Tag: Josh Barro

Must-read: Josh Barro: “Rubio Tax Cut Got Bigger and Bigger”

Posted on by Brad DeLong

Must-Read: Josh Barro: Rubio Tax Cut Got Bigger and Bigger: “If you want an insight into what Senator Marco Rubio’s instincts on policy are…

…just look at what happened when he got his hands on another senator’s tax cut plan: It became about three times larger, and way more tilted toward the rich. Mr. Rubio’s recently announced tax plan is a descendant of the ‘Family Fairness and Opportunity Tax Reform Act,’ introduced in 2013 by Mr. Rubio’s fellow Senate Republican, Mike Lee…. The Lee plan went for a sizable tax cut: $2.4 trillion over 10 years, or about 6 percent of then-projected federal revenues…. The top 1 percent of taxpayers would have gotten a 2.8 percent increase to their after-tax income…. (The top 0.1 percent did better, with a 3.8 percent increase to income.)…

As Mr. Rubio got involved, the price started to soar. The plan was rebranded as the Economic Growth and Family Fairness Tax Plan, and as usual, ‘economic growth’ was code for large tax cuts for owners of capital…. Rich people with capital income weren’t the only big winners under the Rubio-Lee plan; there was also a large new benefit for people with low incomes. The original Lee plan had included a $2,000-per-person tax credit replacing the standard deduction, but you could take the credit only against income tax you actually owed. The Rubio-Lee plan generously revised this credit to be ‘refundable,’ meaning it could lead to a negative income tax bill for people with low incomes. But there’s a catch: It’s not clear the senators had decided exactly how refundable the tax credit would be….

Rubio apparently was not yet done with his Oprah act. In October, now running for president, Mr. Rubio announced his own stand-alone version…. Mr. Rubio’s current plan would cost $6.8 trillion over the 10-year budget window. That is, 16 percent of currently projected federal tax revenues over that period, and nearly three times the size of Mr. Lee’s plan from less than three years ago…. Rubio’s biggest tax cuts, by far, are at the top. His new plan would raise incomes for the top one-thousandth of taxpayers by 8.9 percent — that is, an average tax cut of more than $900,000 per year — because of its sharp cuts in tax rates on business income and capital income. Of course, all that assumes Mr. Rubio could find a way to finance a 16 percent overall cut in federal taxes…

Must-read: Josh Barro: “Sorry, but Your Favorite Company Can’t Be Your Friend”

Posted on by Brad DeLong

Must-Read: It’s not companies that are trying to blur the lines, so much as pro-market ideologues (and I mean that of the extremely-smart Josh Barro in the nicest possible way) trying to draw lines that cannot be sharply drawn.

Look: Back in the environment of evolutionary adaptation we evolved as gift-exchange animals. Monkeys create and reinforce social bonds by grooming each other. Canids create and reinforce social bonds by… I’m not going there. We create and reinforce social bonds by giving each other presents. We like to give. We like to receive. We don’t like being too much on the downside of the gift exchange: to have received much more than we have given in return makes us feel very small. We don’t like being too much on the upside of the gift exchange either: to give and give and give and never receive makes us feel like suckers. We like neither to feel like cheaters nor to feel cheated. We like, instead, to feel embedded in networks of mutual reciprocal obligation.

And on top of this evopsych propensity to be gift-exchange animals–what Adam Smith called our “natural propensity to truck, barter, and exchange”–we have built our complex economic division of labor.

But we face a problem: How do we enter into a gift-exchange relationship with somebody we will never see again. And we have a solution: a cash-on-the-barrelhead exchange. But as soon as we enter into a gift exchange relationship with someone or something we will see again–perhaps often–it will automatically shade over into the friend zone. This is just who we are…

Josh Barro: Sorry, but Your Favorite Company Can’t Be Your Friend: “‘It seems crazy, doesn’t it?’ said Ann McGill…

…also a professor of behavioral science at Booth who studies product and brand anthropomorphism — our practice of projecting human qualities onto the things we buy. It turns out, Starwood customers are far from the only consumers in a complicated, humanlike emotional relationship with a brand. As social psychologists describe it, there are two broad categories of human relationships: exchange relationships, in which we trade for mutual benefit; and communal relationships, which are based on mutual caring and support. Normally, you are supposed to have the former with people you do business with and the latter with your friends and relatives. But sometimes, companies try to blur the lines, insinuating themselves into your friend zone…