Optimal rate of tax on capital is zero

From https://www.aeaweb.org/articles?id=10.1257/jep.23.4.147

Lucas on optimal capital taxes

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No income tax to cut anymore until household incomes in the six figures!

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Source: Most People Don’t Pay Much in Federal Income Tax | Mother Jones

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The wage bump from 1% Oz company tax cut @TheAusInstitute @GrattanInst @JordNZ

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How wasteful is the Oz company tax? @TheAusInstitute @GrattanInst

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Source: The incidence of company tax in Australia, Xavier Rimmer, Jazmine Smith and Sebastian Wende, Australian Treasury working paper.

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Morgan’s capital tax forgot 30% retirees move every 5 years @TaxpayersUnion

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With 30% of retirees changing address every 5 years, they will have to downsize into hovels because they have to pay IRD the great big new tax on their capital championed by Morgan and his Opportunities Party well before they die.

retirees at same residence 5 years ago

Morgan’s 1.8% tax on equity capital is not an inheritance tax for the majority of retirees. It is a nest egg tax as they downsize after the kids fly the nest, grandchildren appear or they move to a more convenient place as they become frail.

Because they will have to pay back taxes of tens of thousands of dollars to IRD every time they sell their house, retirees either will not be able to move closer to family because of grand-children or health issues or they will have difficulty moving into a retirement home of their choice.

This is the first in a series of blogs showing how the Opportunities Party is too clever by half in its manifesto development. By insisting on having different policies to everybody else by a good country mile, it ends up having to take up the policies others rejected because they do not work.

In the case at hand, they put an inheritance tax on ordinary New Zealanders at the same rate as the rich including the founder of the Opportunities Party. This tax will be the only capital tax anywhere that is not progressive.

Over 70% of the retired own their own house mortgage free. The majority of that equity will now go to IRD plus interest by the time both members of the couple die given the average capital tax will be about $10,000 per year in Wellington and twice that in Auckland. They face up to 20 to 25 years of deferred capital taxation that will take half the value of their house easily. It will be hardest if they must cash-out their house to go into retirement home.

The purpose of buying a house is to have a nest egg for retirement. You may draw down that capital because of health issues or pass it on to children if you are luckier than that.

Morgan wants to radically change the way in which retirees go into the evening of their days. People who just managed to save for a house will have nothing to pass on to their children. No more bank of mum and dad either.

@garethmorgannz is getting a little techie about debating optimal tax theory

All I said was “optimal tax theory including that pioneered by Stiglitz and Merrlees, economists of impeccable left-wing credentials, show that taxes on the income from capital should be low because the deadweight social costs of taxes on capital are very high”.

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Combined federal, state and local company tax rates across the OECD, 2015

Britain will have the 2nd lowest company tax rate across the OECD by 2020. The 2016 British budget announced overnight reduces the tax to 17% by 2020.

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Source: OECD Stat  Table II.1. Corporate income tax rate.

Why @garethmorgannz wants his great big new tax @geoffsimmonz

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Source: Poll Results | IGM Forum.

UK has the lowest company tax rate in the G20

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