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On 1/4/07, Scott Hussey <EMAIL:PROTECTED> wrote:
I don't know enough about this to say much, but I'm currently working
on reading some of Milton Friedman's work and so far he seems to be a
proponent of a modified flat tax plan. Right or wrong on the flat tax,
I don't think an argument can made against Friedman's economics
background.
Nope, Milton Friedman is definitely an economist, and what he writes
and says gets taken very seriously. Friedman is also a real idealist,
and, although there is nothing wrong with that, idealistic proposals
have a difficult time in the political process.
In any case, some basic dimensions of taxes that are worth arguing about are:
1) Breadth (how broad a spectrum of economic activity do you want to tax?)
2) Simplicity (how many exceptions and odd incentives/penalties are there?)
3) Progressivity (should tax rates be the same for all levels of
income (or consumption)?
4) Instrumentality (should you try to alter people's behavior through taxation?)
As it turns out, economists are almost unanimously in favor of
simplicity. There is essentially no question that our current tax
system is ludicrously complex, in large part because various special
interest groups have done a magnificent job in carving out various
exceptions that both decreases rates (e.g., mortgage deduction) and
increase them (e.g., on tobacco consumption). Arguments against
simplicity usually invoke some kind of instrumentality (we want to
change people's behavior). Often, but not always, conservatives would
like to see less instrumentality, and some conservatives would like to
see more. I believe economists are usually skeptical of instrumental
arguments except in cases where it is arguable that market failures
are occurring because not all of the costs of an action are being
borne by the beneficiaries. Pollution and traffic are classic cases
where my actions can make your life much worse, and I don't pay the
full cost of polluting (or clogging the roads). Even conservative
economists accept that this is a problem to solve, although they don't
always favor using the tax system per se to solve it.
In any case, this is not an easy problem, and pretending that it its
doesn't strike me as very useful.
jking
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