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Thanks to everyone who commented on my last two posts, especially the many people who disagreed with me. I was wrong to say there was “no case” for the tax bill. Several people brought up problems with the article saying CEOs say they will just give the money back to shareholders, most notably that giving money back to shareholders may stimulate the economy in other ways. Seriously, guys, I admit I don’t know as much about economics as some of you, but I am working off of a poll of the country’s best economists who came down pretty heavily on the side of this not significantly increasing growth. I stand by my claim that I care less about economic growth than about where the money goes.Aside from all of the minor provisions which can be good or bad, the case for slashing corporate rates is that they’re more distortionary and less efficient than other forms of taxation. If you want to tell me that it would, your job isn’t to explain Economics 101 theories to me even louder, it’s to explain how the country’s best economists are getting it wrong. That includes caring less about distortionary taxation, deadweight loss, and all those other concepts.The economic case for Bob is overwhelming – taxes on him are especially inefficient because of the extra wealth they destroy. It seems like the only important thing that happens at all in this town is Alice’s charitable donations.The amount I care about this town’s utility focuses pretty much entirely on that.In reality, the tax cut is being funded by increasing the deficit.I don’t know whether that means we need to compare it to whatever is bad about having a higher deficit, or else take as a given that the deficit has a certain amount of slack, and then compare it to other things we could do with the same money.So the best way to convince me to support this bill would be to find a plausible estimate of what level of growth is expected.


Or suppose the government keeps the 0 billion and distributes it evenly according to its existing priorities.Imagine the government went 0 billion into debt to build a giant bronze statue of George Washington.Should we be debating whether running up the deficit is really that bad?Suppose Alice is an effective altruist who supports whatever charity you think is most important and does a really good job of it. She lives in a town of 1000 people where nobody else is an effective altruist and everyone else just lives a pretty decent life and spends their extra money on, I don’t know, breeding virtual cats or something. Every time Bob pays a dollar in taxes, it destroys a random two dollars’ worth of wealth somewhere in the town.


The town elders meet and decide that for some reason they have to lower taxes either on Alice or Bob.Point 2 is why I stress the economists saying that the gains from cutting corporate taxes really won’t have that much effect on growth. If the government were a perfect effective altruist, it would be no contest – them having the money would be thousands of times more effective than random corporations (or even random middle-class people) having it.



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