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The Federal Government Government DollarDollar: Where It Comes From The Where It From Personal Income Taxes 32% Social Security, Medicare, and Unemployment and Other Retirement Taxes 24%
Borrowing to Cover Deficit 30%
Climate Change vs. TechnoUtopia Given all of the great feats of human ingenuity over the past few centuries, it is tempting to believe that we ultimately will solve the problem of climate change with some yet-tobe developed technological breakthrough. But such thinking carries serious risks. BOSTON – Humanity has never faced a collective challenge as daunting as climate change. Net global greenhouse-gas (GHG) emissions must be reduced to near-zero within the next three decades to give us even a fighting chance of keeping the temperatures within 2° Celsius of pre-industrial levels. The further we exceed that threshold, the more likely we are to run into truly catastrophic scenarios. With the United States back in the Paris climate agreement, this is the time for the world to reengage with these epochal challenges. Bill Gates’s highly respected voice is thus a welcome addition to these efforts. In his new book, How to Avoid a Climate Disaster: The Solutions We Have and the Breakthroughs We Need, Gates argues that we need more experimentation with new ideas and technological innovations if we are to find a solution. But his push for solar geoengineering is a step in the wrong direction, because it may undermine the incentives that are needed to meet the challenge of climate change. The idea behind solar geoengineering is simple: If we cannot limit the amount of GHGs in the atmosphere,
perhaps we can block the sunlight that generates heat, for example by creating a reflective cover. Volcanic eruptions do this naturally. Following the eruption of Mount Pinatubo in the Philippines in 1991, large amounts of sulfuric acid and dust settled into the stratosphere, temporarily reducing the amount of sunlight that the Earth received. Over the next three years, temperatures dropped by about 0.5°C globally, and by 0.6°C in the northern hemisphere. Many brilliant minds are now at work on solar geoengineering projects. Scientists in Harvard University’s Stratospheric Controlled Perturbation Experiment, for example, have proposed using calcium carbonate dust rather than toxic sulfate aerosols, but the overall idea is the same, and Gates himself has backed many of these technological efforts. What could go wrong? For starters, the risks associated with solar geoengineering are as profound as the potential benefits. In addition to creating climatic instability, the Pinatubo eruption also appears to have accelerated the destruction of the ozone layer. To have a meaningful effect on climate change, we would have to replicate that eruption’s effect on a much larger scale, inviting even greater climatic variability, including sharp temperature reductions in some parts of the world. Because these effects would not be distributed evenly across countries and regions, we would also have to worry about increased geopolitical instability. If a proposal has large potential benefits but also massive potential costs, the sensible thing to do is to conduct small-scale experiments into its viability – which is precisely what some Gates-backed ventures are now doing. The problem is that small-scale experiments will not necessarily reveal the true costs, given the complexity of climate dynamics at the global level. Creating a blanket of sun-blocking cloud dust might produce one effect at a small scale, and a completely different one at a larger scale. Moreover, even if pursued with the best intentions, geoengineering has a dark side. The more we believe in its effectiveness, the more we will reject
▶ SEE CLIMATE, PAGE 14
Excise, Customs, Estate, Gift, and Miscellaneous Taxes 7%
The One Percent: Off With Their Heads! S
ocialists promote policies that they claim will lead to greater income equality. They often declare that the rich don’t pay their “fair share” of taxes and must pay more so that the proceeds can be redistributed to boost the incomes of the poor. The problem is that the fair share that the rich must pay never seems to be enough. Higher and higher taxes on the rich result in fewer and fewer of them requiring more taxes on everyone else. In the US today, progressive politicians claim that the “One Percent” of taxpayers are compensated too much and don’t pay their fair share of taxes. It’s hard to deny that a few CEOs, especially the ones heading up technology and financial companies, get paid too much relative to the pay of their workers. Many professional athletes and Hollywood celebrities earn even more than top-paid CEOs. So the progressives could be right, but let’s see what the latest available data through 2018 show: (1) Number of tax returns. The total number of all the tycoons on Wall Street, in Silicon Valley, in Hollywood, and on the playing fields—including everyone with adjusted gross income (AGI) exceeding $500,000 a year—was 1.65 million taxpayers in 2018, exactly 1.1% of the 153.8 million taxpayers who filed individual income tax returns that year, according to the latest available data from the Internal Revenue Servi-
Corporate Income Taxes 7%
ce (IRS). Adjusted gross income is income from all sources before subtracting deductions and exemptions. By the way, the number of returns showing AGI of $500,000 and over has more than doubled since 2009. The rich have been getting richer, and there are more of them. What you won’t hear from progressives is that the same can be said for all the other income groups other than taxpayers earnings less than $50,000, clearly showing that there are fewer low-income tax filers! Their headcount has dropped 6.1 million since they peaked at a record 95.0 million during 2011. Since 2009, the number of returns filed by taxpayers with AGI of $50,000-$100,000 rose 5.0 million, $100,000-$200,000 rose 7.6 million, and $200,000-$500,000 rose 3.7 million. (2) Adjusted gross income. During 2018, AGI in the US totaled $11.6 trillion. The AGI of the One Percent was $2.5 trillion during 2018, accounting for 21.7% of the total, up from 13.9% during 2009 and exceeding the previous high of 21.7% during 2007 (Fig. 8 and Fig. 9). Over that same period, the share of taxpayers reporting less than $100,000 in AGI fell from 50.7% to 36.6% of total AGI. That’s outrageous: The One Percent earned over 20% of all national AGI during 2018! Off with their heads! Not so fast, Robespierre. (3) Taxes. Collectively, during 2018, the One Percent paid $639 billion in income taxes, or 25.3% of their AGI (Fig. 10 and Fig. 11). That amount represented a record 41.5% of the $1.54 trillion in federal income taxes paid by all taxpayers (Fig. 12). That’s up from 29.8% in 2009. Meanwhile, the rest of us working stiffs, the “Ninety-Nine Percent,” picked up only 58.5% of the total tax bill during 2018. What should be the fair share for the One Percent? Instead of about 40% of the federal government’s tax revenue, should they be kicking in 50%? Why not 75%? They would be less rich, but everyone else would be richer—un-
▶ SEE 1 PERCENT, PAGE 10