Gender Gap

The WSJ sometimes disappoints me. In an article dated November 18, 2010 by Pui-Wing Tam, it tried to put the lack of diversity on corporate boards in the best possible light:

Some 56% of Silicon Valley companies now have at least one woman director on their board, up from 51% in 2009 and 41% in 2003...

http://online.wsj.com/article/SB10001424052748704658204575611141839403062.html

There are usually between nine and twelve directors on a board. The study cited above is based on corporate boards that include "at least one woman." Basically, the WSJ is lending support to the idea that diversity is progressing because Boards have added a single woman. Moreover, having a single woman on a Board apparently equals reaching "critical mass":

"There's been a growing critical mass of women on boards" in Silicon Valley, and "now it's really come to fruition," says Jonathan Visbal of Spencer Stuart, who co-wrote the study.

I'm not sure whether to laugh or cry. The only person quoted in the article who doesn't look moronic is Autodesk's general counsel:

"You want board members with divergent experiences and viewpoints, and that leads you down the path of diversity" in directors, says Pascal Di Fronzo, Autodesk's general counsel.

That makes sense. Applauding the addition of a single woman to a Board of Directors does not.

In Defense of Small Business

The WSJ's letter section has gotten so much better in the last five months, I am eagerly anticipating reading the letters section. Here is one letter in the November 25, 2008 edition that deserves to be read by every American:

"Let's All Work for the Government"

In regard to your editorial "The Public Payroll Always Rises" (Nov. 18): I am appalled that during these extremely poor economic times our government is the only substantial hiring body in the whole economy. I used to work for the government in Michigan when I was in my 20s and remember being bored to death, because I only had about two hours of real work to do per day. Having many friends that are business owners, I see a huge contrast. Business owners work 24/7, pay high taxes [we pay all of our own payroll taxes, an automatic 6.2% increase in taxes], receive no government pensions or benefits... [there is no state unemployment insurance fund for any solo business owners]

I wonder if our upcoming government administration has ever owned a business and/or has any clue about the differences between workers in the public sector vs. the private sector. It is not beneficial for the economy for government to keep excessive employees on board...I would suggest lowering then freezing property taxes nationwide as a way to offer more stability in the housing market [this is a great idea, but the real problem we have now is that current owners cannot afford their monthly payments, especially the ones who have ARMs].

How many public servants are needed, especially now that the economy has contracted so much and will continue to do so? Every day we read that tens of thousands of workers are being let go, but never in the government sector. The government needs to act like a business while using our taxpayer money. Consider how many government employees are really needed, especially since every sector in every economy in the world is laying off during these austere times.

Susan Marie
Tampa Bay, Fla.

To Ms. Marie and the WSJ: thank you for such a well-written letter.

WSJ Letters Section

I recently blogged about some WSJ letters I liked:

http://willworkforjustice.blogspot.com/2008/07/july-25-2008-wsj-letters-to-editor.html

After praising the WSJ's recent letters section, the gods smiled upon me--my short letter was published in today's WSJ (08/11/08). I was responding to an article about teachers and investing. The WSJ profiled teachers who were literally crying over being unable to understand investing in their retirement plans. You can view the WSJ letters section here:

http://online.wsj.com/public/page/letters.html

Here is my short letter (a blurb, really, but I'll take it!):

We are entrusting our children to people who can't handle basic investing and, somehow, we wonder why we end up with financially illiterate adults.

Campbell, Calif.

____________________

Update on January 17, 2009: here is a link to my August 11, 2008 letter. I'm unsure if it's a permalink, but as of today, it works.

Top 25% of Earners Paid 85% of All Taxes in 2006

The numbers the IRS released regarding tax burdens in 2006 is stunning. Basically, the top 10% pay 68% of all income taxes. That means if you're making less than $108,904, your contribution to the pool is fairly small in comparison, and if you're making more, well, thank you.

BREAKDOWN OF INCOME AND TAXES PAID BY CATEGORY
Income Category	2006 AGI			Percent of All Income			Percent of Income Taxes Paid
Top 1%	Over $388,806			22%			37%
Top 5%	Over $153,542			37%			57%
Top 10%	Over $108,904			47%			68%
Top 25%	Over $64,702			66%			85%
Top 50%	Over $31,987			87%			97%
Bottom 50%	Under $31,988			13%			3%

The above chart is from Kiplinger's:

http://finance.yahoo.com/taxes/article/105468/What%27s-Your-Share-of-the-Nation%27s-Tax-Bill?

This reminds me of a joke I read on Greg Mankiw's (http://gregmankiw.blogspot.com) blog. He told a story about a group of four friends who went out drinking. At first, they divided the bill equally, each paying 10 dollars for a pitcher of beer. Then, the four friends realized that one only made $10/hr, while another made $90/hr. They agreed the higher-earning friend should pay 20 dollars as a "fair" share. The friend agreed, everyone else paid about 7 dollars each, and everyone was happy. Everything was going well, until the other three friends demanded that the higher earner pay 30 dollars as his "fair" share. The friend got ticked off and moved out of the city. The next time the three friends went out for beers, they all paid about 14 dollars each, more than if they had been nicer to the higher wage earner.

The lesson? People will move or take other measures to avoid taxes if they are too high or unreasonable, leaving everyone else with a higher bill.

Update on April 13, 2009: more on income taxes here and here.

Update on August 10, 2012: more on overall tax burdens here: http://online.wsj.com/article/SB10000872396390444246904577571042249868040.html?mod=e2fb  (David Wessel, August 6, 2012, The Numbers Inside a Hot-Button Issue)

"In the 1980s, the top 5% averaged 22.6% of income and paid 28.5% of taxes.

In the 1990s, the top 5% averaged 25.3% of income and paid 34.3% of taxes.

In the 2000s, the top 5% averaged 28.4% of the income and paid 40.3% of the taxes."

"Average tax rates have come down for everyone. On average, the tax bite on the rich is bigger--except for those whose income mainly comes from capital gains and dividends."

"The share of taxes paid by the bottom 40% of the population has been shrinking along with their share of income." 

July 25, 2008: WSJ Letters to the Editor

I've been reading the Wall Street Journal for years, and I've never seen better letters published on the issue of income taxes. From July 25, 2008 newspaper:

By Sim Pace, from Arlington, VA--the spirit of Jefferson shines bright:

"[T]he top 50% of taxpayers paid 97.1% of income taxes in 2006...Isn't that the well-known definition of democracy, the poorest 51% of the population tyrannizing the richest 49%? I suspect Sen. Obama would like to see the pendulum swing even further and have the top third of taxpayers pay all the income taxes, then the other well-known definition of democracy will have been validated: two wolves and a lamb voting on what to have for dinner.

By Bruce Kebbekus from Hotchkiss, CO:

It should be mentioned that letting about half the citizens escape and pay no income taxes will lead, and probably has already led, to voter disinterest and bad government. Too many have no stake in the game.

By Harold Arkoff from Calabasas, CA:

California...receives back from Washington a smaller percentage of income taxes than it pays. A greater burden is placed on the local population to pay for state services which must be paid for by other sources of revenue..."Their fair share" can have more than one meaning. Is California getting a fair share?

What do D.C. and Delaware produce? They are usually in the highest brackets in terms of per capita GDP by state. See

http://www.bea.gov/newsreleases/regional/gdp_state/gsp_newsrelease.htm

Delaware has attracted almost all the major banks to its state by having a pro-business platform. Also, most of us didn't elect the Delaware Chancery Court to decide economic legal issues, but its opinions make waves nationally in business matters. This small state and D.C. have made themselves epicenters of influence despite their unimpressive physical statures (D.C. is a swamp after all).I t's commendable to see a small state and a district attract so much business and influence. At the same time, one wonders why California and Texas citizens don't project themselves as well as these smaller entities. Is this a case of Lennie and George, as Mr. Arkoff implies in his letter?