CEPR - Center for Economic and Policy Research

Multimedia

En Español

Em Português

Other Languages

Home Press Center Press Releases
Press Releases
The Big Tax Increase Nobody Noticed

For Immediate Release: September 30, 2014

Contact: Alan Barber (202) 293-5380x115

Washington DC – A new paper from the Center for Economic and Policy Research (CEPR) examines the results of two recent polls that indicate that the American public may not be as sensitive to changes in taxation rates as conventional wisdom holds.

The report, “The Big Tax Increase Nobody Noticed,” details the results of two Google Consumer Survey polls conducted by CEPR in 2013 and 2014. The polls asked respondents about the payroll tax that funds Social Security and whether that tax rate had changed that year. In the 2013 poll, the majority of respondents (56 percent) did not know if their taxes went up or down and just 29 percent knew that the payroll tax did in fact go up. This is noteworthy since the expiration of the payroll tax holiday meant that the tax increased a full 2.0 percentage points. In 2014, when the Social Security payroll tax rate was unchanged, 68 percent responded that they did not know while 20 percent thought the tax had gone up. This 20 percent number can be taken as an estimate of the share of the public who believe taxes go up every year regardless of whether they do or not. This would imply that in the 2013 survey, only 9 percent actually recognized a significant increase in the Social Security payroll tax.

This could have serious policy implications for the Social Security program. In the coming decades, Social Security will face a funding shortfall. If no changes are made to the program, it will begin to pay 75 percent of full benefits in the 2030s. A number of analysts and politicians have proposed increasing taxes on higher income earners to close the shortfall. Very few have proposed increasing the payroll tax rate, even if the increase is phased in over time. For example, if a 2.0 percentage point increase in the payroll tax is phased in over twenty years, taxes could be raised at the rate of 0.1 percentage point annually (0.05 percentage points on each the employer and employer). These poll results suggest that the public might not be as averse to a tax increase as is often claimed, if they notice the increase at all. The evidence in “The Big Tax increase Nobody Noticed,” indicates that while politicians and the media may treat tax increases as a hot button issue, the general public may not. The full paper and poll methodology can be found here.

 
Report Examines Economy and Social Indicators During the Past Decade in Brazil

For Immediate Release: September 29, 2014

Contact: Dan Beeton, 202-239-1460

Washington, DC – The Center for Economic and Policy Research (CEPR) released a research paper today that looks at social and economic indicators, as well as policy changes that have occurred since 2003 in Brazil.

“The lives of tens of millions of Brazilians have been transformed by the economic and social policy changes of the past decade,” said CEPR Co-Director Mark Weisbrot, lead author of the paper. “A sharp increase in economic growth, combined with increased social spending, large increases in the real minimum wage, and increased bargaining power for labor allowed for greatly reduced poverty and unemployment, as well as declining inequality.”

“These changes appear to be durable, having mostly withstood the world recession and the slowdown in worldwide economic and trade growth of the past few years.”

Among the paper’s findings:

  • Since the Workers’ Party (PT) won the presidency with Lula da Silva taking office in 2003, poverty has been reduced by over 55 percent, from 35.8 percent of the population to 15.9 percent in 2012. Extreme poverty has been reduced by 65 percent, from 15.2 percent to 5.3 percent over the same time period. Over the last decade, 31.5 million Brazilians were lifted out of poverty and, of that number, over 16 million out of extreme poverty.
  • GDP per person grew at a rate of 2.5 percent annually from 2003-2014, more than three times faster than the 0.8 percent annual growth of the prior government (1995-2002). This was in spite of the 2008-09 world financial crisis and recession, which pushed Brazil into recession in 2009; and also including the slowdown of the past few years.
  • While inequality remains high, there were large changes in how the gains from economic growth were distributed as compared with the prior decade. For example, the top 10 percent of households received more than half of all income gains from 1993-2002, but this fell to about one-third for 2003-2012.
  • Social spending has consistently increased since 2003, rising from 13 percent of GDP to over 16 percent in 2011, the last year for which data is available. Education spending has increased from 4.6 percent of GDP in 2003 to 6.1 percent of GDP in 2011.
  • Unemployment has decreased from 13.0 percent in 2003 to an average of 4.9 percent in the first quarter of 2014, a historic low.

The paper finds that these results were achieved due to policy choices, including often counter-cyclical fiscal and monetary policy, a reactivated industrial policy, lowered domestic interest rates and a break with IMF conditionalities following Brazil’s paying off its IMF debt early, in 2005. Economic stimulus helped Brazil rebound strongly from the 2008-2009 global recession. The government has raised the real (inflation-adjusted) minimum wage by 84 percent; this boosted pensions and public sector wages that are tied to it, as well as other wages and salaries.

Programs such as Bolsa Familia (BF) helped bring down poverty; since 2003, expenditures on the program in real (inflation-adjusted) Reais increased from 4.8 billion to 20.7 billion (0.2 percent of GDP to 0.5 percent of GDP). From 2003 to 2012 the number of individuals covered by Bolsa Familia increased from 16.2 million to 57.8 million. As a percent of the population, coverage increased from below 9 percent in 2003 to nearly 29 percent in 2012.

The PT government has aided the country’s industrial sector in part through the national development bank BNDES. Disbursements from BNDES have increased from 2.2 percent of GDP in 2005 to nearly 4 percent in 2013, with priority sectors for Brazil’s industrial policy receiving about 80 percent of BNDES disbursements between 2006 and 2012.

In the last few years the economy has slowed, although unemployment has continued to decline, and average wages have risen. The paper faults overly-tight and sometimes pro-cyclical macroeconomic policies, including monetary and fiscal policy, since 2011, for the economic slowdown; as well as the slowdown in world economic and trade growth.

 
The Affordable Care Act and Part-Time Employment: A Family-Friendly Policy

September 11, 2014

 
Economists Call on Congress to Mitigate Fallout from Ruling on Argentine Debt

July 31, 2014

 
Haiti Aid Reform Bill “Will Be a Step in the Right Direction,” CEPR Co-Director Says

July 25, 2014

 
Pay-Cut Clock Documents Billions of Dollars Lost by Minimum-Wage Workers

July, 24, 2014

 
Is Paid Family Leave Really Bad for Business?

June 24, 2014

 
Unions Boost Women’s Earnings, Benefits, and Workplace Flexibility

June 18, 2014

 
Federal Paid Leave Policy Could Allow Millions of Working Americans Access to Much Needed Family and Medical Leave

June 16, 2014

 
New Paper Finds No Evidence that Latin America’s Economic Growth Rebound Results from a “Commodities Boom”

May 21, 2014

 
Black Recent Grads Hardest Hit by the Great Recession

May 20,2014

 
New Book Examines Private Equity’s Role in the U.S. Economy & Labor Market

May 15, 2014

 
Expansion of FMLA to Small Firms would Give Coverage to Over 34 Million Working Americans

April 22, 2014

 
The Last Three Decades of Women’s Rising Hours of Work Added $1.7 Trillion to GDP in 2012

April 15, 2014

 
New Report Confirms Connecticut Business Owners’ Positive Experience with Nation’s 1st Paid Sick Days Law

March 6, 2014

 
Statement on the Report of the Society of Actuaries Blue Ribbon Panel on Pension Funding

March 4, 2014

 
OAS Insider Reveals Details of Illegal Foreign Intervention Against Haitian Democracy

February 25, 2014

 
New CEPR Project highlights cycle of excessive pay for CEOs and directors

February 13, 2014

 
Twenty Years after NAFTA, Mexico Has Experienced Lagging Growth, Persistent Poverty and Increased Unemployment

February 12, 2014

 
Unionization Continues to Boost Pay and Benefits of Black Workers

February 12, 2014

 
<< Start < Prev 1 2 3 4 5 6 7 8 9 10 Next > End >>

Page 1 of 24

CEPR.net
donate_new
Combined Federal Campaign #79613