Carpe Diem

Health Care Rx: Market-Based Solutions

San Francisco Chronicle: With health care emerging as a chief domestic issue in the 2008 presidential race, the various candidates are pitching numerous platforms designed to reduce costs and broaden coverage. The proposals of all three Democratic candidates call for universal coverage, citing an estimated 47 million uninsured people in the United States.

Meanwhile, the private sector is quietly but consistently delivering an increasing number of market-based, affordable healthcare solutions, I have posted about many already. Here are a few more:

1. Early Solutions Clinics: “We see you now, we treat you well, we charge you less.” Six clinics are now open in SE Michigan inside Meijer stores (similar to Super Wal-Mart). From its website:

Early Solutions Clinics are a no-appointment-needed health care clinic that offers basic services for a fraction of the cost and reduces patient waiting time. Our board-certified nurse practitioners will provide you with quick access to quality medical diagnosis and treatment under the direction of on-call physicians. In addition, all of our clinics are affiliated with hospitals nearby should you require advanced care.

Our clinics are open seven days a week, 364 days a year (closed on Christmas) in an effort to help you seek treatment at a time that is convenient for you. Hours: M – F 9 a.m. – 8 p.m., Sat 9 a.m. – 5 p.m. and Sun 12p.m. – 5 p.m. and most services cost $49.

2. Carol.com, a website that will allow people to “buy” on an à-la-carte basis the medical services they want done. From its website:

For the first time in the history of health care, everything you need to know to compare doctors, prices, locations, credentials and availability is in one place. In the Web-based marketplace, consumers can compare diagnostic imaging packages such as MRI and CT scans, annual physical, dental and eye exams and the costs of physician-recommended services such as mammography or physical rehabilitation.

From an article in today’s Twin Cities Star Tribune:

Its creators want to do for health care what Travelocity did for airline tickets.
Carol’s creators are riding the leading edge of a wave of change headed toward consumers just as questions about how to cure the nation’s chronic health care crisis are resounding from the corner cafe to the presidential campaign trail.
Carpe Diem

Top 1% of Taxpayers Pay Almost 40% of All Taxes

The chart above (click to enlarge) is from the most recent study on income tax shares from the Joint Economic Committee of Congress, which reported that:

1. The share of total federal income taxes paid by the top 1% of tax filers increased to 39.38% in 2005 (most recent year available), while the tax share of the top 5% climbed to 59.67%. The income tax share of the top half rose to 96.93%, according to recent Internal Revenue Service (IRS) data. The tax shares are the highest on record for these groups in comparable IRS data going back to 1986.


2. The share of adjusted gross income generated by the top 1% increased to 21.20% in 2005, relative to a level of 20.81% reached during the height of the stock market bubble in 2000 (when the income tax share of the top 1% was 37.42%). Although the income share of the top 1% is similar in 2000 and 2005, the income tax share was about two percentage points higher in 2005.


3. Between 1992 and 2000, the top one percent’s share of income jumped from 14.23% to 20.81%, an increase of nearly 7 percentage points, before slipping in 2001 and 2002. These data show that the most significant increases in this income share occurred in the 1990s, not in more recent years.

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Share of Taxes Paid By the Rich After 4 Tax Cuts

The graph above shows the share of personal income taxes paid by the top one-half percent of earners from 1960 to 2001. During this period, there were 4 major reductions in marginal tax rates.

1. The Kennedy-Johnson tax cut reduced the top rate from 91% in 1963 to 70% in 1965, and the share of personal income tax paid by the top one-half percent of earners rose from 16% to 18%.

2. The Reagan tax rates in the 1980s lowered the top rate from 70% to 50% and then to 30%, and the share of taxes paid by these earners rose from 14% to 22% of the total.

3. In 1997, the tax rate on income from capital gains was cut from 28% to 20%, and this rate reduction was accompanied by a substantial increase in revenues collected from capital gains taxes and personal income taxes collected from high-income taxpayers. In fact, capital gain taxes roughly doubled from $66 billion in 1996 (the last year before the tax cut) to $129 billion in 2000, when these earners paid 31% of all taxes collected.

Source: “Economics: Private and Public Choice, by Gwartney, Stroup, Sobel and Macpherson, 11th Edition”

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Global Art Boom in Emerging Markets

It’s not only the stock markets of emerging markets that are gaining increased global interest and attention lately, there’s also a global art boom going on in emerging markets, according to today’s WSJ article “South African Art Goes Global:”

The growing popularity of South African art with international collectors is part of a global art boom that has seen Westerners scouring emerging markets such as China, India and Brazil for works.
Carpe Diem

Why the Stimulus Shouldn’t Stimulate You

“What makes you think that this tax rebate will put anyone to work? The idea behind the stimulus deal is to give people tax cuts so they’ll feel richer and spend more. But government can’t make people richer on average; all it can do is shuffle wealth around. To pay Peter, you must tax Paul (or at least promise to tax Paul in the future, when your debts come due). Peter spends more, but Paul spends less.

Moreover, even if you do somehow manage to increase spending, that doesn’t mean you’ll put Americans to work. More likely, you’ll put Asians to work producing goods for the U.S. market.

President Bush seems to have become confused on this key point because he misunderstands supply-side economics. He has vaguely remembered that tax cuts put people to work, but he’s forgotten that only marginal tax cuts put people to work. Non-marginal tax cuts — such as the ones in the stimulus package — have exactly the opposite effect, when they have any effect at all.”

~Economist Steven E. Landsburg in Sunday’s Washington Post

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The Laffer Curve in the 1920s


During the 1920s, The Revenue Acts of 1921, 1924, and 1926 reduced the top marginal income tax rate from 73% to 25% (see top chart, blue line). Did the drastic cut in tax rates cause tax revenues to fall? No, just the opposite. Personal income tax revenues increased substantially during the 1920s, rising from $719 million in 1921 to $1.16 billion in 1928 (see top chart, red line), an increase of more than 61% (this was a period of no inflation).

The share of the tax burden borne by the rich rose dramatically. As seen in the bottom chart above, taxes paid by the rich (those making $50,000 and up in those days) climbed from 44.2% of the total tax burden in 1921 to 78.4% in 1928.

Source: Heritage Foundation, “The Historical Case for Supply-Side Economics,” by Dan Mitchell

Bottom Line: The significant cuts in marginal income tax rates in the 1920s increased tax revenues collected, and the share of taxes paid by “the rich” increased.

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The Laffer Curve in the 1980s

In 1980, the highest marginal tax rate was 70% and by 1988 the highest rate was cut to only 28%. The chart above shows what happened during that decade, exactly as predicted by the Laffer curve:

1. In constant dollars, the total tax revenue collected from the top 1% of taxpayers increased by 50%, from $58 billion in 1980 to to $87 billion in 1990.

2. On a per return basis, the average taxpayer in the top 1% paid 23% more taxes in 1990 compared to 1980 (inflation-adjusted real dollars).

Bottom Line: As the Laffer Curve predicts, significant cuts in the highest marginal tax rates during the 1980s caused both: a) total tax revenue collected (in real dollars) from the top 1% to increase, and b) the tax collected per return (in real dollars) for the top 1% to increase.

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What a Difference A Century Makes

Some U.S. statistics for the year 1904:

Average life expectancy: 48 years

Homes with a bathtub: 14%

Homes with a telephone: 8%

Cost of a 3-minute call from Denver to NYC: $11.

Number of cars in the US: 8,000

Tallest structure in the world: Eiffel Tower

Average hourly wage: $0.22 ($4.61 in today’s dollars)

Average Annual earnings: $450 ($9,500 in today’s dollars)

Percent of births at home: 95%

Percent of physicians without college education: 90%

3 leading causes of death: Pneumonia, influenza, Tuberculosis

Percent of Americans graduating from high school: 6%

Number of murders in entire US: 230

Average length of recession: 22 months

Source: LibertyPost.org

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The Wayback Machine: Complete Internet Archive

Yahoo! in 1996
First NY Times website in November 1996.
In 1996, the Internet Archive began archiving the web for a service called the Wayback Machine, where you can browse through 85 billion web pages archived from 1996 to a few months ago. The top graphic above shows one of the very first Yahoo websites on December 20, 1996, and the bottom graphic shows the very first web site of the New York Times on November 12, 1996. The World Wide Web sure has come a long way in the last 12 years.