Peter Dunne writes – In 1994 the then Labour Opposition resolved to introduce a new top tax rate of 39 cents in the dollar. The reason for the policy was purely political, not fiscal. Labour was shedding votes to Jim Anderton’s left-wing Alliance at the time and wanted to do something symbolic to staunch the flow. […]
Capital gains tax: how Hipkins has abandoned policy soundness for a symbolic gesture
Capital gains tax: how Hipkins has abandoned policy soundness for a symbolic gesture
01 Nov 2025 Leave a comment
in fiscal policy, income redistribution, macroeconomics, politics - New Zealand, Public Choice, public economics Tags: taxation and investment
Part IV: Yes, Taxes Change Behavior
22 Oct 2025 Leave a comment
in applied price theory, fiscal policy, human capital, labour economics, labour supply, macroeconomics, Public Choice, public economics Tags: taxation and entrepreneurship, taxation and investment, taxation and labour supply
There can be honest and constructive debates about the size of government, such as when I cross swords with someone on the left who understands Arthur Okun’s efficiency-equity tradeoff. Another legitimate debate is about the impact of tax policy, specifically whether higher or lower tax rates have big effects or small effects. But to have […]
Part IV: Yes, Taxes Change Behavior
Taxes and Growth, Part II
15 Oct 2025 Leave a comment
in applied price theory, economic growth, fiscal policy, macroeconomics, Public Choice, public economics Tags: taxation and entrepreneurship, taxation and investment, taxation and labour supply
I wrote a column about taxes and growth in 2020. Let’s augment that analysis by digging into some details. I decided to address the issue today after seeing a tweet with this helpful summary of how different taxes cause different levels of economic damage (the Tax Foundation also has a table that ranks different taxes, […]
Taxes and Growth, Part II
Part II: Yes, Taxes Change Behavior
08 Oct 2025 Leave a comment
in applied price theory, labour economics, labour supply, public economics Tags: taxation and entrepreneurship, taxation and investment, taxation and labour supply
There are several visual ways of helping people understand how fiscal policy (and especially marginal tax rates) can change behavior. The philoso-raptor meme. The questioning worker. Supply-and-demand curves. The Wizard-of-Id parody. To augment these examples, I’ve started a series that is based on real-world examples. Part I of the series highlighted how the capital gains […]
Part II: Yes, Taxes Change Behavior
Part I: Yes, Taxes Change Behavior
26 Sep 2025 Leave a comment
in applied price theory, economic growth, entrepreneurship, fiscal policy, human capital, labour economics, labour supply, macroeconomics, Public Choice, public economics Tags: taxation and entrepreneurship, taxation and investment, taxation and labour supply
From a big-picture economic perspective, I worry most about the damage of high tax burdens on innovation, entrepreneurship, and investment. Those are things that generate enormous benefits for society, yet also things that are very sensitive to bad tax policy (specifically high marginal tax rates and the tax code’s bias against saving and investment). Sadly, […]
Part I: Yes, Taxes Change Behavior
Newsflash! The super-rich are mobile, and higher taxes incentivise them to move away
25 Sep 2025 1 Comment
in applied price theory, human capital, income redistribution, labour economics, labour supply, occupational choice, Public Choice, public economics Tags: taxation and entrepreneurship, taxation and investment
The super-rich are super-mobile. So, if a country decides to increase taxes on the super-rich (for example, with a wealth tax), some (but not all) of the super-rich will simply move elsewhere. This should not be a surprise to anyone. And yet, simplistic proposals to tax the super-rich are a favourite policy for some political…
Newsflash! The super-rich are mobile, and higher taxes incentivise them to move away
David Splinter on how much tax billionaires pay
30 Aug 2025 Leave a comment
in applied price theory, econometerics, entrepreneurship, human capital, income redistribution, labour economics, labour supply, politics - USA, poverty and inequality, Public Choice, public economics Tags: taxation and entrepreneurship, taxation and investment
Here is his comment on the paper presented here: Summary: The U.S. tax system is highly progressive. Effective tax rates increase from 2% for the bottom quintile of income to 45% for the top hundredth of one percent. But rates may be lower among those with the highest wealth. This comment starts with the “top 400” […]
David Splinter on how much tax billionaires pay
The Laffer Curve Triumphs Again: Class Warfare in the United Kingdom Backfires
02 Aug 2025 Leave a comment
in applied price theory, fiscal policy, labour economics, macroeconomics, public economics Tags: taxation and investment
The Laffer Curve provides incredibly important insights about tax policy. Most important, it informs us that you don’t measure the revenue impact of tax policy changes merely by looking at what is happening to tax rates. You also have to consider whether changes in tax rates will alter incentives to earn and report income. Or, […]
The Laffer Curve Triumphs Again: Class Warfare in the United Kingdom Backfires
Slowly Strangling the Death Tax
23 Jun 2025 Leave a comment
in applied price theory, Austrian economics, economic growth, macroeconomics, politics - USA, Public Choice, public economics Tags: death taxes, taxation and entrepreneurship, taxation and investment, taxation and savings
Back in 2013, I debated Joe Biden’s top economist on the death tax. Everything I said then (and wrote four years before then) is still true today. In the interview, I mentioned nations that have abolished their death taxes, including Australia. I should have mentioned Sweden as well. As a general rule, I don’t want […]
Slowly Strangling the Death Tax
What happened when Spain brought back the wealth tax?
13 Jun 2025 1 Comment
in applied price theory, Public Choice, public economics Tags: Spain, taxation and entrepreneurship, taxation and investment, taxation and savings
From the Journal of Public Economics Twitter feed: What happened when Spain brought back the Wealth Tax in 2011? Using variation in exposure, this paper finds: – No drop in savings, but drop in taxable wealth—mainly via legal avoidance – Asset shifting caused most revenue loss – Estimated revenue loss was 2.75x initial 2011 rev. […]
What happened when Spain brought back the wealth tax?
One last post on Investment Boost
27 May 2025 Leave a comment
in applied price theory, economic growth, fiscal policy, macroeconomics, politics - New Zealand, public economics Tags: taxation and investment
After the discussion in my post yesterday on the Investment Boost subsidy scheme announced in the Budget I thought a bit more about who was likely to benefit the most from it. The general answer of course is the purchasers of the longest-lived assets. Why? Because if you have an asset which IRD estimates to […]
One last post on Investment Boost
Some more post-Budget thoughts
27 May 2025 Leave a comment
in budget deficits, business cycles, economic growth, fiscal policy, macroeconomics, politics - New Zealand, Public Choice, public economics Tags: taxation and investment
On two separate themes; aggregate fiscal policy, and the Investment Boost initiative. Aggregate fiscal policy Over the weekend for some reason I was prompted to look up the Budget Responsibility Rules that Labour and the Greens committed to in early 2017 (my commentary on them here). At the time, the intention seemed to be to […]
Some more post-Budget thoughts
The Economic Consequences of Ever-Growing Government in Finland
10 May 2025 1 Comment
in applied price theory, economic growth, entrepreneurship, human capital, labour economics, labour supply, macroeconomics, Public Choice Tags: Finland, taxation and entrepreneurship, taxation and investment, taxation and labour supply
I’m currently in Finland for meetings with various people and I learned that the country’s bloated public sector and expensive welfare state are imposing a very heavy cost on the economy. How heavy of a cost? According to IMF data, there’s been no growth in per-capita GDP over the past 18 years. Why is Finland […]
The Economic Consequences of Ever-Growing Government in Finland
Ireland: Good Corporate Tax Policy vs. Bad Government Spending Policy
11 Feb 2025 Leave a comment
in budget deficits, business cycles, economic growth, economic history, Euro crisis, fiscal policy, global financial crisis (GFC), great recession, labour economics, labour supply, law and economics, macroeconomics, monetary economics, public economics Tags: Ireland, taxation and investment
I’m a big fan of Ireland’s low corporate tax rate for three reasons. First, it shows that good tax policy generates positive economic outcomes as per-capita GDP in Ireland has grown by record amounts. Second, it shows that lower tax rates can in some cases lead to more revenue. Sort of a turbo-charged version of […]
Ireland: Good Corporate Tax Policy vs. Bad Government Spending Policy
Goldilocks and the Laffer Curve
09 Feb 2025 Leave a comment
in applied price theory, budget deficits, economic growth, entrepreneurship, fiscal policy, labour economics, labour supply, macroeconomics, politics - USA, public economics Tags: taxation and entrepreneurship, taxation and investment, taxation and labour supply
Other than Art Laffer, I think of myself as the world’s biggest advocate of the Laffer Curve. I’ve literally written hundreds of columns explaining and promoting the concept. My goal is to help people understand that there is not a linear relationship between tax rates and tax revenue. Why is this the case? Because when […]
Goldilocks and the Laffer Curve
Utopia, you are standing in it! 
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