digitizing these interviews about Iowa’s union and labor history is crucial, since reel-to-reel tapes tend to deteriorate….
Related:
Iowa Labor History Oral Project

Corporate Tax Cuts Boost CEO Pay, Not Jobs – 24th Annual Executive Excess

Source: Sarah Anderson, Sam Pizzigati, Institute for Policy Studies, August 30, 2017

From the summary:
House Speaker Paul Ryan is proposing to cut the statutory federal corporate tax rate from 35 to 20 percent. President Trump wants to slash the rate even further, to just 15 percent. Their core argument? Lowering the tax burden will lead to more and better jobs. To investigate this claim, this report is the first to analyze the job creation records of the 92 publicly held U.S. corporations that reported a U.S. profit every year from 2008 through 2015 and paid less than 20 percent of these earnings in federal income tax. Did these reduced tax rates actually lead to greater employment within the 92 firms? The data we have compiled give a definitive — and sobering — answer.

Golden Parachutes for Public College Presidents Burden Already Thin Budgets

Source: Jon Marcus, Washington Monthly, August 28, 2017

Even presidents who leave their campuses awash in red ink walk away with big payouts. …. Often hammered out in secret, and seldom brought to public attention except when they explode into controversy, these kinds of golden parachutes for university and college presidents are not unique to Northern Illinois. And while anger often flares up when presidents’ salaries are publicized, salary totals alone don’t come close to exposing the universities’ true financial obligations to their chief executives. It’s these hidden severance deals that increasingly obligate higher education institutions to continue paying long-departed presidents large amounts for years, further thinning already stretched finances…..