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Comments on: Tax cuts and interest rates http://www.tvhe.co.nz/2008/05/23/tax-cuts-and-interest-rates/ The Visible Hand in Economics Tue, 23 Dec 2008 08:16:12 +0000 hourly 1 https://wordpress.org/?v=6.9.4 By: Interest Rates » Tax cuts and interest rates | TVHE http://www.tvhe.co.nz/2008/05/23/tax-cuts-and-interest-rates/#comment-5572 Tue, 23 Dec 2008 08:16:12 +0000 http://tvhe.wordpress.com/?p=367#comment-5572 […] Read the rest of this great post here […]

]]> By: Matt Nolan http://www.tvhe.co.nz/2008/05/23/tax-cuts-and-interest-rates/#comment-1472 Fri, 23 May 2008 00:56:11 +0000 http://tvhe.wordpress.com/?p=367#comment-1472 “I’m not convinced that marginal rates facing workers have changed enough to generate a substantial supply-side response”

For the threshold changes we have just seen I would have to agree. In a sense we have made our tax scale more progressive, which will further limit any supply side response from these tax cuts – we discussed this a little bit here:

http://tvhe.wordpress.com/2008/05/22/should-the-government-reward-effort/

However, the net impact from the threshold adjustments should still illicit some type of supply side response – as the adjustments at the lower end will give the income elastic part time workers the incentive to work more hours.

I would have preferred a flattening of the tax base but I don’t think we’ll ever see that with modern Labour government – at least they didn’t cut GST rates!

]]> By: Eric Crampton http://www.tvhe.co.nz/2008/05/23/tax-cuts-and-interest-rates/#comment-1471 Fri, 23 May 2008 00:44:28 +0000 http://tvhe.wordpress.com/?p=367#comment-1471 I’m not convinced that marginal rates facing workers have changed enough to generate a substantial supply-side response. The top rate doesn’t change much; within very little time, inflation will have pushed us back to having a good chunk of productive folks facing the 39 cent rate. The effective high marginal tax rates implicit in WFF don’t really change much, though the income cut points will change a bit with the change in where tax rates hit and with the bringing forward of the inflation adjustment. If they’d instead knocked all the rates back somewhat, the supply side action would have been a lot more effective.

]]> By: Around and About on the Budget « The Inquiring Mind http://www.tvhe.co.nz/2008/05/23/tax-cuts-and-interest-rates/#comment-1470 Thu, 22 May 2008 23:43:55 +0000 http://tvhe.wordpress.com/?p=367#comment-1470 […] The excellent Visible Hand in Economics has an item here on Tax Cuts and here on tax cuts and interest rates […]

]]> By: Matt Nolan http://www.tvhe.co.nz/2008/05/23/tax-cuts-and-interest-rates/#comment-1469 Thu, 22 May 2008 22:50:11 +0000 http://tvhe.wordpress.com/?p=367#comment-1469 “A view not nearly as “popular” as I would like. Definitely a minority view among Australian economists.”

True – its the same in New Zealand. Instead of popular I should have said convincing – as I do find the supply side arguments for tax cuts persuasive, and I do enjoy reading you articulate the arguments!

The only issue I have with them right now is that they come in the face of persistently high inflation expectations and already high labour force participation.

]]> By: Stephen Kirchner http://www.tvhe.co.nz/2008/05/23/tax-cuts-and-interest-rates/#comment-1468 Thu, 22 May 2008 22:25:10 +0000 http://tvhe.wordpress.com/?p=367#comment-1468 A view not nearly as “popular” as I would like. Definitely a minority view among Australian economists.

]]> By: Interest Rates » Tax cuts and interest rates http://www.tvhe.co.nz/2008/05/23/tax-cuts-and-interest-rates/#comment-1467 Thu, 22 May 2008 22:05:30 +0000 http://tvhe.wordpress.com/?p=367#comment-1467 […] Read the rest of this great post here […]

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