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President Trump visits La-La-Laffer Land

Inspired by Mad magazine

        Inspired by Mad magazine

Taken as a whole, the tax plans just announced by US President Donald Trump, which include abolition of the inheritance tax, could represent the largest tax cut for billionaires and millionaires in US history.  According to the President, this will stimulate growth and job creation.  There’s no evidence to support this; in fact the evidence suggests the exact opposite.

More evidence of the links between tax and inequality

campbell-lusherThe economists Thomas Piketty, Emmanuel Saez, Facundo Alvaredo and Anthony Atkinson have played a big role in helping analyse and popularise the role that tax rate cuts for wealthy folk play in fostering economic inequality, particularly the income shares of the top 1 percent of people compared to everyone else. As they put it in 2013:

“The evolution of top tax rates is strongly negatively correlated with changes in pre-tax income concentration.”

Their findings have of course been attacked, not least by certain players keen for taxes on wealthy people to stay low.

Now there’s a new US-focused study by Douglas Campbell and Lester Lusher, called Drivers of Inequality: Trade Shocks versus Top Marginal Tax Rates. It seeks to check on these findings:

Corporate tax cuts: why the old analyses don’t stack up any more (did they ever?)

August 23, 2016   Blog

Last month Pascal Saint-Amans, head of tax for the OECD, spoke to the Wall Street Journal, in an article subtitled The argument against taxing capital income relatively more than wages is losing its force. He said:

“For the past 30 years we’ve been saying don’t try to tax capital more because you’ll lose it, you’ll lose investment. Well this argument is dead, so it’s worth revisiting the whole story,” Pascal Saint-Amans, the OECD’s tax chief, said in an interview.”

This particular article came to our attention via the Fair Skat blog, which sketches out the implications – and they are highly significant.  The usual story goes something like this:

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