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POLITICS: PennAve

Big Ideas: Income segregation, travel fees, tax rates and tuition

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Education,Taxes,PennAve,Joseph Lawler,Economy

Benjamin Landy for the Century Foundation: American society is more divided today than in any other year since the Great Depression, with massive concentrations of wealth and income in the hands of an elite few.

Such extreme inequality should push Americans toward a more redistributive politics. Yet our “one person, one vote” system has proven surprisingly resistant to substantive policy change. It’s a problem that has confounded political scientists: Why hasn’t democracy slowed rising inequality?

“Income segregation” is one possibility. According to a new analysis of census data by researchers Kendra Bischoff of Cornell University and Sean Reardon at Stanford, America’s archetypal middle-class neighborhoods are disappearing at an astounding rate. The result is fewer Americans interacting with people outside their own socioeconomic class, leading to less empathy and more political polarization. Ex Uno, Plures.

Travel taxes vs. government tracking

Diana Furchtgott-Roth for e21: Federal and state fuel tax revenues are increasingly insufficient to build new roads and maintain existing ones.

The most obvious substitute for fuel taxes is to charge road users directly for vehicle miles traveled....

Mileage-based fees would enable drivers to accurately pay for road use and get the roads for which they are prepared to pay.

With revelations that the National Security Agency is tracking Americans’ phone conversations and emails, it is natural that some are concerned about the possibility of charging drivers for vehicle miles traveled.

People fear that the government will track their location — although many smartphones do this already, whether people are walking or driving.

The GPS (Global Positioning System) is a more sophisticated navigation system but, like the sextants that were used to indicate ships’ positions, they cannot, by themselves, enable vehicles to be tracked.

"Some people have the misunderstanding that GPS sees you," said Bern Grush of Applied Telemetrics. But it is not inherent in the system.

But charging drivers for miles driven does not have to mean a loss of privacy. Devices in cars to measure charges for miles driven do not have to record location or trip time. Car odometers, which measure miles driven, are a simple example.

U.S. taxes are progressive

Andrew Lundeen and Scott Hodge for the Tax Foundation: People mistakenly believe that because the rich benefit from many popular tax deductions and credits, they pay a lower average (or “effective”) tax rate than other taxpayers. This is not the case. The average tax rate for all Americans is about 10.4 percent. However, taxpayers earning more than $1 million pay a 23 percent effective rate, and taxpayers earning more than $250,000 pay a 21 percent effective rate -- more than twice the national average.

Meanwhile, “middle class” taxpayers earning between $50,000 and $100,000 pay an effective rate below the national average — just 9 percent. The effective tax rate for Americans making less than $30,000 — who owe no income taxes — is actually negative due to refundable credits that give them a check back from the IRS.

GW not a great deal for poor kids

Stephen Burd for the New America Foundation: Over the last two weeks, George Washington University has been all over the news for lying to its students about its admissions policies. For years, GW has said that it is “need blind” when in fact it isn't. Every year the university chooses not to admit a certain percentage of students not because of grades or test scores or what admissions officers see as being a “good fit.” Rather they don't admit these students simply because their families are low-income.

Most of the news coverage has been critical of the school for doing financially needy students a disservice. But, in fact, the opposite is true. GW is actually doing these individuals a tremendous favor since the school does such a lousy job supporting the small share of low-income students that it does enroll.

GW does not come close to meeting the full financial need of the low-income students it admits. Instead, it leaves these students with substantial funding gaps — forcing them to take on hefty debt loads. In 2011-12, GW students from families making $30,000 or less faced a daunting average net price — the amount students pay after all grant aid has been exhausted — of nearly $21,000 per year. That means low-income families have to pony up the equivalent of 70 percent or more of their annual income for their children to attend GW.

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