1 Making America Work* Jon Forman Alfred P. Murrah Professor of Law University of Oklahoma Oklahoma City Economic Roundtable Rose State College Midwest City, OK October 3, 2007 *A presentation based on Jonathan Barry Forman, Making America Work (Washington, DC: Urban Institute Press, 2006).

2

3

4

5

6 Table 1. Average Annual Earnings of Full-time Workers, 2004 Doctors$128,689 Lawyers 105,716 Economists 71,672 Nurses 53,289 Police 50,063 Auto mechanics 38,967 Secretaries 32,349 Garbage collectors 31,284 Orderlies 20,959 Waiters and waitresses 8,789

7 Figure 5. Distribution of Earnings, 2004

8

9

10

11

12

13

14

15 Table 2. Top 5 Income Tax Expenditures, 2008 (billions of dollars) ProvisionRevenue Effect Exclusion of employer contributions for medical insurance premiums and medical care $160 Deductibility of mortgage interest on owner- occupied homes 89 Accelerated depreciation of machinery and equipment 65 Capital gains (except agriculture, timber, iron ore, and coal) 52 Employer plans 48

16 Fig. 13. Percentage Composition of Federal Receipts by Source: Year Percent Individual Income Tax Corporation Tax Social Insurance Excise Taxes Other

17

18

19 Figure 16. U.S. Payroll Tax Rates: Selected Years Year Percent paid jointly by employee and employer Medicare Social Security

20

21 Figure 18. Average Cumulative Tax Rates Confronting Low-to-Moderate-Income Families ($10k - $40k)

22 Figure 19. Rates in a Comprehensive Tax and Transfer System

23 Figure 20. $2,000 per Worker Earned Income Credit, with or without a Phase-out

24

25 Pre-transfer Earnings plus Universal Grants plus Worker Credit less Tax Imposed Equals After- tax Income 0$6, $5,000$6,000$1,000 $11,000 $10,000$6,000$2,000 $16,000 $20,000$6,000$2,000 $4,000 $24,000 $30,000$6,000$2,000 $6,000 $32,000 $40,000$6,000$2,000 $8,000 $40,000 $50,000$6,000$2,000 $10,000 $48,000 $100,000$6,000$2,000 $27,500 $80,500 $150,000$6,000$2,000 $45,000$113,000 $200,000$6,000$2,000 $62,500$145,500 Table 3. How a Comprehensive Tax and Transfer System Would Affect a Single Parent with Two Children

26

27 Figure 23. Minimum-Wage Earnings versus Poverty Levels,

28 Figure 24. Life Expectancies at Birth versus Social Security Retirement Age

29

30 Figure 26. Hypothetical Accumulations – 2005 Dollars

31 Figure 27. Hypothetical Accumulations - % of Final Wage

32 Table 4. Health Coverage 2006 Source of Coveragemillionspercentage Total population Employment-based coverage Individually Purchased Public Medicare Medicaid Military health care No health insurance

33 Clusters without Coverage Employees of small businesses Workers who lose their jobs Workers who decline employer coverage Low-income parents Low-income childless adults The near elderly Young adults Children Immigrants

34 Transition to Expanded Coverage Tax Changes: cap the exclusion for employer- provided insurance at a fixed dollar amount and gradually replace it with a tax credit Employer Mandate: require employers to offer a plan, and automatically enroll workers Individual Mandate: require workers to get coverage

35 Summary—Making America Work Government should intervene –To encourage work –Promote economic justice Tax, spending, and regulatory proposals –Increase the size of the economic pie –Allow us to divide it more equally