VAT taxes can end up being progressive?

The Economist Free Exchange blog has a brief discussion on consumption/VAT taxes:

...[A]n OECD study... finds, contrary to perceptions, that America has
one of the world's most progressive tax structures.
Even before the rise in
top marginal rates promised by Mr Obama, the US income tax collects 45 per cent
of its revenues from the highest-income decile. Compare that with Britain at 39
per cent, Canada at 36 per cent, France at 28 per cent, Sweden at 27 per cent
and an OECD average of 32 per cent.
That is because consumption taxes (VAT)
in Europe undermine the progressivity of income taxes. There exists a healthy
strand of the public finance literature suggesting that consumption taxes are
more efficient than income taxes. They can encourage more saving which leads to
more investment. Mr Crook believes that rather than steepening the tax schedule
America should consider a VAT.
Actually, this needn't even undermine
progressive taxation; consumption taxes can be implemented in a manner which
taxes higher earners (or spenders) more. Glenn Hubbard and
Bill Gentry have found that broad consumption taxes can be progressive, for
instance.

Someone writing in the Nikkei's Economics Classroom column (not online, and I neglected to save the copy...) argued in line with that last argument that raising the consumption tax could end up being progressive. In particular they estimated that a higher Japanese consumption tax with the revenue used to fund social programs would end up being progressive as the poor would spend less yet use more social services, resulting in a net progressive redistribution. In their estimate, the middle class earners were squeezed the hardest as their net taxation/service usage was about even, even compared to the rich. Compared with the deeper analysis of the 48 page Hubbard and Gentry article, the Nikkei article seems kind of oversimplified.

Obama speech - everyone now required to go to college

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Obama: Dropping out of high school isn't just quitting on yourself, it's quitting on your country. Highest proportion of college grads in the world by 2020.

This guy is totally on the right track to make education the big pillar of the US long term strategy. But wouldn't this be kind of meaningless if 80% of those grads are poli sci and liberal arts majors? While there is a place for that (it was a decent platform for me to learn Japanese and hone translation skills), it seems like we need more scientists and engineers.

More people working till they die of old age

This story from the WSJ made me sad and reminded me of the consequences of poor retirement planning. My grandma worked until her mid 70s because she never had an extra pension. Don't let this happen to you!

During past recessions, older workers simply would have retired rather than searching want ads and applying for jobs. But these days, with outstanding mortgages, bank loans and high medical bills, many of them can't afford to be out of work.

With jobs so scarce, people in their seventh and eighth decades are up against those half their age in a desperate scramble for work.

The number of unemployed workers 75 and older increased to more than 73,000 in January, up 46% from the prior January. Among workers 65 and older, the jobless rate stands at 5.7%. That's below the national average, but well above what it was in previous recessions, including the recession of 1981, when it reached at 4.3%.

The growing numbers reflect, in part, an increase in the number of older workers. The percentage of people 65 and older who are in the work force rose to 16.8% at year end, from 11.9% a decade earlier. Among people 75 and older, the increase was even greater -- to 7.3%, from 4.7%.

As people live longer and stay in better health, some of them merely want the stimulation and challenge of a job. But for workers like Ms. Appleby, Ms. Bennett and Mr. Dase, the motivation is financial necessity.

Fewer people than in years past are covered by defined-benefit plans, such as company-sponsored pensions that guarantee them specific monthly income for life. Those with retirement investments have seen their values erode with the stock-market tumble. Others worked for smaller companies, or were self-employed, and never had pensions. Many are outliving whatever savings they might have had, especially by the time they reach their mid to late 70s. Mortgages and medical bills push others into the job market because Social Security and Medicare, though helpful and critical, aren't enough.

There are few programs to help older unemployed workers. Several states are developing pilot programs. The Obama administration is receiving proposals for new ways to connect workers 55 years and older with local jobs.