I wish sometimes that Greg Mankiw sounded as intelligent in the NYTimes as he does in this Post. It is at that point of discussion where We can have an intelligent discussion on Taxes. I have always wondered Why exactly that Economists insist that Taxes are an automatic distortion of the economic optimum. How can one define that Infrastructure Cost of Production without Taxation. There are Economists who consider Economics only from the position that the sole Goal must be maximization of individual wealth. The proper scope of economics should be the social growth of the entire economy. It must include Taxation as a Production Cost, else there would be no Production of magnitude. The deadweight Cost of Taxation must be amended by the enhancement benefit of Production increase by the infrastructure construction.
Tyler Cowen believes that marginal tax rates are morally wrong. It is true that its entire basis relies on the ‘Deep Pockets’ formula of lawyers, and enjoys all the respect that our dear lawyers possess. I suggest there is a way to remove the moral hazard of marginal tax rates for Tyler, but it is one he would not enjoy; eliminate the Work-up phase of Taxation; not granting lower Tax rates to the Wealthy on lower Income earned first. It would clearly delineate the difference in taxation between alternate Income levels, and positively assert the Social demand to Tax.
I will finish with this Post from Stan Collender. One can ask Why, and I will only state that all exemptions from taxation that one finds in the law have already garnered the support necessary to pass such legislation into law. This support rarely changes under any conditions, and Reformers face this opposition anytime they attempt a serious revision in tax law. It is admitted that current tax law is patently unfair through much of its operation, but the favored groups are organized, while Reform is not; particularly in the fact that it is idealistic, but not individually rewarding. Everyone is desirous of changing some aspect of tax law; still, the chances of making the situation worse are higher than the chances of making things better. lgl