Today's numbers from the OECD are a window into:
*The effects of the Trump tax cuts
*The wide gulfs in policy among Democratic presidential candidates
*And a brewing revolution in economic thinking.
Let's ... do a thread. 1/
*The effects of the Trump tax cuts
*The wide gulfs in policy among Democratic presidential candidates
*And a brewing revolution in economic thinking.
Let's ... do a thread. 1/
First, as @RichardRubinDC notes, the OECD data show US tax revenues (at all levels of government) falling from 25.9% of GDP in 2016 to 24.3% in 2018. The Trump tax cuts are the big driver there. 2/
And, no surprise, the Dem presidential candidates want to change that. They all want to reverse at least some of the Trump cuts (though -- side note -- they would use the resulting revenues to pay for new spending, as opposed to reversing the deficit increases from TCJA) 3/
The Democrats' plans vary *widely* on how much to increase taxes. Biden would do $3.4T over 10 yrs. Buttigieg would do $6.75T. Warren is ~$30T, Sanders is somewhere north of that. nytimes.com/2019/12/04/bus… 4/
So here's a thought experiment, visualized. What if we'd had one year of each Dem candidate's proposed new tax revenues in 2018 (holding the size of the economy constant)? How would that have changed the U.S. rank in the OECD?
It looks like this: 5/
It looks like this: 5/
Biden/Pete would shift the U.S. rank up by one spot in the OECD. Warren would vault it above the OECD average, in the ballpark of Norway and the Netherlands. That would be a sea change in taxation for the US economy. 6/
Now, the classical view of economics is that tax increases that large (which Warren concentrates on high earners/the wealthy/corporations) would dramatically slow growth.
Warren says the opposite. 7/
Warren says the opposite. 7/
And that's the brewing revolution: the contention that a dramatic increase in taxation and government spending would be, in fact, "pro-growth" in an economy with America's levels of inequality and wealth concentration.
I wrote about that today: nytimes.com/2019/12/04/bus…
/fin
I wrote about that today: nytimes.com/2019/12/04/bus…
/fin
Bonus chart: OECD measure of American tax revenues as a share of the economy, 1965-2018 (for all levels of government)
