Comments on: Reply: On flat tax

By: Income vs consumption taxes: What’s the difference « The visible hand in economics

Thu, 18 Sep 2008 20:26:28 +0000

[...] policy and tax (diminishing marginal utility), (Flat taxes and fairness), (fiscal responsibilities), (tax free threshold), (income splitting), (tax cuts and [...]

By: Kimble

Kimble — Thu, 17 Jul 2008 07:42:57 +0000

with Nome

By: Kimble

Kimble — Thu, 17 Jul 2008 07:42:26 +0000

” Unless you beleive the ability of someone to buy a new BMW everery year is more important than giving children from poor households freedom from avoidable illness, and proper eductional opportunities.”

Thats the problem you will always have with, Nome. Tax on one part of the population cannot be reduced ever, because if you do, orphans will die.

By: Matt Nolan

Matt Nolan — Wed, 16 Jul 2008 20:20:09 +0000

“Fuck yes it is. Unless you beleive the ability of someone to buy a new BMW everery year is more important than giving children from poor households freedom from avoidable illness, and proper eductional opportunities.”

But what happens if that is not the trade-off. I don’t think that many people in that top 22% go out and buy BMW’s (in fact given tax avoidance and the prevalence of trusts I think that there will be more BMW’s in the other category). Furthermore we aren’t talking about cutting services in this example at all – so talking about health and education is a straw-man.

“I don’t see the rationality in that assumption. Low skilled workers usually face downward wage pressure from competition with the unemployed, and so are paid at, or close to the minimum wage.”

Indeed, I was hoping someone would raise that point – because it is completely true. If there is a ceiling on prices, then as long as the ceiling is higher than the tax + the reservation wage the whole incidence will fall on the employee.

However, in the current environment is there sufficient “competition from the unemployed”? If there is, then there is two things to remember:

1) Trained staff are still worth more than fresh staff – people generally don’t stay on the minimum wage for long or they move (just look at the turnover at clothing stores!).

2) The unemployment benefit also provides a reservation level – as a result, the higher the benefit, the more likely it is that some of the incidence will fall on employers.

By: CPW

CPW — Wed, 16 Jul 2008 02:29:02 +0000

“Fortunately most New Zealanders don’t think this way.”

Yeah, I’d say that roughly 78% think the current distribution is fair

By: roger nome

roger nome — Wed, 16 Jul 2008 01:29:14 +0000

” If low skilled labour are those on low incomes, then firms will attempt to pay them their reservation wage. If tax goes up on these workers, the firm still has to pay the reservation wage – and so gross wages rise to keep net wages constant.”

I don’t see the rationality in that assumption. Low skilled workers usually face downward wage pressure from competition with the unemployed, and so are paid at, or close to the minimum wage.

By: roger nome

roger nome — Wed, 16 Jul 2008 01:17:44 +0000

“Is it fair to make 22% of Kiwi’s shoulder a greater than proportional share of the provision of public services for everyone?”

Fuck yes it is. Unless you beleive the ability of someone to buy a new BMW everery year is more important than giving children from poor households freedom from avoidable illness, and proper eductional opportunities.

Fortunately most New Zealanders don’t think this way.

By: Diminishing marginal utility of income and “big ticket” items « The visible hand in economics

Wed, 16 Jul 2008 00:31:37 +0000

[...] of income and “big ticket” items 16 07 2008 One of the main justifications for redistribution policies is “diminishing marginal utility”. We have already discussed that this doesn’t [...]

By: Matt Nolan

Matt Nolan — Sun, 13 Jul 2008 23:46:37 +0000

“Actually Matt, if we assume that people get equal rather than proportional access to public goods and services, it’s more like 30% of people who pay more than they get”

Agreed – I didn’t feel that I needed to bring that up to make my point initially though

By: CPW

CPW — Sun, 13 Jul 2008 23:45:24 +0000

Ha, I hadn’t even read Kimble’s comment when I posted mine.