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Monday, February 21, 2005

Roaming through today's New York Times 

The driveway is shoveled, the nose is blown, and my next move is to go to the office and read a huge stack of documents. But since I'm undercaffeinated for that task, I've stopped at Starbucks for a spin through the New York Times and as many shots as it takes. Think of this as the ultimate derivative work, the liveblogging of me reading the Gray Lady.

The politics of the Alternative Minimum Tax

The first article to attract my inner geek is a long-anticipated rehashed bit on the "alternative minimum tax," or AMT. The AMT is a sort of parallel tax system enacted in 1969 guard against the possibility that rich people might avoid normal federal income taxes entirely. It imposes an alternative calculation of tax assuming one large AMT exemption, but none of the usual tax deductions (such as state and local taxes). The problem is that nobody thought to index the AMT triggers to inflation. A nominal income that would have been considered quite large in 1969 is now a bit above average in affluent states. The result is that literally millions of basically middle class people living in high tax states are going to get hammered by the AMT in the next few years unless Congress repeals or otherwise modifies it drastically.

The New York Times only hints at the politics behind AMT reform. It does point out that high tax jurisdictions will come under pressure to keep taxes down as their citizens lose federal deductions, and it suggests that higher "after tax taxes" may curtail soaring home values in high tax jursidctions such as New York, New Jersey, Connecticut, and California. The Times does not ask the obvious question, though: If the AMT hammers "blue states" disproportionately (as the NYT demonstrates), will the Republican federal government really want to repeal the tax? Sure, some of these hapless AMT victims may be Republican contributors or happen to vote in Republican congressional districts, and the Republicans have rarely met a tax cut they didn't like, but will that be enough?

If the Republicans do reform the AMT they will accomplish four things, none of which will obviously benefit them politically. First, they will be repealing a tax specifically designed to nail rich tax avoiders. It is inevitable that Democratic candidates and 527s will hammer at that point in the next election campaign with all the deceptive advertising they can muster.

Second, repeal of the AMT would have the effect of shifting wealth from low tax states -- which tend to vote Republican -- to high tax states which almost always vote for Democrats.

Third, repeal of the AMT would make it harder to shrink the federal deficit, which the Democrats will use against the Republicans at every opportunity.

Fourth, the repeal of the AMT will alleviate pressure on local governments, which in my experience are the most wasteful and least accountable level of government that we have. Most local tax jurisdictions are controlled by one party with no serious opposition. They collect money in all sorts of opaque ways, and spend it on public works meant to buy more votes to expropriate more tax revenue. In Princeton, our taxes have gone up by leaps and bounds in the six years that we have lived here, and the local governments have managed to spend every bit of it. The loss of the federal deduction subsidy might, though, create enough wind in the face of the local politicians that they think twice about the next grandiose scheme for spending our money. It's our last, best hope for fiscal sanity at the local level.

So, as an affluent voter living in a profligate "blue state" college town, I would personally benefit from AMT repeal -- at least until Princeton Township grabs the "ups" for some white elephant construction project. I honestly can't imagine, though, why the federal Republicans would make AMT a priority. The math is all wrong. (And here is at least some evidence that the Republicans are looking at the politics of AMT reform the same way I do.)

Voting with their feet

Sam Roberts has an interesting article about African immigration to the United States.
For the first time, more blacks are coming to the United States from Africa than during the slave trade.

Since 1990, according to immigration figures, more have arrived voluntarily than the total who disembarked in chains before the United States outlawed international slave trafficking in 1807. More have been coming here annually - about 50,000 legal immigrants - than in any of the peak years of the middle passage across the Atlantic, and more have migrated here from Africa since 1990 than in nearly the entire preceding two centuries.

According to the Times, the inflow is "already redefining what it means to be African-American... The influx... [is] recalibrating the largely monolithic way white America views blacks to raising concerns that American-born blacks will again be left behind."

The article focuses on the assimilation, or lack thereof, of African immigrants into the African-American community, and it raises the possibility that we may start thinking of blacks more on ethnic terms than racial terms. Indeed we will if African immigrants follow the economic arc of other immigrant groups rather than that of the descendants of American slaves. We would then know that the limitations on African-American success are defined less by the color of their skin than other considerations. This is not to say that racism did not create the conditions that have limited the economic success of blacks, but it may be that it has burned away, like the gasoline that starts a fire. We may still be picking through the wreckage of the fires caused by racism, even if the accelerant is largely burned away.

The Times avoided one interesting question, which is whether the new immigration from Africa may reflect a growing sense that blacks can make it in America. I have observed elsewhere that it is important to watch the flow of the refugees. If they come home -- as in Iraq and Afghanistan -- you know things are better than they were. Well, if African immigration to the United States is picking up, is it because the United States may today be a better place for blacks than it has ever been before? People flow like water to opportunity, and the emergence of voluntary African immigration may be the best measure of the strength of American opportunity for black people.

Too much knowledge in public health

Gina Kolata, the Times most well-known science reporter, has a lengthy front-page article about a new federal proposal to require that newborn babies be tested for 29 diseases. The proposal is generating "fierce debate" between doctors and patient-advocacy groups who argue that more information is always better, and others who argue that for most of the rare diseases in question "it is not known whether the treatments help or how often a baby will test positive but never" manifest the disease. The Kolata article graphically illustrates a problem that has long fascinated me, the uses and abuses of deception in public health. There are clearly times when the withholding of information may improve the public health outcome, even if it works against the interest of any particular patient. The mandatory testing of infants for rare diseases may be one of those cases.

That's it for now.

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