Taxes and Economic Growth

Here is a conclusion of a 2012 CRS report titled “Taxes and the Economy: An Economic Analysis of the Top Tax Rates Since 1945 (Updated)”

It is reasonable to assume that a tax rate change limited to a small group of taxpayers at the top of the income distribution would have a negligible effect on economic growth.

The report isn’t conclusive as the report looks at their association and not causation, but the report reinforces (to me anyways) that the Republicans need a broader solution to 1) achieving economic growth and 2) producing growth that is more inclusive. There are all sorts of ways to evaluate economic policy including GDP growth and its allocation, labor participation, unemployment, etc..  Economic growth seems to be the only metric Republicans talk or care about and even if we can growth the economy, we still need to make sure it “works for everyone.”

You can read the rest here.



Does the 54 billion already exist?

The $54 billion defense spending increase the White House has proposed is a sign that President Trump intends to keep his promise to rebuild the military. Yet simply increasing the defense budget will not be enough. The president must fundamentally reshape the way Washington approaches defense spending if he hopes to be successful.


Our defense budget is a sieve for congressional pet projects, special interest contracts, and social engineering programs. Pumping more fuel into the tank is little use if you don’t patch the holes in the bottom first.

There is more than enough money already allocated to make American “safer.” The US military, just like any large institution, is grossly inefficient and rent seeking is rampant.

You can read the rest here. The author is James Hasson.

Background on Chile’s Pension System

Alas, benefits have not measured up to people’s unrealistic expectations. The scheme’s founders told workers that if they contributed continuously throughout their careers they would receive a generous 70% of their final salaries upon retirement. And indeed, men who chipped in for 30 years or more earned an average pension of 77% of their final salary. But most workers contributed far less. Women took time off to raise children (and retire earlier than men). Many Chileans spent time in informal jobs or unemployed. On average, they contribute for only 40% of their prime working years.


For most people the 10% contribution rate, just half the average in the OECD, a club of mainly rich countries, is too low. As a result, the typical benefit, including a supplement paid to poor people, is 45% of a pensioner’s final salary, well below the OECD average of 61%. Women are worst off. They take home pensions worth 31% of their final salaries, compared with 60% for men. In 2008 the government decided to reward mothers for each child they raised by topping up their pensions, but that does not fully compensate for the shortfall.

You can read more at the Economist here.