• The richest Americans currently pay a 35 percent tax on income over a certain threshold. This is a divisive subject between the two major parties that is sure to come up in the general election. Both Mitt Romney and Rick Santorum propose plans that would lower the rate to 28 percent. Newt Gingrich's plan includes a flat tax of just 15 percent. Obama favors returning the pre-Bush tax cut rate of 39 percent.

    Proponents of lowering this rate argue that higher marginal tax rates retard productivity for the highest earners, since they are reluctant to work as hard if the bulk of their income is taxed at too high of rate. Lower the rate, the thinking goes, and the rich are incentivized to earn more, thus increasing the total tax revenue and putting more money into the economy.

    Democrats point to studies like that of the Congressional Budget Office, which found that cutting income tax by 10 percent would reduce revenues by $466 billion in five years and another $775 billion in the next five

    Read More »from The imaginary connection between tax rates and GDP
  • On Super Tuesday, the Signal got 9 out of 10 election predictions correct, following up on an Oscar night where we got 3 of 4 award picks right. Not bad, but we really wish we didn't have those two annoying blemishes, right?

    In fact, we're delighted! When the markets are functioning properly, we expect to get a certain percentage wrong every time. (The exact amount depends on how certain the probabilities are for each election on a given day; on Oscar and election nights we actutally expected to get about one wrong each.) If we had swept all 14 predictions, it would have meant our confidence was too low, or what statisticians call "miscalibrated." It sounds strange, but it's actually possible to get too many predictions right.

    Think of it like rolling a six-sided Monopoly die and predicting the odds that you'll roll a one, two, three, four or five. On any given roll, you can say with high confidence—83 percent—that you will succeed. But do it 100 times, and you would expect to roll a six about 17 times. If you got your one-through-five all 100 times, there's probably something wrong with your dice.

    Read More »from Why we’re happy we got one prediction wrong on Super Tuesday
  • Ten states voted in caucuses and primaries on Super Tuesday, but you could be forgiven for thinking only Ohioans were holding a primary contest, given the news industry's relentless obsession with the state. Now that the dust has settled, let's have a look at how poll-based and market-based prediction engines fared in foreseeing the victor.

    Polls are a key ingredient in making political forecasts. They specialize in providing a snapshot of the current state of the election, and will be a critical part of the Signal's general election predictions beginning in September, when the Republican's finally have a nominee and the picture in November has clarified. But they are only one piece of the puzzle. A survey cannot completely account for variables like a candidate's cash on hand, organization and general momentum in the political narrative. A wealthy, organized candidate with a strong presence in a state can boost his numbers in the polls and ballot box by utilizing that advantage,

    Read More »from As go the prediction markets, so goes Ohio


(177 Stories)

About The Signal

The Signal is the Yahoo! News predictions blog featuring real-time forecasts and sentiment on politics, economics, and more. MEET THE TEAM: David Pennock, David Rothschild



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