Author Topic: Trickle Up Economics?  (Read 1699 times)

LC

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Trickle Up Economics?
« on: May 20, 2019, 06:44:32 AM »
https://www.journals.uchicago.edu/doi/abs/10.1086/701424

This paper investigates how tax changes for different income groups affect aggregate economic activity. I construct a measure of who received (or paid for) tax changes in the postwar period using tax return data from NBERís TAXSIM. Variation in the income distribution across US states and federal tax changes generate variation in regional tax shocks that I exploit to test for heterogeneous effects. I find that the positive relationship between tax cuts and employment growth is largely driven by tax cuts for lower-income groups and that the effect of tax cuts for the top 10 percent on employment growth is small.

"Lethargy bordering on sloth remains the cornerstone of our investment style."
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LC

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Re: Trickle Up Economics?
« Reply #1 on: October 06, 2019, 07:57:34 PM »
Great news for the uber-wealthy out there:

You officially pay the lowest taxes in our entire country!



https://www.nytimes.com/interactive/2019/10/06/opinion/income-tax-rate-wealthy.html

"Lethargy bordering on sloth remains the cornerstone of our investment style."
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RuleNumberOne

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Re: Trickle Up Economics?
« Reply #2 on: October 06, 2019, 09:34:35 PM »
Article is misleading. It focuses on the "400 richest households" and the "sharp change from the 1950s and 1960s".

Those "400 wealthiest" people can live anywhere in the world - that too is a "sharp change from the 1950s and 1960s". Their tax rate is capped by what other countries like France and Germany would tax them (30% capital gains tax rate.) Europe was bombed out in the 1950s.

As it is the US cannot afford the promise of unlimited quantities of the best healthcare. Those authors say
we need to tax the top 400 and spend it on universal pre-K.

The article evades talking about how much the upper middle class pays. But it can be inferred - they say the middle-class and poor tax rates are flat compared to the 1950s. That can only mean everybody else other than the top 400 pays more.


Great news for the uber-wealthy out there:

You officially pay the lowest taxes in our entire country!



https://www.nytimes.com/interactive/2019/10/06/opinion/income-tax-rate-wealthy.html
« Last Edit: October 06, 2019, 09:44:19 PM by RuleNumberOne »

RuleNumberOne

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Re: Trickle Up Economics?
« Reply #3 on: October 06, 2019, 10:14:08 PM »
When France's President put in his "millionaire tax" in 2014, France's richest man moved to Belgium.

Elizabeth has a 40% exit tax, but can she make it retroactive?

Schwab711

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Re: Trickle Up Economics?
« Reply #4 on: October 07, 2019, 09:17:25 AM »
The article evades talking about how much the upper middle class pays. But it can be inferred - they say the middle-class and poor tax rates are flat compared to the 1950s. That can only mean everybody else other than the top 400 pays more.

That's the point of the article?

The article isn't evasive. It's just an article and it can only be so long before it's readership drops off due to length. You have to have a focus? Not every article you don't like is biased or wrong.

The issue is the tax scheme and the lack of tax enforcement. The IRS has stated numerous times in recent years that they don't have enough personnel/resources to enforce tax laws, especially against rich folks. The wealthier you are, the less likely you are to be audited at the moment. That makes no sense from a simple ROI point of view. The CBO put out a study in 2018 saying that if $20b was spent on tax enforcement over 10 years, it would generate $50b in additional, uncollected tax revenue. It's a concerted effort to under-staff the IRS and allow tax dodging.

LC

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Re: Trickle Up Economics?
« Reply #5 on: October 07, 2019, 09:25:00 AM »
https://www.theguardian.com/inequality/2017/nov/20/if-you-tax-the-rich-they-wont-leave-us-data-contradicts-millionaires-threats

The data indicates: No, generally the rich do not leave jurisdictions based on taxation.

Also, up until the 1980s the wealthiest paid the most taxes. And up until 2018 did the wealthiest pay more than the poorest. So why didnít we see mass migration from the 70s through the 2000s?

Going back to a tax regime from the 80s (which when represented graphically, looks exactly how a progressive scheme should appear) would generate probably 500-600B, which could go a long ways to upgrade infrastructure and put a dent in rising inequality.

"Lethargy bordering on sloth remains the cornerstone of our investment style."
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stahleyp

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Re: Trickle Up Economics?
« Reply #6 on: October 07, 2019, 09:44:22 AM »
I think all the wealthy people leaving is fear mongering. They have their business here, friends, family. Seriously, is your life going to be better if you have $100 million and no close friends or family near by in a culture you're not familiar with vs $75 million (or whatever) and with your current set up?

I don't agree with some of Warren's policies (like free college or loan forgiveness) but I do like higher taxes.
Paul

Tim Eriksen

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Re: Trickle Up Economics?
« Reply #7 on: October 07, 2019, 09:54:29 AM »
Great news for the uber-wealthy out there:

You officially pay the lowest taxes in our entire country!



https://www.nytimes.com/interactive/2019/10/06/opinion/income-tax-rate-wealthy.html

I would love to see the data to support this claim.  Their graphic I saw on twitter showed the bottom 10% of income paying over 20% federal, state and local taxes.  I find that very hard to believe.  The bottom half pay no federal income tax.  Did they use income or Adjusted Gross Income?  The bottom 10% of filers have a negative rate due to EITC and Child Tax Credit.  I suspect these were ignored.  The bottom 10% get additional subsidies (food stamps, Sec. 8, school lunches, heating assistance, Pell grants, etc.).  Likely also ignored.  The bottom 10% get much more from Social Security than they put in (if they even contribute due to EITC), but they conveniently ignore that part.  The bottom 10% do not pay for Medicare but will collect that too.    The bottom 10% typically do not own a home.  Did they attribute property tax to renters or property owners?     

Schwab711

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Re: Trickle Up Economics?
« Reply #8 on: October 07, 2019, 11:48:17 AM »
Here's the paper:
https://www.brookings.edu/wp-content/uploads/2019/09/Saez-Zucman_conference-draft.pdf

They don't go in to detail on the math but it says "all federal, state, and local taxes included". It seems like they aren't including tax credits, to your point (though that makes you wonder what "all" taxes means then).

I'm guessing excise taxes, flat tax schemes in many states, and sales taxes/negative savings rates are an overwhelming factor here. There has to be double counting of property taxes and/or adjusting social security income, right? It seems really hard to reconcile these results with other studies that have far lower estimates of all-in tax rates for the lowest quintile.

LC

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Re: Trickle Up Economics?
« Reply #9 on: October 07, 2019, 01:48:45 PM »
https://gfycat.com/fakecandiddungbeetle

This is the progression of tax rates per income group from 1950-2018.

"All federal, state, and local taxes are
included. Taxes are expressed as a fraction of pre-tax income"

This should exclude tax credits.

The source is: source is Piketty, Saez, and Zucman 2018 updated
estimates

Which I believe is this:
https://eml.berkeley.edu/~saez/PSZ2019datafile.xlsx
"Lethargy bordering on sloth remains the cornerstone of our investment style."
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