2301 Assignment 1.

Name________________________________________________

Part I

Public Policy Process

 

Identify the stage(s) of the policy process reflected in each article. Cite several examples from each of the articles to defend your choice. Hint: There may be more than one policy process identified in some of the articles.

Wind Jammers

Wall Street Journal

August 18, 2008

Hope Glimmers Through Petraeus’ Fatigue

Houston Chronicle

August 21, 2008

Schools’ Later Start is Saving Big Bucks

Houston Chronicle

August 21, 2008

Part II

The Truth About The Top 1%

Alan Reynolds

Cato Institute

Oct. 29, 2007

Part 1

  1. Why did thousands of professionals and business owners change from the corporate tax to individual income-tax rates (LLC’s and Sub-S corporations)?
  2. What did this bookkeeping shift do to the top 1% share on individual tax returns?
  3. How is a huge portion of middle and lower income excluded from the tax returns?
  4. Reynolds does not believe the top 1% own 21%-33% of all capital and are collecting 59% of income from capital as reported by the Congressional Budget Office (CBO).

So why does it seem the top 1% is simply reporting a rising share of capital income?

 

 

 

Part 2

  1. Adjustable Gross Income (AGI) includes only the taxable portions of Social Security.

    2. What middle and lower incomes are excluded from the adjustable gross income?

  2. As a result of this omission and tax avoidance, was the adjusted gross income larger or smaller than the pretax personal income?
  3. Why should we be concerned about the difference between income per household and income per tax return?
  4. How much full-time work did the top 1/5 and bottom 1/5 account for last year?
  5. What percent of the bottom fifth accounted for no one working? Why is this important when labor economist discuss income inequality? (Two part question)

Part 3

  1. Why are the latest Internal Revenue Service (IRS) figures not comparable with those of 1986, much less with 1929? What did the Adjusted Gross Income exclude? ( Two part question)
  2. What happened when the tax dividends were reduced in 2003? If they are not in taxable accounts instead of nontaxable accounts, do you think they would inflate the top percentile?
  3. Top income reported on individual tax returns is sensitive to changes in marginal tax rates on individual income, corporate income and capital gains. What happened when tax on capital gains was cut in 1997 and 2003?
  4. According to Mr. Reynolds, when the top 1% share falls in a recession, does that mean the recession raises everyone else’s income?
  5. Mr. Reynolds believes the surge in reported top incomes has been caused by the reduction in taxation. (A lower tax on capital gains encourages more people to sell stock, houses, etc. This will show up on tax returns because of the increased income received from these transactions. ) What do you think the behavior of people would be if you increase the rates on capital gains?
  6. Messrs. Piretty and Saez believe higher tax rates on top incomes, dividends, and capital gains would reduce top incomes, dividends, and capital gains reported on tax returns. (People would not have as many transactions from the sales of stocks, houses, etc, and therefore would not be reflected in the reported tax returns. Who will be left to pick up a much larger share of the burden?

Part III

"Poverty in America"

Robert Rector

New York Post

August 30, 2007

  1. The author believes much of the official poverty that exists in self-inflicted. Why? What four solutions does he recommend?