Hey, it’s tax time again!
- Currently Listening To: "Can't Fight This Feeling", REO Speedwagon
Hey, it’s tax time again!
The 2015 Minnesota Tax Incidence study is out. Since I last posted about this two years ago, not much has changed. Details below:
Tax time is here, and that means it’s time to calculate our 2014 tax incidence below…
I’m fascinated by Bitcoin, but not as a currency. I enjoy it’s mathematical underpinnings, its algorithms, its self-enforcing decentralization (I like torrents for the same reason). It is pretty ingenious with its block chain record of transactions and its use of cryptography, which I love.
As a currency, though? It’s absurd. Ignoring the fact that every major exchange eventually seems to go under, as a currency it has a lot of limitations. It’s incredibly volatile: any merchant that accepts Bitcoin for payment for something like a TV has to contend with the fact that in a week that Bitcoin may be two TVs, and a week later just half of one. Foreign currency exchange risk is a huge factor for even the most languorous of currencies, such as the USD/EUR exchange rate; I can’t imagine keeping the books on something as insane as Bitcoin.
Also, I find it hilarious that it seems the most avid haters of fiat currency such as the U.S. Dollar are most in love with Bitcoin, which is the ultimate in fiat currency. Maybe it’s the anarchic rejection of any centralization, or maybe because Bitcoin’s inherent deflation is in line with what contemporary goldbugs want. In any case, seeing people cling to Bitcoin and reject the major reserve currency that can be used in nearly every country on Earth is pretty funny.
I have no idea what the future of Bitcoin will be, but I think it’s much more likely to be a fundamental case study in a math or crypto class than a fundamental part of our economy in the future.
Hey, it’s time for my now-annual blog post on tax incidence! Graphs below…
Businessweek has put out a quite memorable story on the decline of hedge funds. The story, and a very good response, are worth a read. Even if you don’t pay much attention to that sector of finance a whole lot.
Let’s start with the standard picture: the overall effective tax rate. Little has changed in the past few years.
Minnesotans are paying about 11½% of their income in taxes, the same since 2000. It is even projected to go down a few ticks in the future.
Next is my favorite graph, that of tax incidence broken down by decile. The same as before, the wealthiest 10% pay a lower share of their income in taxes than the middle class:
No wonder Governor Dayton’s plan to raise taxes on the rich is popular.
There really isn’t much new in this report. Despite all the hemming and hawing over the past several years, the tax situation is mainly status quo in Minnesota.
I have nothing better to do on a Saturday morning than go over finances. In doing so, I realized that I had miscalculated the tax incidence graphs I had previously created. The biggest change is for payroll taxes in college: instead of looking at my W2s I just assumed I was paying full Social Security and Medicare taxes on my student jobs. In fact, I was not. This reduced my tax burden in the late 90s. The 2012 blog post has been updated with the most accurate figures.
So I’ve done our 2012 taxes, and as such, I can update my last blog post on tax incidence. Graphs below…
Note: These graphs have been corrected in the 2012 Tax Incidence post.
I like analysis, and I like tax policy. Put the two together, as I’ve done before, and it’s a pretty sweet time. But I have a lot of numbers at my disposal, much more than the past couple of years. So because I had little better to do, I decided to calculate my tax incidence for the time I’ve been working, which is a very long time indeed. All the details after the jump.