Bryan Caplan and David Henderson

Taxation

A Category Archive (145 entries)
Starting in January, Californians will pay an added 10 cents or so per gallon of gasoline due to a new law that goes into effect next month. UC Berkeley economist Severin Borenstein writes: Under California's cap-and-trade program to reduce greenhouse... MORE

He Who Wills the End Wills the Means

Economics of Crime
David Henderson
In an otherwise excellent segment on the tragic Eric Garner case, in which some New York cops choked to death a man selling loose cigarettes, Jon Stewart, generally a smart man, either misunderstands or plays to his audience's ignorance. Either... MORE

Carbon Taxes: The Tax Interaction Effect

Energy, Environment, Resources
David Henderson
UPDATE: I made an important mistake. Robert Murphy corrected me in an e-mail. Correction below. Robert P. Murphy, one of the economists who writes frequently for Econlib, has published a number of pieces on the "tax interaction effect." He has... MORE

Zycher on Gruber

Economics of Health Care
David Henderson
When L'Affaire Gruber began two weeks ago, Tyler Cowen challenged us to stick to discussing Gruber's economics rather than his personal failings. I took up the challenge here, pointing out that Gruber's willingness to mislead could explain what looked like... MORE

Henderson on Piketty, Part 6

Books: Reviews and Suggested Readings
David Henderson
This is my final installment from "The Unintended Case for More Capitalism," my review of Capital in the Twenty-First Century by Thomas Piketty. Piketty, not to his credit, sometimes uses ad hominems in place of actual argument. I note two.... MORE

Good bye to tax competition

Taxation
Alberto Mingardi
Tax competition may well be a thing of the past. The OECD tax conference in Berlin has ratified a new tax deal between fifty countries, to allow automatic exchange of tax information. German finance minister Wolfgang Schäuble rejoiced at this... MORE

Henderson on Piketty, Part 4

Income Distribution
David Henderson
Here's the next installment from "An Unintended Case for More Capitalism," my long review in Regulation of Thomas Piketty's Capital in the Twenty-First Century: How does Piketty handle this serious problem? [The problem that his proposed tax on capital would... MORE

Henderson on Piketty, Part 3

Income Distribution
David Henderson
More excerpts from my recently published review of Thomas Piketty's Capital in the Twenty-First Century. For those who are worried about growing wealth inequality because their own wealth is not growing, there is a simple solution: save more and invest... MORE

This discussion is related to the time inconsistency of optimal policy, which occurs when the government cannot implement an optimal tax policy because the stated policy is inconsistent with the government's incentives over time. Consider a proposal made by the... MORE

Richard McKenzie on Foreign Export Subsidies

International Trade
David Henderson
The subsidization of foreign exports enables Americans to tap into the income bases of foreign countries and impose a tax on foreigners every time a subsidized product is imported into this country. Communist China, for example, would never consider allowing... MORE

Immigrants as Defenders of Freedom

Labor Mobility, Immigration, Outsourcing
David Henderson
One issue that has come up a lot in the discussion of expanding immigration is many people's worry (at times, I have been one of the worriers) about immigrants coming in and voting, more than existing Americans do, for statist... MORE

Good News on Australia's Economic Policies

International Trade
David Henderson
The Australian Parliament voted yesterday to end the government's tax on carbon. The reporting in the link is pretty good except for this statement: "Australia on Thursday became the first country in the world to abolish a price on carbon."... MORE

Or, you could call this post "Adam Smith on the Tragedy of the Commons" I'm reading a section of Adam Smith's The Wealth of Nations for a conference on The East India Company. I've never read Smith's book all the... MORE

Robert Murphy on Capital and Income

Wealth distribution
David Henderson
Our three examples highlight the importance of understanding both the theory and the practice of capital and income measurement. Analysts have often used statistics to make statements about U.S. savings behavior and inequality, without understanding some important causes of the... MORE

Henderson on Thaler and Sunstein

Behavioral Economics and Rationality
David Henderson
Another issue on which TS [Thaler and Sunstein] are silent--and should not be--is the issue of income tax withholding. The U.S. federal government moved to withholding during World War II because that was when it changed the income tax from... MORE

Is the Social Security Tax Cap Disappearing?

Political Economy
Bryan Caplan
How will the U.S. resolve its long-run budget crisis?  I've long predicted the abolition of the Social Security tax cap.  As I told my Public Choice undergrads back in 2011:I think we've likely to eliminate the Social Security payroll tax... MORE

When ideologies change

Labor Market
Scott Sumner
Over the past 5 years I've done a number of posts discussing a strange phenomenon. My views on money/macro are in many respects quite close to the consensus view of 2007: 1. Fiscal stimulus is ineffective. 2. Monetary stimulus can... MORE

On his other blog, The Money Illusion, my co-blogger Scott Sumner argues for an 80% marginal tax rate on consumption for high-consumption people. I admit my surprise at seeing Scott advocate that, which is why it has taken me a... MORE

Consumption is the bedrock upon which essentially all of economics is built. We assume that all economic activity is aimed at creating consumption (defined broadly to include the value of leisure time, and non-market factors such as clean air.) Of... MORE

I have a special course I'm leading this quarter for students who did well in a previous course on Cost/Benefit Analysis. We work our way through articles--sometimes technical articles from economics journals and more often articles by economists in the... MORE

Obamacare defenders and Princeton University economists Paul Krugman and Alan Blinder have granted that the Congressional Budget Office is making a reasonable claim in saying that by 2024, Obamacare, if not repealed or delayed, will reduce the number of hours... MORE

Marginal Tax Rates: Singing Taxman to My Class

Economic Education
David Henderson
UPDATE BELOW: Often, when I teach my classes about marginal tax rates, I give them a little history about such rates. They're shocked when I tell them that the top U.S. federal marginal tax rate on individual income in the... MORE

Steve Moore's Alternative Maximum Tax

Taxation
David Henderson
Last week, I credited John Cochrane for his idea of the alternative maximum tax. I pointed out, though, that there was a basic problem with his having it apply to all levels of taxation: federal, state, and local. Then I... MORE

Multiple Bandits are Roving Bandits

Public Choice Theory
David Henderson
What I learned from my local anti-tax activism UPDATE BELOW: One of the late Mancur Olson's most-valuable insights was his distinction between roving bandits and stationary bandits. His basic idea was as follows. Consider an anarchist society in which there... MORE

John Cochrane Views the World

Taxation
David Henderson
One of the big advantages of having been an economist for a long time and having been at the Council of Economic Advisers 30 years ago is that I've gotten to know and follow a lot of people and their... MORE

Zwolinski's Weak Case for a Guaranteed Minimum Income

Economic Philosophy
David Henderson
Philosophy professor Matt Zwolinski has written an article making the case for a guaranteed minimum income, guaranteed, that is, by the government. That, in itself, is not surprising. What makes it somewhat surprising is that Matt is a libertarian and... MORE

An Exemption is not a Credit A steeply progressive income tax combined with generous dependent deductions ($500 originally, later raised to $600) played some unquantifiable part in stimulating the Baby Boom and family stability for a generation after the war.... MORE

Friday Night Video: McKitrick on Carbon Taxes

Energy, Environment, Resources
David Henderson
If you have paid much attention to the debate about carbon taxes, you know that there is a "Pigou Club," of which Harvard economist Greg Mankiw is a founding member, and that these members advocate a tax on carbon.... MORE

When you leave out major sources of income, surprise, surprise, you estimate that income is lower than it really is. What about the "other 99 percent," whose income supposedly rose by only 0.4 percent from 2009 to 2012? Piketty and... MORE

Mike Lee's Anti-Supply-Side Tax Cut

Taxation
David Henderson
Arguably, one of the biggest accomplishments of supply-side economist Art Laffer in the late 1970s and early 1980s was to get mainstream economists to take marginal tax rates seriously. We all knew that the deadweight loss from a tax is... MORE

Explaining Burden of a Tax with Words

Taxation
David Henderson
Two days ago, I was talking to one of my allies in our recent successful fight against an increase in the property tax in Pacific Grove. He commented that the tax increase would have hurt renters too because landlords would... MORE

We Won!

Taxation
David Henderson
"David, what's wrong?" said my wife Rena last night as she heard me gasping for air shortly after opening my computer while on the couch last night. She thought I might be having a stroke. "I can't believe it," I... MORE

Henderson on the Three Nobels

Finance
David Henderson
"Today, Apple announced a bigger dividend than stock market analysts predicted. So I should buy Apple stock, right?" I sometimes get this kind of question from people who know I'm an economist. My answer: "No, you should have bought Apple... MORE

On Bastiat and the Edifice Complex

Central Planning vs. Local Knowledge
Art Carden
Last week, I asked my principles of macro students to do the following: Evaluate this argument in light of Frederic Bastiat's essay "What is Seen, and What is Not Seen." You may use the assigned readings and videos, but you... MORE

Quote of the Day: Alan Reynolds

Taxation
David Henderson
In writing on the recent paper by Robert Rector and Jason Richwine ("The Fiscal Cost of Unlawful Immigrants and Amnesty to the U.S. Taxpayer"), which found that U.S. governments spend more on households headed by illegal immigrants than those immigrants... MORE

Congratulations to Cato Legal Scholars

Regulation
David Henderson
The Supreme Court's term is over, with 75 cases having been argued and decided. It's safe to say that the most significant ones were those decided this week, on the politically fraught subjects of affirmative action, the Voting Rights Act... MORE

Atkinson and Krugman on Tax Rates

Taxation
David Henderson
On May 20, British economist Anthony Atkinson and Paul Krugman had a long discussion about inequality and income tax rates. Atkinson thought the top income tax rate should be 60% and Krugman thought it should be 73%. Apparently, the City... MORE

Uncertainty Can Go Both Ways

Energy, Environment, Resources
David Henderson
In the latest issue of Regulation magazine is a symposium on carbon taxes. The lead article is by Bob Litterman and then four authors, including me, responded. Here's an excerpt from my piece. On two other issues, I disagree with... MORE

Feeling Good About Solar Panels

International Trade
Alberto Mingardi
War is the health of the state, said Randolph Bourne. What then about trade war? The European Union is imposing tariffs on solar panels imported from China, as Chinese manufacturers are accused of dumping and EU producers are "suffering badly",... MORE

IRS Speakers' Fees

Taxation
David Henderson
Andrew Kaczynski has posted an official report from the Treasury Inspector General that documents the amounts paid for various conferences held by the Internal Revenue Service. Here is a list of speakers and pays for an IRS conference in Anaheim.... MORE

Linda Gorman on How ObamaCare Treats Middle Class

Economics of Health Care
David Henderson
Linda Gorman, my former Naval Postgraduate School colleague and author of three excellent articles in The Concise Encyclopedia of Economics (here, here, and here), has written a post laying out some weird consequences of the ObamaCare law. I would be... MORE

Margaret Thatcher's Legacy

Taxation
David Henderson
I've held off commenting on Margaret Thatcher because I didn't know her legacy as well as many did. In 2011, Bruce Bartlett pointed out that she did not succeed in reducing government spending or government revenue as a percent... MORE

Jared Bernstein Gets Efficiency Wrong

Taxation
David Henderson
Jared Bernstein, formerly chief economist for Vice-President Joe Biden, argues for a measure that I agree with him on, but ends up arguing, on one criterion, against the measure. He doesn't know that this argument goes the other way, which... MORE

The Hoover/Mellon Tax on Checks

Money
David Henderson
It's heartening to see that virtually everyone who has blogged on the proposed tax on bank accounts in Cyprus has pointed out that this is a set-up for a run on Cyprus banks. I have little to add to that... MORE

In early January, I wrote a post whose subtitle was "Pssst: Someone tell the Republicans they won." The gist of it was that the Republicans got the Bush tax cuts made permanent for all but the very highest-income Americans. An... MORE

Lefty's Laffer Curve

Taxation
David Henderson
Golfer Phil Mickelson, aka "Lefty," recently hinted that he was thinking of leaving California because of the high tax rates there that, combined with federal income and payroll taxes, make his tax rate (I'm pretty sure he meant marginal, not... MORE

Horwitz on Hoover's Economic Policies

Regulation
David Henderson
Many historians, most of the general public, and even many economists think of Herbert Hoover, the president who preceded Franklin D. Roosevelt, as a defender of laissez-faire economic policy. According to this view, Hoover's dogmatic commitment to small government led... MORE

Murphy on Fiscal Austerity and Higher Tax Rates

Fiscal Policy
David Henderson
UPDATE: Market monetarist Lars Christensen responds. As these quotations from [Paul] Krugman and [Christina] Romer illustrate, many of today's proponents of Keynesian policy do not simply disagree with their critics, but go further by leading the general public to believe... MORE

Thoughts on the Latest Tax Bill

Taxation
David Henderson
Pssst: Someone tell the Republicans they won. Now that I've had time to reflect, I do have some thoughts on the tax bill that differ a lot from thoughts of others who are usually my political allies. Most of the... MORE

Update: Scott Sumner responds. Sometime in the next 24 or so hours, I'll give my thoughts on the latest tax and budget deal between Congress and President Obama. I find that one's first thoughts are not typically one's best. There's... MORE

Payday for Behavioral Economics

Behavioral Economics and Rationality
David Henderson
Do retirement savings policies--such as tax subsidies or employer-provided pension plans--increase total saving for retirement or simply induce shifting across accounts? We revisit this classic question using 45 million observations on savings for the population of Denmark. We find that... MORE

Murphy on Frum and Global Warming

Energy, Environment, Resources
David Henderson
Earlier this week, Robert Murphy, a frequent writer of Econlib Feature Articles, had an excellent critique of a piece on global warming by David Frum. Were I to quote all the good parts, I would end up quoting almost the... MORE

It's often wise to pay more attention to marginal tax rates than to average tax rates.  If you can make your first $100 tax free but the 101st dollar is taxed at a marginal rate of 99% you'll probably decide... MORE

WSJ's "Roll Your Own" Deficit Reduction

Fiscal Policy
David Henderson
The Wall Street Journal has on its site a list of options for reducing the projected $1-trillion-plus federal budget deficit for 2020. It's a list of cuts in discretionary spending, cuts in so-called "entitlement" spending, and increases in taxes. I... MORE

People hate the property tax more than other taxes. There are fairly regular "tax revolts" against the property tax, many of which are based on local or statewide referenda. Property tax limits, whether imposed by referenda or by state legislatures,... MORE

How starting with a progressive tax system and cutting everyone's taxes by the same percent gives you a regressive tax cut. We all know what a regressive tax is: it's one that takes a higher percentage of income from low-income... MORE

Often over the last few years, President Obama has blamed the Bush cuts for a large part of the deficit. He's right. But he often gave the impression that they went primarily to "the rich." Of course, he didn't mean... MORE

Revealed Preference

Revealed Preference
David Henderson
"Nobody likes to pay taxes. Nobody wants to raise taxes on anybody." This is a quote from a newly elected Democratic congressman from Illinois named William L. Enyart. So, unless he considers himself a nobody, would he advocate raises on... MORE

My Election Outcomes: Final Update

Taxation
David Henderson
Or, Did I Optimize or What? I've posted a couple of times now (here and here) about a local election in Pacific Grove in which I took part. The proposal on the ballot, Measure A, would have imposed an added... MORE

My Election Outcomes: An Update

Public Choice Theory
David Henderson
The day after November's election, I posted on my bets and on the results on a local tax increase referendum. Here's what I wrote on the local tax increase: A friend and retired lawyer, Carl Mounteer, and I wrote the... MORE

It's not Go Galt: It's Go to Texas. As I have noted before, the Laffer Curve--the curve that relates tax revenues to tax rates--must be correct. The relevant question is where we are on the Laffer Curve. Are we on... MORE

Bruce Bartlett's Mistake

Taxation
David Henderson
I wrote on Friday: Bruce's bottom line may be right, but there's something fishy about these numbers. Start with the fact that the median income for the whole country is at or around the bottom end of this bracket. That... MORE

Bartlett on Romney's Tax Plan

Taxation
David Henderson
In response, Romney put forward a new tax plan in recent days suggesting that he might not raise taxes by eliminating specific deductions that are too popular to touch, but rather by capping all of a taxpayer's deductions by some... MORE

By keeping average taxes the same, while reducing marginal tax rates, it is possible to encourage people to earn and report more income. This is from Alan Reynolds, "Marginal Tax Rates," in the first edition of The Concise Encyclopedia of... MORE

Romney's Tax Cut

Taxation
David Henderson
There is a lot of controversy about Mitt Romney's proposal for cutting tax rates and broadening the tax base by limiting deductions and exemptions. I've discussed this here and here and Garett Jones highlighted Josh Barro's piece on it yesterday.... MORE

Hanson on "Bankrupt California," Part Two

Energy, Environment, Resources
David Henderson
I promised in yesterday's post to cover the parts of Victor Davis Hanson's article that dealt with other aspects of California. Immigration aside, I found myself agreeing with a number of them and wanting to extend some. 1. Gas prices.... MORE

Why the GOP is the Bigger Default Risk

Public Choice Theory
Garett Jones
Because Democrats really, really believe in death panels.  Steve Rattner, a former Obama Administration official, used the term (presumably as a form of gallows humor) in the Times a few weeks ago.  Rattner's piece hits some of the same themes... MORE

Robert Murphy: A New Result on Carbon Taxes

Energy, Environment, Resources
David Henderson
Just about every public discussion of carbon tax swaps implicitly assumes that the distortions emanating from the tax code must decrease if the government begins taxing a negative externality (carbon emissions) and uses the revenue to reduce tax rates on... MORE

Is the Georgist Single Tax Pigovian?

Taxation
Bryan Caplan
On Facebook, John Strong asks me:Bryan, earlier this year you offered some arguments against a Georgist land tax and expressed bewilderment that tax economists don't seem to notice the obviously preferable alternative of Pigouvian taxes on negative externalities. You wrote:... MORE

On the question of how progressive a tax system can be if people can exit, Alexei Sadeski writes:Interesting theory, Garett. A supporting piece of evidence is that the US has a more progressive national taxation system - far more progressive -... MORE

Can Progressive Taxation Survive Exit?

Public Choice Theory
Garett Jones
The other day I tweeted:Under a Tiebout federal government, I posit the rich would pay more in dollars than the middle class, less as a percentage Tiebout is shorthand for "voting with your feet," and it's a way to think about... MORE

I don't know what the copyright issues are and so, rather than assuming I have the right, I'll simply give this link to an excellent exposition of the Laffer Curve by Tim Groseclose. It's titled "Do High Taxes Raise More... MORE

Feldstein and Rosen on Romney Tax Cut

Taxation
David Henderson
I posted recently about Brad DeLong's correct criticism of a Wall Street Journal op/ed by Martin Feldstein. In the op/ed, Marty claimed that under reasonable assumptions, the 20% cut in marginal tax rates that Romney proposes would be revenue-neutral for... MORE

DeLong vs. Feldstein on Romney Tax Cuts

Taxation
David Henderson
I know that there are not a lot of Brad DeLong fans who read this blog. I'm not one either. But when someone gives a good analysis, I tip my hat. If I understand the analysis of Marty Feldstein (my... MORE

Goolsbee on Romney's Tax and Budget Plans

Fiscal Policy
David Henderson
Hard to know, then, if the wider public noticed the spat over a nonpartisan budget think tank's finding that for Mitt Romney's tax plan to avoid increasing the deficit, it would need to raise taxes significantly on the middle class.... MORE

Are You Asking or Telling?

Economic Methods
David Henderson
I had a smart aleck friend in high school, Jack McKay, who, when a teacher ordered us to go to the principal, whispered "Are you asking or telling?" I laughed out loud and, if I recall, got in deeper trouble.... MORE

Alan Blinder: Banks Don't Pay Taxes

Taxation
David Henderson
Oh, and, by the way, the federal government is a taxpayer. In an op/ed in Monday's Wall Street Journal, "How Bernanke Can Get Banks Lending Again," Princeton University economist Alan Blinder writes: But suppose it doesn't work. Suppose the Fed... MORE

Thomas Ricks's Fiasco

Labor Market
David Henderson
In late June, Gen. Stanley A. McChrystal, the former commander of international forces in Afghanistan, called for reinstating the draft. "I think if a nation goes to war, every town, every city needs to be at risk," he said at... MORE

Where Are We on the Laffer Curve?

Taxation
David Henderson
A cut in federal income tax rates in the US right now would raise taxable income enough so that the annual total tax revenue would be higher within five years than without the tax cut. This is one of the... MORE

Means Testing Isn't "Awesome"

Fiscal Policy
David Henderson
Over two years ago, Bryan Caplan posted on why means testing is "awesome". He didn't actually make that case, though. The case he actually made is that means testing is a good idea. "Awesome" is a step above "a good... MORE

Alan Reynolds writes: One affluent member of the Top One Percent club, Paul Krugman, has narrowed his sights to the even more affluent top 0.1 percent in his new book, End This Depression Now! He claims that, "Recent work by... MORE

Redo of Proposition 29 Tax Calculations

Taxation
David Henderson
In a comment on my post yesterday, BLM4L had another way of calculating the implied elasticity of demand for cigarettes. His looked right; mine looked right too. But they didn't give the same result. The problem, it turns out, is... MORE

Economic Analysis of Prop 29

Taxation
David Henderson
Good Analysis by a Government Official Next month, we California voters will get to vote on Proposition 29, an initiative to raise the cigarette tax by $1.00 per pack. On Econlog, we are not allowed to advocate passage or defeat... MORE

John Cochrane on Taxes

Taxation
David Henderson
Now wait a minute here...The top graph is a tax rate, the percentage of income paid, while the bottom graph is total dollars. To say this is comparing apples and oranges is an insult to fruits. This is one of... MORE

I've been trying to figure out what marginal tax rates would be if the so-called "Buffett Rule" were passed. There's an actual Senate bill out there but, as with almost all bills, you have to look at previous law--and know... MORE

My Review of Bruce Bartlett

Taxation
David Henderson
My review of Bruce Bartlett's latest book, The Benefit and the Burden: Tax Reform -- Why We Need It and What It Will Take is on-line. Two paragraphs from early in my review: Bartlett's bitterness about his firing has turned... MORE

Like Byran Caplan and Karl Smith, I think conversational evidence is important to pay attention to. And like Bryan, and unlike Karl, I do hear lots of conversation about the effect of marginal tax rates (MTR), especially on spouse's labor... MORE

Was the 2001 Tax Cut Regressive?

Taxation
David Henderson
In a post today, Paul Krugman approvingly cites Jonathan Chait's claim that the Bush tax cut of 2001 was regressive. Chait wrote: When George W. Bush proposed a huge, regressive tax cut in 2001, Snowe, sitting at the heart of... MORE

Problems with Henry George's Single Tax

Taxation
David Henderson
Bryan Caplan makes a good point with his and Zac Gochenour's search-theoretic critique of Henry George's tax on the value of unimproved land. It's similar to a point that Charles Hooper made in his bio of Henry George in The... MORE

Two New Blogs

Taxation
David Henderson
I recommend two new blogs that I've been reading in the past week. What they have in common, besides being good, is that both bloggers have been frequent commenters on Econlog. One is "PrometheeFeu's Blog." This recent post on tax... MORE

Most of the discussion by economists of the appropriate capital gains tax rate is about a very narrow criterion: the effect of capital gains tax rates on capital gains tax revenues. But in a 2009 study done for the Institute... MORE

The "Courage Campaign's" False Statement

Taxation
David Henderson
In my state of California, the so-called Courage Campaign is pushing for higher tax rates on high-income people. California now, by the way, has one of the highest top marginal tax rates on income in the country: 10.3 percent. To... MORE

My Review of Robert Frank

Books: Reviews and Suggested Readings
David Henderson
Ultimately, though, I find his case unconvincing. Moreover, his own reasoning leads to conclusions that even he finds distasteful, and he has yet to find a way out of those unfortunate conclusions. Frank often misstates the libertarian viewpoint, sometimes in... MORE

Pre-Tax and Post-Tax Candy on Hallowe'en

Economic Education
David Henderson
Teaching kids about taxes and welfare using Hallowe'en candy Comedian Tim Slagle, whom for some reason I had never heard of, has an excellent video out in which he uses Hallowe'en candy to illustrate taxes. A lot packed into 3... MORE

Mike Stroup on Tax Progressivity

Taxation
David Henderson
Mike Stroup, who used to be my colleague at the Naval Postgraduate School and who is now at Stephen F. Austin State University in Nacogdoches, Texas, has done a pithy 2-pager for the National Center for Policy Analysis. It's titled,... MORE

Obama's Weird Tax Plan

Taxation
David Henderson
According to the Sept. 19 White House fact sheet, "The President calls on [the super committee] to undertake comprehensive tax reform, and lays out five principles for it to follow: 1) lower tax rates; 2) cut wasteful loopholes and tax... MORE

Megan McArdle on the "Buffett Rule"

Taxation
David Henderson
Megan McArdle has an excellent post today on the so-called Buffett tax rule. That's the idea that high-income people should pay some minimum percent of their income in federal taxes. After demolishing the case, pointing out that to trap every... MORE

Obama's Budgetary Sleight of Hand

Fiscal Policy
David Henderson
President Obama Double Counts Now, I'm proposing real, serious cuts in spending. When you include the $1 trillion in cuts I've already signed into law, these would be among the biggest cuts in spending in our history. But they've got... MORE

More on Social Security and Ponzi

Social Security
David Henderson
In his comment on my previous post on Paul Krugman and whether Social Security is a Ponzi scheme, "wintercow20" writes: Would it not have made sense from the outset to argue something like, "Professor Krugman also recognizes the problems with... MORE

Krugman on Ponzi: I Was Being Cute

Taxation
David Henderson
Many people have quoted an article Paul Krugman wrote 15 years ago in which he said that Social Security has a "Ponzi game aspect." So how does Krugman respond? He now claims that he said it because Paul Samuelson had... MORE

Warren Buffett--or Howard Buffett?

Fiscal Policy
David Henderson
A non-libertarian economist colleague recommended Warren Buffett's recent op/ed, "Stop Coddling the Rich," to me and I decided to read it for myself. I came away unimpressed. I won't do a full analysis, but I will point out a few... MORE

Good News from Amitai Etzioni

Fiscal Policy
David Henderson
A well-known sociologist shares information about a prominent Democratic Senator that made him despair--and gave me hope. For some reason, I'm on what is probably a very large e-mail list from Amitai Etzioni, the left-wing sociology professor at George Washington... MORE

Media Watch: Man Bites Dog

Economic Education
David Henderson
In my local paper, the Monterey County Herald, this morning, on the front page above the fold is the following headline: "GOP may approve payroll tax hike." It was a shocking headline and the story, by Charles Babington of the... MORE

Betty Yee's Outrageous Untruth

Taxation
David Henderson
Having just returned from my vacation in Canada, I got around to reading tax advocate Betty Yee's side of the "Amazon tax" issue. Yee is a member of the California Board of Equalization. I had argued against the tax but... MORE

Last week, Mitt Romney, in a rare moment of passion, said that "corporations are people." Of course, they're not. But if you watch the 20-second YouTube, you'll see from context that he wasn't really saying that. He was really saying... MORE

The "Amazon" Tax

Taxation
David Henderson
Economists generally think that competition is good. Competition among computer makers causes prices to be lower. So does competition among airlines, rental car companies and insurance companies. Why would competition among tax authorities be bad? But, says the pro-tax side,... MORE

Medicare: Almost Everybody Loses

Economics of Health Care
David Henderson
John Goodman's health policy blog this morning summarizes the results of a study done for the National Center for Policy Analysis by economists Courtney Collins and Andrew J. Rettenmaier. Goodman's table summarizes the most important points in the longer Collins/Rettenmaier... MORE

In a post back in January, "McArdle Waves the White Flag," I questioned Megan McArdle's view that it was a good idea for the Illinois government to raise income tax rates substantially. At the time, she saw the tax increases... MORE

Tennessee's Roving Bandits

Taxation
David Henderson
Check out this video news story about Tennessee police stopping people and taking their money for keeps, simply on the suspicion that the money was earned on illegal drugs. The whole thing is well worth watching. Here are nine highlights... MORE

Good News on California Schools

Economics of Education
David Henderson
California could cut school year by several weeks That's the headline of a recent article in the San Jose Mercury News. The article states: While plans aren't settled or even proposed, Gov. Jerry Brown and other officials have suggested that... MORE

Marginal vs. Average Tax Rates

Taxation
David Henderson
From Anthony R. Palmer, M.D.'s letter in the April 26 Wall Street Journal: I got out my calculator and found that the President and Mrs. Obama paid 26.6% and Vice President and Mrs. Biden paid 22.8% of their adjusted gross... MORE

Think on the Margin

Taxation
David Henderson
Donald Trump's potential candidacy for President reminds me of a proposal he made in 1999 and Bruce Bartlett's analysis of his proposal in the Wall Street Journal. Trump had proposed a one-time 14.25% net-worth tax on those with a net... MORE

I'm looking for estimates of the PDV of a newborn American baby from the point of view of the consolidated government budget, a.k.a. the "fiscal externality" of a birth.  Other than Lee and Miller (1990), I'm not finding much.  Anything... MORE

The Uneasy Case for Progressive Taxation

Taxation
David Henderson
I posted on David Cay Johnston's article on taxation recently. I appreciate his acceptance of my apology and his willingness to discuss the issues. In his comment on another comment by Joe Barnett, Mr. Johnston defends "progressive" taxation, that is... MORE

David Cay Johnston Plays with the Facts

Taxation
David Henderson
In the latest issue of our local left-wing weekly, the Monterey County Weekly, David Cay Johnston has an article, "Tax Facts Hardly Anyone Knows." He lists and discusses 9 purported tax facts. Many of them are right. But I want... MORE

John Goodman on Inequality and Lotteries

Income Distribution
David Henderson
I can't think of anything in the private sector that even begins to compare to this reverse Robin Hood redistribution from the poor to the rich and the nouveau riche. And remember, in order to pull it off, government first... MORE

Your Taxes at Work

Taxation
David Henderson
From Third Way comes this clever exercise in numeracy: seeing how important various parts of the federal budget are by translating it into what you pay in taxes for each part. So you plug in all the taxes you pay,... MORE

Distribution of Tax Burden by Quintile

Taxation
David Henderson
In comments on my post on Rand Paul and David Letterman, some commenters expressed interest in seeing the data on overall federal tax burden, not just the burden of the federal income tax. As it happens, the Congressional Budget Office... MORE

Americans who have the means should refuse to surrender to Senate Republicans. We should act, together, to give back our Bush tax cuts, by making donations to organizations that promote fairness, economic growth, and a vibrant middle class. GiveItBackforJobs enables... MORE

Abolition of the Corporate Income Tax

Taxation
David Henderson
Megan McArdle has a good post on her case for abolishing the corporate income tax. I say "good," not "excellent," because, in the midst of a comprehensive though succinct analysis, she doesn't get the issue of incidence correctly. She starts... MORE

The Colbert Effect

Taxation
David Henderson
On his blog yesterday, Mankiw has a great humorous YouTube done by, presumably, students at Harvard. Mankiw himself has a starring role and plays it beautifully. The video is professionally done also and even, in the midst of humor, shows... MORE

Work Choices, Money, and Status

Income Distribution
Arnold Kling
If Greg Mankiw did not know that his latest column on the incentive effects (on Greg) of higher marginal tax rats would be ill-received, then he is somewhere along the autism spectrum. Tyler Cowen tries to return the discussion to... MORE

Not From the Onion

Taxation
David Henderson
UK Proposes All Paychecks Go to the State First Update at bottom. That's the headline on a CNBC story and these are the first two paragraphs: The UK's tax collection agency is putting forth a proposal that all employers send... MORE

Me on WGN, Chicago

Taxation
David Henderson
Last week, I was interviewed for 16 minutes by Mike McConnell on WGN, Chicago. He was a cut above in his understanding of the various economic issues. My test for whether it's working with the host is whether he invites... MORE

Tax Rates, 1990 to Now

Taxation
David Henderson
In a comment on my post, "From the Vault: My Review of Krugman," commenter David C writes: I'd like to point out that on taxes at least, Krugman's position hasn't changed from 1990. He still thinks the tax rates we... MORE

WSJ Survey Biases the Options

Taxation
David Henderson
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... MORE

Unfair Measure of the Laffer Curve

Supply-side Economics
Arnold Kling
Nick Schulz links to a post by Tino that makes the point that in spite of much lower tax rates, the U.S. government collects more tax revenue per capita than do European governments. If all else were equal, this would... MORE

Lebron and State Taxes

Taxation
David Henderson
I was going to write on the tax advantage to LeBron James in going to income-tax-free Florida until I started to research it and see that, earlier today, Aaron Merchak at the Tax Foundation beat me to it. He did... MORE

Bartlett's Final Chapter

Fiscal Policy
David Henderson
My last post on Bruce Bartlett's The New American Economy led, understandably, to a lot of discussion of supply-side economics. I'll deal with that more in future post(s) but meanwhile I'm keeping my promise to post about his last chapter.... MORE

More on Supply-Side Economics

Supply-side Economics
David Henderson
On yesterday's post, Bob Murphy asks: David, what exactly do you mean by saying tax rate cuts didn't increase revenues? Tax revenues did in fact go up (eventually), right? So I assume you mean they didn't go up more than... MORE

Bruce Bartlett on "Starving the Beast"

Taxation
David Henderson
I've posted twice now (here and here) about sections of Bruce Bartlett's book, The New American Economy. I found Chapter 6, titled, "Starving the Beast Didn't Work," quite persuasive. First, Chapter 6. Bartlett deals with the idea, popular with many... MORE

Income Variability

Taxation
David Henderson
In a post two months ago, I pointed out the important distinction between being high-income and being rich. I gave an example of a friend, and a couple of the commenters suggested that my friend guest blog about his situation.... MORE

Bruce Bartlett on Supply-Side Economics

Supply-side Economics
David Henderson
Bruce Bartlett's The New American Economy is currently my "Starbuck's book," i.e., the book I keep in my car and read a few pages of every time I'm in line at Starbuck's. I'm almost through and it's really quite good.... MORE

Robert Frank and Progressive Taxes

Taxation
David Henderson
In a debate with Robert Frank, David Friedman has pointed out some huge flaws in Frank's argument for higher taxes on "the rich." I found Friedman's critique devastating. I'll point to one highlight and then point out two criticisms I... MORE

Taxation of Unemployment Benefits

Labor Market
David Henderson
On the comments yesterday on my post on the effect of unemployment benefits on unemployment, Noah Yetter wrote: You have to pay taxes on unemployement benefits? Am I the only one who finds this to be unalloyed lunacy? I actually... MORE

De Rugy on VAT

Fiscal Policy
David Henderson
Veronique de Rugy recently published an excellent article on the perils of a value-added tax (VAT). She gives a nice history of the VAT along the way. Great paragraph: The first thing to note is that Greece collapsed in spite... MORE

Here's what Megan McArdle advocated today: eliminate the tax-deductibiity of health insurance benefits for people making more than $150K a year in household income, $100K for singles. So now imagine that you're a married person with a family and you're... MORE

The Economics of Illegal Drugs

Taxation
David Henderson
WSJ article gets a lot right and a little wrong. A recent article by David Luhnow in the Wall Street Journal, "Saving Mexico," contains a lot of good economic analysis of the market for illegal drugs, as well as a... MORE

The Lesson of Ebenezer Scrooge

Taxation
David Henderson
When Scrooge wakes up, he realizes that indeed he can change. In my favorite scene in the movie, Scrooge dances around in his nightshirt like a kid in a candy store, celebrating his power to change. And what is the... MORE

Are Taxes "Passed On"?

Economics of Health Care
David Henderson
In arguing with the recent study done by Price Waterhouse Coopers for the American Health Insurance Plans (AHIP), the White House bloggers say the following: AHIP CLAIM: Fees on health insurance providers, pharmaceutical manufactures and device makers will be passed... MORE

What Leonhardt Leaves Out

Taxation
David Henderson
In a positive article, almost a puff piece, on Bruce Bartlett, New York Times reporter David Leonhardt highlights Bruce's advocacy of a value-added tax for the United States. Leonhardt points out that many countries have such a tax and mentions... MORE

Ross Douthat's Strange Supply Curve

Income Distribution
David Henderson
In his New York Times column this morning, Ross Douthat considers various ways of reducing income inequality. While not endorsing higher taxes on high-income people, Douthat's takes it as given that such taxes would reduce inequality. Ignore the fact that... MORE

Competition in Media Works

Taxation
David Henderson
When I read that President Obama would make the rounds of all the major network news shows except that of Fox News Channel, I was skeptical that any hard information would come out. But we did see the results of... MORE

Should You Pay Off Your Mortgage?

Taxation
David Henderson
That's a question asked by Louis J. Prues and answered by the Wall Street Journal's Kelly Greene in the weekend Journal. Ms. Greene summarizes the findings of an analysis by Tony Webb, a research economist with the Boston Center for... MORE

Implicit Marginal Tax Rate Could be 131 Percent University of Chicago economist Casey Mulligan, in his latest NBER piece, finds greater than 100 percent marginal tax rates across a large swath of the U.S. population. How so? From his NBER... MORE

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