But Spudda, if Krugman is correct then so is Mirrlees

Paul Krugman wrote an interesting blog on corporate tax incidence a couple of days ago for the New York Times. The essence of his argument is threefold.

Second, the argument makes little sense when so many corporate profits are now based on the exploitation of monopoly trading rights backed up by intellectual property law. He uses IT and pharmaceutical companies as an example, where excess profits appear to be prevalent. It is his, clearly argued and logical argument that corporation tax incidence falls largely on these excess profits.

Assume this is true. Then we should tax those economic rents alone, not all profits. As Mirrlees suggests.

19 thoughts on “But Spudda, if Krugman is correct then so is Mirrlees”

  1. In other “Ritchie is an entrepreneur” news, Progressive Pustule is now down to 1 post per week. Going as well as the FTM then.

  2. We should definitely tax rent-seekers. Starting with Nobel prize winners who write shit like this and only get away with it because of their reputation.

  3. ‘Paul Krugman wrote an interesting blog on corporate tax incidence a couple of days ago for the New York Times’

    Krugman (somewhere on the Upper east Side): ‘Robin! Look at this…

    One of the Robins: Look at what?

    Krugman: This! This here! Richard Murphy says I wrote something interesting! Praise be, I can die happy.

  4. Excess profit, economic profit and economic rent are all much the same thing in the jargon. “Above the general rate of profit in the economy” is sorta right, and if it’s the result of market pricing power then that is it.

  5. ‘Paul Krugman wrote an interesting blog on corporate tax incidence a couple of days ago for the New York Times’

    Richard Murphy appears to now be channeling Matt Yglesias, who just by chance happens to be another lefty ass who doesn’t know anything about economics. Matty loves affecting knowledge by starting his silliness with a “I read an interesting post/article/paper by so-and-so…” riff. And funny enough, it usually involves Krugman.

    Actually, any time you see an article or post starting with any variation of the quote above, you know you’re dealing with a fool.

  6. There’s an interesting article by Polly in Pegging Monthly where she compares her experiences of working on set with Snippa and with a donkey. Snippa needed fluffing with a copy of the taxes act before he could achieve the money shot

  7. I thought Tuppence advocated taxing turnover, not profit. Now he seems to be moving towards taxing not profit, but just that bit of profit that is “excess”.

  8. based on the exploitation of monopoly trading rights backed up by intellectual property

    Patents last ten years in practice. (They last longer, but it takes five or so years to get the product to market and you have to patent right at the start of the process, so the usual monopoly is shorter.) Pharmaceutical companies can make extraordinary profits in that time but it isn’t enough to run their core business, but after a decade we all get to share.

    Trademarks last forever, and that’s where the money is, but only because the association of that mark with quality. All decent companies, not just IT and pharmaceutical need that protection to prevent rip-offs.

    The whole “monopoly through IP” is bullshit. At the end of the day he’s cherry picked a couple of companies making brilliant stuff that everyone wants and thinks the problem is not that they have what we want but that somehow they are protected in some special way.

  9. Every few months, Snippa remembers the concept of economic rent and every blog post for the next few days refers to it in some peculiar way. This is economic rent week for September

  10. @Chester Draws

    Agreed, but you missed out Copyright, which is where the real abuse is. Extended fairly recently mainly to protect DIsney, it is much too long lasting to achieve its stated purpose – to encourage creators to create.

    They are, after all, unlikely to create much when they have been dead 20 years.

  11. Krugman thinks Apple and Google are monopolies? Ever heard of Lenovo or Bing? Apple have less than half the smartphone market, and around 10% of the computer market.

  12. Jack Hughes,

    I’m not bothered by Disney having a 1,000 year copyright. There’s so much new material being produced every day that the value of the old stuff diminishes rapidly. Disney’s Snow White (1937) isn’t worth much when I can get thousands of hours of cartoons at the tap of a finger for very little.

    Patents are different: there aren’t usually many ways of making a particular drug; whereas there are infinite ways of telling a story.

  13. Diogenes
    September 3, 2017 at 9:19 am
    @Jack Hughes, isn’t it 70 years now?

    Yes, but just as unlikely to be creating new work when 20 or 70 years a stiff. 🙂

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