Friday, January 19, 2018

The Aloofness of Pax Sinica [feedly]

The Aloofness of Pax Sinica
http://www.globalpolicyjournal.com/blog/19/01/2018/aloofness-pax-sinica

The Aloofness of Pax Sinica

Branko Milanovic - 19th January 2018
The Aloofness of Pax Sinica

Branko Milanovic how China's rise might affect the international political order?

"When China Rules the World" (no question mark or conditional tense) by Martin Jacques is a large, somewhat repetitive, volume of 700 pages that tries to answer a number of questions that many people in the world are asking themselves: Will China's growth continue? Will China become a multi-party democracy? And what might Pax Sinica look like?

On the first question, Jacques entertains no doubt: China will successfully move (actually, it is already moving; the edition of the book that I read was published In 2012) to high value-added and high tech production and growth will, for the foreseeable future, remain high.

On the second question, Jacques is more circumspect: China might become a multi-party democracy but it is likely, if Communist Party manages to control the process, to look like a cross between Singapore, a de facto single-party state, and Japan where factional struggles within Liberal Party often matter more than inter-party politics.

He is scathing of the view, often heard in the West, that higher education levels and higher incomes will, quasi-automatically, lead to demands for democracy. (Although he allows that in twenty years "and likely more" Chinese Communist Party will no longer be ruling.) Jacques believes that China, because of Confucian tradition of "virtuous" government that puts the emphasis on quality of governance and not on the way the rulers are selected, is different. Perhaps he is right…or perhaps not : nobody can tell. Here Jacques' book also illustrates the hazards of prediction. It was written when Bo Xilai was still a contender for supreme power and before Xi Jinping took office and began implementing his "turn of the screw". I have little doubt that today Jacques would be more sanguine about durability of CCP rule.

I would like to focus on the third question where I believe Jacques brings most interesting reflections. How would China's rise affect the international political order? Two long-term factors (discussed in chapters 7 and 8) play the most important role there, First, Jacques' argument that China is not a nation-state but a civilization-state that sees itself as a fulcrum of Asia (and by extension of the world). It is at ease with "tributary relations" that leave to the dominated party full freedom in domestic affairs and considerable freedom in foreign policy. The second important element is a deeply ingrained racism or inability to comprehend "the other" which (as I will argue below) may be linked or might underlie the rather benevolent approach to international relations.

The "tributary" approach is contrasted with the current Western-based theory of international relations that is built on the concept of the nation-state. This difference between the West and China is, in Jacques' opinion, a lens through which we should look at the type of the international system that China might build. But the difference may be less than it seems. The two recent global hegemons, UK and the United States, also had a somewhat similar approach to international relations. UK ruled half of the world using a very flexible system spanning everything, from almost fully independent nations like Australia and Canada, to protectorates and colonies. Many US allies were (and are) similar to protectorates. Italy or South Korea could more or less do whatever they wanted in domestic policy (short of bringing Communists to power) but very little in foreign policy. So under the recent hegemons, countries were neither fully equal as the theory would have it, nor were the allies of the hegemon obliged to blindly align all their policies. It then becomes less clear where Chinese concept of flexible or "tributary rule" differs from the one used by the Western powers in the past 150 years.

However, perhaps because of China's lack of interest in "others" and its complex of superiority, Pax Sinica may be more peaceful. This is indeed a possibility (one of the four Jacques considers in Chapter 11). If we look at it empirically, in the past half-century China has been involved in only one foreign military adventure (a war against Vietnam) and several very limited border skirmishes. Other hegemons, USSR and USA were much more belligerent: USSR has invaded Czechoslovakia and Afghanistan while US has invaded or attacked Vietnam, Dominican Republic, Panama, Lebanon, Afghanistan, Serbia, Iraq and Libya, in addition to overthrowing a number of unfriendly governments. So China has, up to now, been, on the international stage, a peaceful country. Chinese pacifism might have deeper roots: as Jacques writes, Chinese are fond of drawing a contrast between exploratory and friendly mission of Zheng He and rapacious slave-grabbing European conquests.

But was China peaceful because it was weak and in Deng Xiaoping words needed international peace and domestic stability for at least one hundred years and thus had "to hide its strength, and bide its time"? Would a dominant China do "regime-changes"? Although Jacques does not pose the question directly, his view is that it would not because it does not care to export its model.

This is where the ingrained sense of superiority comes in. If you believe that others are fundamentally different (and inferior) you also may not care under what governments they live, so long as these regimes accept your suzerainty and do not pose a threat to you. Thus China's sense of superiority translates into aloofness, and perhaps paradoxically, may imply a relatively peaceful rule.

Whether this will happen or not—and even whether China will become a global hegemon—is everybody's guess. (I am certainly less convinced of that than Jacques.) But one thing, Jacques writes, is certain: "The emergence of China as a global power relativizes everything. The West is habituated to the idea that the world is its world; that the international community isits community, that international institutions are itsinstitutions….that universal values are its values…This will no longer be the case". 



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A Survival Guide for The Fourth Industrial Revolution [feedly]

A Survival Guide for The Fourth Industrial Revolution
http://www.globalpolicyjournal.com/blog/19/01/2018/survival-guide-fourth-industrial-revolution

A Survival Guide for The Fourth Industrial Revolution

L. Rafael Reif - 19th January 2018
A Survival Guide for The Fourth Industrial Revolution

For those of us fortunate enough to come together at Davos this year, the Fourth Industrial Revolution promises gains in scientific knowledge, human health, economic growth and more. But for most people around the world, the prospect of a future in which robots and computers can perform many human jobs is a source of profound personal concern.

As president of an institute with 'technology' in its name and 'the betterment of humankind' in its mission, I take these concerns seriously. Every past technology wave ultimately produced more jobs than it destroyed and delivered important gains, from higher living standards and life expectancy to productivity and economic growth. Yet many fear that this time the change may be so fast and so vast, and its impact so uneven and disruptive, that it may threaten not only individual livelihoods but the stability of society itself.

This outcome is not inevitable. The future is in our hands. Indeed, deliberate, coordinated action is exactly what smoothed the way for such transitions in the past. If we want the advance of technology to benefit everyone, however, we need to take action right away. We must proactively and thoughtfully reinvent the future of work.

Simply understanding the problem is a challenge. Experts still disagree on exactly which groups and regions are losing jobs primarily to automation, how quickly such impacts will spread and what interventions might help. To build sound, long-term policy on something this important, we cannot rely on anecdotes. Government, foundation and corporate leaders need to invest in better data - today.

 

Which jobs are most immediately at risk of automation? Image: University of Oxford, Morgan Stanley

 

In the meantime, we must act on what we do know and make progress wherever we can. For instance, CEOs across many sectors describe one painful current quandary. They have said to me, in effect: "I have to lay off hundreds of people because their jobs have disappeared and I do not need their skills – and I have hundreds of job openings I can't fill because I can't find people with the right training and skills." This mismatch is bad for everyone: Lives are derailed, families and communities damaged, business opportunities lost.

Technology itself offers one path to a solution. In fields from robotics and cybersecurity to supply chain management, many universities, including MIT, are pioneering online programmes - such as MicroMasters - that provide top-quality, industry-relevant skills and credentials, in a form recognised by leading employers, and at a fraction of the price of traditional higher education.

For people with industry expertise who need to become proficient in digital or problem-solving skills, including teachers seeking to prepare their students for the future, an answer could be 'continuous uptraining': a system that would allow every employee to devote significant time – every week, every month or every year – to acquiring fresh skills. If educational institutions, employers and employees can imagine and refine a solution together, continuous uptraining could become a crucial tool to help individuals adapt to relentless change.

Reinventing the future of work needs to be a whole-society effort – and finding long-term solutions will require ideas and initiative from every quarter. Could educators, from kindergarten to college, make sure that every graduate, in every field, is computationally literate? Could institutions like MIT do better at helping students balance efficiency with other human values in choosing the problems they work on and in how they design solutions? Could workers help develop automating technologies that make humans more effective and efficient, instead of obsolete? Could corporations use some of the profits earned through automation to invest in developing those employees whose jobs have been erased by automation? Could unions help shape more relevant and accessible apprenticeship and uptraining programs? Could governments develop educational incentives that would motivate firms to locate in hard-hit regions? I believe the answer to all those questions can and should be yes – and I'm certain we need many more and better ideas, too.

Automation will transform our work, our lives and our society. Whether the outcome is inclusive or exclusive, fair or laissez-faire, is up to us. Getting this right is among the most important and inspiring challenges of our time. It should be a priority for everyone who hopes to enjoy the benefits of a healthy and stable society; one that offers opportunity for all.

In this work, those of us leading and benefiting from the technology revolution must help lead the way. This is not someone else's problem; it is a call to action. Technologies embody the values of those who make them. It is up to those of us advancing new technologies to help ensure they do not end up damaging the society we intend them to serve.

At MIT, we are deeply engaged in defining the current problem and forecasting challenges ahead. And we are urgently seeking allies, from across our society, who want to join in developing creative, collaborative solutions – and in building a future in which technology works for everyone.



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State and local policymakers should beware preemption clauses snuck into legislation [feedly]

State and local policymakers should beware preemption clauses snuck into legislation
http://www.epi.org/blog/state-and-local-policymakers-should-beware-preemption-clauses-snuck-into-legislation/

On January 12, 2018, the Maryland legislature successfully overrode Governor Hogan's veto of a bill granting Maryland workers access to paid sick days across the state. This is great news—it means that nearly 700,000 workers who previously lacked access to paid sick days will no longer have to choose between their health and their paycheck, or even their job. The Maryland legislature's victory comes after other states, such as Oregon and Rhode Island passed statewide paid sick days laws in in 2015 and 2017.

There is no federal law that provides workers with the right to earn paid leave for sick days or to take time off to care for an ill family member—the federal Family Medical Leave Act simply allows workers to take up to 12 weeks of unpaid leave. In the absence of federal action, with Maryland, nine states have passed paid sick days laws, and five states (and the District of Columbia) have passed paid family leave laws. Local governments, however, have taken up the cause of providing workers with this fundamental need: at least 30 cities and two counties have enacted their own paid leave ordinances in various forms.

But state governments have begun blocking local government efforts to give workers the opportunity to earn paid time off for paid sick days and/or paid family leave through the use of "preemption laws." "Preemption" in this context refers to a situation in which a state law is enacted to block a local ordinance from taking effect—or dismantle an existing ordinance. The figure below shows that at least 20 states have passed paid leave preemption laws.

Figure A

While Maryland, Oregon, and Rhode Island's paid sick leave laws are an important step forward, they all have something in common: each contains a preemption clause in the fine print. These preemption clauses mean that local governments cannot legislate more generous paid sick and safe leave benefits than the states' plans going forward.

While preemption of local governments may seem a harmless compromise to get a bill enacted now, these laws can handcuff localities who may need to act to help working people in the future. As our friends at the National Employment Law Project explain in their 2017 minimum wage report, for example, in 2004 Wisconsin Governor Jim Doyle (D) agreed to a preemption clause to prohibit local governments from raising their own minimum wages as a compromise to push the Republican-controlled state legislature to raise the statewide minimum wage. But now, Governor Scott Walker (R) is blocking any statewide increase above the federal minimum of $7.25 that was implemented in 2009, and Wisconsin's preemption law is preventing cities and counties from acting to raise the minimum wage—like forty other local jurisdictions across the country have.

Progressive state legislators should beware of preemption clauses that are snuck into the text of state bills that are intended to help working people gain a foothold in our economy.



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Unrigging the economy to grow the middle class: Pennsylvania takes the lead on overtime [feedly]

Unrigging the economy to grow the middle class: Pennsylvania takes the lead on overtime
http://www.epi.org/blog/unrigging-the-economy-to-grow-the-middle-class-pennsylvania-takes-the-lead-on-overtime/

Yesterday, Pennsylvania Governor Tom Wolf became the first state executive to take action to provide workers overtime protections that help guarantee fair pay for hard work, since a 2016 federal rule to do this at the national level was blocked in the courts by corporate interests. As part of his "Jobs That Pay" initiative, Wolf proposed a state rule change that will modernize the state's overtime policies, providing new or strengthened overtime protections to 460,000 more middle-income workers by 2023 and ultimately putting close to $53 million more each year into Pennsylvanians' paychecks.

The Keystone Research Center (KRC), a member of the Economic Analysis and Research Network (EARN), advocated for the Wolf administration to take this action. Stephen Herzenberg, KRC economist and executive director, applauded Wolf's leadership.

On overtime pay, the governor has authority to act without the state legislature. On another vital measure to improve the lives of working families, raising the minimum wage, legislative action is required—and Pennsylvania still lags its neighboring states. Unlike these six contiguous states, the Pennsylvania legislature has failed to increase the minimum wage above the federal level of $7.25.

Nationally, millions of low- and moderately-paid working people are working overtime but not getting paid for it. Federal law guarantees certain workers overtime pay, meaning when they work more than 40 hours in a week they get 1.5 times their regular pay for the extra hours. This guarantee applies automatically to salaried workers making below a specified income threshold, because detailed studies of job duties show that most lower-paid salaried workers do not perform sufficient executive, "administrative," or professional duties required by federal law to be exempt from overtime. But as the federal government has failed to update this income threshold over the last few decades, it had been allowed to erode dramatically with inflation.

As a result, the percentage of full-time salaried workers who are automatically eligible for overtime based on their pay dropped from more than 60 percent in 1975 to less than 7 percent in 2016. Recognizing the problem this caused, the Obama administration undertook a lengthy regulatory process to increase the threshold to $47,476 annually and to automatically increase it every three years thereafter. If this rule had not been blocked, the new income threshold would have resulted in 33 percent of full-time salaried workers being automatically eligible for overtime based on their pay.

The Obama administration's overtime regulations would have provided new or strengthened protections to 12.5 million more U.S. workers. While the Trump administration appealed the Texas court decision to protect its authority to set an overtime standard, it failed to fight for the $47,476 salary threshold that was established through careful economic analysis in the 2016 rule. Under federal law, therefore, it remains legal for companies to force many low-paid salaried employees to work many hours above a 40 hour workweek—for free.

Similar to other areas of economic policy vital to working families—such as the minimum wage, but also paid family and medical level and paid sick leave—Washington is unlikely to adequately address the problem of exploited low-paid McDonald's supervisors, Walmart department heads, and office managers. Now, more than ever, the solutions will arise from states and cities. EARN partner organizations across the country are joining with allies and state officials to take the lead on improving the wages and lives of working families. In the absence of effective federal action on behalf of working people, state leaders are the best hope for presenting a vision and a road map for improving the economic prospects of all Americans.



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Thursday, January 18, 2018

Marxism as anti-ideology [feedly]

Marxism as anti-ideology
http://stumblingandmumbling.typepad.com/stumbling_and_mumbling/2018/01/marxism-as-anti-ideology.html

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Sam Bowles has a nice piece in the FT on the case for pluralism in economics by integration – "marshalling the insights of differing schools of thought and academic disciplines into a common paradigm." I'd add only that the points at which the marshalling should occur must be determined by the facts. We learn about economics from the real world, not just from schools of thought.

I want to suggest something that some of you might think paradoxical – that Marxists are well-placed to do this because we are, in a sense, less ideological than others.

Take, for example, the question: do higher minimum wages destroy lots of jobs? As a Marxist, I can accept either answer. If they do, we have (more?) evidence that actually-existing capitalism is incompatible with decent living standards. If they don't then we have a way of making workers better off. Either way, I'm happy. I can allow myself to be guided by the evidence in a way that either free marketeers or their social democratic opponents might not be.

Or another example: could fiscal policy not just stabilize aggregate demand but increasetrend growth? If it does, then fine: we've a way of making people better off. If not, then my prior that capitalism is prone to stagnation and crisis is strengthened.

Here's a third example. Are financial markets informationally efficient or not? I can accept either answer. If they're efficient, then fund managers are ripping people off and we have another example of the exploitative nature of capitalism. If they're inefficient then we have another mechanism whereby capitalism can generate instability. (In fact, both might be true, as markets might well be micro efficient but macro inefficient). Being a Marxist has, I suspect, made me less bad at my day job than I otherwise would be.

A fourth example is Brexit. Being in or out of the EU is orthogonal to my Marxism. Again, therefore, I'm happy to be guided by the evidence on whether Brexit will make us better off or not.

There's another thing here. As a Marxist, I haven't invested my human capital in only one paradigm. Marxist economists must be pluralists simply because we must run our Marxism alongside the orthodox/mainstream/whatever economics we learn at university and in my day job. Integrating different perspectives – which might of course mean ditching large parts of some – does not therefore threaten the destruction of my human capital as much as it does specialists in one paradigm.

On a lot of issues, then, we Marxists can be intellectually flexible simply because there are a lot of fights in which we have no dog.

But, you might ask, if this is the case, isn't your Marxism just an unfalsifiable pseudo-science?

No. There are some claims which – if true – would weaken my Marxism perhaps to the point of refutation, for example: if capitalism could deliver sustained full employment with good working conditions and satisfying jobs; if it could be shown that capitalism were non-exploitative; if the capitalist state were genuinely neutral; or if capitalistic relations of production were never fetters upon growth. These claims, however, have not been satisfactorily established.

I'll turn the question around to centrists, Tories, libertarians or social democrats. What equivalent claims (if they could be established) would falsify your political position?

What I'm trying to do here is weaken the prior of many anti-Marxists. Many of you have traditionally seen Marxism as a fanatical ideology opposed to the cool-headed rationality of mainstream politics.

I'll concede that there might be something in this: the worst advert for Marxism has often been those who profess to be Marxists.

For me, though, the opposite is the case: in some respects, Marxism takes the ideology and fanaticism out of some debates.


Dani Rodrik: Has Global Finance Reformed Itself More Than It Appears? [feedly]

Has Global Finance Reformed Itself More Than It Appears?
http://rodrik.typepad.com/dani_rodriks_weblog/2018/01/has-global-finance-reformed-itself-more-than-it-appears.html

The answer is yes, according to Ilene Grabel in her fascinating new book When Things Don't Fall Apart. I wrote a preface for the book, which is reproduced below. It explains why I liked the book so much.

It happens only rarely and is all the more pleasurable because of it. You pick up a manuscript that fundamentally changes the way you look at certain things. This is one such book. Ilene Grabel has produced a daring and delightful reinterpretation of developments in global finance since the Asian financial crisis of 1997–1998.

The book addresses, and resolves, a long-standing puzzle: Why has our present model of financial globalization been so resilient, despite an abysmal track record that includes the most severe global financial crisis since the Great Depression, recurrent sovereign debt crises (in Latin America, East Asia, Russia, and Turkey), and many other disappointments (such as capital flowing "uphill" from poorer to richer nations)? How is it that we have not jettisoned this model for something that is more sensible and works better?

Professor Grabel's insight is that those of us who were looking for signs of change have had the wrong idea about how real reform often happens. We have been mistaken in searching for evidence of wholesale, programmatic reconsideration of the rules of global finance. Systems of governance rarely change through established blueprints, a master plan, or radical reforms. And besides, such a reform path would suffer from the same kind of hubris that the neoliberal playbook produced.

Instead, she suggests, it is the cracks in the consensus, the local heresies, and the small departures and innovations that matter and lead us in an altogether novel direction. Inconsistency, ambiguity, and incoherence are useful and productive—they are a feature, not a bug.

Thus, Professor Grabel builds a case for a gradual, evolutionary change in the global financial system and argues that there is at least as much evidence for this alternative thesis as there is for the regime-continuity thesis. The Asian financial crisis may have given the IMF new powers, but it also set in motion defensive moves on the part of developing countries, such as self-insurance through reserve accumulation and mutual swap arrangements. The G-20 and Financial Stability Board may have been largely ineffective to date, but there are signs they can evolve into experimental, networked forms of global financial governance accommodating greater developing-country influence. The IMF itself has not been overhauled, but it has changed: it no longer treats capital controls as taboo, has distanced itself from austerity, and pays increasing attention to social safety nets. And look at the new institutions that have been created—regional reserve pooling arrangements, development and infrastructure banks—and the forum-shopping benefits they confer to client states.

Put all of this together and we have what Professor Grabel calls a move toward "a more complex, fragmented, and pluripolar direction" in international financial governance, "driven in large part by initiatives from below rather than from above." The evolving system is one that provides greater policy space, enables "unscripted innovations," and makes "pragmatic adjustments not dictated by an overarching scheme of economic organization."

The book's deeper argument about how regimes really change is as interesting as the specific details of the case of international finance. Here looms the large figure of Albert Hirschman. As Professor Grabel is happy to remind us at every turn, her argument is very much a Hirschmanian one. Hirschmanian motifs—the advantages of improvisation, surprise, incrementalism, and pragmatism—are all over the book.

But to say that the book owes a debt to Hirschman is to undersell it. The Hirschmanian perspective has rarely been deployed so well and to such great effect. The reason Hirschman never developed a school of thought, as he himself well recognized, is that his thinking did not lend itself to emulation and replication. The flashes of brilliance, the unexpected turn of argument, and the relish of paradox that characterized his style spawned admirers but not followers.  But we have all of those in this book. Professor Grabel has produced not only an extensively researched book but also one that is tremendously fun to read.

My colleague Roberto Mangabeira Unger likes to say that universal orthodoxy cannot be defeated solely by local heresies; overcoming it requires a universalizable heresy. Professor Grabel disagrees, as would Albert Hirschman. She would be the first to acknowledge that the incremental innovations she discusses in the book do not, in her words, "come close to displacing neoliberalism from top to bottom." But the neoliberal consensus is gone, the institutions that uphold it have become more agnostic and flexible, and new arrangements have sprung up. We do not yet know where the international financial system will end up. Professor Grabel says this is as it should be: enjoy the Hirschmanian moment, and keep your fingers crossed that sanity and common sense will prevail.



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Dean Baker: State Employer-Side Payroll Taxes and Loser Liberalism [feedly]

Dean derives considerable pleasure from inciting food fights between factions of the rich....


State Employer-Side Payroll Taxes and Loser Liberalism
http://cepr.net/publications/op-eds-columns/state-employer-side-payroll-taxes-and-loser-liberalism

State Employer-Side Payroll Taxes and Loser Liberalism

Dean Baker
Truthout, January 15, 2018

See article on original site

There's an old line that the definition of a liberal is someone who won't take their own side in an argument. The line certainly describes the response of many liberals to the new Republican tax scheme. By capping the deduction for state and local taxes, the Republican tax bill raises taxes on higher-income people in liberal states. Many liberals seem to think this is just fine.

The basic logic of the "this is just fine" gang is that higher-income people have been the winners in the economy over the last four decades. Insofar as we need more revenue for the government, they should be the ones to provide it. Therefore we should not be upset about a provision in the Republican tax plan that means higher taxes for people with money.

But this provision is not raising taxes for all wealthy people; it is raising taxes for a subgroup of higher-income people. That is a very different story. Presumably, we would not think it's ok if the bill just raised taxes on higher-income people of Polish or Italian ancestry, even though as high-income people they may be able to afford a larger tax burden.

In this case, the subgroup of high-income people are those who live in relatively liberal states that provide better services to their population. The reason that states like California and New York have higher taxes is that they have relatively good education and Medicaid systems, and try to provide some income support to their poor.

The Republican plan is to make higher-income people pay a higher price for living in liberal states. In many cases, this relatively powerful group will put pressure on state and local governments to reduce their tax burden, which will force cutbacks in services. The rich will certainly object to any efforts to raise their state and local tax burden further to meet new needs going forward.

There are several routes that have been proposed to circumvent the cap on the deduction for state and local taxes. One being seriously considered in California is to set up state-run charities to which people can contribute and get a 100 percent credit against their state taxes. Since charitable contributions are still fully deductible under the new law, this would effectively preserve the deductibility of state income taxes.

There is a debate among tax experts as to whether this sort of set up would be legal, but it does maintain a certain symmetry in how tax law treats different types of contributions. Under the new law, a high-income person can give to the charity of their choosing and effectively get the government to kick in 37 cents of every dollar.

This means that if a rich person gives $1 million to the "Religious School for the Education of White Nationalists," the taxpayers will chip in $370,000 for the cause. In that situation, it certainly seems reasonable that a $100,000 payment by a high-income person to support Los Angeles public schools should at least get the same 37 percent subsidy.

If that route doesn't pass legal muster, there is an alternative route that is not legally suspect. This involves substituting an employer-side payroll tax for a portion of the state income tax.

To take a simple case, suppose that a state has an income tax of 5 percent. The state could get rid of the income tax and replace it with an employer-side payroll tax of five percent.

The conventional view among economists is that an employer-side payroll tax comes out of wages, which means that employers will eventually reduce workers' pay by the amount of the tax. So a lawyer who had been getting $200,000 a year will see her wages lowered $10,000 as a result of the five percent tax.

This leaves the worker with the same amount of money as she would have had after paying her state taxes, but instead of paying federal income taxes on $200,000 in wages, she would only pay it on $190,000 in wages. This effectively preserves the deductibility of her state income taxes.

An additional benefit of going this route is that the tax is deductible on income taxes for people who don't itemize. That would be a pure gain for people in states like California and New York. We can also leave a portion of the income tax in place for very higher-earners and have a lower cutoff under which the tax is not collected to preserve progressivity.

There will be complicating factors in making this switch, but no tax system, including the current one, is perfect. The key point is that liberal states have the weapons they need to fight back against this pernicious Republican tax plan. The question is whether they will try or just accept yet another massive defeat without a battle.



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