Thanks for Paying Your Federal Income Taxes, Here's Your Itemized "Taxpayer Receipt"

From the policy paper "A Taxpayer Receipt" from a D.C.-based policy group called "The Third Way":

"Corn syrup, milk chocolate, sugar, cocoa butter, coconut, almond, soy lecithin… any consumer can read these ingredients and their nutritional value on every package of a75-cent Almond Joy. What is provided to a taxpayer with a $5,400 tax bill? Nothing. For many Americans, the amount they pay in taxes is larger than any purchase they make during the year, but studies show they know almost nothing about where that money goes.

An electorate unschooled in basic budget facts is a major obstacle to controlling the nation’s deficit, not to mention addressing a host of economic and social problems. We suggest that everyone who files a tax return receive a “taxpayer receipt.” This receipt would tell them to the penny what their taxes paid for based on the amount they paid in federal income taxes and FICA."

MP: See the example above of an itemized tax receipt for the median tax filer in 2009 making an adjusted gross income of $34,140, and paying $2,790 in federal taxes, and $2,610 in Social Security and Medicare "contributions," for a total federal tax bill of $5,400. 

And here's a slightly different version of an interactive itemized tax receipt calculator at a website called "Where My Money Goes," which allows you to put in any income amount and see an itemized tax receipt (thanks to Alex Rodriguez for this website).

China's Currency Policy is the Greatest Anti-Poverty Program in America, Why Should We Complain?

Warren Meyer writing in Forbes asks "Why Are Democrats Promising to Raise Prices?" by pressurng China to appreciate its currency instead of celebrating cheap imports from China as one of the most effective anti-poverty programs in America today?

Democrats claim the American manufacturing base is declining in the face of unfair competition from a Chinese government that is unfairly helping its own manufacturers through currency manipulation and export subsidization. To which I say: So what?

We should be thrilled that the Chinese government and its people see fit to spend their own money to subsidize lower prices for American businesses and consumers. Last week, President Obama put substantial pressure on the Chinese prime minister to revalue Chinese currency, a revaluation that would have the effect of raising prices of all Chinese goods in the United States. What possible sense does such a move make, particularly in a recession?

There is no question that if Democrats are successful in changing China’s currency policy and/or imposing new tariffs (taxes) on Chinese goods, prices will rise for all Americans, but particularly so for the lower income brackets that are supposedly the Democrats’ constituency.  In a sane world, Democrats would be celebrating Chinese imports as one of the greatest anti-poverty programs that exist in America today. 

Except for CFC, Auto Sales Reach 2-Year High

Vehicle sales were released today for September, and here are some highlights:

1. On a "seasonally-adjusted annual rate" basis, total U.S. light vehicle sales increased to 11.76 million units in September, which was 2.55% higher than August, and 25.4% higher than September last year (see chart above). 

2. Except for the artificial sales stimulus of "cash-for-clunkers" (CFC) in August 2009 when sales topped 14 million (at an annual rate), September vehicle sales reached the highest monthly level in two years. 

3. Ford and Chrysler led the automakers in September with sales increases of 46.4% and 60.9%, respectively, compared to the same month last year.

4. Light truck sales were especially strong in September, with a 40.8% increase over last year.  See related CD post "The Pickup Truck Indicator: Recovery is Real."

5. Year-to-date vehicle sales this year are 10.3% ahead of last year. 

NFL Income Inequality: It Just Keeps Getting Worse

Click once, and then again to enlarge.

According to a new report from the Census Bureau, the top 20% of American households earned 50.3% of the total income in 2009, just slightly higher than the 50% share of income for the top fifth of households in 2008. Looking at a longer period of time going back to 1967 when the top quintile earned 43.6% of all income, the share of income going to the top fifth increased throughout the 1970 and 1980s, until stabilizing in the 49-50 percent range in the mid-1990s.

Using NFL salary data from USA Today, the shares of total team payrolls going to the highest-paid  20% of players in 2000 and 2009 are displayed in the chart above for all 32 teams. The average share of NFL payrolls going to the highest-paid 20% of players in 2009 was 62.4%, higher than the 59.5% share in 2008, and much higher than the 56.3 percent in 2000.  Between 2000 and 2009, income inequality increased for 27 of the 31 teams that played in both years. 

For the second year in a row, the Indiana Colts led the league in income inequality, with just two players (Kelvin Hayden at $17.5 million and Peyton Manning at $14 million) capturing more than 30% of the total team payroll of $103.4 million in 2009. Top-paid Kelvin Hayden's salary was a whopping 56.4 times more than his lowest-paid teammate, Rudolph Hardie, who made the NFL minimum of $310,000. That would mean that Kelvin Hayden was paid almost as much for each quarter of regular-season play ($273,125) as Rudoph Hardie made for the entire season. (How can that be fair?)

In other words, there is significantly greater income inequality in the NFL than in the general U.S. population, with 62.4% share of team payrolls going to the top fifth of NFL players in 2009, compared to 50.3% of total national income going to the top quintile of American households. And while the share of income going to the top 20% of U.S. households has been constant for more than a decade, payroll inequality in the NFL keeps increasing each year.

What are some of the lessons we can learn from the escalating income inequality in the NFL?

Find out here at The Enterprise Blog.

Booming Bull Market Rally in Emerging Markets; MSCI Index Reaches 27-Month High Today

BLOOMBERG -- "Emerging-market stocks rose, sending the benchmark index to the highest level in 27 months (see chart above), and currencies strengthened as reports showed China’s manufacturing grew and developing-nation fund inflows hit an 11-month high.

The MSCI Emerging Markets Index climbed 0.7 percent to 1,082.92 at 11:07 a.m. New York time, poised for a fifth straight weekly advance.  China’s manufacturing expanded at the fastest pace in four months in September, adding to signs that growth is stabilizing in the world’s fastest-expanding major economy. Investors poured $4.3 billion into emerging-market equity funds in the week ended Sept. 29, the biggest amount since October 2009, and the funds are poised for record annual inflows."

MP: The Emerging Markets Index has gained 9.4% over the last month, and 19% over the last twelve months, and reached the highest level today since June 30, 2008, 27 months ago.

Stronger Yuan Will NOT Bring Jobs Back to the U.S.

Nancy Pelosi claims that "One million U.S. jobs could be created if the Chinese government took its thumb off the scale and allowed its currency to respond to market forces." 

In the NPR "Planet Money" report, Adam Davidson is pretty skeptical about Pelosi's claim, based on the following example:

Some American manufacturers that use industrial springs can buy them in China for 95% less than in the U.S. - if they cost $1.00 here, they're only 5 cents from China, shipping included.  In that case, even if China's currency appreciated significantly by 30% or 40% or more, the springs from China would still cost only 7 or 8 cents, or maybe even 10 cents, and there would be NO jobs coming back to the U.S. That's just one example, but there are many other products (toys, T-shirts, shoes, low-end electronics, commodities, etc.) that are so cheap to produce in China compared to the U.S., that even a greatly-appreciated renminbi/yuan wouldn't bring any manufacturing jobs back to America, and certainly not anywhere close to 1 million jobs.

A similar point was made in a WSJ article in May, subtitled: "You're not going to change the balance of China trade by adding 25 cents to the cost of a T-shirt."

There are other reasons that a stronger renminbi wouldn't bring jobs back to America:

1. A stronger renminbi/yuan would give China an advantage for any commodities, inputs, raw materials, and energy products (oil and natural gas) that it imports, which might allow them to maintain the current prices for exports to the U.S.

2. If a stronger renminbi/yuan did make Chinese exports to America more expensive, manufacturing production and jobs would likely shift to other areas in Asia (Vietnam, Bangladesh, India, Thailand, Korea, etc.) and not back to America.

Real Consumer Spending Increases in August to 27-Month High, Almost Back to Pre-Recession Level

According to today's report from the BEA on "Personal Income and Outlays," real personal consumption expenditures reached a 27-month high of $9,321.2 billion in August, the highest level of consumer spending since May of 2008 (see chart above).  Real consumer spending in August was just $34.3 billion (or 0.37%) below the peak of $9,355.5 billion reached in December 2007, the month the U.S. economy went into recession. 

In the 16-month period between January 2008 and April 2009, real personal consumption fell in 13 of those months; in the 16-month period from May 2009 to August 2010, consumer spending has increased in 13 months, as the economy has gradually recovered.  Over the last seven months, consumer spending has increased in every month except April.   The August increase in real spending was the fourth straight monthly increase and beat the expectations of economists.

This rebound in consumer spending over the summer is consistent with the widespread increases in August state tax revenues (which includes sales taxes) that were higher than expected in many states, see CD post here with 13 states reporting increases in August tax revenues.