tag:blogger.com,1999:blog-4491040877840120845.post4762852110152928270..comments2024-03-16T17:47:07.792-04:00Comments on Stationary Waves: Taxes: Maybe I'm Just StupidRP Longhttp://www.blogger.com/profile/15028013805248797978noreply@blogger.comBlogger4125tag:blogger.com,1999:blog-4491040877840120845.post-767545788130165602012-12-03T18:55:23.203-05:002012-12-03T18:55:23.203-05:00IMHO, while you're not the first person to sug...IMHO, while you're not the first person to suggest that a dollar is worth more to a poor man than to a rich man, that is actually a bit of a controversial claim. My view is closer to Robert Murphy's here:<br /><br />http://consultingbyrpm.com/blog/2011/11/modern-utility-theory-and-interpersonal-utility-comparisons.html<br />RP Longhttps://www.blogger.com/profile/15028013805248797978noreply@blogger.comtag:blogger.com,1999:blog-4491040877840120845.post-26571295651105355562012-12-03T18:52:45.143-05:002012-12-03T18:52:45.143-05:00True, utility technically can't be compared ac...True, utility technically can't be compared across individuals. That doesn't stop people (esp the left) from trying. More to the point here though, without trying to pin things down further it's just not that controversial to suggest that $X has more utility to a poor person than to a wealthy person, for cigarette-tax-like values of X.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-4491040877840120845.post-33342456938655052952012-12-03T15:47:24.031-05:002012-12-03T15:47:24.031-05:00If you look at utility instead of income, then you...If you look at utility instead of income, then you run into the problem of the non-cardinality of utility. You can't really compare indifference curves between individuals.<br /><br />I admit the math in my marginal tax rate example is intended more to serve as an example for the concept, not to be an airtight case. There are better examples out there, I just wanted to touch on what the idea is, so that I could go one to say, "But still - total tax rates are important." The point is, it's not *solely* marginal rates that matter.<br /><br />But yeah.RP Longhttps://www.blogger.com/profile/15028013805248797978noreply@blogger.comtag:blogger.com,1999:blog-4491040877840120845.post-59038410722473196312012-12-03T15:20:20.181-05:002012-12-03T15:20:20.181-05:00LOL@your cocaine example. Never thought of it that...LOL@your cocaine example. Never thought of it that way.<br /><br />But I think the careful way to clean up that sort of claim is to speak of marginal utility and forget about 'disposable' income. Taking $X as cigarette from a rich person means taking far less Utility (whatever that means) from than than when the same tax takes $X from a poor person. <br /><br />Now this is, in large part, *because* the poor person has far less disposable income. But I do think it avoids your 'cocaine' criticism. <br /><br />As for the example of 30% becoming 35%, I think that's wrong, and it's been a pet peeve of lots of lefty commentators: your second person would still pay 30% tax on the first $999 of the $2000 bonus, and then 35%on the remaining $1001. The $2000 bonus would still net her more money overall.<br /><br />There is an issue with benefits/deductions phasing out in a retarded way which can indeed sometimes lead to weird marginal 'cliffs', but it's just not a property of the income tax rate schedule itself.Anonymousnoreply@blogger.com