As such, it is practically impossible for additional taxes to be levied on workers without canceling out a supposed efficiency gain from new Pigouvian tax types that economists say arises from some other regressive tax already in force. In other words, Pigouvian taxes that cancel out other Pigouvian taxes cannot yield an efficiency gain because workers do not have an unlimited pool of funds from which to pay all of these taxes. In fact, there are limits on the taxes that workers can ultimately pay whether economists set out to identify those limits or not.
NOTES
1See Arthur Villasanta, Jeff Bezos’ DC Mansion Has 25 Bathrooms and Reddit Was Not Having It, International Business Times (Nov. 7, 2019), https://www.ibtimes.com/jeff-bezos-dc-mansion-has-25-bathrooms-reddit-was-not-having-it-2861437. Accessed Nov. 10, 2019.
2Tax Cuts and Jobs Act of 2017, Pub. L. No. 115–97. References to data on federal tax revenues and the corporate share of the tax base are from the U.S. Treasury Department data (Fiscal Year 2017) and Congressional Budget Office (CBO) estimates; CBO, Options for Reducing the Deficit (Dec. 2016), https://www.cbo.gov/publication/52142. Accessed Nov. 10, 2019.
3Tax Cuts and Jobs Act of 2017, Pub. L. No. 115–97. References to data on federal tax revenues and the corporate share of the tax base are from the U.S. Treasury Department data (Fiscal Year 2017) and Congressional Budget Office (CBO) estimates; CBO, Options for Reducing the Deficit (Dec. 2016), https://www.cbo.gov/publication/52142. Accessed Nov. 10, 2019.
Federal income tax revenues derived from labor in comparison to business or investment, see: Jay Soled & Kathleen DeLaney Thomas, Automation and the Income Tax, 10:1 Columbia J. of Tax Law, 1, 7–17 (2019).
4Richard Hammer, The Helmsleys: The Rise and Fall of Harry & Leona (New York: NAL Books, 1990).
5Matt Egan, Just 4% of Companies Boosted Hiring Because of Tax Cuts, CNN Business (Jan. 29, 2019) https://www.cnn.com/2019/01/28/business/tax-cuts-jobs-business-spending-nabe/index.html. Accessed Nov. 10, 2019 (“The expensive 2017 tax law failed to encourage Corporate America to embark on a boom in hiring or job-creating investment. Just 4% of business economists say their companies accelerated hiring because of the tax overhaul, according to a survey released Monday by the National Association for Business Economics.”). And only 10% of business economists said their firms stepped up investments like building factories, buying equipment and purchasing software because of the tax law.
6Data are available on the relation between tax base and GDP per capita. See Organization for Economic Cooperation and Development (OECD), http://www.oecd.org/tax/revenue-statistics-2522770x.htm; World Bank Data on GDP Levels Per Capita https://data.worldbank.org/indicator/NY.GDP.PCAP.CD?view=chart. I have previously compiled and published charts to illustrate the lack of any correlation between tax cuts and GDP per capita. See, e.g., Bret N. Bogenschneider, Causation, Science & Taxation, 10:1 Elon L. Rev. 1 (2017); Bret N. Bogenschneider, The Tax Paradox of Capital Investment, 33:1 J. Taxation of Inv. 59, 79 (2015).
7Bret Bogenschneider & Ruth Heilmeier, Income Elasticity and Inequality, 5:1 Int. J. Econ. & Bus. Law 34 (2016).
8Switzerland has a federal tax, a cantonal tax and some municipal taxes, which when combined are relatively low. For an explanation and tax rates on the individual tax system in Swiss localities, see Federal Government of Switzerland, The Swiss Tax System (Dec. 2018), https://www.efd.admin.ch/efd/en/home/themen/steuern/steuern-national/the-swiss-tax-system/fb-schweizer-steuersystem.html. Accessed Nov. 10, 2019.
9An interesting illustration is the deceased multimillionaire, Jeffrey Epstein, who was once a scion of the investment banking scene. See generally, Greg Norman, Jeffrey Epstein’s Private Caribbean Island Had Mysterious Safe, Former Employee Claims, Fox News (July 12, 2019), https://www.foxnews.com/us/jeffrey-epstein-caribbean-island-mystery. Accessed Nov. 10, 2019. Obviously, Epstein’s capital investments into his various sex palaces in the Caribbean and New York City were not efficient investments for broader society.
10St. Louis Federal Reserve, Why Are Corporations Holding So Much Cash? (Jan. 1, 2013), https://www.stlouisfed.org/publications/regional-economist/january-2013/why-are-corporations-holding-so-much-cash. Accessed Nov. 10, 2019.
11See Jeffry Bartash, Repatriated Profits Total $465 Billion After Trump Tax Cuts, Leaving $2.5 Trillion Overseas, MarketWatch (Sept. 19, 2018), http://www.marketwatch.com/story/repatriated-profits-total-nearly-500-billion-after-trump-tax-cuts-2018-09-19. Accessed Nov. 10, 2019.
12For a general discussion of this idea, see: Benjamin Willis, Fool Me Twice: Trump’s Payroll Tax Cuts, Tax Notes (Aug. 22, 2019) (“On August 20 President Trump said regarding tax cuts that the ‘payroll tax is something that we think about, and a lot of people would like to see that, and that very much affects the workers of our country.’ Such a strategy is based on the economic belief that reducing taxes on low- and middle-income Americans is the best way to ensure that consumers continue spending money and the economy is stimulated.”), https://www.taxnotes.com/opinions/fool-me-twice-trumps-payroll-tax-cuts/2019/08/22/29vv7. Accessed Nov. 10, 2019.
13Robert Frank, Top 1% Pay Nearly Half of Federal Income Taxes, CNBC (Apr. 14, 2015), https://www.cnbc.com/2015/04/13/top-1-pay-nearly-half-of-federal-income-taxes.html, citing Tax Policy Center, https://www.taxpolicycenter.org/research-commentary. Accessed Nov. 10, 2019
14See, e.g., Stephen Moore, Do the Rich Pay Their Fair Share?, Heritage Foundation (Mar. 3, 2015), https://www.heritage.org/budget-and-spending/commentary/do-the-rich-pay-their-fair-share.
