Category Archives: Econ & Money

A Number I Can Grasp

The US is planning to send $13.6 billion in aid to Ukraine, about half of it military.

I like to divide federal spending by the number of US households (c. 130 million in 2021) to help me grasp what it means.

So that $13.6bn becomes $104.62 per US household. Of course that’s just an average as federal tax incidence is not uniform. Personally I’m happy to pitch in, but it’s easy for me to say that.

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Good Tax Policy (Ukraine Edition)

Yours tax-free if you can get it out of the mud.

Bloomburg’s Matt Levine points us to the latest Ukrainian tax announcement: Feel free to capture Russian tanks tax-free:

Ukraine’s National Agency for the Protection against Corruption (NAPC) has declared that captured Russian tanks and other equipment are not subject to declaration.

“Have you captured a Russian tank or armored personnel carrier and are worried about how to declare it? Keep calm and continue to defend the Motherland! There is no need to declare the captured Russian tanks and other equipment, because the cost of this … does not exceed 100 living wages (UAH 248,100),” NAPC’s press service said.

Also, there is no need in this case to submit reports of significant changes in property status within 10 days.

“Speaking by the letter of the law, combat trophies are not subject to reflection in the declaration for the following reasons: they were acquired not as a result of the conclusion of any type of transaction, but in connection with the full-scale aggression of the Russian Federation on February 24, 2022 against the independent and sovereign Ukrainian state as a continuation the insidious attack of the Russian Federation on Ukraine launched in 2014. Thanks to the courage and victory of the defenders of the Ukrainian state, enemy military equipment usually comes to you already destroyed and disabled, which makes it impossible to evaluate it in accordance with the law On the valuation of property, property rights and professional valuation activities in Ukraine. Therefore, it is also impossible to find out how much such property costs,” the NACP said.

Wouldn’t want to discourage capturing tanks, would we?

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Optional Thought

Today’s Exponential View by Azeem Azhar contains an arresting chart, sourced to a paywalled article in the Wall St. Journal, Individuals Embrace Options Trading, Turbocharging Stock Markets :

The WSJ article suggests that individual bettors investors on Robin Hood are the driver of the growth of options; to the extent that increases volatility, then old school securities firms feel driven to hedge more, which also adds to the options boom.

Somehow, this explanation feels inadequate to me, but I don’t know why.

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The Rent is Too Damn High

Lots of news outlets picked up on this report by the National Low Income Housing Coalition stating that there is no place in the USA where a person with a 40-hour minimum wage job can afford a two-bedroom rental.

I’m very much for greater equity, and I think it’s likely true as a general matter that this is a particularly bad time for new renters due to the house-buying mania plus the moratorium on evictions (both of which restrict supply of available rentals), but at a first glance this report seems to have some issues.

For starters, they stacked the deck by pricing 2 BR rentals with one worker with one job and no overtime. Why does a single person need a 2 BR to live? Or even a couple without kids? I agree that in a wealthy country like ours, decent housing ought to be a basic right, but does decent housing mean a 2BR for everyone?

What this report suggests to me is how tough things can be for a single parent, but even then in most states a single parent on 40hrs minimum wage ought to get various kinds of aid, e.g. food stamps, sometimes section 8 housing vouchers [which admittedly can be hard to use] or maybe the Low-Income Housing Tax Credit (LIHTC), plus Earned Income Tax Credit (EITC), plus now child subsidy. There’s no sign the report took account of any transfer payments at all nor that it took any account of family circumstances.

Also is it weird to think that maybe many single minimum wage job holders might live in shared housing? Have half of a 2BR? Or a share of a house? When I was a single law clerk I lived in an efficiency, not even a 1BR.

Yes, a two-parent household with kids often has to have at least 2 jobs, maybe more, to hope to make ends meet, and that is a real problem, but that isn’t what this study says, and that isn’t what got into the headlines (e.g. CNN, “Minimum wage workers can’t afford rent anywhere in America“).

And, oh yes, the numbers they used probably are too general to support the scare headline. To identify the cost of rent they use a HUD number, the FMR, which is based on an entire metro area. As the report itself notes, “The FMR is usually set at the 40th percentile of rents for typical homes occupied by recent movers in an area. FMRs are often applied uniformly within each FMR area, which is either a metropolitan area or nonmetropolitan county. Therefore, the Housing Wage does not reflect rent variations within a metropolitan area or nonmetropolitan county”.

In other words, in a large metro area, there could be less expensive parts of town with substantial amounts of more affordable if less desirable housing, but the FMR for the city/county could be pulled up by having lots of more expensive housing too.

This is not my subject, so I’m very open to correction, and I don’t want to suggest there is not an unequal income crisis, which in turn feeds a housing crisis, but I think this particular report is more advocacy than serious research. And thus, I suspect, it’s not actually the case that there are no places in the US where adequate housing can be afforded by a single person on a minimum wage and by couples on two minimum wages. Maybe it won’t be a great neighborhood, it likely will not be a 2BR, maybe even shared housing, it may be older, but I have a strong suspicion that it often exists. Not, perhaps, in San Francisco and a few other outliers, but likely much more often than this scare headline suggests?

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Wealth and (non)Taxes

Informed Comment reports in Taxes on the Rich: One-Sixth of What They Used to Be that,

According to a new IPS briefing paper, the richest .01 percent of Americans, about 33,000 lucky souls today, now pay just one-sixth of what they used to pay in tax, when measured as a percentage of their total wealth.

This suggests that “tax the rich” has a long way to go, but also that it may have a political opening.

On the other hand, we tend to tax income, and do not in the main do wealth taxes other than on real property, so to the extent this wealth increase is unrealized capital gains after a huge surge in the market it is maybe not surprising that there is such a large untaxed body of wealth out there.

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Digging Out

I’m sure it speaks badly for me, but I thought this, via Digby, was pretty funny:

For a more serious take, see today’s Krugman.

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