Krugman quality control worsens

Doug Henwood dhenwood at panix.com
Tue Jul 25 09:20:15 PDT 2000


Peter van Heusden wrote:


>I assume this would be a regressive adjustment in the tax base. I have
>often heard that the US budget surplus was, in part, a result of a change
>in taxation during the mid-1990s, capturing a significant part of the
>stock market gains. Is this true?

About the only good thing Clinton ever did was to raise taxes on the top 1-2% of the distribution, from a marginal rate of 36% to 39.6%. This boosted revenues somewhat, but extremely high capital gains and a generally strong economy have probably had a greater effect than that rate boost.


>Secondly, how would a tax cut correct the savings rate?

Cet par (though as Joan Robinson said, cet is rarely par) a tax cut would reduce the national savings rate, because the government would run smaller surpluses.


> Do you mean that a
>cut in taxation would allow people to put money which was previously spent
>on taxes into savings? Wouldn't any surplus money being added to the pot
>at present just fuel further recklessness?

Rich people aren't reckless. It's only poor people who are reckless. Therefore the great incentive asymmetry: to get rich people to work harder, pay them more; to get poor people to work harder, pay them less.

Doug



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