tag:blogger.com,1999:blog-3240565408401956331.post923296695402848908..comments2023-07-08T05:49:38.333-04:00Comments on Larry Davidson's Thoughts on Macro and Other Stuff: Robn Hood Rides againUnknownnoreply@blogger.comBlogger4125tag:blogger.com,1999:blog-3240565408401956331.post-22819743839719932302010-03-23T15:09:11.148-04:002010-03-23T15:09:11.148-04:00And now for Mike's point about inflation. It i...And now for Mike's point about inflation. It is true that inflation acts as a tax -- and one that bites the worst for people whose incomes are not rising as fast as the general price level. In a world of indexed wages, social security benefits, and tax brackets, the bite might not be very severe at relatively low inflation rates. What worries me more is the general havoc and uncertainty that arises when inflation increases in a permanent way. We remember the 1960s and 70s when the general trend of the inflation rate had it rising from less than 1% per year to double digit rates. That's the kind of inflation that causes real problems. Once rising inflationary expectations get embedded in everyday decisions it get much harder to ring out. Recall 20+% interest rates in the USA in the early 80s...we definitely don't want to go there again...Larry Davidsonhttps://www.blogger.com/profile/10028971586654033347noreply@blogger.comtag:blogger.com,1999:blog-3240565408401956331.post-38903504126037358252010-03-23T14:59:42.953-04:002010-03-23T14:59:42.953-04:00I like the joke that is relevant to the tax issue....I like the joke that is relevant to the tax issue. Three guys go drinking every Friday night. Since Joe is richer than his two friends, he usually pays more. He pays $8.00 and his two friends usually pay the remaining $2.00 despite the fact that they all imbibe equally. One day the proprietor reduces the price of beer and charges them a total of $9 -- a reduction of 10%. Joe throws in his usual relative amount -- this time $7.20 expecting his friends will kick in the remaining $1.80. But they don't and complain that Joe would have benefited by $1.80 while they only gained by 20 cents. Joe said okay and that was the last time he drank with his friends. How much did they pay for drinks on their next outing?Larry Davidsonhttps://www.blogger.com/profile/10028971586654033347noreply@blogger.comtag:blogger.com,1999:blog-3240565408401956331.post-18236991052922546522010-03-22T22:09:05.953-04:002010-03-22T22:09:05.953-04:00Tax avoidance is quite an interesting issue. As u...Tax avoidance is quite an interesting issue. As usual wiki is your friend with this blurb on Hauser's Law<br /><br />http://en.wikipedia.org/wiki/Hauser%27s_Law<br /><br />along with several links to additional blurbs about tax rates verses tax revenues. Basically Hauser's Law states that since the early 1950s marginal tax rates have ranged from over 90% to a low of around 28%; but tax revenues have remained constant at around 19.5% of GDP. Hauser claims this is due to shifting, hiding, or under reporting income; and notes that this is easier for rich peeps than poor peeps. It is also common for capital to flee to areas with lower tax rates.<br /><br />Another issue normally raised when tax rate increases are discussed is how inflation is a hidden tax on every one, regardless of income. The problem of tax creep is also an issue when inflation can put low or middle class wages in a higher tax bracket.Unknownhttps://www.blogger.com/profile/15701395081467814624noreply@blogger.comtag:blogger.com,1999:blog-3240565408401956331.post-1940682692299748142010-03-22T19:18:25.327-04:002010-03-22T19:18:25.327-04:00I got an email from a dear friend who pointed out ...I got an email from a dear friend who pointed out that Robin Hood was a thief. While technically he and his merry men were outside the law, the reality is that he was thought of as a hero. In my attempt to be even-handed I was thinking of Robin Hood more as a hero than as a common thief. I leave it to my friends and time, however, to decide if ROBN was a hero or a heel.Larry Davidsonhttps://www.blogger.com/profile/10028971586654033347noreply@blogger.com