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The dynamic marginal tax rate

 
Paper:ewp-get/9708002
From: Thomas Cool <   > 
Date: Tue, 26 Aug 1997 15:03:45 +0200

Abstract:
There is a general misconception on the impact of marginal tax rates. Following the hypothesis of optimising economic agents, it is proper that marginal rates enter the discussion. The only issue is that the margin mu= st be computed correctly. In dynamics, one must take account of the fact tha= t tax parameters may change, or for optimality should change. The change of tax parameters affects the value of the proper marginal rate. The proper dynamic marginal rate can be called the =91dynamic marginal rate=92. The revolution in dynamics as exemplified by Keynes (1936) may find another twist in this issue. This new analysis dramatically affects macro-economi= cs and common perceptions in policy making. It is commonly thought that stagflation has been caused by external factors such as technology or the competition of low wage countries. The current analysis points to the conclusion that stagflation has been caused by internal factors, notably government policy itself, which policy has been based on a wrong percepti= on of the marginal tax rate.

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EconWPA began as a conversation between Bob Parks and Larry Blume on January 28, 1993. I located Paul Ginsparg's archive (then xxx.lanl.gov) and he graciously installed his software on a Sun Sparc system which was supporting the department of economics email and computation. EconWPA began accepting papers July 1, 1993 and had ftp, email, gopher and web interfaces. The web interface for submissions was engineered into existence in July 1995. A complete and catastrophic machine failure in 1999 caused the loss of EconWPA's email new paper announcment service at which time there were over 15,000 subscriptions with over 8,000 unique email addresses.

In 2005, Arts and Sciences commandeered the computing services that I had provided to the Department of Economics since 1987. Some might say that the department was sold out, others would (erroneously) claim that centralization is efficient, and still others would claim that I have few marketing skills.

I was told that I could keep operating EconWPA (as well as many other services including rfe.wustl.edu, barnett.wustl.edu, and three RePEc servers) but I would receive no support (hardware, software, or anthing else) and (as had been the case) no compensation. At that point, given the apparent low valuation of my activities by the department, and university, it made no sense for me to continue operating EconWPA or other services.

Thanks to all who have supported EconWPA in the past.

A Chinese curse states May you live in intersting times. I have. Bob Parks - Jan 2006