US Policy Research at Cornerstone Macro (@csm_research). Tweets on public policy, inequality, and labor markets. Formerly Chief Economist @waysandmeansgop
Furman makes the point that the corporate rate cut is only half reversed. True. But the rate is being raised on a broader base b/c of TCJA... which cut taxes on corps by ~$330bn over a decade. Biden's 3 biggest provisions will raise corp taxes by *$1.5 trillion*
On the assertion that the growth effex of the tax plan are negligible: These are both high quality models but a shortcoming is that they are mostly driven by crowding out effects - which isnt relevant right now. And b/c the plan is scored in isolation as deficit reduction...
Quick look at the 2019 census data:
Real median household income is up *61%* since 1967.
Incomes also up 14% since 2007, making this business cycle even better than the 1990s boom
Here it is by age group over the life cycle in 1979, 2000, and 2019
And by age since 1979. Even incomes for young households up 8% since 2007
THREAD/
Good news: using a new(ish) measure of the labor share that Rognlie deems "the best measure," pay and productivity are growing together.
Bad news: there's a much bigger puzzle than supposed decline of the labor share
In an overlooked comment here ( mattrognlie.com/kn_comment_rog… ) Rognlie reviews common biases in measuring labor share and comes up with a preferred measure that addresses them: "the net labor share of domestic corporate factor income"
I take his definition and update it (using the nonfinancial corporate sector - more on that later). It has hovered between 74% and 84% since 1947 and now sits above historical average at 80%. In Rognlie's words "there is no postwar trend in the net corporate labor share"
