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I dont know anyone that got a substantial pay raise in 2017 when the corporate tax rate went from 35% to 21%. I also dont remember prices declining. are you s

by eigen 5y ago

I dont know anyone that got a substantial pay raise in 2017 when the corporate tax rate went from 35% to 21%. I also dont remember prices declining. are you sure that corporate taxes are paid by the employee and lowering taxes results in higher pay and lower prices?

renewiltord 5y ago
Yeah, the personal income elasticity with respect to those taxes doesn’t seem appreciable.
DFHippie 5y ago
A scenario: Daddy Warbucks learns that the government is raising corporate taxes. He goes and tells his workers the government has cut their pay. He has no choice. Business necessity. Daddy Warbucks learns that the government has cut corporate taxes. He pockets the windfall. There is some business logic behind this: if the windfall is temporary, he doesn't want to raise salaries. That would be difficult to undo if the tax rates go back up. And whether this is the logic that actually motivates his decision hardly matters. Who can know what is in his heart? Even he doesn't. This helps him sleep at night. When he harms others his hand has been forced. When he helps other it proves his essential goodness. Fundamental attribution error FTW!
- imtringued 5y ago
  The logic is that the unions are dead and workers have no bargaining power to demand a raise even with the tax cut.
colinmhayes 5y ago
Wages are sticky because people generally don't like job hopping. Over time they absolutely lead to higher wages as firms compete for employees. As far as corporate tax incidence, the literature is pretty clear that they reduce wages. They reduce return on capital too, some estimate that a $1 corporate tax costs capital 60 cents and labor 40 cents from what I've read. Some estimates are 50/50 though. https://www.aeaweb.org/articles?id=10.1257/aer.20130570 https://www.aeaweb.org/articles?id=10.1257/aer.20130570 https://www.sciencedirect.com/science/article/abs/pii/S0014292112000451 https://www.sciencedirect.com/science/article/abs/pii/S00142...

by eigen 5y ago

renewiltord 5y ago

Yeah, the personal income elasticity with respect to those taxes doesn’t seem appreciable.

DFHippie 5y ago

A scenario: Daddy Warbucks learns that the government is raising corporate taxes. He goes and tells his workers the government has cut their pay. He has no choice. Business necessity. Daddy Warbucks learns that the government has cut corporate taxes. He pockets the windfall. There is some business logic behind this: if the windfall is temporary, he doesn't want to raise salaries. That would be difficult to undo if the tax rates go back up. And whether this is the logic that actually motivates his decision hardly matters. Who can know what is in his heart? Even he doesn't. This helps him sleep at night. When he harms others his hand has been forced. When he helps other it proves his essential goodness. Fundamental attribution error FTW!

imtringued 5y ago
The logic is that the unions are dead and workers have no bargaining power to demand a raise even with the tax cut.

colinmhayes 5y ago

Wages are sticky because people generally don't like job hopping. Over time they absolutely lead to higher wages as firms compete for employees. As far as corporate tax incidence, the literature is pretty clear that they reduce wages. They reduce return on capital too, some estimate that a $1 corporate tax costs capital 60 cents and labor 40 cents from what I've read. Some estimates are 50/50 though. https://www.aeaweb.org/articles?id=10.1257/aer.20130570 https://www.aeaweb.org/articles?id=10.1257/aer.20130570 https://www.sciencedirect.com/science/article/abs/pii/S0014292112000451 https://www.sciencedirect.com/science/article/abs/pii/S00142...