Quick summaries of a few items of interest.
Flat tax. Here’s the view of Princeton Professor Alan Blinder:
The flat tax is typically marketed as a way to achieve drastic tax simplification– something virtually everyone favors, at least in the abstract. But what a flat tax would actually achieve is a drastic reduction in tax progressivity….
Figuring out your taxable income can be quite an effort. But once that is done, most taxpayers just look up their tax bill on an IRS-provided table. Those with incomes above $100,000 must perform a simple calculation that involves multiplying two numbers together and adding a third. A flat tax with an exemption would require precisely the same sort of calculation. The net reduction in complexity? Zero.
Financial instability. Felix Salmon suggests we focus on the spread between the euro interbank 3-month lending rate as measured by Euribor and the euro interbank overnight rate. That measure raises more concern than does the TED spread.
And… two more from Mark Thoma, who misses nothing. INSEAD Professor Antonio Fatas finds some reasons for optimism about Italy, and Liberty Street Economics has a nice review of the history of Treasury debt management.