Jared Bernstein on the economic effects of tax cuts

[Happy_Fun_Ball]

@emacknight

<snip>We’ve seen wages stagnate over the past 10 years, and although I’ve been told it’s because the rich are getting richer, the proposal put forward says that education is to blame.

What proposal is that?

[New_Deal_Democrat]

The only economic effect of tax cuts is that they lead to the budget deficits which Republicans pretend to oppose, while advocating more tax cuts.

[emacknight]

@L. G. Butts

What proposal is that?

@gonzomax

Jobs are added with increased demand.

@emacknight

And what increases demand?

@L. G. Butts

People with jobs.

One thing that does not increase demand is people that make $500k per year getting to keep and extra $10k to invest in corporations that are doing the majority of their investment overseas.

But it is conceivable that if you took that $10k and invested it in education, that it could increase demand.

That proposal. The one that says it is conceivable that increasing taxes on the rich, and putting that money towards education, might possibly lead to higher demand.

Which in reverse says that demand could be higher if education was better, so we need more tax funding for education, and we should get that from the rich, who would otherwise invest overseas.

[Mr.Duality]

@emacknight

“Among 15-Year-Olds”

Is that where we’re trying to increase demand? Is there a shortage of 16 year old entrepreneurs?

Are 15-year-olds not expected to enter the workforce within a few years on whatever planet you live on?

The two questions that need to be answered when considering the use of progressive taxes to fund education in order to increase demand are:

1. Will *increased *education actually increase wages?

You seem to be willfully obtuse, to put it as kindly as possible. But here’s some data:
http://www.pacificweb.org/DOCS/rmi/pdf/Education%20and%20wages.pdf

2. Have education levels *changed *over the past 10 years?

We’ve seen wages stagnate over the past 10 years, and although I’ve been told it’s because the rich are getting richer, the proposal put forward says that education is to blame.

It says no such thing. Education is a cure for, not a cause of, employment and wage problems.

[Cyberhwk]

@erez

Actual paper about this topic instead of this poor blog post cited by foolsguinea: http://www.ecb.int/pub/pdf/scpwps/ecbwp1174.pdf : “We therefore conclude that there rarely is a free lunch due to tax cuts. However, a substantial fraction of the lunch will be paid for by the efficiency gains in the economy due to tax cuts.”

I’m not sure what they’re refering to. The previous paragraph states…

We find that from the US model, 32% of a labor tax cut and 51% of a capital tax cut are self-financing in the steady state

I’d hardly consider 32% and 51% a “substantial fraction.”