Is Driving in California Subsidized?
by Marc Joffe, Cato at Liberty, July 16, 2024.
Excerpt:
To determine whether the government is still subsidizing California drivers today, Krit Chanwong and I reviewed a variety of local, state, and federal disclosures for the 2022–2023 fiscal year. We used actual figures when available but were sometimes obliged to use budgeted amounts due to lack of sufficiently detailed actuals.
Teamsters Boss Sean O’Brien Put Political Spectacle Ahead of His Job
by Eric Boehm, Reason, July 16, 2024.
The reality, however, looks a bit different. The contract that the Teamsters and UPS signed only requires air conditioning in vans and trucks purchased in 2024 and beyond. In June, CNN reported that UPS has not yet purchased any new trucks that include air conditioning.
As a result, Teamsters members working for UPS are still sweltering on the job this summer—while their boss turned a victory lap into a plum speaking gig at the RNC.
A supporter of O’Brien’s might argue that progress in the labor moment is always incremental and that air conditioning only in newly purchased trucks is better than no air conditioning at all. Fair enough.
But if unions were essential to extracting those concessions from employers, why are Amazon’s non-union delivery drivers working in fully air-conditioned trucks?
US Workers Earning $60,070 Face $3,063 in Higher Taxes to Keep Social Security Solvent
by Romina Boccia, Cato at Liberty, July 18, 2024.
Excerpt:
If the Social Security program continues to operate as it currently does, a median US worker earning around $60,000 annually could soon face an additional burden of more than $3,000 in payroll taxes, bringing their total payroll tax burden to more than $10,000 a year.
Figure 1 shows how much taxes would increase for a median US worker should Congress increase the payroll tax rate from 12.4 percent to 17.5 percent, which is necessary to maintain Social Security’s current benefit structure through 2097. With this higher payroll tax rate, the yearly payroll tax burden for median earners would rise by more than 40 percent, increasing from $7,449 to $10,512.
Social Security depends on immigrants — especially those in the U.S. unlawfully
by Robert Posen and Charles Blahous, MarketWatch, July 16, 2o24.
Excerpt:
Social Security’s critical worker-collector ratio is boosted even more directly by immigration than by increased fertility. This is because immigrants are most likely to arrive as working-age, taxpaying adults, whereas it usually takes almost two decades before native-born Americans make appreciable payroll-tax contributions. The 2024 Social Security trustees’ reportcontains a sensitivity analysis showing that if future immigration were 35% higher than is now projected, Social Security’s financing shortfall would be reduced by 11%. Immigration can’t eliminate Social Security’s financing shortfall, but it helps.
And:
As a 2013 actuarial note from the Social Security Office of the Chief Actuary explains, these contributions only result in benefits for the individual if they subsequently achieve legal work authorization and resident status (or leave the U.S. entirely), and if they have contributed long enough to accrue a benefit. The vast majority of people who enter the country unlawfully fail to ever attain this status, and what’s more, the note says, “the evidence indicates that a relatively small portion of those who potentially could draw benefits do so.”
As a result, nearly all such immigrants pay Social Security payroll taxes without ever claiming benefits. In effect, those immigrants subsidize Social Security for the rest of us. These subsidies are significant. For example, in 2010, Social Security began running cash deficits that have continued ever since. Were it not for payroll-tax collections on immigrants’ unauthorized earnings, Social Security would have begun running deficits a year earlier, in 2009.
This last is especially important for people (and there are many of them) who think that immigrants are hurting Social Security.
READER COMMENTS
Kevin Dick
Jul 21 2024 at 6:09pm
I looked up annual mikes driven in CA and it’s about 340B.
Joffe calculates the total net subsidy as about 3.4B.
So about a penny per mile
David Henderson
Jul 21 2024 at 9:32pm
Thanks for doing that calculation.
A penny per mile is not much, as I’m guessing is your point. Gasoline alone in California costs about 25 cents per mile (based on $5.00 per gallon and 20 mpg average.)
Monte
Jul 21 2024 at 7:19pm
Isn’t the prevailing attitude among Libertarians that we should abolish SS based, among other things, on the fact that it’s a coercive government retirement program that extorts money from private individuals and has consistently run at a deficit since 2010?
Politics aside, if we were to grandfather in current recipients and prorate those who currently contribute, wouldn’t that create an opportunity going forward for people to save, invest, or spend their money as they see fit without the heavy hand of government eliminate the need to rely on immigrants, legal or otherwise, to shore things up?
David Henderson
Jul 21 2024 at 9:37pm
You write:
Yes.
You write:
No. Young people would be forced to pay very high taxes to grandfather in current recipients and give something to people who have paid in (not “contributed”). So people would not be free to “spend their money as they see fit.” That’s the Ponzi scheme that FDR set up and that’s the problem.
Monte
Jul 21 2024 at 10:33pm
You’re right, of course. Anyway, there’s no putting aside politics. The least painful way forward, I suppose, is some combination of tax increases and benefit cuts.
Thanks for the response.
Monte
Jul 22 2024 at 11:21am
Not to belabor the point, but has any further consideration been given to Ebeling’s 2005 proposal to abolish SS and privatize publicly-owned land to compensate current and future retirees
David Henderson
Jul 22 2024 at 9:29pm
Thanks. I read Richard’s piece and I think his numbers were roughly accurate at the time.
Notice what he says, though. He writes:
So the asset sales would pay for the unfunded liability. In other words, taxpayers would still be on the hook to pay for promised benefits. His proposal would keep Social Security afloat for decades but would not allow young people to fund their own retirement without paying for the elderly.
It’s a mess.
MarkW
Jul 22 2024 at 6:48am
One problem with the driving subsidy calculations is that even if private autos were entirely banned, much of the road network (and pretty much the entire local road network) would still be required for buses, mail trucks, delivery vehicles, and bicycles or pedestrians. Some money could be saved by making these roads narrower and lighter duty (though they’d still have to support heavy buses and trucks), but still a great deal of the spending would be required even with no private auto drivers on the roads at all. Isn’t this another case where one should think at the margin — do car drivers fully pay for the additional marginal cost of supporting cars on the road network? On that basis, I suspect the answer is that they more than pay for the marginal spending. The other point is that, even given the calculations in the article, fully covering the remaining shortfall would require only a very modest increase in fuel taxes and/or tolls (especially if EV subsidies were also eliminated)
Comments are closed.