Texas governor Rick Perry has decided not to run for another term as governor, and that has many on the right excited about a possible 2016 presidential campaign. Perry is thought to be a good primary candidate due to his social conservatism (he has recently called a special session of the Texas legislature in an attempt to once again pass the anti-abortion legislation filibustered so recently by Wendy Davis). He is still thought to make a good general election candidate due to his state’s comparative economic performance. Texas has posted unusually low unemployment numbers relative to the rest of the country during his stint as governor. So today I’d like to consider the question of whether or not Rick Perry makes a suitable republican candidate for US president.
Tag: Tax
Oregon’s College Funding Scheme
In the state of Oregon a new mechanism for funding university studies has been proposed. The scheme is called “Pay It Forward“. The idea is that instead of charging students tuition to go to universities, the state will fund their education and then extract payment after the degree is finished as a percentage of their income. For a student with a bachelor’s degree, the expected repayment would be 3% of income for the following 20 years. This presents a very different alternative to the university funding system presently in force throughout the United States, so let’s dissect it. Would Pay It Forward make Oregon’s university system better than it presently is? Is it the ideal alternative, and if not, in what respects does it differ from that ideal?
Prop 8 and Direct Democracy
I ran across an interesting piece today, in which the author, Joshua Spivak, notes that by declaring that the supporters of Prop 8 (the proposition in California which forbid same-sex marriage) did not have legal standing to sue in its defense, the Supreme Court has made direct democracy through propositions and referendums much more difficult to defend. Implicitly assumed in the piece is that direct democracy is an ideal worth defending, and that the Prop 8 decisions amounts to a dangerous precedent. Today I intend to dispute that assumption.
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? Continue reading “Clandestine Inequality”
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. Continue reading “Tax Rates and Growth”
Benjamin Studebaker 