Do high taxes mean better government services?

(This is being reposted due to technical difficulties last week. Apologies to those for whom this is a repeat.) People sometimes justify high taxes by saying they provide us with better government services. Is it true? It’s hard to make a definitive judgment. There are many moving parts. However, we can make some partial judgments. …

Lessons from Amazon’s NYC pullout

Last week Amazon abandoned its previously-announced plan to open a new headquarters in New York City. It would have employed 25,000 people. Apparently, Amazon decided to pull out after local politicians voiced strong resistance to the deal. Their main objection appeared to be the tax incentives granted to Amazon by state and local governments. There …

Does a carbon tax make sense?

Proposals to levy taxes on carbon seem to be popular. A recent example is a proposal in the Wall Street Journal by a couple dozen economists, some of them famous. Why tax carbon dioxide (CO2)? The goal is to persuade people to use less fossil fuels, thereby reducing CO2 emissions and the risk of global warming. …

Can tax cuts pay for themselves?

When people discuss cutting taxes, the question of whether tax cuts can pay for themselves usually arises. I’ll try to answer that question here. The optimistic view says that tax cuts often pay for themselves because lower tax rates encourage economic growth. The larger economy then throws off higher tax revenue, offsetting the tax loss …

Do the rich pay their fair share?

It is an article of faith to some class warriors that the rich do not pay their “fair share” of taxes. Is it true? We can evaluate this claim since there is plenty of publicly available data. The data here comes from a 2016 CBO report. Effective tax rates It is difficult to look at …

Tax reform goals

Congress is talking about tax reform. Hopefully something will get done. The US tax code is overly complicated and discourages growth. This post will lay out some rough goals for tax reform, with a few details on how to achieve the goals. It’s aimed at the US tax code, but some principles apply anywhere. The …

Why Corporate Tax Cut Makes Sense

Last week President Trump’s team proposed to cut the corporate tax rate from 35% to 15%. Tax reform that cuts the tax rate and also closes loopholes is an excellent idea that would benefit all of us. Popularity of corporate taxes Taxing corporations is popular. Gallup and Pew Research surveys both show that more than …