Yesterday I found my hand shooting to the volume knob on my radio to stop another endocrine rush of annoyance when I heard Boehner once again reciting the ear worm "job-killing taxes."
My intolerance of Boehner's mechanical repetition is due in part to the seemingly counterfactual nature of his claim, at least to to economic naifs such as myself.
We've been cutting taxes in the U.S. for the past 60 years. In 1950 the unemployment rate here was about 5%. Income tax rates ranged from 38% for the lowest bracket to 91% for the highest income levels. Now, today, income tax rates range from 10% to 33%. During the intervening 60 years unemployment has varied wildly, from some 3% to 10%, while taxation has relatively smoothly and steadily fallen. In other words, there's no apparent correlation between taxation and unemployment, yet Boehner and his crew are never challenged to support their claim about "job-killing taxes."
Understanding basic relationships like this seems key to having an electorate that can choose between effective leadership and incompetent fumbling in the dark.
Does anybody here have the economic chops to explain how the disconnect between unemployment rates and taxation rates comports with "job-killing taxes?"
The poll version of the cartoon, as it pertains to climate change: http://theidiottracker.blogspot.com/2011/09/bad-climate-policy-yale-study-fingers.html
That no jobs have been created in the years since the tax cut was enacted does not deter the GOP from fantasizing that it will happen this time.
This has apparently been going on for 60 years.
Today I listened via NPR to E.J. Dionne and David Brooks discussing Obama's problem communicating with voters. Members of the "working class" vote against their own interests, appear to show little cognition of the forces controlling their lives. The chattering classes find this behavior puzzling, at variance with what ought to be salient facts in voters' lives.
So, here's another persistent, multi-decadal fantasy failure: attempting to analyze voters as though they were capable of collective rationality in the face of a heavy diet of bad information, such as that there's a connection between incremental changes in tax rates and employment levels. "Garbage in, garbage out" is the old saw; the economist's theoretical pool of intellect inclined to producing useful or at least predictable decisions is impossible in these conditions. Pundits struggling to connect cause and effect in the minds of voters are doomed to frustration, or the case of Brooks and Dionne wondering why the electorate voted themselves more civil degradation and degeneracy by turning the House over to the GOP last November.
I was shocked paging through some of the Yale climate research polling by the extent to which we actually have the climate policies that are popular (except for a treaty to contain greenhouse gas emissions. Such a treat is very popular, although I suspect complying with it would not be.) Regulation is popular, research and subsidies are popular. Gas taxes, anything that adds to the utility bill, and expanded nuclear power are very unpopular. Right now the public basically has the climate policy that it wants, feeble and irrational as it is (I support a binding treaty to cut GHG emissions by 90%; I reject paying $1.50 a month on my utility bill for energy efficiency!)
Thank you for the honorable mention in the sidebar. I always enjoy your writing and have a lot of respect for you, so it's cool to have you highlight something I wrote.
Not all tax cuts have an equal impact, and timing is important as well. In olden days, Democrats used to favor tax cuts as well as infrastructure spending to combat a recession while Republicans of the time didn't want to do either because they didn't like deficits (i.e. they really didn't like deficits, whereas modern Rs don't mind them if they come from tax cuts).
I agree that over the long haul, there is no correlation between tax rates and unemployment or economic growth. But that isn't necessarily true in recessionary times.
via JonikCartoons
Yesterday I found my hand shooting to the volume knob on my radio to stop another endocrine rush of annoyance when I heard Boehner once again reciting the ear worm "job-killing taxes."
ReplyDeleteMy intolerance of Boehner's mechanical repetition is due in part to the seemingly counterfactual nature of his claim, at least to to economic naifs such as myself.
We've been cutting taxes in the U.S. for the past 60 years. In 1950 the unemployment rate here was about 5%. Income tax rates ranged from 38% for the lowest bracket to 91% for the highest income levels. Now, today, income tax rates range from 10% to 33%. During the intervening 60 years unemployment has varied wildly, from some 3% to 10%, while taxation has relatively smoothly and steadily fallen. In other words, there's no apparent correlation between taxation and unemployment, yet Boehner and his crew are never challenged to support their claim about "job-killing taxes."
Understanding basic relationships like this seems key to having an electorate that can choose between effective leadership and incompetent fumbling in the dark.
Does anybody here have the economic chops to explain how the disconnect between unemployment rates and taxation rates comports with "job-killing taxes?"
Sure, see http://is.gd/4PEGMZ
ReplyDelete:-)
This comment has been removed by the author.
ReplyDeleteThe poll version of the cartoon, as it pertains to climate change: http://theidiottracker.blogspot.com/2011/09/bad-climate-policy-yale-study-fingers.html
ReplyDeletePeople may as well be saying those things.
Favorable comment about the cartoon which I linked to elsewhere.
ReplyDeleteFrom MT's pointer:
ReplyDeleteThat no jobs have been created in the years since the tax cut was enacted does not deter the GOP from fantasizing that it will happen this time.
This has apparently been going on for 60 years.
Today I listened via NPR to E.J. Dionne and David Brooks discussing Obama's problem communicating with voters. Members of the "working class" vote against their own interests, appear to show little cognition of the forces controlling their lives. The chattering classes find this behavior puzzling, at variance with what ought to be salient facts in voters' lives.
So, here's another persistent, multi-decadal fantasy failure: attempting to analyze voters as though they were capable of collective rationality in the face of a heavy diet of bad information, such as that there's a connection between incremental changes in tax rates and employment levels. "Garbage in, garbage out" is the old saw; the economist's theoretical pool of intellect inclined to producing useful or at least predictable decisions is impossible in these conditions. Pundits struggling to connect cause and effect in the minds of voters are doomed to frustration, or the case of Brooks and Dionne wondering why the electorate voted themselves more civil degradation and degeneracy by turning the House over to the GOP last November.
BTW, to see how wildly over-employed we all ought to be according to GOP logic, see this handy chart:
ReplyDeleteTop Marginal Tax Rates 1916-2010
Crippling shortage of labor apparent these days?
Great cartoon.
ReplyDeleteI was shocked paging through some of the Yale climate research polling by the extent to which we actually have the climate policies that are popular (except for a treaty to contain greenhouse gas emissions. Such a treat is very popular, although I suspect complying with it would not be.) Regulation is popular, research and subsidies are popular. Gas taxes, anything that adds to the utility bill, and expanded nuclear power are very unpopular. Right now the public basically has the climate policy that it wants, feeble and irrational as it is (I support a binding treaty to cut GHG emissions by 90%; I reject paying $1.50 a month on my utility bill for energy efficiency!)
Thank you for the honorable mention in the sidebar. I always enjoy your writing and have a lot of respect for you, so it's cool to have you highlight something I wrote.
Not all tax cuts have an equal impact, and timing is important as well. In olden days, Democrats used to favor tax cuts as well as infrastructure spending to combat a recession while Republicans of the time didn't want to do either because they didn't like deficits (i.e. they really didn't like deficits, whereas modern Rs don't mind them if they come from tax cuts).
ReplyDeleteI agree that over the long haul, there is no correlation between tax rates and unemployment or economic growth. But that isn't necessarily true in recessionary times.