Ethersnap
Interests:
Current events, yoga, economics, food, travel, and all things cute.
Interests:
Current events, yoga, economics, food, travel, and all things cute.
According to our analysis of current tax rates and their elasticity, the revenue-maximizing top federal marginal income tax rate would be in or near the range of 50%-70% (taking into account that individuals face additional taxes from Medicare and state and local taxes). Thus we conclude that raising the top tax rate is very likely to result in revenue increases at least until we reach the 50% rate that held during the first Reagan administration, and possibly until the 70% rate of the 1970s.
Diamond and Saez: High Tax Rates Won’t Slow Growth - WSJ.com
Pleasantly surprised that WSJ even published this.
WSJ explains the difference between marginal and average tax rates, and why Kim Kardashian does not actually pay only 1% more in taxes than your average Californian tax payer.
Hilarious since I remember one of their opinion columns made (basically) the same mistake a couple months back.
The young people “occupying” Wall Street may decry capitalism, but societies open to risk and initiative and free exchange have always done better by the “99%” than those that do not. That is why a place like Hong Kong, with no natural resources, has prospered while many other countries rich in natural resources (some in Africa) have not.
And Baby Makes Seven Billion - WSJ.com
Never mind the rest of the article! These two sentences have absolutely nothing to do with each other! How did we get from Occupy Wall Street to Dutch Disease? Thanks for another political non-sequitur, WSJ!
Yes, clearly resource-rich countries are poor because they are not “open to risk and initiative and free exchange.”
No.
If anything, risk and free exchange are two reasons why resource exporters do so badly—volatile commodity prices in the market cause volatile government revenue, which makes it difficult to create and implement policy, which further entrenches corrupt/incompetent institutions, etc etc. A lot of the research done in this field centers around how the free market interacts with these resource exporters to create a perfect storm of failure.
Sigh. So silly. Why would this William McGurn character say such silly things? Maybe because he is neither an economist nor an actual policymaker—he’s a speechwriter who works for Rupert Murdoch (lol) and GWB (more lol).
I said a long time ago that I oppose reading the WSJ on principle, but sometimes it’s a lot of fun to see what shenanigans they’re up to.
his means GOP leaders Mitch McConnell and John Boehner have to be especially careful in their choice of appointees. No one from the Senate Gang of Six, who proposed tax increases, need apply. The GOP choices should start with Arizona Senator Jon Kyl and House Budget Chairman Paul Ryan, adding four others who will follow their lead.
LOLOLOLOL WSJ
Kyl is that guy who said that 90% of what Planned Parenthood does is abortion, and then claimed that his comment “was not intended to be a factual statement.”
Ryan is the one who previously brought you such great ideas as abolishing SCHIP (we hate sick kids!), eliminating capital gains taxes (yay rich people!), and privatizing Medicare (old people don’t need affordable healthcare, right?).
Yeah, we really need more people to follow their lead…
I’m really surprised that an op-ed like this got published in the WSJ. Actually, scratch that. I’m not surprised at all, seeing as the WSJ is part of NewsCorp…
There are so many things misleading and disingenuous here that I don’t even know where to start.
First, as college students learn in Econ 101, higher marginal rates cause real economic harm…Thus tax rates need to be kept as low as possible, on the broadest possible base, consistent with financing necessary government spending.
Boskin, is this how you teach Econ 101 at Stanford? If so, I’m glad I got rejected there. So if you don’t care about issues of equity at all you might be right on this account. Maybe. There’s more to economics than simply considerations of efficiency.
Second, as tax rates rise, the tax base shrinks and ultimately, as Art Laffer has long argued, tax rates can become so prohibitive that raising them further reduces revenue—not to mention damaging the economy.
Misleading. Laffer argued that after a certain tipping point, raising taxes may be counterproductive. Boskin makes no mention of which side of the Laffer curve we’re on. Granted, the existence of such a curve and the rate that constitutes the tipping point are both highly controversial, but that just makes Boskin’s statement all the more misleading, as if there was no argument over where this rate should be (and whether the same rate applies across income groups).
Higher tax rates are the major reason why European per-capita income, according to the Organization for Economic Cooperation and Development, is about 30% lower than in the United States—a permanent difference many times the temporary decline in the recent recession and anemic recovery.
Cool story, bro. So what? What about the part where people go bankrupt due to medical expenses? Per-capita income doesn’t tell the whole story about overall quality of life and purchasing power.
Take a teacher in California earning $60,000. A current federal rate of 25%, a 9.5% California rate, and 15.3% payroll tax yield a combined income tax rate of 45%. The income tax increases to cover the CBO’s projected federal deficit in 2016 raises that to 52%. Covering future Social Security and Medicare deficits brings the combined marginal tax rate on that middle-income taxpayer to an astounding 71%. That teacher working a summer job would keep just 29% of her wages.
How is this man even a professor? Does he even know basic arithmetic? Marginal tax rate is not the same as effective tax rate. The guy who got a C+ in my Public Finance class could tell you the difference, and a tenured Stanford professor can’t?!
A marginal tax rate of X% means that you’re taxed X% on the next dollar of income, not X% on all the income you’ve earned overall. A guy who makes $1 million in wages per year is taxed the same rate on the first $10,000 as the guy who works part-time at Starbucks and makes only $10,000 total. But the difference is that the millionaire pays progressively higher marginal taxes as he advances up the tax brackets. Otherwise, you’d have the trippy situation where higher pre-tax wages translate into lower real post-tax income. So even if it were the case that the teacher faces a 71% marginal tax rate, she will keep far more than 29% of her pre-tax wages.
I’m not gonna go through the rest of the errors here, but rest assured, the 1000+ comments are probably pretty comprehensive in attacking Boskin.
TL;DR? If you’re gonna name drop economists, you should back it up with actual econ, not just hand-wavy assertions that make it sound like all you did was skim Wikipedia prior to writing the piece.
Sat a couple seats from Nobel laureate Daniel Kahneman for Bernanke’s lecture. Practically the entire ECO, ORF, and FIN departments were downstairs in Richardson for this.
MLIG!
