Employment Report

Article

http://www.washingtonpost.com/wp-dyn/content/article/2011/03/03/AR2011030303030.html

Summary

The US economy has shown signs of improvement, corporate profits are up, consumers are spending more, and activity in the service sector has expanded. Job growth however has failed to catch up, only 36,000 new jobs in January have been added and the country needs 130,000 to keep up with the population growth. However, the US has added 196,000 new jobs in February and Stephan Stanley estimates that many firms "will have no choice but to hire en masse if [the] economy activity continues to pick up." Unemployment rate has risen .1 percent from 9%- 9.1% and hourly earnings are expected to rise. The U.S economy still faces numerous threats because of state fiscal crises, rising oil prices due to the Middle East and spiking food prices. The Fed also said that manfuacturers are passing along higher input costs for wheat, cotton and iron. On Thursday the Labor Department reported a surprise decline in weekly jobless claims and unemployment benefits, the number has fallen to its lowest in three years. The retail sector has also seen a increase in sales of 4.3% compared to 3.8%."We are seeing the indications that the underlying pace of job creation is improving and looking more sustainable," John Ryding and Conrad DeQuadros of RDQ Economics states.

Connection
This article relates to unemployment discussed in Chapter 5, but there has been improvements in spending, corporate profits are up and activities in the service sector has expanded. This all shows an improvement in the economy and with 196,000 new jobs in February and the the hourly rate increasing this is a good sign. Even with all this success though the unemployment rate has risen by .1% but this may be due to the population growth experienced in the U.S. Most of the economic factors have improved and weekly job claims and unemployment benefits has fallen to its lowest in three years.

Reflection
With the U.S seeing a large improvement in the recent month I hope that their economy will continue to recover because it will be good for the global economy also. If noone is out spending their money then it has a disastrous affect on the rest of the country. And with this many positive prospects recently it may encourage the corporations to follow suit by creating more jobs and employing more workers. However, there are still some problems production and the input cost of cotton, iron, wheat so the U.S will have to tread carefully.  But with all the optimistic news I expect it will only get better as time goes on as people start working and feel more involved and confident in their country.

Progressive Tax and Estonia

 Article

http://balticbusinessnews.com/article/2011/2/21/experts-estonia-should-not-rule-out-progressive-tax

Summary

Foreign and Domestic economic experts believe Estonia shouldn't rule out the possibility to introduce a progressive tax under certain conditions. One economist named Stuart Adam states "Overall, a flat rate of individual income tax has no advantages in itself. It is also restricting the way the government can re-distribute tax revenues." The biggest reason for use of a flat rate is that its simple but it comes with a big disadvantage by reducing work motivation and affects economic growth. Another ecnonomist Viktor Trasberg believes progressive tax will help the state collect a larger amount of revenue and decrease tax burden on low income owners. Progressive tax may also stabilise the economy because people are paying less taxes. Bert Brys a OECD tax economist also says that before Estonia considers progressive taxation, it should revise its tax exemptions because "Usually the case is that the rich will get more benefit from various tax exemptions related to housing and pension saving costs" and Estonia may need to sacrifice some economic growth for equality.

Connection
This relates to Chapter 4 because it shows how a progressive tax can be applied in real world situations and of the advantages it may have over flat tax rates. I believe that a progressive tax would be good for a nation like Estonia due to the fact that it can close bridge between the classes and give the citizens a more equal standard of living instead of having extreme situations. This will also help stabilize the economy and I feel the advantages outweigh the disadvantages in this case.

Reflection
The only disadvantage mentioned in the proposal of a progressive tax is that it will be more complicated then the simplicity of a flat rate tax which would tax everyone the same amount without taking into consideration any other factors. This is why I feel a progressive tax should be used because it is more developed and thought about then the flat tax rate. It provides an equal advantage for everyone in the country to live their life comfortably without having to worry as much about taxation.