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Policy: Economy

Big Ideas: On Christie's mess, suburbanites and Bitcoin

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Chris Christie,Joseph Lawler,Economy,Think Tanks,Bitcoin,Minimum Wage

Edward Glaeser for Economic Policies for the 21st Century: The Chris Christie mess in Fort Lee shows exactly why Americans should prefer tested executives rather than unproven legislators for the Oval Office. Either the scandal will be traced to the governor himself -- in which case Americans will have learned something damning about this potential president -- or it will stop at his underlings --in which case, the governor will himself have learned something crucial about management. In either case, the country benefits from the travails that can beset the leader of any complex organization.

The legislative branch has many virtues — especially its ability to check the power of the executive — but it presents ordinary members with few opportunities for obvious failure. Constituents expect some services, surely, but that is hardly an arduous task. Big legislation is rare, so reasonable voters do not expect their congressman to regularly author earth-shattering laws. You might think that voters would at least expect their senators to vote — showing up is usually a key ingredient in job performance — but John. F. Kennedy was regularly at the low end of participation in Senate votes. ...

By contrast, governors, mayors and other leaders of large organizations have an abundance of opportunity for major mistakes. There are clear duties that must be performed, and everyone notices if a city has failed to clear its snow or its garbage. ...

The opportunity to err is a great advantage. We learn by making mistakes. If Gov. Christie gets through this mess, he will surely be a different and better manager.

 

MINIMUM-WAGE WORKERS LIVE IN THE 'BURBS

Sarah Jackson and Elizabeth Kneebone for the Brookings Institution: [L]ike most Americans, minimum wage workers are suburbanites.

They include parents like Shawndrakae Mack, a single mom of two teenagers who works at the McDonald’s on Edisto Island, a suburban beach community near Charleston, S.C., and earns $7.60 per hour. Mack told the Charleston Post and Courier that she relies on food stamps and Medicaid to supplement her income and has trouble affording the athletic equipment her kids need for school.

Or they are workers like Semaj Ransom, 39, who was hired in February at Jack in the Box in the Bay Area suburb of Hayward, Calif., for a full-time position at $8.50 an hour. But, he says, he rarely gets a full schedule. Ransom told the San Jose Mercury News his hours fluctuate drastically week-to-week, “so you can't even save."

Like Mack and Ransom, roughly one in four workers living in the suburbs works in a low-wage occupation (i.e., an occupation where at least 25 percent of workers make less than $10 an hour). Many are employed in retail, restaurant and other low-wage service jobs. In fact, according to our colleague Jane Williams’ analysis of American Community Survey data, suburbs are home to two-thirds of all workers employed in such jobs in the nation’s largest metro areas.

 

HOW DO YOU TAX BITCOIN?

Howard Gleckman for the Tax Policy Center's Tax Vox: Bitcoin is usually described as virtual currency. That's useful shorthand, but is it really money? And should it be taxed as if it is? Or is it a capital asset? How about a commodity? And then there is the matter of using this quasi-cash to avoid taxes and regulation altogether.

The IRS says it is studying the matter but has yet to issue any guidance. Until it does, it is anyone’s guess how Bitcoin should be taxed. Most users/investors will simply pick what is most beneficial to them when they file their 2013 returns. ...

Back in November, Mindi Lowy and Miriam Abraham of PricewaterhouseCoopers wrote a terrific review of the current state of play for Tax Notes Today. They concluded that for now virtual currency would probably be viewed as a capital asset since it has limited use as real money. However, should these vehicles gain wider commercial acceptance, they’d more likely be treated as actual currency for tax and regulatory purposes.

The distinctions are not trivial.

If Bitcoin is a capital asset ... long-term gains and losses would be subject to preferential capital gains rates (23.8 percent for high-income taxpayers). However, losses of more than $3,000 could only be used to offset other gains and not ordinary income. Separate rules may apply to professional traders.

What if Bitcoin is a currency for tax purposes, the same as, say, a euro? In that case, profits from sales would be taxed as ordinary income, with a top rate of 39.6 percent, though all losses could offset other income.

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