I haven’t done this since 2009, so lets take a look and see how federal, state and local government tax collectors would treat two prototypical fictional New York City couples, the Senior Voters, and the Young Hopefuls, today. In the past I showed that the Young Hopefuls would pay vastly higher taxes in New York on incomes identical to the Senior Voters, despite being much poorer in wealth, and in employer-provided and public benefits, as well. In this example I make the Senior Voters two former NYC school teachers who retired at age 55 in 2008 after the Bloomberg/Spitzer/UFT pension deal that year.
Currently age 61, they own a house in Windsor Terrace and have a pension and investment income of $132,500, plus retiree health insurance. Social Security and Medicare will also be received starting at age 65. The Young Hopefuls, meanwhile, have an income of $80,000 per year. They are now age 35, and Baby Hopeful is now age 9. The live in a one-bedroom apartment in an old tenement building on busy 4th Avenue (at 14th Street) in Gowanus, have no retirement plan other than (perhaps) Social Security at age 67 or (more likely) medical marijuana followed by legal assisted suicide. But they do have health insurance today, with some public assistance, thanks to Obamacare. That is a big change from my past analyses, and one way that public benefits and burdens have shifted slightly to less well off younger generations since I last did this analysis. So how much would these two fictional couples pay in taxes? And how much would be left for other things? Let’s fire up the TurboTax and find out.
Because most of the existing U.S. housing stock is built in the suburban pattern, that is where the majority of Americans are going to have to live, for several generations. It is a high cost lifestyle because of the high cost of getting around in one automobile per adult, and the even higher cost of providing mass transit service to such low-density areas. For younger, poorer generations to live in these places affordability, different ways will have to be found to get around. To allow young singles and couples, and seniors, to live without owning their own cars, families with children to get by with just one, and moderate-income households, a growing share, to afford that one car. For trips outside of walking and bicycling range, this probably requires some kind of carpooling.
This is something I realized 20 years ago when, as an employee at the NYC Department of City Planning, I was asked to come up with a transportation proposal that would work for Staten Island, New York’s suburban borough. I suggested dynamic carpooling, with drivers and riders matched for trips using the technology of the time – touch tone phones and conference calling – with a fixed fare. As it happens, Uber has introduced a new carsharing application of its own, using the more advanced information technology now available. According to the Daily News:
“Uber is introducing a carpooling service that will match riders in the five boroughs with other travelers going in the same direction, bringing down prices by as much as 50%.” Unfortunately, however, Uber’s computer app, even if it works great, would not come close to what is required to meet the needs of those seeking affordable transportation in suburban America. That would require a different plan.
A recent article in The Atlantic chronicled the diminished economic circumstances of young Americans in the wake of the Great Recession. http://www.theatlantic.com/business/archive/2014/12/the-incredible-shrinking-incomes-of-young-americans/383338/articleText American families are grappling with stagnant wage growth, as the costs of health care, education, and housing continue to climb. But for many of America’s younger workers, “stagnant” wages shouldn’t sound so bad. In fact, they might sound like a massive raise. Since the Great Recession struck in 2007, the median wage for people between the ages of 25 and 34, adjusted for inflation, has fallen in every major industry except for health care.
What this analysis fails to account for is the difference between a cyclical trend – many people became worse off as the result of the recession – and a long term structural trend. One would expect incomes to fall behind inflation in a recession as severe as the one we just had – and then rise after a few years of recovery. In reality, however, the trend of later generations earning less than those who came before had earned when they themselves were young – indeed at every age – goes beyond the recession. In fact is has been going on for decades, starting with the second half of the baby boom. Each trough is lower, each peak not as high. Continue reading