David R. Henderson  

WSJ Survey Biases the Options

PRINT
Mandatory Bad Customer Service... Tax Rates, 1990 to Now...

Greg Mankiw posts about how some economists responded to a Wall Street Journal poll about whether the Bush tax cuts should be extended. According to Greg:

6 percent said no, all the tax cuts should be allowed to expire,
24 percent said yes, but only for those making less than $250,000 a year,
70 percent said that all the tax cuts should be extended.

Greg does the math correctly, based on the numbers that the Journal's Phil Izzo reports in the article. (The base is not the 48 economists polled but the 46 who responded.) For some reason Izzo's own numbers don't correspond to those in his spread sheet.

But that's not the important point. What I find interesting is that the economists were given only those three options. Given those three, I would have chosen the majority view too. But what about the option of keeping the cuts in marginal tax rates for all income levels but ending the child tax credit? That way, the major supply-side elements of the tax cuts are kept, with resulting supply-side benefits. But the major part of the Bush tax cut that discourages supply--the child tax credit that, through the income effect, reduces labor supply--would be gone. Moreover, the child tax credit accounts for a major share of the revenue loss from the 2001 Bush tax cut.


Comments and Sharing


CATEGORIES: Taxation



Return to top