Comments on: Important New Research On a Key Fiscal Cliff Issue

By: Andrew

Andrew — Tue, 25 Sep 2012 05:58:48 +0000

What are we trying to achieve? Jobs? Consumption? Increased living standards (better access to healthcare, education, housing)? A juiced market? Whether we should tax or not isn’t the question to ask UNLESS it is important to achieving our goal. We keep arguing about silly things like if a tax is good or bad or what it would do to GDP without deciding what, specifically, we are trying to achieve.

Taxes aren’t good or bad. They are useful for redistribution of assets and they could be used for inflation control. But they aren’t liked by ANYONE. There are other ways. First, decide what you are trying to accomplish. Second, find the best way to accomplish it.

As I think you lately said, doing things the direct way are likely to be the most effective. Taxation (especially income taxation) isn’t a direct way of doing much of anything.

By: Bob Wyman

Bob Wyman — Tue, 25 Sep 2012 04:30:17 +0000

Increases in GDP flow disproportionately to increased profits for the investor classes. So, tax cuts for the “spending classes” can be seen as profit generators for members of the 1% “investment class.” The interesting question is: “How much does 1% income increase in response to tax cuts to the spending classes?” And then: “What is the impact on 1% net disposable income of spending-class tax cuts that are not mirrored by tax cuts on the 1%?”

Similarly, if high-end tax cuts expire, what will be the GDP impact if the government were to spend the $1 trillion of new revenue on stimulus? How much of it will be recovered by the 1% in the form of increased income?

By: jonathan

jonathan — Tue, 25 Sep 2012 02:47:13 +0000

One interesting thing to me was that Zidar’s paper, which is quite a neat construction, only considers some national tax changes but chooses those using the very reference conservatives favor. This work isn’t the be all and end all of tax analysis but it’s miles better than the regressions done carelessly by right wing tax commenters.

By: azlib

azlib — Tue, 25 Sep 2012 01:47:03 +0000

Don’t worry Jared, the opposition will just fall back on the moral argument that taxation is evil. They are really very chameleon like in their arguments. They are simply not serious about economic or fiscal policy.