Maximum Wages: An absolutely terrible idea

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% employees working more than 50 hours per week, 2014 OECD area

Not coincidentally, countries with high marginal income tax rates have low levels of long hours worked per week.

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Data extracted on 14 Aug 2016 01:52 UTC (GMT) from OECD.Stat; Data does not include the self-employed.

% women age 25 to 54 working full-time in USA, UK, Canada, Germany, France, Italy, Australia, New Zealand, Ireland, Sweden, Norway and Denmark

To account for full-time work being 35 hours per week in some countries but 40 hours others I have included both in the chart below. Not many Dutch women work full-time.

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Data extracted on 11 Mar 2016 14:08 UTC (GMT) from OECD.Stat.

Gap in GDP per Australian, Canadian, French, German, Japanese, New Zealander and British hour worked with the USA

This data tells more of a story than I expected. Firstly, New Zealand has not been catching up with the USA. Japan stopped catching up with the USA in 1990. Canada has been drifting away from the USA for a good 30 years now in labour productivity.image

Data extracted on 28 May 2016 05:15 UTC (GMT) from OECD.Stat from OECD Compendium of Productivity Indicators 2016 – en – OECD.

Australia has not been catching up with the USA much at all since 1970. It has maintained a pretty consistent gap with New Zealand despite all the talk of a resource boom in the Australia; you cannot spot it in this date are here.

Germany and France caught up pretty much with the USA by 1990. Oddly, Eurosclerosis applied from then on terms of growth in income per capita.

European labour productivity data is hard to assess because their high taxes lead to a smaller services sector where the services can be do-it-yourself. This pumps up European labour productivity because of smaller sectors with low productivity growth.

#NeverTrump but why no #neverBernie, only #feelthebern?

Why have no Democrats formed the equivalent of #NeverTrump?

Bernie Sanders is not even a member of their party. Have they no principles?

Many of their republican opponents do in rejecting Trump and planning to vote for either Clinton or Gary Johnson.

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Sanders is an old socialist throwback whose economic policies would plunge the American economy into a deep recession harming most of all those that Democrats claim to represent.

Sander’s mind is just as inflexible as that of Trump as is his unwillingness to learn from events.

Money makes people right-wing and inegalitarian

Figure 1. Evidence on switchers: The percentage of people who switched right (conservative), and previously did not vote conservative, after a lottery win

Source: Money makes people right-wing and inegalitarian | VOX, CEPR’s Policy Portal.

@BernieSanders nothing is free in Denmark

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Source: Brutal Meme Reveals Truth About European Socialist Countries? : snopes.com.

@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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@garethmorgannz gives optimal tax theory a pass once again @JordNZ

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Source: Mankiw, N. Gregory, Matthew Weinzierl and Danny Yagan. 2009. "Optimal Taxation in Theory and Practice." Journal of Economic Perspectives, 23(4):147-74.

The Morgan Foundation gave optimal tax theory a pass in yesterday’s publication about taxes on land and capital. Gareth Morgan is keen on a comprehensive capital tax.

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Source: Taxing Wealth & Property – What Works? A Morgan Foundation Report.

This failure to refer to optimal tax theory is despite the Foundation’s strong commitment to evidence-based policy. Any discussion of tax policy that is evidence-based must refer optimal tax theory.

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Source:  Morgan Foundation, Public Policy Education.

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Taxpayers Alliance mistaken about tax revenues as a stable % of GDP @the_tpa

The British Taxpayers Alliance got carried away a bit when it said taxes as a share of British GDP have not varied much over the last 50 years or so. Margaret Thatcher would be turning in her grave.

A stable tax take is more the case in the USA. Federal tax receipts stay within the range of 18-20% of U.S. GDP as shown in the charts below and above.

There were large cuts in the top tax rates in the USA without any fall in tax revenues as a percentage of GDP because of base broadening.

Margaret Thatcher really did make a dent in taxes as a share of GDP in the 1980s. They fell by 5% of GDP but then went back up again in the 1990s as is shown in the Centre for Policy Studies chart below.

That 5% drop was a big variation as a share of GDP which is also shown in the Taxpayers Alliance chart if you look closely at the 1980s. That sharp drop in taxes as a share of British GDP is clearer in the Centre for Policy Studies chart because it magnifies the data.

There are also big changes in the British tax mix in the 1970s and 1980s. The large rise in tax in personal income in the 1970s as a percentage of GDP, also shown in both British charts above as well is the one below, coincided with the rise of the British disease and British economy becoming widely known as the sick man of Europe.

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Source: OECD Stat.

The large decline in taxation in personal income under Thatchernomics was followed by an economic boom. The UK grew at above the trend annual real GDP growth to 1.9% for most of the period from the early 1980s to 2007 as shown in the detrended data in the chart below.

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Source: Computed from OECD Stat Extract and The Conference Board. 2015. The Conference Board Total Economy Database™, May 2015,http://www.conference-board.org/data/economydatabase/.

In the above chart, a flat line is growth at the same rate as the USA for the 20th century, which was 1.9% for GDP per working age person on a purchasing power parity basis. The USA’s trend growth rate in the 20th century is taken as the trend rate of growth of the global technological frontier.

A falling line in the above chart is growth in real GDP per working age person, PPP at less than the trend rate of 1.9%  per annum while a rising line is real growth in GDP per working age person in excess of the trend rate.

Australian taxes on income are not particularly high if you include social security

British tax mix as a percentage of GDP

The large rise in tax in personal income in the 1970s coincided with the rise of the British disease and British economy becoming widely known as the sick man of Europe. The large decline in taxation in personal income under Thatchernomics was followed by an economic boom.

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Source: OECD Stat.