Five out of six isn’t bad

July 22, 2012

Here’s an interesting topic from NPR’s Planet Money: Six Policies Economists Love (And Politicians Hate).

Here’s the short list of policies; there’s explanation for each in the post so Read The Whole Thing. (Or listen to the epsiode here.)

    One: Eliminate the mortgage tax deduction.
    Two: End the tax deduction companies get for providing health-care to employees.
    Three: Eliminate the corporate income tax.
    Four: Eliminate all income and payroll taxes.
    Five: Tax carbon emissions.
    Six: Legalize marijuana.

I’d argue against #5 since I’m not convinced carbon emissions are the negative externality that many others think they are. But the rest of the list makes a lot of sense.

The corporate income tax in particular has never made any sense to me. What do we think we’re taxing? It’s either (a) investment capital that’s used for taxes so it can’t be re-invested or (b) it’s a cost that’s passed on to customers or (c) it’s individual income being taxed (i.e., lower dividends)… yet again. WTH?

Does anyone honestly think the government is better at making capital investments than the market is? And if you do think so, have you checked your Social Security account balance lately?

The economists on the show were an interesting mix.

Dean Baker, co-director of the Center for Economic and Policy Research in Washington, D.C., and widely published blo “You could probably describe me as left of center. It’d be fair.”

Russ Roberts, George Mason University economics professor. “In the grand spectrum of economic policy, I’m a pretty hard core free market guy. I’m probably called a libertarian.”

Katherine Baicker, professor of health economics at Harvard University’s Department of Health Policy and Management. We simply called her a centrist on the show.

Luigi Zingales, professor of entrepreneurship and finance and the University of Chicago’s Booth School of Business. “What I like to say is that I’m pro-market, but not necessarily pro-business.”

Robert Frank, professor of management and economics at Cornell University’s Johnson Graduate School of Management. “I’m a registered Democrat. I think of myself as a radical pragmatist.”

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