Sacred Cows – The Political Economy of Tax Loopholes

If Social Security is the third rail in American politics, then tax loopholes are the sacred cows and we have a growing herd of tax dodge heifers. Whether you call them loopholes, expenditures, exclusions or deductions often characterize how you feel about them. Nobody likes loopholes, expenditures should be scrutinized, exclusions can be okay, but everyone loves deductions. We tend to think of loopholes as things that other people get and deductions are things we deserve. The Joint Committee on Taxation (JCT) has been publishing reports on tax expenditures since the 1970s, so that is what we’ll call them here. The debate on tax expenditures has been simmering for decades but it has attracted renewed attention with the ascendance of Paul Ryan as the Republican Vice Presidential nominee and his call for closing tax loopholes. A lot of attention is focused on “…loopholes that let politically-connected companies avoid paying taxes…” What is also less known is that most tax expenditures go to individuals (Figure 1). From 2001 to 2011, individuals get more than $800 billion in tax breaks compared to just $98 billion for corporations. Continue reading “Sacred Cows – The Political Economy of Tax Loopholes”

Rethinking the Same Old: 4 Trends Shaping New Economic Development Models

Many traditional approaches and methods for economic development are failing to keep up with the changing nature of job creation and investment in our communities. We submit that even those traditional measures, jobs and investment totals, that have been sacrosanct for the last 50 years, are losing relevancy. Why? Here are four key observations that are creating the urgency to rethink traditional economic models, tools and measures. Continue reading “Rethinking the Same Old: 4 Trends Shaping New Economic Development Models”

Gross Domestic People or Gross Domestic Product: Is GDP Leaving out People?

On a recent trip to the Allegheny Conference on Community Development, I realized that community leaders are marketing the economy to investors in terms of job growth, sector growth, and migration numbers. This comes as little surprise during a time when Gross Domestic Product (GDP) has indicated that the Great Recession of 2009 is long past. However, employment numbers have looked less promising. For years, GDP has been the economic measure of choice for the United States and for other countries. Policymakers, analysts, and academics have focused on GDP as the primary variable to both understand economic growth and to manipulate in order to change the economic condition. However, in our daily lives we care less about GDP growth than we care about payroll income and job security. Continue reading “Gross Domestic People or Gross Domestic Product: Is GDP Leaving out People?”