PODCAST: Hexapodia XIV: Þe Capital Gains Tax

"Hexapodia" Is the Key Insight: by Noah Smith & Brad DeLong

Key Insights:

* Economic arguments against higher taxes that may have been somewhat plausible back in the days of 70% or so maximum individual and 40% or so maximum capital gains tax rates simply do not apply now.

* Right-wing parties that don't think they can credibly make the argument that cosseting their core constituencies is necessary for rapid economic growth search for some non-economic cleavage in which the rich and the right-thinking poor, or the right-colored poor, can be on one side and the people who seek a fairer and more equal distribution of income and higher taxes on the rich can be put on the other—let's all yell about critical race theory, and maybe they won't pay attention to the fact that we just, you know, take everybody's money.

* Capital to fund investment is really not a big constraint right now—incentivizing savings in financial assets really is just pushing on a string.

* Companies with investments that have high societal value in expansion need to be properly incentivized—either by the smell of more profits next year from serving a larger market with lower costs of production through larger scale, or through the government paying and so getting prices righter than the free market gets them.

* “Doge coin” is pronounced with a soft “g” sound.

* No, Doge coin is not named after the title of the head of state of the Venetian Republic

* Doge coin’s name comes from the Homestar Runner line: “I want a doge”…

* Hexapodia!

References:

Len Burman (2021): Biden Would Close Giant Capital Gains Loopholes—At Least For The Rich <https://www.taxpolicycenter.org/taxvox/biden-would-close-giant-capital-gains-loopholes-least-rich>

Peter Diamond & James Mirrlees (1971): Optimal Taxation and Public Production I: Production Efficiency <https://www.jstor.org/stable/1910538>

Peter Diamond & James Mirrlees (1971): Optimal Taxation and Public Production II: Tax Rules <https://assets.aeaweb.org/asset-server/journals/aer/top20/61.3.261-278.pdf>

Ken Judd (1999): Optimal Taxation and Spending in General Competitive Growth Models <http://darp.lse.ac.uk/PapersDB/Judd_(JPubE_99).pdf>

Paul Krugman (2021): Why Doesn’t Cutting Taxes on the Wealthy Work? <https://www.nytimes.com/2021/04/30/opinion/tax-cuts-rich.html>

Jacob Lundberg & Johannes Nathell (2021): Tax Burden on Capital Income: International Comparison <https://taxfoundation.org/tax-burden-on-capital-income/>

Robert McClelland (2021): Avoiding Biden’s Proposed Capital Gains Tax Hikes Won’t Be So Easy. Or Will It? <https://www.taxpolicycenter.org/taxvox/avoiding-bidens-proposed-capital-gains-tax-hikes-wont-be-so-easy-or-will-it>

Alicia Munnell (2021): Biden’s Plan to Fully Tax Capital Gains Is Good Policy<https://www.marketwatch.com/story/bidens-plan-to-fully-tax-capital-gains-is-good-policy-11620658190>

Garrett Watson & Erica York (2021): Capital Gain Rates Under Biden Tax Plan<https://taxfoundation.org/biden-capital-gains-tax-rates/>

Thomas Piketty & Emmanuel Saez (2012): A Theory of Optimal Capital Taxation <http://gesd.free.fr/w17989.pdf>

Ludwig Straub & Ivan Werning (2020): Positive Long-Run Capital Taxation: Chamley-Judd Revisited <https://www.aeaweb.org/articles?id=10.1257/aer.20150210>

Tax Foundation (2017): Preliminary Details and Analysis of the Tax Cuts and Jobs Act <https://taxfoundation.org/final-tax-cuts-and-jobs-act-details-analysis/>

&, of course:

Vernor Vinge: A Fire Upon the Deep <https://books.google.com/books?id=fCCWWgZ7d6UC>

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