tag:blogger.com,1999:blog-6976144462093297473.post1632036910556100093..comments2024-03-26T19:10:00.791-04:00Comments on West Coast Stat Views (on Observational Epidemiology and more): The indispensable Professor ThomaJosephhttp://www.blogger.com/profile/10760453165301871031noreply@blogger.comBlogger4125tag:blogger.com,1999:blog-6976144462093297473.post-61079643067250544962010-10-13T19:36:21.768-04:002010-10-13T19:36:21.768-04:00But also, the effect can go in the other direction...But also, the effect can go in the other direction. An increase in taxes can make people work harder, more hours, and empirically this appears to happen with those upper middle class and higher.<br /><br />Plus, of course, if the tax money is used to provide high return government investments of the kind the pure free market will grossly underprovide, or inefficiently provide, due to long established in economics free market problems (externalities, etc.), then people can be made much more productive. Such investments include education, infrastructure, basic scientific and medical research, and much more.Richard H. Serlinhttps://www.blogger.com/profile/09824966626830758801noreply@blogger.comtag:blogger.com,1999:blog-6976144462093297473.post-50676791115517054342010-10-12T17:37:11.480-04:002010-10-12T17:37:11.480-04:00Richard,
I'm not sure we're really disagr...Richard,<br /><br />I'm not sure we're really disagreeing here. You say the effect is not sizeable; I said it was "very small." It's there but it's consistently swamped by other factors. <br /><br />MarkMarkhttps://www.blogger.com/profile/14705408455380402571noreply@blogger.comtag:blogger.com,1999:blog-6976144462093297473.post-27879888419850580102010-10-12T14:01:15.341-04:002010-10-12T14:01:15.341-04:00And yes Mankiw knows this well; he's intention...And yes Mankiw knows this well; he's intentionally misleading as usual for libertarian ends.Richard H. Serlinhttps://www.blogger.com/profile/09824966626830758801noreply@blogger.comtag:blogger.com,1999:blog-6976144462093297473.post-21456708017571185642010-10-12T13:59:02.448-04:002010-10-12T13:59:02.448-04:00"Every product that reaches the marketplace d..."Every product that reaches the marketplace did start with the producer asking "Is this worth my while?" Tax rates do factor into that calculation, so, yes, there can a situation where dropping the Bush tax cuts would cause someone to decide not to make a product."<br /><br />Please look up the long established in economics income and substitution effects and the backward bending labor supply curve.<br /><br />If low after tax income per hour gives you less of an incentive to work, then why did people 100 years ago work more than today at a tiny fraction of the wage per hour?<br /><br />If your income went from $30/hour to $1 million per hour would you work more hours, or would you go from 60 hours per week to 60 hours per year? and spend the rest of the time living it up on your $60 million per year?<br /><br />There's no theoretical basis for people working more hours per week. This is due to the income effect. Empirically this has been well studied and this is the conclusion of a top expert in this literature, MIT economist Jonathan Gruber, “Changes in tax rates appear to have relatively modest effects on total gross income; the total amount of income actually generated through work or savings does not respond in a sizable way to taxation”, (“Public Finance and Public Policy”, 2nd edition, 2007, page 734)Richard H. Serlinhttps://www.blogger.com/profile/09824966626830758801noreply@blogger.com