Comments for Horrors: We're Going to Have Both Too Few and Too Many Workers! at http://www.cepr.net , comment 1 to 10 out of 10 comments http://www.cepr.net Wed, 19 Jun 2013 02:14:12 +0100 FeedCreator 1.7.3 http://www.cepr.net/index.php/blogs/beat-the-press/horrors-were-going-to-have-both-too-few-and-too-many-workers#comment-20418 There is a point about the tax system being game-able by virtue of its complexity. On the other hand, this is mistaking the forest for the trees (as is also the case with most proponents of campaign finance law). Our system is game-able without the existence of a complex, corrupt tax code and bad campaign finance rules, the arrow of causation is being reversed. Compared to "best practice" standards of parliamentary systems, our system is undemocratic, unaccountable, manipulable by insiders and power brokers, and at the best of times maddeningly slow/inefficient. It is the one reason I have a problem with Dean's stance on trade, the tendency toward corruption that some sort of protectionist regime would contribute to our polity would be insignificantly marginal compared to the pre-existing corruption of our so-called democratic institutions. The place we most need competitiveness, informational symmetries, etc., is our politics, even more so than our markets. Most Americans, even social scientists, have little idea how backward and dysfunctional American democracy truly is. In politics, the rules structure the system, predetermine outcomes. Disproportionality, requirements for super majorities, non-existence of accountable parties, and so on, matter. The rules matter. - PJM Fri, 30 Nov 2012 21:39:55 +0100 http://www.cepr.net/index.php/blogs/beat-the-press/horrors-were-going-to-have-both-too-few-and-too-many-workers#comment-20416 [b]Brian Dell[/b] wrote, [quote]Rich people should be taxed directly.[/quote] The problem with that argument is that corporations are legal entities that are separate from their shareholders, so the claim that they shouldn't be taxed separately is not nearly as simple as it looks. - liberal Fri, 30 Nov 2012 15:33:49 +0100 http://www.cepr.net/index.php/blogs/beat-the-press/horrors-were-going-to-have-both-too-few-and-too-many-workers#comment-20415 [b]Kat[/b] wrote, [quote]Is this true? Is this something that economists are universally in agreement on?[/quote] I'm not sure---google on "tax incidence corporate" or something---but my recollection is that the incidence of corporate taxes is relatively controversial. (More so, than, say payroll taxes, which IIRC falls mostly on the employee, even if remitted by the employer.) Of course it probably varies depending on the sector... - liberal Fri, 30 Nov 2012 15:29:09 +0100 http://www.cepr.net/index.php/blogs/beat-the-press/horrors-were-going-to-have-both-too-few-and-too-many-workers#comment-20408 Kat, the Tax Policy Center's rule of thumb is to place 20% of the corporate tax burden on wages. When NPR identified six policies that economists support back in July, Dean Baker agreed that economists support elimination of the corporate tax. Rich people should be taxed directly. However, Dean expressed his concern at the time that as a practical or political matter, he didn't "see much likelihood of the sort of increase in individual income taxes on the wealthy that would come close to offsetting the impact of lost corporate income taxes." Dean also noted that the Citizens United ruling could give people who control corporations the unfair advantage of using pre-tax dollars to support political causes of their choice if corporations were not taxed. - Brian Dell Fri, 30 Nov 2012 10:58:42 +0100 http://www.cepr.net/index.php/blogs/beat-the-press/horrors-were-going-to-have-both-too-few-and-too-many-workers#comment-20404 Thanks, Mike. I guess at least they didn't say that the cost is passed on to consumers which I have heard before. But, if you do have a monopoly I guess this could very well be the case. At any rate, I imagine lower corporate tax rates are passed on to the general populace in the form of higher property taxes, sales taxes, and user fees. - Kat Fri, 30 Nov 2012 05:13:36 +0100 http://www.cepr.net/index.php/blogs/beat-the-press/horrors-were-going-to-have-both-too-few-and-too-many-workers#comment-20403 @Kat, What I remember from econ 101 is that whether a tax (or any extraneous cost) gets passed on to consumer or are born by the company depends on the price elasticity of demand. If the elasticity is small (a small price change does not change demand so much) then a larger portion of the tax get passed on to consumer. Companies with market power (i.e. monopolists, oligopolists) will pass much of taxes on to customers. What the company does have to pay has to come out of profits or cost reductions -which could include wages. But wages are "sticky" as they say, so my guess would be that executive compensation/dividends is affected more than the pay of the average worker (though wages can stagnant so that in the presence of inflation, workers over time are getting paid less.) I don't know which is more likely. Two things, the sentence is odd 1) It doesn't take economists to agree on it, only someone who can add (though it did not mention the effect on prices/consumers), did someone imagine that the owners of companies (i.e., investors) are somehow not on the hook for taxes at least in terms of a "cut" of the profits? 2) It is a bit of non-sequitur "and corporate tax collections have fallen sharply". Meaning what? Is the author trying to imply that a decline in tax collections somehow implies increasing wage declines or taxes paid by owners (it doesn't, afaict). And anyway, to the extent upper income households have to give up some of the profits to pay the corporate tax, that is a good(!) thing, hopefully all of the tax burden falls on them. But they aren't writing checks to the IRS, it is coming out of their income stream (not unlike taxes withheld on one's paycheck - except there is no settling up at the end of the year for underpayments). - Paul Meyer Fri, 30 Nov 2012 04:51:31 +0100 http://www.cepr.net/index.php/blogs/beat-the-press/horrors-were-going-to-have-both-too-few-and-too-many-workers#comment-20402 Potential GDP is usually estimated from the trend of past GDP, so when the economy has been down for a while potential GDP goes down also: research.stlouisfed.org/publications/es/12/ES_2012-04-20.pdf Since economies are actually cyclic, potential GDP is not prophetic, and projecting it far into the future gives wild and unrealistic swings. - skeptonomist Fri, 30 Nov 2012 03:34:18 +0100 http://www.cepr.net/index.php/blogs/beat-the-press/horrors-were-going-to-have-both-too-few-and-too-many-workers#comment-20401 I'm sorry to ask this question here, but I read this today in the NYT article on the changing tax burden. This was about corporate tax rates: [i]Economists agree that taxes on business are passed on to investors, reducing profits, and to workers, reducing wages. Upper-income households bear the brunt of these taxes, and corporate tax collections have fallen sharply.[/i] Is this true? Is this something that economists are universally in agreement on? - Kat Fri, 30 Nov 2012 03:30:42 +0100 http://www.cepr.net/index.php/blogs/beat-the-press/horrors-were-going-to-have-both-too-few-and-too-many-workers#comment-20392 If the problem is large numbers of people not in the labour force, though, declining numbers of people in general is not going to solve that problem. The number of men between 25 and 54 in the work force seems to be in a secular decline that predates the housing bubble. I don't expect Krugman to call attention to it, because it undermines his argument, but it seems that every few months that we get closer to 2020 - that is, move along the X axis of a potential GDP line - the CBO revises the line, shifting the curve to the right, such that by 2020 the economy is going to hit potential GDP just by continuing to chug along at about current growth rates with no additional stimulus! This is, of course, the same thing as saying that the economy is already at full employment and the CBO is just progressively realizing that! The flipside of the CBO restating potential GDP downwards is an upward revision of the extent to which the deficit is structural, and if the deficit is structural that undermines the case for postponing austerity. What am I missing here? - Brian Dell Thu, 29 Nov 2012 14:59:23 +0100 http://www.cepr.net/index.php/blogs/beat-the-press/horrors-were-going-to-have-both-too-few-and-too-many-workers#comment-20389 This is obviously not a contradiction but a conspiracy by austerians. Technology is used to reduce wasteful demand for too many workers. Birth control is used to reduce wasteful demand for too many children who would become wasteful workers. The result is perpetual full employment attained from the supply side and complete elimination of Keynesian spending from the demand side forever. That leaves retired baby boomers for whom excess supply is to be addressed by Obamacare death panels. It was supposed to be a compartmentalized secret but WaPo slipped up and released all three parts in the same article. - Last Mover Thu, 29 Nov 2012 12:25:49 +0100