More Unherd

A one percentage point increase in wealth taxes – a very large increase indeed – reduces growth by just 0.02 to 0.04 percentage points. Not insignificant, but certainly not the picture of economic doom painted by critics.

Our star editor at the new Unherd appears confused here.

A 1% of GDP increase in wealth taxes would indeed be large. But that’s not what this paper, which she refers to, says. Rather, a 1% increase in the revenue from a wealth tax reduces GDP growth by 0.02 to 0.04%.

The countries studied have wealth tax revenues as % ge of GDP of 0.1% to 1%. Call it, say. 0.3% as an average. We increase the revenue from that by 1%, to 0.31% of GDP. Future GDP is lower by 0.03% of GDP. Marginal tax take is higher than average, of course. So a reasonable guess is that tax revenue would have been 50% of that marginal 0.03% of growth we’re not having. Which is higher than the 0.01% of extra tax we did get.

We’re over the peak of the Laffer Curve already…..

13 comments on “More Unherd

  1. Unherd-More like a steaming fucking herd busy smearing their bodily products on the pages of the media.

    They must have run out of Luxury Venezuelan toilet paper.

  2. Got some crap on my Twitter from unherd- ‘time to rein in reckless monopolies, by Ann Pettifor.’ Needless to say I didn’t waste time after the first line –
    ‘Today, the world is confronted by globe-spanning, tax-dodging corporate behemoths; monopolies based on advanced, intrusive as well as seductive technologies’

  3. Perhaps they could talk to the French about the pros and cons of a wealth tax. Specifically, how little it actually raises; and how many wealthy French don’t live in France.

  4. If we are really over the Laffer hump, then there is no amount of tax-rate increase that will raise 1% more revenue; all it will do is make more business projects infeasible.

    “Certainly not the picture of economic doom” is the latest attempt to claim that high taxes are just as good as low taxes, well virtually, and bad government is just as good as good government. It is not a valid argument for a policy change that we will survive it.

  5. “Call it, say. 0.3% as an average. We increase the revenue from that by 1%, to 0.31% of GDP.” You’ve rounded up 0.303 to 0.31, which is not the custom. If you start from 0.5% you could round up 0.505% to 0.51% without my primary school teacher objecting.

    But I happen to be exhausted at the moment so maybe I’ve misunderstood.

  6. @Bloke in Germany, February 6, 2018 at 6:00 pm

    Why do small-state advocates want the state to be at the peak of the Laffer curve?

    I don’t. My preference is Gov’t spending should be maximum 25% of GDP and a flat-tax of maximum 20%.

  7. @BiG

    It’s just an argument strategy so far as I can see. If someone’s got unshakeable premises that they cling to axiomatically, what’s the use in attacking them? That’s the advantage of “Even if I were to accept your premise, your conclusion still does not follow because…”

  8. Wealth inequality? Kill them and take their stuff; you know you want to.

    Problem is, you can only do it once. Then everybody dies.

  9. “Why do small-state advocates want the state to be at the peak of the Laffer curve?”
    They don’t. Small state advocates want to be as low down as practicable on the rising part of the curve. Big state advocates want to be parked right at the top (if they believe in the Laffer curve at all).
    Only the truly demented want to be past the top of the Laffer curve.

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