Finding a Way Out of America's Demographic Dilemma

Notwithstanding the rosy short-term fiscal scenarios being advanced in Washington, the demographic transition presents the United States with a very serious fiscal crisis. In 30 years there will be twice the number of elderly, but only 15 percent more workers to help pay Social Security and Medicare benefits. A realistic reading of the government demographic projections suggests a two thirds increase in payroll tax rates over the next three to five decades. However, these forecasts ignore macroeconomic feedback effects. In particular, they ignore the possibility that the nation will have more capital per worker as the number of elderly wealth-holders rises relative to the number of young workers. More capital per worker would mean higher worker productivity, higher real wages, and the lower return to capital that worries Wall Street. It would also mean a bigger payroll tax base and a smaller rise in tax rates. On the other hand, a higher payroll tax will leave workers with less after-tax income out of which to save and, therefore, fewer retirement assets than would otherwise be the case. Thus capital deepening is not a foregone conclusion. This study develops a dynamic general equilibrium life-cycle simulation model to study these conflicting forces. The model is the first of its kind to admit realistic patterns of fertility and lifespan extension. It also features heterogeneity, within as well as across generations, and, thus, can be used to study both intra- and intergenerational equity. Unfortunately, our baseline demographic simulation, which assumes the continuation of current social security policy, shows deteriorating macroeconomic conditions that will exacerbate, rather than mitigate, our fiscal problems. Real wages per effective unit of labor fall 4 percent over the next 30 years and 10 percent over the century. For Wall Street, this bad news about real wages is good news about the real return on capital, which rises 100 basis points by 2030 and 300 basis points by 2100. The model's gradual capital shallowing reflects the concomitant major rise in tax rates. In 2030, payroll tax rates and average income-tax rates applied to wages are 77 and 9 percent higher, respectively, than in 2000. Together, these tax hikes raise

public expenditure review (PER)

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Assessing fundamental tax reform

A look at how some basic tax reform proposals stack up against four, sometimes competing, requirements laid out by President Clinton in a December 1997 speech: Is the proposal fiscally responsible? Will it be good for the economy? Will it lead to a simpler tax system? And finally, is it fair to all Americans?Taxation

Simulating U.S. tax reform

A presentation of a large-scale, dynamic simulation model for comparing the equity, efficiency, and macroeconomic effects of five alternatives to the current U.S. federal income tax: a proportional income tax, a proportional consumption tax, a flat tax, a flat tax with transition relief, and a progressive variant of the flat tax called the "X tax."Income tax

Optimización Técnico-Ecónomica de sistemas discontinuos de tintura.

En la actualidad, no es posible hablar sólo de métodos rápidos de tintura o de optimización de sistemas de tintura, sino que debemos introducir también el concepto de balance técnico-económico para que cada decisión que tomemos signifique una aportación positiva a la solución de los problemas.Peer Reviewe

Evidence for the positive-strangeness pentaquark Θ+\Theta^+ in photoproduction with the SAPHIR detector at ELSA

The positive--strangeness baryon resonance $\Theta^+$ is observed in photoproduction of the $\rm nK^+K^0_s$ final state with the SAPHIR detector at the Bonn ELectron Stretcher Accelerator ELSA. It is seen as a peak in the $\rm nK^+$ invariant mass distribution with a $4.8\sigma$ confidence level. We find a mass $\rm M_{\Theta^+} = 1540\pm 4\pm 2$ MeV and an upper limit of the width $\rm \Gamma_{\Theta^+} < 25$ MeV at 90% c.l. From the absence of a signal in the $\rm pK^+$ invariant mass distribution in $\rm\gamma p\to pK^+K^-$ at the expected strength we conclude that the $\Theta^+$ must be isoscalar.Comment: 9 pages, 4 figure