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View Diary: Killing Sacred Liberal Cows, or What Economists Think About the Economy (105 comments)

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  •  Dean Baker wrote an explanation for these (3+ / 0-)
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    mbayrob, MGross, ricklewsive

    proposals.,entitled The Disagreement Behind Our Economic Platform. What was actually agreed to by these economists is obviously far less than some might presume. As ever,the devil is in the details. And NPR,just isn't that into details these days.

    The real world also interferes with the idea of getting rid of the corporate income tax. As Robert Frank and I both suggested in the segment, the idea should be to tax the wealthy people who are getting large incomes from the corporation (either as shareholders or top executives), not to tax the corporation itself.

    However as a practical matter, I don'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. For example, if we could raise the marginal tax rate on those earning above $250,000 to 45 percent, and for those earning above $1,000,000 to 60 percent (with no special treatment for dividends or capital gains), then we might be in the ballpark of offsetting the elimination of the corporate income tax.

    Unfortunately, I don't see anyone about to include tax rates of this size in their presidential platform. In the absence of a large increase in individual taxes on high-income households, I would not want to see the corporate income tax eliminated, since again it would imply a large upward redistribution of income.

    Worth the read if only to be clear on just how far apart these 5 economists actually are.

    "George RR Martin is not your bitch" ~~ Neil Gaiman

    by tardis10 on Thu Nov 15, 2012 at 01:52:23 PM PST

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    •  That's consistent with what I thought (1+ / 0-)
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      Short version of his write up:  "the income tax is a better tax than the corporate tax in theory, but in practice, you can't get a better tax than the corporate tax".

      He thinks it's a bad tax (i.e., the bad behavior it engenders via tax evasion behavior have serious economic costs), but since we can't get the rich to pony up via the better income tax, he prefers to keep it.

      There's lots of literature going back on decades on the income tax.  It turns out to be one of the less distortionary taxes.   Lauffer and other quacks aside, it turns out to be about the most efficient (in the economic sense -- you get the maximum revenue with the minimum distortion of behavior) way to finance government.

      [I]t is totally not true that Mitt Romney strapped Paul Ryan to the top of a car and drove him to Canada. Stop spreading rumors! -- Gail Collins

      by mbayrob on Thu Nov 15, 2012 at 03:56:59 PM PST

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