Assorted links

Comments

The basic concept is simple: generally the tax system should strive to be neutral so that decisions are made on their economic merits and not for tax reasons.

-from Senate testimony by Jason Furman

I like this guy. More evidence that Obama is a left libertarian.

Econotarian: There is an important and didactic sense in which Obama's idea is consistent with the minimum-distortion principal that Furman spoke of. A random tax -- one in which the person to be taxed and the amount of the tax is chosen randomly -- is minimally distorting: everyone behaves as if they had slightly less money, to account for the possibility of being taxed, but their investment and consumption decisions are the same as they would have been on that lower budget line. To the extent that the oil companies didn't expect a windfall profit tax, and that consumers didn't expect to get that money, Obama's proposal is minimally distorting. Of course, if the proposal gets promoted from a one-time measure toa principal of taxation that producers and consumers expect to be applied in the future, it becomes quite distortionary.

In several areas - energy policy, health care, college education - it seems that Obama (and Democrats generally) prefer policies that they say "level the playing field" or "help the neediest". But the help, in the form of subsidies for those below certain income levels, do nothing to increase supply and definitely increase demand with the very predictable result that prices rise. It's the middle class that bears the burdens imposed by these policies - the expense of the subsidies, the higher prices, and, marginally, being unable to afford that which they could have absent government tinkering. Never mind the elimination of the incentive to work and save for people on both sides of the subsidy.

This "war on the middle class" by the Democrats seems to me an opportunity for Republicans. It's a complicated message, though, and takes time to sink in.

I thought Austen Goolsbee was Obama's main economic adviser. What's Austen's position within the campaign now that Jason is Director of Economic Policy? Or is Austen gone?

When you say "Could be better, could be worse," are you implying college kids shouldn't be having sex?

Comments for this post are closed