So someone\’s done the work

I pondered as to whether there was a connection between high marginal tax rates and the substitution of market for household working hours as a result.

It seems that there is a weak connection, but only a weak one.

So does anyone who knows how to do this empirical economics stuff want to pitch in and see if a better handle on the idea is possible?

6 comments on “So someone\’s done the work

  1. Since a lot of household production can be more efficient than going through the economy, isn’t there some value in having it even though it doesn’t result in numbers that politicians can play with?

    For example, as a bog-standard employee you might net 20% of what your time is considered to be worth by the end customer. Putting your own shelf up could work out “paying” you more than getting someone else (who also gets say net 20% of the deal) to do it. This seems to me where GDP-focused economics forgets that there are real people involved. Employees are also not generally free to say “I’ll work an extra hour this week and earn the money to pay a workman, rather than spend 1.5 hours putting a shelf up”. Even at zero tax rates, there are going to be plenty of such activities that are worth doing yourself, even for well-paid people who can insist on extra hours of paid work.

  2. Even at zero tax rates, there are going to be plenty of such activities that are worth doing yourself, even for well-paid people who can insist on extra hours of paid work.

    Unfortunately, at the moment my boss would be quite happy for me to work additional hours, but doesn’t want to pay for them. Hence no additional hours get worked.

    Looks like I’m putting up those shelves myself at the weekend.

  3. Oh Gawd, someone moderate out that comment @2 before the Murph sees it.
    He’ll be claiming next that the loss of revenue due to putting up your own shelves rather than having it done by a tax paying contractor amounts to tax evasion.

  4. bloke in spain:

    You’re probably right that RJM would be one of those seeing self-accomplishment of any other than employment tasks as taxable “income.” But he’d not be the only.

    When Clinton was in ofice, Hillary was vociferous
    in pushing for a tax regime which would consider virtually every activity as potentially income-generating and, therefore, liable to taxation (including taking care of your own kids, cleaning your own house, doing your own shopping, etc.)

    At the time, I remember wondering whether they’d slap a “luxury tax” on a man’s receipt of his wife’s sexual services (and taxing the couple also for her “imputed” income in having rendered said services).

    People of this sort are infinitely resourceful (and we’d be best advised to never forget it).

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