Carl Davis for the Institute on Taxation and Economic Policy: In announcing a tax cut framework in Indianapolis that was negotiated with House and Senate leaders, President Trump said, “Indiana is a tremendous example of the prosperity that is unleashed when we cut taxes and set free the dreams of our citizens … In Indiana, you have seen firsthand that cutting taxes on businesses makes your state more competitive and leads to more jobs and higher paychecks for your workers.”
The tax cuts referred to by Trump were signed by then-Gov. Mike Pence in May 2013 and included the immediate elimination of the state’s inheritance tax as well as reductions in the state’s personal and corporate income tax rates. The personal income tax cut alone (from 3.4 to 3.23 percent) reduced state revenue by roughly $295 million this year and has contributed to Indiana’s unfortunate distinction of having one of the most regressive tax systems in the nation. Families with incomes over $484,000 received an average personal income tax cut of $1,555 this year, compared to just $54 on average for the middle 20 percent of Indiana families, or approximately $2 per bi-weekly paycheck. The inheritance and corporate tax cuts were similarly tilted in favor of the state’s wealthiest families. In total, state officials estimate the cuts will drain at least $580 million from state coffers each year.
Following the signing of these cuts, Indiana’s recovery from the Great Recession continued roughly in line with the rest of the nation. While the state’s unemployment rate has fallen more dramatically than the national average, the “higher paychecks” spotlighted by Trump have not materialized. Since the signing of these tax cuts, average income growth in Indiana has trailed both the national average and the level of growth seen in neighboring states.
It’s time for Turkey to talk succession
Michael Rubin for the American Enterprise Institute: The problem with strongman rulers is that the illusion of strength and stability they bring is fleeting. When dictators eviscerate checks-and-balances, they become the only glue holding society together.
Consider Turkey: Under the grasp of President Recep Tayyip Erdogan, the country has just a thin façade of stability. Erdogan’s purges have decimated the army and security forces, neither of which retain the power nor competence of decades past. The blows to judicial independence will likewise be hard to repair. Nor is it clear that the Justice and Development Party, the political party Erdogan founded, will be sufficient to stabilize the country once Erdogan is gone. In recent years, Erdogan has promoted family members … at the expense of longtime aides and party leaders. Regardless, with the exception of Mustafa Kemal Ataturk and his Republican Peoples Party, no Turkish political party which has managed alone to lead the country has survived the death of its charismatic leader. …
Few policymakers, academics or outside analysts anymore pretend that Erdogan is anything but an autocrat. Some temper criticism for fear of losing business or access, while others more inclined to ignore Erdogan’s behavior say that, despite his foibles, Turkey is simply too important from which to walk away. Either way, however, it behooves American policymakers to consider what may happen in Turkey the day after Erdogan’s death, especially if that day comes sooner than many diplomats assume.
The wealth slide is ending for black families
Algernon Austin for Demos’ Policyshop: Newly released data from the Federal Reserve’s Survey of Consumer Finances reveal that the downward slide in wealth for African Americans in the 21st century is finally over. The Survey of Consumer Finances is conducted every three years. The data from the 2016 survey show the first increase in net worth for non-Latino black families since the 2001 survey.
From 2001 to 2013, the median net worth of black families declined by nearly 50 percent, from $26,300 to $13,600 … In 2016, black net worth increased to $17,600, equal to its level in 2010.
Most American families experienced wealth increases over the 2001-to-2007 business cycle. This was the period of the housing bubble, when the value of American homes rose dramatically. African-American families did not share in this wealth increase. While white and Latino median net worth increased, black net worth declined slightly.
Although African-American families did not see their wealth increase during the housing boom, they did suffer during the housing bust. During the Great Recession, black wealth declined substantially from 2007 to 2010. And then, after the recession, it continued to decline into 2013, even as white net worth began to recover.
Compiled by Joseph Lawler from reports published by the various think tanks.
