Wednesday, July 23, 2014

Information Everyone Should Know

Considering that everyone (i.e. all the very serious people) know that high taxes hurt job should come as no surprise that they are wrong and high taxes don't hurt job growth.  They may actually help create more jobs as is now being seen in CA.  A couple paragraphs I like (in part because I've made similar points here 4 years ago):
Neumark said he asks his students, “Does raising income tax rates reduce hiring?”
“The answer is no. What firms care about when deciding how many workers to hire is the marginal product of workers and the marginal cost of those workers. So if you are an employer and your personal income tax rate is increased, that does not raise the marginal cost of your workers, but it may encourage you to work a little less hard,” Neumark noted, applying standard economic theory.
Some research into tax rates indicates that high rates have the opposite effect: People may work harder, trying to make more money to achieve a desired after-tax income and may slough off if tax rates are lowered.
Hmm...On the one hand I'd like to gloat about being right.  On the other it is so frustrating that the people who are constantly and so badly wrong have so much influence, that I can't really feel good about it.

Also in that article and following a recent discussion regarding high taxes driving people away and low taxes attracting them:
The empirical evidence also shows that the best-paying jobs tend to be clustered in states (and countries) with high taxes. The same tends to be true of wealth creators, including the most money-motivated among scientists, and existing wealth holders not actively engaged in business.
Manhattan, home to the highest taxes in America, is also home to many centimillionaires and billionaires drawn by the proximity of other dealmakers, as well as taxpayer-supported amenities such as museums and performing arts halls. [emphasis mine]
If you want to live in a really nice place that place being really nice costs something and that something is tax dollars.  So nicer places to live have to be higher taxed. Looking back on the first thing I bolded, you see this seems to be true even among people who have the freedom to live wherever they want: "those not actively engaged in business"--i.e. the retired and/or people who have inherited their wealth--should be most tax sensitive...they choose to live in high tax areas.

I understand that in government there is waste (less than people think) and abuse (ditto) and money spent on "things you don't like" (say, the military), but tough.  In the end, if you vote for and/or support tax cuts you are championing a shittier country/state/municipality than you currently live in.

No comments: