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The itemized deduction for state and local taxes has become a flash point in the debate over the GOP’s tax plans.

The House and Senate proposals call for sharply limiting or eliminating the so-called SALT deduction. Critics say Republicans in high-tax states would have a hard time voting for any bill that included this provision, because the deduction is so valuable to their constituents.

And it is, to some. But many people in high-tax states get no benefit from this deduction because they don’t itemize deductions or they are subject to the alternative minimum tax, which doesn’t allow it. Another group of people get little benefit because they are subject to the phaseout of all itemized deductions that kicks in at higher incomes.

The decline in the U.S. industrial base over the past couple of decades is the main factor eroding the share of American national income that goes to middle-class workers, according to consultants at McKinsey & Co.

For decades, labor’s share of gross domestic product has shrunk—while the share that goes to capital like profits, interest and rent, has risen. The McKinsey Global Institute, the firm’s research arm, finds that manufacturing accounts for more than two-thirds of the overall decline in labor’s share of gross domestic product since 1990. That, in turn, has harmed the prospects of the middle class and widened income inequality.

Wages are supposed to track worker productivity, and from the end of World War II until 1973 they did. Then, something happened: Productivity kept rising but wages did not. Many on the left argue the link is now broken and redistributing income from the wealthy downward would help workers more than faster economic growth. But a new study co-authored by Harvard University economist Lawrence Summers says that’s wrong. He and Anna Stansbury, a doctoral student at Harvard, found a strong and persistent link between hourly productivity and a variety of wage measures since 1973. The problem, they conclude, is that the positive influence of productivity on pay has been overwhelmed by other forces pushing the other way.

The Census Bureau reports that home ownership in the United States rose to 63.9 percent in the third quarter of 2017. This continues a rising trend since the second quarter of 2016, when home ownership had dropped to 62.9. This equaled the previous low of 51 years before (1965), just a year after annual data reporting began. Home ownership peaked at 69.2 percent during the housing bubble and had been generally declining since late 2006 (Figure).

The California dream isn’t dead. It just upped and moved to South Dakota. Less than half of people born in California in 1980 are making more money than their parents did as young adults. That’s the lowest percentage of children out-earning their parents that California has seen since at least 1940. By contrast, 62 percent of people born in South Dakota in 1980 out-earn their parents. That’s the highest percentage for any state in the country.

Compensation costs increased 0.7 percent for civilian workers, seasonally adjusted, from June 2017 to September 2017. Over the year, compensation rose 2.5 percent, wages and salaries rose 2.5 percent, and benefits rose 2.4 percent. 

The U.S. economy grew robustly in the third quarter despite two hurricanes, propelled by steady spending from American businesses and households.

Gross domestic product, the broadest measure of goods and services made in the U.S., expanded at a 3% annual rate in July through September, the Commerce Department said Friday. Economists surveyed by The Wall Street Journal had projected a 2.7% gain.

Output expanded at 3.1% rate in the second quarter. This marks the economy’s best six-month stretch since mid-2014.

Stockton, California, announced last week that it will try out a new anti-poverty program that provides $500 per month for a small subset of eligible residents. Earlier this month, the province of Ontario mailed its first monthly checks to 400 lucky Canadians. Advocates for a “universal basic income” (UBI) call these programs “experiments,” or “pilots,” and they hope that positive results will build support for their proposals. But these governments are not testing a UBI; they are running a free lottery. No one should be impressed or persuaded if its winners prove to be fans.

. . . Treating this program as a useful test of the UBI, however, is a marketing gimmick that borders on fraud. The experiments ignore the UBI’s disquieting aspects. It’s generally accepted that people in need should receive short-term support. But limited, means-tested government support is not the same thing as rearranging cultural expectations and economic incentives by making self-reliance optional, which would devalue work, weaken families and communities, discourage young people from launching their adult lives, and subsidize an expanding and idle underclass.

How important was international trade for each US state’s economy in 2016? The map and table above help to answer that question. The table above shows GDP for each US state (data here) in 2016, the total trade volume (exports + imports, data here for merchandise trade only, data on trade in services aren’t available by state) last year, and the volume of international trade activities as a share of each state’s GDP, ranked from highest to lowest. Ignoring the District of Columbia, the average trade share for US states in 2015 was 16.7%, and ranged from a low of 4.7% for South Dakota to a high of nearly 39.0% for Michigan. The trade shares by state are also displayed graphically in the map above — the greater the share of state trade activities (exports + imports) in relation to state GDP, the darker the shade of blue.

Around $1 million is coming from the Economic Security Project, a network of researchers, elected leaders, and organizers. There are no tax dollars being spent.

Tubbs said over the next six months a study group will determine who gets the money and for how long, anywhere from one to three years. There could be 25 to 75 families involved.

U.S. economic output grew at a 3.1% annual rate in the second quarter, slightly stronger than previously thought and marking the best growth in two years.

The estimate, based on revised data released by the Commerce Department on Thursday, replaces a previous tally of 3% growth. Economists surveyed by The Wall Street Journal had expected the estimate to remain 3%.

Nearly all Americans have now emerged from the Great Recession with more money than before — with African American and Hispanic families and Americans without high school diplomas showing the greatest gains, according to new data released Wednesday from the Federal Reserve. It’s a sign that the recovery from the devastating Great Recession and financial crisis of 2008 is picking up as more people are able to get jobs, pay off debt and invest more. Household wealth for African-American and Hispanic families and Americans without high school diplomas rose the fastest from 2013 to 2016, according to the Fed’s Survey of Consumer Finances, which surveys over 6,000 households about their pay, debt and other finances.

U.S. families’ wealth and incomes rose across the board as the economic recovery continued in recent years, a shift after they stagnated for all but the most well-off in the aftermath of the recession, the Federal Reserve reported Wednesday.

Minority households and families with less education had larger proportional gains in income than others between 2013 and 2016, suggesting the fruits of the recovery spread to a wider swath of society, the Fed said.

Marriage, which used to be the default way to form a family in the United States, regardless of income or education, has become yet another part of American life reserved for those who are most privileged.

Fewer Americans are marrying over all, and whether they do so is more tied to socioeconomic status than ever before. In recent years, marriage has sharply declined among people without college degrees, while staying steady among college graduates with higher incomes.

Currently, 26 percent of poor adults, 39 percent of working-class adults and 56 percent of middle- and upper-class adults are married, according to a research brief published today from two think tanks, the American Enterprise Institute and Opportunity America. In 1970, about 82 percent of adults were married, and in 1990, about two-thirds were, with little difference based on class and education.

An Oakland nonprofit group founded by Y Combinator’s Sam Altman is raising funds to launch what could become the nation’s largest basic-income research project.

In a detailed proposal unveiled late Wednesday, Y Combinator Research said it wants to give 1,000 low- and moderate-income people $1,000 a month with no strings attached for three to five years and compare them to a control group of 2,000 people who get $50 a month.