November 9
Unintended Consequences
David Meltzer and Zhuo Chen argue that there is an inverse relationship between the real minimum wage and the average body mass index of Americans.
Textbook References:
Pages 7-8 “Principle 4: People Respond to Incentives”Pages 119-121 “The Minimum Wage”
Pages 348-354 “Competition with Differentiated Products”
November 2
Disincentives from Reform: The House Edition
The implicit marginal tax rates in the House version of health care reform are even higher than in the Senate version.
Textbook References:
Pages 7-8 “Principle 4: People Respond to Incentives”Pages 123-130 “Taxes”
Pages 249-253 “Taxes and Efficiency”
Pages 253-257 “Taxes and Equity”
Pages 258-260 “Conclusion: The Trade-Off Between Equity and Efficiency”
October 31
Disincentives from Health Reform
Mankiw discusses how the proposed health care reform would significantly increase marginal tax rates on the middle and upper classes.
Textbook References:
Pages 7-8 “Principle 4: People Respond to Incentives”Pages 123-130 “Taxes”
Pages 249-253 “Taxes and Efficiency”
Pages 253-257 “Taxes and Equity”
Pages 258-260 “Conclusion: The Trade-Off Between Equity and Efficiency”
October 30
Average Marginal Tax Rates
Robert Barro and Charles Redlick present a graph of the average marginal tax rate, defined as the sum of the marginal rates of the federal and state income taxes plus the marginal FICA tax.
Textbook References:
Pages 7-8 “Principle 4: People Respond to Incentives”Pages 123-130 “Taxes”
Chapter 8 “Application: The Costs of Taxation”
Chapter 12 “The Design of the Tax System”
October 15
Davis on Job Creation
Steven Davis does not like the proposed tax credit for job creation. He offers alternative suggestions.
Textbook References:
Pages 119-121 “The Minimum Wage”
Pages 246-247 “The Fiscal Challenge Ahead”
Pages 251-252 “Administrative Burden”
October 13
The Incidence of the Cadillac Tax
Kevin Hasset argues that the Baucus health care reform bill would raise taxes on the working and middle classes. The tax is on insurance companies, but will likely be passed on to their customers.
Textbook References:
Pages 123-130 “Taxes”
Pages 442-445 “The Political Philosophy of Redistributing Income”
October 10
Marginal Tax Rates from Health Reform
The CBO estimates that the Baucus healthcare reform bill will add about 22 percentage points to the marginal tax rate of many working-class people.
Textbook References:
Page 7-8 “People Respond to Incentives”
Pages 127-128 “Can Congress Distribute the Burden of a Payroll Tax?”
Pages 166-167 “The Deadweight Loss Debate”
Pages 246-248 “The Fiscal Challenge Ahead”
Pages 449-451 “Antipoverty Programs and Work Incentives”
October 9
A Cautionary Tale
The current discussion of a tax credit for job creation is reminiscent of a Carter-era tax credit.
Textbook References:
Page 7-8 “People Respond to Incentives”
Pages 8-10 “Principle 6: Markets Are Usually a Good Way to Organize Economic Activity”
Pages 10-12 “Principle 7: Governments Can Sometimes Improve Market Outcomes”
Pages 127-128 “Can Congress Distribute the Burden of a Payroll Tax?”
Pages 830-832 “Should Monetary and Fiscal Policymakers Try To Stabilize the Economy?
October 7
A 70-Percent Marginal Tax Rate
James Capretta argues that the Baucus healthcare bill will impose a marginal tax rate of 70 percent on workers just above the poverty line.
Textbook References:
Page 7-8 “People Respond to Incentives”
Pages 127-128 “Can Congress Distribute the Burden of a Payroll Tax?”
Pages 246-248 “The Fiscal Challenge Ahead”
Pages 449-451 “Antipoverty Programs and Work Incentives”
A Tax Credit for New Hiring?
Congress is considering a tax credit for firms that create new jobs. But the issue is not as simple as it appears.
Textbook References:
Page 7-8 “People Respond to Incentives”
Pages 8-10 “Principle 6: Markets Are Usually a Good Way to Organize Economic Activity”
Pages 10-12 “Principle 7: Governments Can Sometimes Improve Market Outcomes”
Pages 127-128 “Can Congress Distribute the Burden of a Payroll Tax?”
Pages 830-832 “Should Monetary and Fiscal Policymakers Try To Stabilize the Economy?
October 5
Medicare and Freedom
Medicare sometimes imposes price controls on markets. When people try to circumvent them, more restrictive rules are imposed.
Textbook References:
Pages 7-8 “People Respond to Incentives”