by Joel Slemrod & Jon Bakija ‧ RELEASE DATE: June 1, 2000
A fair-minded exposition of a politically loaded subject.
Economists Slemrod (Univ. of Michigan) and Bakija (Williams Coll.) provide a sometimes dense but mostly easy-to-read road map of the US tax system.
The authors discuss the progressivity of the graduated income tax in great detail, explaining how it yields more revenue than corporate taxes, penalizes savings (by taxing interest), and can be considered superior to the flat tax (which is simpler but not progressive) but inferior to the value-added tax (or VAT, widely used in Europe) because of its complexity and many loopholes. Readers, especially conservative ones, will be surprised to hear that there is no direct link between tax rates and prosperity. Rates in the US haven’t changed much over the past 50 years, even during periods of stellar growth, whereas in Europe (where taxes are higher) growth has often proceeded ahead of the US. Slemrod and Bakija also outline factors most laymen don’t consider when discussing (or complaining about) the topic. Any discussion of tax reform, for example, has to take into consideration what it costs to comply with the rules as well as how much we spend enforcing them. Taxpayers blow around $100 billion a year figuring their taxes; the IRS has a budget of $8 billion. Given these figures, policymakers and legislators (and, by extension, the voters) must be held to blame for the nation’s tax woes, not the IRS. The authors’ prescriptions for reform are myriad and leave no clear avenues. The efficiency of the flat tax might (but probably won’t) compensate for its regressive nature. The VAT in theory is cheaper to enforce than the income tax, but in Europe it costs the same or more. A national sales tax appears very easy, but it would break the economy. It’s possible to catch oneself reading but not comprehending the extended proofs that accompany these proposals. Given the usual opacity of the subject, however, Slemrod and Bakija are as clear as glass.
A fair-minded exposition of a politically loaded subject.Pub Date: June 1, 2000
ISBN: 0-262-19429-5
Page Count: 312
Publisher: MIT Press
Review Posted Online: May 19, 2010
Kirkus Reviews Issue: April 15, 2000
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More by Michael Keen
BOOK REVIEW
by Michael Keen & Joel Slemrod
by Abhijit V. Banerjee & Esther Duflo ‧ RELEASE DATE: Nov. 12, 2019
Occasionally wonky but overall a good case for how the dismal science can make the world less—well, dismal.
“Quality of life means more than just consumption”: Two MIT economists urge that a smarter, more politically aware economics be brought to bear on social issues.
It’s no secret, write Banerjee and Duflo (co-authors: Poor Economics: A Radical Rethinking of the Way To Fight Global Poverty, 2011), that “we seem to have fallen on hard times.” Immigration, trade, inequality, and taxation problems present themselves daily, and they seem to be intractable. Economics can be put to use in figuring out these big-issue questions. Data can be adduced, for example, to answer the question of whether immigration tends to suppress wages. The answer: “There is no evidence low-skilled migration to rich countries drives wage and employment down for the natives.” In fact, it opens up opportunities for those natives by freeing them to look for better work. The problem becomes thornier when it comes to the matter of free trade; as the authors observe, “left-behind people live in left-behind places,” which explains why regional poverty descended on Appalachia when so many manufacturing jobs left for China in the age of globalism, leaving behind not just left-behind people but also people ripe for exploitation by nationalist politicians. The authors add, interestingly, that the same thing occurred in parts of Germany, Spain, and Norway that fell victim to the “China shock.” In what they call a “slightly technical aside,” they build a case for addressing trade issues not with trade wars but with consumption taxes: “It makes no sense to ask agricultural workers to lose their jobs just so steelworkers can keep theirs, which is what tariffs accomplish.” Policymakers might want to consider such counsel, especially when it is coupled with the observation that free trade benefits workers in poor countries but punishes workers in rich ones.
Occasionally wonky but overall a good case for how the dismal science can make the world less—well, dismal.Pub Date: Nov. 12, 2019
ISBN: 978-1-61039-950-0
Page Count: 432
Publisher: PublicAffairs
Review Posted Online: Aug. 28, 2019
Kirkus Reviews Issue: Sept. 15, 2019
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More About This Book
SEEN & HEARD
by Enrico Moretti ‧ RELEASE DATE: May 5, 2012
A welcome contribution from a newcomer who provides both a different view and balance in addressing one of the country's...
A fresh, provocative analysis of the debate on education and employment.
Up-and-coming economist Moretti (Economics/Univ. of California, Berkeley) takes issue with the “[w]idespread misconception…that the problem of inequality in the United States is all about the gap between the top one percent and the remaining 99 percent.” The most important aspect of inequality today, he writes, is the widening gap between the 45 million workers with college degrees and the 80 million without—a difference he claims affects every area of peoples' lives. The college-educated part of the population underpins the growth of America's economy of innovation in life sciences, information technology, media and other areas of globally leading research work. Moretti studies the relationship among geographic concentration, innovation and workplace education levels to identify the direct and indirect benefits. He shows that this clustering favors the promotion of self-feeding processes of growth, directly affecting wage levels, both in the innovative industries as well as the sectors that service them. Indirect benefits also accrue from knowledge and other spillovers, which accompany clustering in innovation hubs. Moretti presents research-based evidence supporting his view that the public and private economic benefits of education and research are such that increased federal subsidies would more than pay for themselves. The author fears the development of geographic segregation and Balkanization along education lines if these issues of long-term economic benefits are left inadequately addressed.
A welcome contribution from a newcomer who provides both a different view and balance in addressing one of the country's more profound problems.Pub Date: May 5, 2012
ISBN: 978-0-547-75011-8
Page Count: 304
Publisher: Houghton Mifflin Harcourt
Review Posted Online: April 3, 2012
Kirkus Reviews Issue: April 15, 2012
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