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IWETHEY Home / IWETHEY Board / Money, Financials, and Economics Forum / Isn't it the *rate* that matters?
Post #326,542
by drook
Picture of drook
5/19/10 11:05:08 AM
Reply
New Isn't it the *rate* that matters?
If we're talking about relative effects of various tax policies, isn't it the actual rate that matters? Because some people argue that lower rates lead to higher collections. Others say higher rates lead to higher collections. And of course the same arguments play out over what effect the rates have on GDP.

So isn't is specifically the rate we should be comparing, to see what effect it actually does have on those two numbers?
--

Drew
Post #326,544
by Another Scott
5/19/10 11:28:33 AM
Reply
New Dunno.
I think one could argue that it's the rate of change that matters. Increasing the tax rate from 20% to 25% (either a 5% or 25% increase, depending on how you look at it) may be different from increasing the tax rate from 5% to 10% (either a 5% or 100% increase, depending on how you look at it).

R&R's paper shows that it's complicated and tough to separate out the variables. They argue that the marginal rates are important. It makes much more sense to me that the actual end-of-the-day tax burden is what matters. Who cares if the theoretical marginal rate is 90% if nobody actually pays it due to various deductions and exclusions?

Cheers,
Scott.
     Effect of tax cuts and tax hikes on economic expansions - (Another Scott) - (21) - May 19, 2010, 01:49:10 AM EDT
         no, he doesnt understand economics - (boxley) - (20) - May 19, 2010, 08:24:41 AM EDT
             Sure he does... - (beepster) - May 19, 2010, 09:20:09 AM EDT
             Why? - (Another Scott) - (18) - May 19, 2010, 10:22:11 AM EDT
                 Isn't it the *rate* that matters? - (drook) - (1) - May 19, 2010, 11:05:08 AM EDT
                     Dunno. - (Another Scott) - May 19, 2010, 11:28:33 AM EDT
                 left out a couple of things - (boxley) - (8) - May 19, 2010, 12:01:56 PM EDT
                     "among the several states" - (Another Scott) - (7) - May 19, 2010, 12:44:01 PM EDT
                         judicial activism means the judge isnt doing what you want -NT - (boxley) - (6) - May 19, 2010, 01:13:33 PM EDT
                             Ding ding ding ... we have a winner - (drook) - (5) - May 19, 2010, 01:23:01 PM EDT
                                 thats different tiger doesnt get as much golf in -NT - (boxley) - (4) - May 19, 2010, 01:39:26 PM EDT
                                     Tiger works for the federal government now? - (lincoln) - (3) - May 19, 2010, 02:54:56 PM EDT
                                         Sure - he's qualified now . . . - (Andrew Grygus) - (2) - May 19, 2010, 03:53:08 PM EDT
                                             hafta be a dem, he is hetro -NT - (boxley) - (1) - May 19, 2010, 04:24:34 PM EDT
                                                 I LOLed -NT - (drook) - May 19, 2010, 04:37:49 PM EDT
                 Re: Why? - (Rdan) - (6) - May 20, 2010, 10:09:26 PM EDT
                     Welcome. Stick around if you can - we like new perspectives -NT - (Another Scott) - May 20, 2010, 10:16:43 PM EDT
                     hey cool, new blood. Feel free to hang out -NT - (boxley) - May 21, 2010, 09:48:48 AM EDT
                     Krugman offers support for your thesis today. - (Another Scott) - May 22, 2010, 01:17:15 PM EDT
                     Hmmm Rdan - (Ashton) - (1) - May 25, 2010, 04:36:58 AM EDT
                         He's not really hidden. - (Another Scott) - May 25, 2010, 07:32:33 AM EDT
                     I'd like to add my voice to the chorus - (jake123) - May 27, 2010, 09:29:40 AM EDT

It is toilet- ka ka crap as in the egregiously unfunny and unwatchable SNL.
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