John C. Goodman

Why do people save for retirement? Or buy life insurance? Or home owners and other kinds of insurance? In all cases the objective is the same: to smooth out life time consumption. We don’t want our normal consumption of goods and services to be interrupted by retirement or the myriad accidents that could befall us.

In the face of cash constraints, job market uncertainty and other uncertainties planning is very difficult, however. And it isn’t helped much by conventional financial advice. New breakthroughs in computer programming by Prof. Laurence Kotlikoff help solve these problems.

A new study shows that the benefits of tax reform vary widely – and the most important reason is a new $10,000 limit on itemized deductions for state and local taxes. As a result, high-tax states which tend to be Democratic had smaller gains than low tax states which tend to be Republican. For example, Among the 12 states where the average household has the smallest gain from tax reform, 10 are reliably blue states in presidential elections. Among the 10 states where the average household had the highest gains from tax reform, half are reliably red states in presidential elections.

U.S. inequality is egregious, but it’s far less egregious when measured correctly. But understanding our true degree of inequality is important, especially for the many Democratic presidential candidates now proposing tax, Social Security and health-care reforms to fix the problem.

U.S. inequality is egregious, but it’s far less egregious when measured correctly. But understanding our true degree of inequality is important, especially for the many Democratic presidential candidates now proposing tax, Social Security and health-care reforms to fix the problem.