Discover and read the best of Twitter Threads about #DBCFT
Most recents (6)
As promised: long and boring thread about income vs consumption tax. TL;DR they are not as different as you might think. Income taxation distorts saving and consumption taxes are harder to make progressive in the short term, but they are close cousins 1/29
Let’s start with (national) income identity:
Labor income (L)+Capital Income (K)+Transfers (G) -Taxes (T)=Consumption (C)+Saving (S)
where T should be thought of here as taxes other than consumption/income tax that we are about to introduce.
I’ll mostly ignore foreigners 2/29
Labor income (L)+Capital Income (K)+Transfers (G) -Taxes (T)=Consumption (C)+Saving (S)
where T should be thought of here as taxes other than consumption/income tax that we are about to introduce.
I’ll mostly ignore foreigners 2/29
What would be an income tax? It’d be a tax on the left hand side or it could also be a tax on L+K (not the same from distributional and political economy standpoint, but I’ll put it aside). I’ll mostly ignore T and G and think about L+K. 3/29
So I guess #DBCFT twitter really didn't do a good job of explaining the concept... 1/
One could (loosely) think of DBCFT as the current corporate tax less the normal return less foreign-source income 2/
Various arguments proposed for the shift to a domestic consumption base, including traditional consumption tax arguments and base erosion 3/
Are you a health/tax nerd? Take this quiz
GOP does NOT repeal the individual mandate. Instead, penalty is reduced to $0. Can you guess why?
GOP does NOT repeal the individual mandate. Instead, penalty is reduced to $0. Can you guess why?
@vicfleischer @AlexGodofsky FTW. Also, I'm puzzled why there is almost ZERO media coverage of the GOP bill. Is it already dead?
Let me make the #DBCFT progressivity point even more bluntly. There is a huge political risk for progressives in saying nice things ... /1
@BDGesq ...about the reform. Those statements provide political cover for building in very regressive elements to the reform. E.g. ... /2
@BDGesq ...the House Blueprint uses that cover to make a huge rate cut. Or, cld manipulate transition rules & the 10-yr budget window... /3
If you take a tax that falls on capital, make it slightly more progressive, and then slash the rate, you have a net regressive move. #DBCFT
@BDGesq Everyone should read the #DBCFT analysis by @WeisbachD , which makes the point that there is no economic rationale for a rate cut...
@BDGesq @WeisbachD ...though Graetz points out that a lower rate is less risky, if you're concerned that exchange rates won't fully adjust.
A must-read. I was feeling convinced after seeing Alan Auerqbach defend #DBCFT . Now kinda terrified.
@BDGesq For me, biggest point is the tax shelter possibilities for individuals. Unless dividend rates upped, it's close to unlimited Roth.
@BDGesq And yet another challenge for U.S. states. V. difficult to audit wealthy t/p who can shelter $ in Corp w/ no nexus to your state.
