Discussion about this post

User's avatar
Jonathan Brown's avatar

Jon as you may remember my dissertation (from USC's Price School) was on the income tax. And for the most part I agree with Banshen's analysis. Had I been the decision maker I would have eliminated the SALT limit entirely - forcing those of us from high tax states to quit being subsidized by middle and lower income tax payers in lower tax states. That might put a fire under the California legislature to change their view on the efficacy of extreme tax rates. The data on how much those provisions actually raise suggested that the Legislature is always overly optimistic. I have not looked at the distributional analysis from the FTB on who actually pays the California personal income tax - but I do know that when federal rates have been reduced that the share of income taxes paid by the highest earners actually rises. I have done some crude analysis on the deficit effects of the bill and I think the estimate of $3 trillion in cost is a bit off. But the National Debt numbers are very scary and the Congress should begin to do something about it. For the last couple of years interest in the national debt as a share of the budget has been rising. I think the business tax provisions have the possibility of adding a bit more growth than the CBO and JCT projected. Since the 2017 projections were done, the Washington estimates underestimated the revenue/growth effects by about $1.5 trillion. Finally there are some other dynamic effects that I think some have not considered. For example, if we cannot use migrants for agriculture or in other areas where they are critical to the California economy - we might well have diminished output.

Expand full comment
1 more comment...

No posts