"For starters, notice all the developments in the marketplace that neut activists feel obliged to be outraged about, which they imagined the government could stop. Netflix continues to be dunned for interconnection fees by big cable operators. This is a terrible offense against net neutrality, we’re told, except that it undoubtedly helped to incentivize Netflix’s recent project to reduce the burden of its video on the Internet by 20% without hurting video quality.
Ditto the zero-rating plans put forward by wireless operators like T-Mobile, Verizon and AT&T, allowing some data to pass through to users without being subject to data caps. Net neuts are enraged even as these plans help to make video affordable on wireless.
We come to the most bizarre case of net neuties making lemons out of lemonade. A Pew survey finds a small but absolute drop in the number of American households subscribing to fixed broadband. Now, no WSJ reader would be so incautious as to conclude the value of the Internet must therefore be falling for many Americans—it costs too much, who needs it!
Yet this is exactly the interpretation the neut brigade are peddling, even while Pew quietly acknowledges the truth: Fixed broadband subscriptions slipped slightly because fast wireless is increasingly seen by many customers as an adequate substitute.
Let’s see. Mobile devices overtook PCs to account for 55% of Internet traffic in 2014. They accounted for a majority of Google searches by early 2015. Half of Americans use LTE wireless networks, with an average speed of 11 megabits. Is it really a tragedy that some of these Americans now find it unnecessary to pay two broadband bills?"
Alloza looks at panel data between 1967 and 1996 to examine whether tax rates affect the probability of staying in the same decile in the following two years. He examines different scenarios including pre-tax, post-tax and post-tax and transfer. Most of the paper focuses on federal taxes, but he also examines a case where state and payroll taxes are included as well. Increases in the marginal tax rate are associated with a reduction in short-run relative income mobility. Households are roughly 6 percent more likely to stay in the same income quintile when the marginal tax rate is increased by one percentage point. This mechanism holds for all of the different tax and transfer scenarios. Even accounting for the impact of transfers and benefits, higher rates curbed the upward mobility of people at the lower end of the income distribution. This suggests that the impact of tax rates on income mobility is not confined to redistribution effects, but the changes in labor market incentives.
These effects are even more pronounced for people with low-income or less than a college degree. Tax changes focused on compressing the income distribution by taking more from those at the top could also make it harder for these people at the bottom to climb the economic ladder. When Alloza restricts his sample to non-college households, he finds that a one percentage point increase in the marginal tax rate increases the probability of moving down to lower deciles by roughly one percent, increases the likelihood of remaining in the same decile by roughly the same amount, and reduces the probability of moving up to a higher income decile by almost one and a half percent. For households in the lowest income decile, an increase in the marginal tax rate reduces their probability of moving up to a higher decile by almost one and half percent in the post-tax and transfer scenario. Higher marginal tax rates reduce the mobility for these groups in particular.
These results provide more evidence that taxes matter for all people when they make decisions about work. Higher tax rates limit income mobility by changing work incentives, particularly for people near the bottom of the income distribution. Public policy should not further reduce the scope of opportunity for these people, and increasing tax rates would likely do just that."