tag:blogger.com,1999:blog-7905515.post5251269158267443939..comments2024-03-14T11:09:32.759-05:00Comments on Falkenblog: Robert Frank Wrong on Curing InequalityEric Falkensteinhttp://www.blogger.com/profile/07243687157322033496noreply@blogger.comBlogger7125tag:blogger.com,1999:blog-7905515.post-67242545928089967182010-11-17T12:50:08.269-06:002010-11-17T12:50:08.269-06:00JB: There is a lot of progressivity in the current...JB: There is a lot of progressivity in the current tax code, as 50% of earners pay no federal income tax. Frank is basically saying to increase this progressivity a lot, but on consumption. I think the deadweight loss would still be there, but Frank is hoping consumption signalling would be diminished, making us all better off (like cutting all Peacock tails in half), and use those proceeds more productively. I don't think reducing consumption competition would reduce anxiety, because people would compete in less benign ways.<br /><br />I do think a consumption tax beats an income tax, but then, why not eliminate the tax on corporate profits altogether too? Then, people maximize their wealth, and pay only when they actually try to consume it. But I still think competitive consumption argument doesn't work, because that's easy for me to ignore (eg, I don't feel bad when I see someone with an expensive watch).Eric Falkensteinhttps://www.blogger.com/profile/07243687157322033496noreply@blogger.comtag:blogger.com,1999:blog-7905515.post-68051530384648371652010-11-17T11:30:10.772-06:002010-11-17T11:30:10.772-06:00Don't you take the argument unnecessarily far ...Don't you take the argument unnecessarily far when saying that a more progressive tax structure (on consumption or income) is designed to eliminate relative competition based on wealth? A fairer way to judge it would be that this competition still occurs but at a lower level. As someone who believes in a relative status utility function (which i agree with) I don't see how you get away from one of the implications being that the deadweight loss of taxation at high income levels is much less than a standard model would predict. Would appreciate your thoughts.JBnoreply@blogger.comtag:blogger.com,1999:blog-7905515.post-34132795952079258392010-11-17T10:43:06.848-06:002010-11-17T10:43:06.848-06:00I think a stronger argument in favor of a consumpt...I think a stronger argument in favor of a consumption tax RATHER than taxes on labor and investment is that we don't really want to discourage working hard and investing. Why do we levy so much taxation against hard work and wise investment when we know that taxes DISCOURAGE the activities they apply to?<br /><br />Some people would argue that we don't really want to discourage consumption either, but I'm less convinced of that.Anonymoushttps://www.blogger.com/profile/05431036725490947171noreply@blogger.comtag:blogger.com,1999:blog-7905515.post-17532836370498338122010-11-17T08:34:08.307-06:002010-11-17T08:34:08.307-06:00hello there thanks for your grat post, as usual (...hello there thanks for your grat post, as usual ((o:Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-7905515.post-10441580198105952282010-11-16T12:12:56.383-06:002010-11-16T12:12:56.383-06:00If you make watches harder to get (by increasing t...If you make watches harder to get (by increasing their prices) you'll make them a more effective mean of showing off your status - so this tax should not discourage people from buying this too expensive stuff - it would be more expensive but also proportionally more effective. Of course it's really impossible to balance all these effects using just thought experiments.zbyhttps://www.blogger.com/profile/04636763782334128869noreply@blogger.comtag:blogger.com,1999:blog-7905515.post-81372209322711313792010-11-16T04:11:51.645-06:002010-11-16T04:11:51.645-06:00wrong on the drinking causes in socialism. men dra...wrong on the drinking causes in socialism. men drank out of boredom and hopelessness, not because of inequality/unfairness.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-7905515.post-15273520300438479222010-11-16T00:55:27.233-06:002010-11-16T00:55:27.233-06:00"Competition for status in inevitable. If peo...<i>"Competition for status in inevitable. If people can not compete with wristwatches and cars, they will compete in other ways. Think about schools or prisons. Both of these places contain a lot of status competition, and there is a lot of anxiety as the strong ridicule and bully the weak, often using physical violence."</i><br /><br />That is a pretty weak argument against a progressive consumption tax, for a couple of reasons. First, Bill Gates wouldn't stuff you in a locker or give you an atomic wedgie if he were subjected to such a tax. Second, you ignore the possibility of beneficial forms of non-consumption status competition (think endowing and buying the naming rights to wings of hospitals, etc.).<br /><br />A better, utilitarian argument against a highly progressive consumption tax (though not against a consumption tax <i>per se</i>) is that it hurts the folks who make, service, sell, etc. fancy watches, cars; work in expensive restaurants; or otherwise earn their livelihoods providing high-end products or services. Another good utilitarian argument against it is that today's luxuries often become tomorrow's mainstream products, so the better high-end products are today, the more quality products and services will be available to everyone else tomorrow.Davehttp://steamcatapult.com/noreply@blogger.com