After dispelling some unwise conventional wisdom about corporate taxes (first that American corporations pay the highest tax rates in the developed world, and then that “tax reform,” as commonly defined by Congress and businesses alike, would be either sound policy or good politics or both), here’s another tired idea that needs to be put to bed: Taxing American multinationals’ overseas profits when they return home “traps” money overseas and is a leading cause of the American corporate code’s “anti-competitiveness.”

The U.S. corporate tax code is unlike many other developed nations’ in that it taxes its multinationals’ profits that are earned overseas. (Taxing profits no matter where they’re made is called a “worldwide” tax system.) However, American corporations may defer payment on these taxes until they bring their overseas profits back to the States in the form of dividends. American corporations are well-versed in ways to use this cash overseas (for example, if classified as “permanently reinvested” in a foreign country, those earnings are exempt from U.S. taxation), and thus avoiding “repatriating” profits and paying taxes owed.

Corporations, and those they’ve managed to bamboozle on this issue, often say that these profits are “trapped” overseas. “Being obligated to pay taxes” is not the same as “trapped.” Imagine that your employer told you he’d love to pay you, but your salary is “trapped” because if you were paid then your employer would be obligated to remit payroll taxes to the Treasury. You would be rightfully skeptical of this “trapped salary” argument. However, corporations routinely trot out this “trapped” line to call for a “repatriation holiday,” during which profits earned in a foreign country could be brought to the United States at a reduced tax rate. (The previous such holiday was granted as a “one-time” deal in 2004, but corporations’ belief that it will be repeated is part of why their overseas cash hoard has grown so large—now up to $2.1 trillion.) Moreover, the anticipated benefits of the one-time tax holiday—increased business investment and hiring here at home—did not materialize; the 15 companies that repatriated the most foreign earnings cut more than 20,000 jobs over the following three years and “slightly decreased the pace of their spending on research and development.” The tax break also cost the U.S. Treasury $3.3 billion in lost revenue.

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Perhaps the highest priority issue on the conservative agenda is keeping taxes on the highest-income Americans low. Their arguments essentially boil down to claims that raising taxes on “job creators” would doom the economy, and, besides, the government has taken so much from them already that there’s no more left to take.

In the past few weeks, the claim has been making the rounds that the U.S. tax code is already overly progressive, and much more redistributive than those of other developed nations. The line of argument following from this often seems like a tacit—or not so tacit—warning to progressives: If you want to increase public spending you’ll have to raise taxes on the middle class—because the rich just don’t have any more to give—and you’ll get hammered politically for doing so. Therefore, we can’t have any new spending. QED.

The idea that the U.S. tax system is already too progressive pops up every few years, but its persistence doesn’t mean its intellectual underpinnings are reliable. Indeed, the most recent resurgence of this theory is built on a deeply flawed foundation, consisting of a truly terrible measure of “progressivity”—namely, the fact that a relatively large percentage of all U.S. taxes collected is paid by the highest-income filers, relative to our advanced-economy peers.

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The release of new Social Security Administration wage data gives us a chance to update our analysis of wage trends for the top 1.0 percent of wage earners and wage groups in the bottom 99.0 percent. There’s some surprising news this year, as top 1.0 percent wages fell, while the remainder of the workforce saw real wage improvements. In the analysis below we review these recent trends, as well as trends during the Great Recession and over the longer-term.

Wage growth from 2012 to 2013

New data for 2013 (Table 1) provide some surprising news: real average annual wages nudged down slightly, falling 0.2 percent since 2012, because wages of the top 1.0 percent of wage earners declined, although those of the bottom 99.0 percent grew. The biggest wage decline was among the top 0.1 percent of earners, whose wages fell 9.0 percent, while the next 0.9 percent saw their wages fall just 1.4 percent. In contrast, the wages of the bottom 90 percent (averaging $32,333 in 2013) rose a modest 0.4 percent (real hourly wages did grow modestly in 2013). Higher wage workers, those earning between the 90^th and 99^th percentiles of wages (averaging $136,820 in 2013) fared the best, with real wages rising by 2.5 percent. Thus, wage inequality between high and middle/low wage workers grew even though those at the very top—the 1 percenters—actually lost ground. David Cay Johnston wrote on this yesterday. Our analysis goes beyond his reporting by placing earners in percentile wage groups (bottom 90 percent, top 1 percent, etc.) and providing analyses of changes over the Great Recession’s downturn and recovery and the longer-term changes back to 1979.

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A few weeks back, we examined whether the conventional wisdom that the U.S. has the highest corporate tax rate in the world is indeed true. (Hint: No.) Now let’s take another look at what’s become another “truism” about taxes in Washingtonese: that “fundamental corporate tax reform” would be both desirable policy and achievable politics.

(Hint 2: Still no.)

When politicians (of both parties) talk about “corporate tax reform,” what they tend to mean is ridding the code of many exemptions, deductions, credits, and loopholes, and then lowering the top rate to maintain revenue neutrality. For example, see these nearly identical quotes from Speaker Boehner (“Let’s grow the economy and create jobs and broaden the tax base and lower rates”) and President Obama (“By broadening the base, we can actually lower rates to encourage more companies to hire here”).

The public policy argument against this kind of tax reform is simple: The idea that we should reform the tax code but not get any additional revenue out of it is simply absurd. Additional federal revenue is sorely needed, both to finance infrastructure investment and public-sector jobs in the short- and medium-term, but also to continue to pay for our social safety net (which is quite modest, by international standards) in the long-term. Our corporate tax code has features that make it an excellent source of such revenue. First, the incidence of the corporate tax is very progressive: The lowest fifth of earners pay about 0.9 percent of their income in corporate income tax, while the top 0.1 percent of earners pay 9.7 percent. And second, after-tax corporate profits are at an all-time high. The code also has a bug that, if fixed, could help produce additional progressive revenue: Many large American multinationals take advantage of the myriad loopholes, deductions, exemptions, and whatnots in the code so as to pay little or no federal taxes.

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When I read recently that General Mills had tried to impose binding arbitration on people who used Facebook to like its cereals, I thought the company was stupid, and didn’t much care because I don’t buy their products anyway. But when I learned that an ever-increasing number of corporations are sneaking forced arbitration clauses into the fine print of their purchase agreements, I became more concerned. How can I be forced to give up the right to sue if a product hurts me or my family, just because I bought the product?

Today, I’m totally alarmed and outraged, after watching the Alliance of Justice’s film “Lost in the Fine Print.” The film tells the story of consumers who were harmed by for-profit schools, credit card companies, and employers, but were then prevented from suing in court by the arbitration clauses hidden in the fine print of their contracts. Denied any access to the courts, their only choice was arbitration before an arbitrator hand-picked by the company. The consumers all lost, but one of them lost more than just her case: she was forced to pay the company’s $362,000 in legal fees and costs! It’s no surprise the outcomes are so lopsidedly in favor of the corporations, given that they choose and pay the arbitrators, who depend on the corporations for business.

AFJ’s Nan Aron, who hosted a showing of the film at the Women’s National Democratic Club, told us that 93% of consumers who try to use company-mandated arbitration lose. Worse, when a small business in California challenged the imposition of a forced arbitration clause by American Express, the US Supreme Court upheld the clause last year, despite a stinging dissent by Justice Elena Kagan. Now, as far as the companies are concerned, there’s nothing to stop them: Comcast, Wells Fargo, AT&T, Amazon, and Verizon are just a few of the companies that impose binding arbitration on their customers. The Court vindicated the arbitration clause even though by requiring individual arbitration actions it made it so expensive for Amex’s small business customers to challenge unfair fees that they effectively had no remedy. According to Justice Scalia, under the Federal Arbitration Act, the fact that there is no remedy is irrelevant. Now, as far as the companies are concerned, there’s nothing to stop them: Comcast, Wells Fargo, AT&T, Amazon, and Verizon are just a few of the corporations that prohibit class actions and impose binding arbitration on their customers, without their knowledge.

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Fed Chair Janet Yellen gave a speech this week, ”Perspectives on Inequality and Opportunity from the Survey of Consumer Finances”, and she deserves our applause for speaking some truths about social mobility and income inequality that are frequently overlooked. I am going to focus on one aspect of her speech in particular—the relationship between income and wealth inequality and opportunity.

First, there was no mincing of words as to what has happened:

“It is no secret that the past few decades of widening inequality can be summed up as significant income and wealth gains for those at the very top and stagnant living standards for the majority. I think it is appropriate to ask whether this trend is compatible with values rooted in our nation’s history, among them the high value Americans have traditionally placed on equality of opportunity.”

I appreciate both the straightforward description of the rise of both income and wealth inequality, and the explicit connection between these growing inequalities and the threat this poses to future generations’ upward mobility and opportunity. Our current economic discourse on these matters is very confused. Let’s be clear on our terms. When we talk about social mobility, or ”opportunity,” we are talking about the ability of the members of the next generation who are starting at the bottom of the income ladder (i.e. growing up poor) to climb that ladder and be better off than their parents in either an absolute sense (having more money) or a relative one (ranking higher in the income distribution, such as being in the middle or the top fifth rather than the bottom fifth). Income inequality, meanwhile, is how far apart the rungs on the income ladder are, and whether the incomes produced over the next ten or twenty years are narrowly or widely shared. Conservatives seem to only be concerned with facilitating opportunity or social mobility, and consider income inequality itself not a worthy focus of policy—presumably because markets have produced these outcomes and markets know best. Some on the center-left also seem to want to focus solely on social mobility, because they think ”income inequality” polls poorly. Or perhaps they want to help the poor, and feel that we can do so without addressing income inequality more generally, which would involve tackling the oversized income gains of the top one percent (after all, one must raise campaign funds from them). Along these lines, various reporters have noted the Obama administration backing away from making ”income inequality” a key issue and shifting to a focus on opportunity or mobility.

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The last barricades in the right wing’s fight to prevent increases in the minimum wage are starting to fall, as even the businesses that minimum wage opponents are supposedly protecting from having to pay a decent wage are saying, “Enough! It’s time to raise the minimum wage.”

The American Sustainable Business Council and Business for a Fair Minimum Wage conducted a national phone poll of 555 small business employers and found support for raising the minimum wage to $10.10 an hour in every region of the country. Two thirds of surveyed businesses in the Northeast were in favor, and even in the South, 58 percent of small businesses approve of President Obama’s proposal to raise the minimum wage in steps and then index it to inflation.

Unsurprisingly, these business owners are not simply being altruistic. Most of them understand that their businesses will benefit in two ways when millions of poorly paid employees get a raise. First, higher pay would mean lower employee turnover, increased productivity and higher customer satisfaction—all of which helps employers’ bottom line. Second, most of the owners surveyed agree that a higher minimum wage would increase consumer purchasing power and help the economy. Putting money in the pockets of millions of potential customers means more sales and higher profits.

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This post originally ran on the Wall Street Journal‘s Think Tank blog.

According to the Federal Reserve’s now-famous “dot charts,” most members of the Fed’s board of governors and regional Fed presidents believe that short-term interest rates should be raised in 2015. But should this week’s stock market declines lead the Fed to postpone monetary tightening?

Well, no.

To be clear, tightening should almost surely be postponed past 2015—but the stock market really shouldn’t have much to do with that. For one thing, even after this week’s declines, stocks do not look particularly undervalued. One could argue that they were getting slightly overpriced in recent months (not a bubble, just on the high side).

Further, a much healthier recovery will almost inevitably involve an increase in wages and a reduction in the share of income claimed by corporate profits instead of workers. This means that economic growth would stop so disproportionately benefiting capital owners (including holders of stock) and should moderate the increase in stock prices.

Finally, focusing on the stock market one way or the other risks distracting policymakers from the important question: How much labor market slack remains in the economy? If one looks at wage growth—the most relevant measure of slack—the answer is that there is lots of slack left. Given that fiscal policy and international developments are providing no boost (or are actively dragging) on growth in the next year, it would be premature for the Fed to raise short-term rates before the labor market was back to healthy.

The dictum to not overreact to stock market changes should apply to policymakers, not just investors. And this is true even when the daily reaction to market changes happens to correspond with more measured judgments. In short, even when you end up doing the right thing, you should do it for the right reason. And trying to stem stock market declines is the wrong reason for the Fed to act.

The U.S. Treasury announced today, for the 12^th time, that the Obama Administration has determined that neither China, nor any other “major trading partner of the United States met the standard of manipulating the rate of exchange between their currency and the United States dollar for purposes of preventing effective balance of payments adjustments or gaining unfair competitive advantage in international trade…”

This political document ignores the fact that China purchased $681 billion in total foreign exchange reserves between December 2012 and June 2014, and more than $2 trillion since this Administration took office. Currency manipulation by China and approximately 20 other countries has increased the U.S. trade deficit by $200 to $500 billion. Elimination of currency manipulation would create 2.3 million to 5.8 million U.S. jobs, without raising public spending at all (indeed, reducing the trade deficit through currency re-alignment would reduce the federal budget deficit).

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A Wall Street Journal blog post this morning describes an Obama administration initiative to combat long-term unemployment. In the opening sentence, the author follows a too-common convention in describing the long-term unemployment rate as “sticky.” Sometimes the adjective is “stubborn.”

I know that this will sound like quibbling, but in this case adjectives really matter for understanding the problem. As a paper I co-wrote shows pretty clearly, the long-term unemployment rate (LTUR) has not been sticky or stubborn for years. In fact, the LTUR has fallen faster than one would expect given the overall pace of labor market improvement. It is true that the LTUR remains too high, but that is because it skyrocketed during the Great Recession and in the six months after its official end. But the LTUR has since then not become resistant to wider labor market improvement.

The concrete policy implication of recognizing this is that by far the most important thing that can be done to lower the still too-high LTUR is to maintain support for economic recovery more broadly. In today’s far too narrow macroeconomic policy debate, this simply means the Fed should not boost short-term interest rates until the labor market is much, much healthier (including a much lower LTUR).

In regards to the Obama administration effort as described in the WSJ, it seems to mostly consist of jawboning corporations to discard human resources strategies that might disadvantage the long-term unemployed for no reason other than their long duration of joblessness. This is a good idea. There seems to be some real evidence that employers have begun using automatic filters based on the duration of joblessness to screen potential hires—and this can disadvantage the long-term unemployed even though there is no evidence that the productivity or employability of long-term unemployed workers has been damaged by the Great Recession and long recovery.

Basically, because there have been so many potential hires for each vacancy in the economy for so long, employers figured they had to sort these potential hires somehow. Many seem to have chosen a pretty dysfunctional strategy of simply sorting based on unemployment duration. The Obama administration initiative is in a sense an effort to save employers from their own bad decisions.

However, we should be clear that even this employer discrimination has not kept the LTUR from falling faster than overall labor market improvement would predict. And, we should also be clear what would be the most powerful tool to rob employers of the ability to sort potential hires in the queue for vacancies like this: a return to genuine full employment.