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The problem with this paper is that it's just not measuring anything interesting. Seeking to prove that cutting taxes for the rich increases income inequality a

The problem with this paper is that it's just not measuring anything interesting. Seeking to prove that cutting taxes for the rich increases income inequality and doesn't impact GDP growth isn't cutting-edge research, it's borderline tautology. There are three massive problems with this paper: 1. Their dependent variable for measuring the impact on economic growth is GDP, which includes government spending. By their methodology, if you cut taxes (and government spending) by 50%, you will see a 10% drop in GDP (since government spending is ~20% of GDP). 2. Who cares about income inequality (or even GDP growth in the first place)? What you really want to understand is: how well off are people in society? What is the distribution of life outcomes? GDP is a famously flawed metric for quality of life[0]. 3. They are failing to account for a key confounder: spending. Ceteris paribus, we should expect GDP to decline with tax cuts not met with spending cuts (even after accounting for #1) since debt servicing load will increase. Not only does this paper say nothing about what we actually care about: how well off is society when cutting taxes on the rich, but it comes off as a pseudo-rationale for confiscatory policy justified by nothing other than envy. [0] https://www.nber.org/papers/w23306 https://www.nber.org/papers/w23306 (edit: formatting)

PaulDavisThe1st 5y ago
> Seeking to prove that cutting taxes for the rich increases income inequality and doesn't impact GDP growth isn't cutting-edge research, it's borderline tautology. People said this after Reagan was elected and that idiot Laffer got to shape tax policy. They were laughed out of the room with the "grown-ups" in it, and was certainly not seen as a tautology back then. Nor has it been seen that way by a couple of generations of Republican tax cut boosters, including (notably) Grover Norquist. > Who cares about income inequality (or even GDP growth in the first place)? What you really want to understand is: how well off are people in society? What is the distribution of life outcomes? GDP is a famously flawed metric for quality of life[0]. Caring about income inequality is quite different than caring about GDP. And it is precisely caring about income inequality that become a visible point of difference between the left and right, particularly since Piketty's book.
- settrans 5y ago
  > Caring about income inequality is quite different than caring about GDP. And it is precisely caring about income inequality that become a visible point of difference between the left and right, particularly since Piketty's book. Right: my thesis is that unless you are simply envy-stricken, income inequality is a red herring distracting us from interesting metrics like "How well-off is the median person? 10th percentile earner? 1st percentile earner?" and that GDP is a flawed proxy for this.
  - PaulDavisThe1st 5y ago
    It's not red herring at all if you have a certain moral take on the world. There are long-lived, well justified moral positions that would say that it makes no difference if 99% of the population is entirely comfortable, the fact that 1% makes (say) 10x what the other 99% make is just indefensible. You appear not to share this view.
    - nemo44x 5y ago
      Taxes should exist to fund the needs of the government, not to punish people. Confiscating incomes and gains as described in this thread (punitively) would destroy working capital and investment capital which would would lead to lower incomes for everyone, higher unemployment, and in essence make everyone poorer.
      - PaulDavisThe1st 5y ago
        > Confiscating incomes and gains as described in this thread ... It's not punitive confiscation. It's taxes to fund the decided needs of society, where the needs are established using the mechanisms of government (as flawed or otherwise as they might be). > ... (punitively) would destroy working capital and investment capital which would would lead to lower incomes for everyone This seems like the reciprocal of the now completely debunked claim "reducing taxes would increas working capital and investment capital which will lead to higher incomes for everyone". There are so many bundled assumptions in your claim here, most notably that higher incomes require private investment. There's no particular evidence that this is true (although there is a lot of hand-waving "common sense" pronouncements from certain parts of the political landscape designed to us think that it is obvious).

PaulDavisThe1st 5y ago

> Seeking to prove that cutting taxes for the rich increases income inequality and doesn't impact GDP growth isn't cutting-edge research, it's borderline tautology. People said this after Reagan was elected and that idiot Laffer got to shape tax policy. They were laughed out of the room with the "grown-ups" in it, and was certainly not seen as a tautology back then. Nor has it been seen that way by a couple of generations of Republican tax cut boosters, including (notably) Grover Norquist. > Who cares about income inequality (or even GDP growth in the first place)? What you really want to understand is: how well off are people in society? What is the distribution of life outcomes? GDP is a famously flawed metric for quality of life[0]. Caring about income inequality is quite different than caring about GDP. And it is precisely caring about income inequality that become a visible point of difference between the left and right, particularly since Piketty's book.

settrans 5y ago
> Caring about income inequality is quite different than caring about GDP. And it is precisely caring about income inequality that become a visible point of difference between the left and right, particularly since Piketty's book. Right: my thesis is that unless you are simply envy-stricken, income inequality is a red herring distracting us from interesting metrics like "How well-off is the median person? 10th percentile earner? 1st percentile earner?" and that GDP is a flawed proxy for this.
- PaulDavisThe1st 5y ago
  It's not red herring at all if you have a certain moral take on the world. There are long-lived, well justified moral positions that would say that it makes no difference if 99% of the population is entirely comfortable, the fact that 1% makes (say) 10x what the other 99% make is just indefensible. You appear not to share this view.
  - nemo44x 5y ago
    Taxes should exist to fund the needs of the government, not to punish people. Confiscating incomes and gains as described in this thread (punitively) would destroy working capital and investment capital which would would lead to lower incomes for everyone, higher unemployment, and in essence make everyone poorer.
    - PaulDavisThe1st 5y ago
      > Confiscating incomes and gains as described in this thread ... It's not punitive confiscation. It's taxes to fund the decided needs of society, where the needs are established using the mechanisms of government (as flawed or otherwise as they might be). > ... (punitively) would destroy working capital and investment capital which would would lead to lower incomes for everyone This seems like the reciprocal of the now completely debunked claim "reducing taxes would increas working capital and investment capital which will lead to higher incomes for everyone". There are so many bundled assumptions in your claim here, most notably that higher incomes require private investment. There's no particular evidence that this is true (although there is a lot of hand-waving "common sense" pronouncements from certain parts of the political landscape designed to us think that it is obvious).