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There has been a bit of discussion about the YAMSLT from April 2, 2011.
Or you can see it below:
For more on the Laffer Curve go here.
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Saturday, April 2, 2011
YAMSLT
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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.
Posted by Wayne Bell at 11:18 AM
Labels: politics
5 comments:
YA said...
Desired answers: 1. d, 2. no 3. no 4. Yes .
August 18, 2011 12:28 AM
tryanmax said...
I 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.
But to paraphrase Buckley, you strike me as someone too intelligent to believe that.
October 14, 2011 7:12 PM
Wayne Bell said...
No. The negative of a universal is not another universal.
A '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.
November 11, 2011 3:12 AM
tryanmax said...
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).
That 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.
November 11, 2011 9:18 AM
Wayne Bell said...
As to length, Q 3 seems very similar to your follow up question.
In my case I'm getting old and don't have much time left!
November 13, 2011 12:25 PM
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Sunday, November 13, 2011
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You must listen to different Republicans than I do because I hardly ever hear a Republican argue that lowering tax rates can increase revenue. In fact, it is a near universal refrain among Republicans to assert that we have a spending problem, not a revenue problem (we most definitely have both). And they consistently conflate raising tax rates with raising tax revenue, and they let Democrats get away with pretending the two are the same. If you want a litmus test for candidates for public office, I think it would me far more instructive to ask the converse of the question: do you believe that, regardless of the tax rate, increasing the tax rate will increase tax revenue? If they answer yes, enough said, and if they answer no, I would ask them to explain how that could be and to estimate an approximate revenue-maximizing tax rate (or, put another way, at what income tax rate do people begin to work less?).
ReplyDeleteI did want a litmus test and the first two questions were aimed at the Democratic mythology and the last two were aimed at Republican mythology.
ReplyDeleteIt is true that the Rs are not talking about the Laffer curve as much lately. They are now focusing on making the Bush tax rates permanent because raising the rates would be incredibly oppressive – tantamount to confiscation … . It is a political achievement of the first order that they have sold this idea despite these two facts: 1) the Bush rates corresponded to a slow economy and deficits in his administration and 2) with the higher rates in the Clinton administration things were booming and the federal government had a surplus.
PS Aren't those two facts serious evidence that we are on the side of the curve for which increasing rates produces increased revenue?
PPS Is that really the converse?
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