Horribly crunched with travel and testimony—more to come on both—but wanted to point out a few things.
First, this: France plans to introduce a small tax on financial transactions, an FTT of 0.1%. One argument as to why we might not want to do this is that traders will flee to exchanges without the tax. Well, this chips away at this argument and Germany has made similar noises about adopting the measure.
Probably not de rigueur to cite Sarko, but I agree: “There’s no reason why deregulated finance, which brought us to the current situation, can’t participate in the restoration of our accounts.”
I offer another rationale for the tax at the end of this piece.
Second, there were a few revealing moments, I thought, in this radio debate we had this AM on (the great) Diane Rehm’s show. I was debating WSJ editorial writer Steve Moore on supply-side-trickle-down, and numerous times, he argued that supply-side tax cuts put more money in the hands of wealthy people and that generates more government revenue—this is Laffer curve stuff—and that this is what supply side is all about.
But as I tried to stress whenever that came up…no, it really isn’t just that. I’m perfectly willing to grant that tax cuts for rich people make them richer, and while there’s no Laffer curve—the cuts don’t come anywhere close to paying for themselves—Steve’s right that their extra income will generate tax revenue.
But what doesn’t happen next is what matters: it doesn’t trickle down. I know this is simple but it must be repeated. The point of supply-side tax cuts is not to raise the after tax income of the wealthy, and then go home. The legend is that their wealth will create more growth and jobs for the rest of us.
And that’s the part that doesn’t work.