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James Medlock Profile picture
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9 Oct, 4 tweets, 2 min read
Interesting paper on Norway's wealth tax, suggesting that it hasn't had a negative impact on jobs, and in fact suggests "a positive causal relationship between the level of a household's wealth tax and subsequent employment growth in the firm it controls."
iza.org/publications/d…
The mechanism here seems to be that investing in firm employment can be a way of reducing wealth tax liability
Norway's wealth tax is worth studying, because it's been one of the more successful implementations in Europe.
To me, an effectively administered wealth tax is like the holy grail of tax policy. There's no denying there are implementation challenges, but if you can do it well, it'd be extremely good

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More from @jdcmedlock

James Medlock Profile picture
16 Sep
When I talk about unions people often ask “aren’t you afraid workers will get too powerful?” and in the current context of the US it feels sort of like saying “aren’t you afraid you’ll trip and fall if you run away from this bear that’s trying to eat your face?”
It is possible to have poorly designed institutions that lead to perverse incentives, but the problem isn’t worker power itself
The nordics manage to have near universal public sector unionization without major issues because the government acts as an institutionalized voice for the public, rather than just rolling over to demands (as we’ve done in the US with police unions)
Read 4 tweets
James Medlock Profile picture
5 Sep
This is an interesting paper on the implications of means-testing Norway's Universal Child Allowance
cesifo.org/sites/default/…
They push back on the idea that universal transfers are "wasted" on higher income recipients, by noting that progressive tax brackets share a similar structure (), and noting that the real costs are not nominal expenditures but distortions to incentives
They note that the effect of means-testing the benefit would be to shift marginal tax rates towards the middle of the income distribution (where it phases-out), while increasing the universal payment with taxes would maintain a progressive structure
Read 8 tweets
James Medlock Profile picture
3 Sep
The extent to which we face equity-efficiency tradeoffs is really overstated. A lot of the time we're sacrificing efficiency to maintain inequality
Income inequality has a significant negative effect on the long-run level of GDP per capita in developed countries papers.ssrn.com/sol3/papers.cf…
Making wage structures more egalitarian can boost productivity at the same time
(see also: cepii.fr/PDF_PUB/wp/201…)

Read 8 tweets
James Medlock Profile picture
16 Aug
Unions mostly get talked about as a way of helping workers, but I think their ability to solve collective action problems and improve economic output when properly structured is vastly underrated
For example, in a fluid labor market there's a disincentive to train workers, because a company's investment in training may be poached by another firm. Unions can, in collaboration with employer groups, solve this problem by coordinating training
Sectoral bargaining can also address the prisoners dilemma of wage-price inflation. Under individual bargaining, every worker has incentive to maximize wage growth, even if this leaves everyone worse off due to resulting inflation peoplespolicyproject.org/2018/05/03/cou…
Read 4 tweets
James Medlock Profile picture
4 Aug
The main variables within the framework of sectoral bargaining are centralization vs decentralization, and coordination vs non-coordination (and every possible combination of those). These are all in contrast to fully decentralized systems with no sectoral bargaining (eg US & UK)
A fully centralized system is one in which the bargaining that happens at the national/sectoral level is binding. In decentralized systems, sectoral bargaining sets parameters which firms must follow (minimum and maximum wages for each position) or allows for selective opt outs
Coordination refers to the degree to which there is cross-sector cooperation in negotiations. For example, non-tradable sectors (like services) may agree to moderate wage growth in line with tradable sectors (mostly manufacturing) to maintain competitiveness and high employment
Read 5 tweets
James Medlock Profile picture
28 Jul
Honestly the Tax Positivity stuff started out as a troll, but like all good troll positions I’ve come to see it as the correct position over time. The number of people who are up in arms about my tax appreciation posts sort of proves my point
Taxes are an incredible innovation that have helped solve massive collective action problems, and and made possible the advanced societies that we all reap the benefits from. Of course we should celebrate taxes!
Many of the problems with public policy in the US are rooted in an aversion to taxation. We jump through hoops and choose second-best solutions all so we can brand policies as not “taxes” (see: means-testing, the individual mandate, tax advantaged savings accounts, etc)
Read 5 tweets

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