Benjamin Studebaker

Yet Another Attempt to Make the World a Better Place by Writing Things

Tag: Income Tax

Trump’s Tax Plan is Regressive and Unrealistic, Copies Bush and Romney

I was disappointed to read Donald Trump‘s tax plan today. In recent weeks, Trump has been talking a pretty progressive game on taxes. Many of us, myself included, speculated that Trump might be a bit left wing on this issue and might be attempting to shift the Republican Party a to the left on economic issues. Unfortunately, this appears to have been wishful thinking. Trump’s new plan is almost precisely the same as Jeb Bush‘s and Mitt Romney’s. This still puts him to the left of flat tax and fair tax candidates (Carson, Cruz, Paul, Huckabee, Perry, Walker all explicitly endorsed one or both, while Rubio and Kasich have expressed interest in ultimately going to a flat tax), but it puts him to the right of Hillary Clinton and far, far to the right of Bernie Sanders. So let’s talk a bit about how the Romney/Bush/Trump tax plan works, why it’s so disappointing, and what the differences are between the various versions of the plan.

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Candidate Evaluations: Donald Trump

Donald Trump is running for president. A few people have told me I shouldn’t do an evaluation for Trump, that to write one for him treats him with a level of seriousness he’s not entitled to. But here’s the deal folks–as of late May and early June, Donald Trump polls at 4% among republican primary voters. That may not sound like a lot, but he has roughly twice as many supporters as George Pataki, Carly Fiorina, Lindsey Graham, or Rick Santorum. In some polls, he also tops Rick Perry. And as we’ve seen over the course of this series, there are a great many serious candidates for president who have said outlandish things or taken reactionary positions. So I’m going to do an evaluation for Trump, because he really isn’t that much crazier or that much less popular than many of the republican candidates I’ve already done. Before we begin, here’s a quick reminder of what we’re doing. I’ll be evaluating Trump’s background, policy history, and explicit statements to determine whether or not he would make a good president. I won’t be paying attention to electability or likeability, as is often common elsewhere on the web. Read the rest of this entry »

Clandestine Inequality

The other week, I wrote a post in which I observed a connection in the United States between the rate of federal income tax on the wealthy and the rate of economic growth. As the rate of tax on the rich fell, the pace of economic growth appears to slow. However, it was pointed out to me by readers that despite changes in the tax rate, effective tax rates remained more or less the same. In 1979, the formal tax rate, the rate the baseline rate mandated by the tax code, on the rich was 70%, and in 1996, it was 40%, yet the effective tax rates, the rates people actually pay after taking into account deductions and other loopholes, according to the CBO, were only 1 percentage point apart–37% in 79′, 36% in 96′. Surprisingly, according to a Berkeley study, the effective rate of individual income tax on the rich in 1970 was actually lower–32%. Yet despite this, we still have lower growth rates and more inequality. This is bizarre. What on earth is going on? Read the rest of this entry »

Tax Rates and Growth

Last week, I took a look at optimal tax rates, the top rates of income tax which economic research suggests would maximize revenue if implemented as policy. The research suggested that for every 1% higher the top rate of income tax rises, the rich report 0.25% less income. This suggested an optimal top rate of between 73 and 80%. Toward the end of that post, I suggested that it might be the case that even as the rich report lower earnings, the economy as a whole might operate more efficiently at those high rates, if the government is more effective at investment than the private sector. Today I’d like to look at some empirical data to see if there’s any historical basis for that claim. Read the rest of this entry »