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This is the Yellow Armadillos Math Science Literacy Test. Revised August 18, 2011
I expect political candidates that I support to be able to pass this test.
Q.1. If the annual budget for program X has a built in annual bump up of 11% per year and you reduce that bump up by 3%, then the change in the amount spent for program X is most accurately labeled as:
a) an 8% decrease, b) a 3% decrease, c) a 24% decrease, or d) an 8% increase.
Q.2. Can we eliminate the deficit by returning to the Clinton tax rate for those making over 250,000?
Q.3. Do you believe that, regardless of what the income tax rate is, cutting that rate will stimulate enough growth in the economy to increase revenue?
Q.4. Do you oppose teaching religious belief in science class?
Desired answers are in comment 1.
Saturday, April 2, 2011
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Desired answers: 1. d, 2. no 3. no 4. Yes .
ReplyDeleteI don't understand the point you are trying to make with question 3. Are you saying that regardless of any specific, the tax rate has no effect on economic production or that production has no relationship with tax revenue? Because that is the meaning that I take away.
ReplyDeleteBut to paraphrase Buckley, you strike me as someone too intelligent to believe that.
No. The negative of a universal is not another universal.
ReplyDeleteA 'yes' answer to 3 would mean that
the candidate believes that "regardless of any specific" lowering the rate will change behavior enough to increase revenue.
My 'no' answer to 3 means that I believe that there is at least one example where lowering the rate will not increase revenue.
To listen to the Rs talk you would think that they believe that reducing tax rates ALWAYS increases revenue.
My point is that their universal (the one in my question) is false.
If you find the rate at 91% (as Kennedy did) or 70% (as Reagan did), then a reduction apparently changes behavior and perhaps increases revenue.
If you find the rate at 10%, I don't think a reduction in rate will change much behavior. I expect that Buckley would agree that changing the tax rate from 1% to 0% will not increase revenue.
The really interesting question is: "What is the revenue maximizing level of taxation? That is, what is the high point on the Laffer curve? The taxation level that is such that any change, either an increase or decrease, reduces revenue.
The fact that the Clinton taxation level put us in the black in the nineties and the lower Bush level put us in the red in the oughts seems like a good indicator that the Bush rates are on left side of the Laffer Curve high point and raising rates from the Bush level would raise revenue.
PS However, perhaps the recession prevents raising tax rates now.
PPS The fact that I think the revenue maximizing taxation rate is interesting does not mean that I am advocating that the govt should maximize revenue.
Ah, I understand now. Though I might suggest that the question is deceptively loaded in its brevity (as indicated by the length of the explanation).
ReplyDeleteThat said, while clever, I think #3 is the wrong question to be asked. Sure, it's a quick and dirty way to judge the depth of a candidate's fiscal acumen. But for the vices that grip Washingtonians, I'd be satisfied if any candidate could demonstrate a grasp of kitchen table economics. That alone is a rarity.
As to length, Q 3 seems very similar to your follow up question.
ReplyDeleteIn my case I'm getting old and don't have much time left!