If you were king for a day, which tax would you lower:
* Personal income
* Gas
* Corporate
Few Americans would choose the latter, but Greg Mankiw makes a strong argument for it.
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- John
- When I'm not working I try to find time to get some exercise, play with my kids, court my wife and serve my neighbor. Life goes by so fast.
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Musings on seemingly random topics - politics, economics, religion, sports, boardgames - best left alone if you want to keep your friends. However, if it itches I can't help but scratch it.
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The curious task of economics is to illustrate to men how little they know about what they imagine they can design.
~ F.A. Hayek
~ F.A. Hayek
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3 comments:
'They' say that all politics is local - I think the same maxim applies, to some extent anyway, to economics. That is, my guess is that most people tend to think more in terms of their own pocketbooks, and not so much in terms of how their actions might bear on the economy at large. Considered from that perspective, I'd bet that most people would choose to lower their own taxes. However, I think the most good for the economy as a whole and, ultimately, the consumers, would be realized by lowering corporate taxes. This would hopefully stimulate corporate spending and investment, which would ultimately benefit shareholders - anyone who owns stock, either directly or by way of a mutual fund - 'a rising tide lifts all boats.' Thus, while the quick 'fix' of a personal income tax reduction is tempting, I would lower corporate taxes.
As an appendix to my earlier post, the decision about what taxes to lower will be driven, significantly I think, by the extent to which taxes affect your ability to satisfy your basic needs. For the widow on a fixed income, whose every dollar counts, it makes a lot more sense to lower your own personal taxes since the benefit is immediate and quite significant. For a person in an upper income bracket whose basic needs are well met and whose lifestyle may not be significantly affected by an increase or decrease in taxes, it is easier, and makes more sense, to take the longer view and choose to lower corporate taxes.
John, I enjoyed this article and thank you for posting it. I would not have found it to read had you not done so. Your post about the progressive tax and the current graphs was helpful to me as well. Keep thanks for thinking about these issues and thinking outloud!
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