The US should take the lead in promoting global co-operation in the international tax arena. There has been a race to the bottom in the taxation of corporate income as nations lower their rates to entice business to issue more debt and invest in their jurisdictions. Closely related is the problem of tax havens that seek to lure wealthy citizens with promises that they can avoid paying taxes altogether on large parts of their fortunes. It might be inevitable that globalisation leads to some increases in inequality; it is not necessary that it also compromise the possibility of progressive taxation.Proposition Two, from Greg Mankiw
This issue goes well beyond economics to questions of political economy and political philosophy. If you think it is the job of government to take from Peter to pay Paul, and if Peter can move around the globe, then you need international tax cooperation. Otherwise, some countries will become nations of Peters, leaving all the Pauls to fend for themselves. On the other hand, if you think that the main job of government is to facilitate voluntary exchange by protecting property rights, rather than re-slicing the economic pie as it sees fit, then tax competition is a good check against excessive interventionism. In other words, are you more worried about too little government or too much?Proposition Three, from Arnold Kling
The question that I would ask Larry Summers (who is on the other side from me on this issue) would be this: how big a share of GDP would the Federal government have to control before you would worry about government being too big? I mean, unless you have a totally romantic notion of government as the embodiment of the will of the people (and I don't think Larry would make that defense), there must be some upper limit. Right now, the Federal government directly controls roughly 20 percent of GDP, and indirectly it controls more through regulation, mandates for state governments. etc. If that's not too much, then what is? 30 percent of GDP? 50 percent of GDP? 75 percent of GDP?This is actually a great kind question to ask of anyone who makes a normative statement. If the Government doesn't control enough of the GDP, how much should it control? If oil companies make too much profit, how much profit should they be making? What is the optimal capital gains rate, if the current one is too high or low? What should the prison population be? What should Acme Inc's CEO be making? How much should those tickets cost? How many pairs of shoes should you own? And why?
It's not that these questions are unanswerable per se (although I suspect most of the time you won't get an answer), but forcing someone to defend their answer will tell you almost everything you need to know about their attitudes and reasons for making their original claim.
Addendum:
Matt Welch asks an even more direct question regarding LA's "affordable housing." Confronted with a constant refrain of "there ought to be more" he asked "how much is there now?" Predictably, he got no answer. Not only could no one answer how much there ought to be, no one knew how much there already was. But still, gotta have more.
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