51–60 of 105 posts
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No, not at all. There is no evidence that tax cuts lead to higher wages or economic growth. It's been studied and debunked to death but it never dies.
Deadweight losses from taxes have most certainly not been debunked.
Oh wait.
> In fact, one basic result in the theory of cheap talk is that if you assume the cheap-talker will do what’s best for him and worst for you, you can often get him to reveal more of the truth. This is basically the definition of enemy. These people are your enemies. By that I mean, in the context of fair wages, employees ought to treat executives as enemies, not as slightly conflicted parties with slightly divergent…
Enemy and counterparty are not the same. When I negotiate with my landlord, they aren’t my enemy. They’re someone I’m negotiating with.
It's not "best for them, a little bad for you", it's "best for them, worst for you".
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You are supposed to take the promotion, update your linkedin, and find a real position with that title elsewhere for more money.
I've had the privilege to have the proactive version of this discussion: A discussion was had about an employee and then the question was asked "If they left, how much would we pay to hire someone the replace them? Let's give them a raise to that amount now and avoid that mess."
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Is there any verifiable time in history when such a complicated multi-actor system actually did increase wages? Or is this the cold fusion of government policy?
Certainly during the biggest period of US wage growth ushered in by the Internal Revenue Act of 1954. Income in excess of $400K/yr taxed at 90% ensured that businesses invested as management and shareholders weren't permitted to capture earnings.
It also helped that the world was destroyed and the US was the only developed country with sufficient manufacturing capacity. High taxes or not, that sort of environment is not going to happen anytime soon.
>Income in excess of $400K/yr taxed at 90% ensured that businesses invested as management and shareholders weren't permitted to capture earnings.
But CEOs and executives rarely have high income/base pay. They're incentivized by the owners of the company via performance linked bonuses, payment via stock options, long term incentive bonuses, etc.
The idea that pay raises come from some sort of collective negotiation with a bunch of executives is just bizarre on its own. Executives do not get to decide the pay level of employees. The point of the tax law was to lower the cost of employment and investment in the US (specifically, the cost of repatriating foreign profits to pay US salaries and buy US-based infrastructure). The hope being that lower costs cause c…
No, but they get to set the payroll budget for different departments, and they get to put other incentives in place, like bonuses for managers that keep payroll down.
"A tight labor market causes the raises"
We already had a tight labor market. The conventional wisdom that tight labor markets lead to raises is being bucked. Economists have been pretty stumped at the fact that wages have not been rising.
"But none of that involves buttering up CEOs and getting them to pinky-swear that they're going to give out raises just because they can. The wage level is always "as low as they can get away with""
See, this is complete horseshit. Why the fuck did we give them the tax break, then? Why the fuck do we just take them on their word that they'll do something and give them tax breaks, and then tell workers that they have to beg and plead with their employers to actually fucking get it?
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"The point of the tax law was to lower the cost of employment and investment in the US. [...] The hope being that lower costs cause companies to value US labor more, which tightens the labor market." The point of the tax cut was to get more money in the hands of owners of corporations. And, so far, it's working quite well. We won't see much wage growth for one big reason, the Fed has and will continue to raise intere…
Actually the point of the tax cut was to harmonize our corporate tax rates with the rest of the world, and take steps to eliminate the domicile arbitrage and general loopholing that creates an enormous amount of deadweight loss in our economy.
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This is very reductive. You could use the same logic to argue that your coworkers are your enemies because the money being paid to them could be paid to you instead.
If a person had a coworker who thought "well I could get a 40% pay increase if I get fired", then that person should consider that coworker an enemy. Fortunately, the world does not revolve around game-theory and most other parties with whom we choose to associate, will at least consider and value our interests. Enemies do not do so, or value our interests at something close to zero; thus their calculus: "worst for y…
Meanwhile in an actual adversarial relationship the other party can be expected to take actions that harm their own position if it harms you more. In such a position it is the relative difference that matters, an enemy seeks to either lose less or win more than you.
I'd argue that (except for the most pathological managers), jobs fall in the first category instead of in the second.
The idea that pay raises come from some sort of collective negotiation with a bunch of executives is just bizarre on its own. Executives do not get to decide the pay level of employees. The point of the tax law was to lower the cost of employment and investment in the US (specifically, the cost of repatriating foreign profits to pay US salaries and buy US-based infrastructure). The hope being that lower costs cause c…
"The point of the tax law was to lower the cost of employment and investment in the US. [...] The hope being that lower costs cause companies to value US labor more, which tightens the labor market." The point of the tax cut was to get more money in the hands of owners of corporations. And, so far, it's working quite well. We won't see much wage growth for one big reason, the Fed has and will continue to raise intere…
However, like everything else in our country -- what's superficially a good idea gets cut to pieces by private interests and it ends up benefiting them.
In a perfect world a corporate tax cut would be offset by hefty consumption taxes for the rich, and estate taxes. But that of course did not happen, and will not happen in a republican-controlled government.
My favorite scam I've seen lately has been the "We're gonna give you a promotion with no salary increase, see how you do, and then discuss a pay raise after X months! You should be grateful for this opportunity!" And then of course in six months, the pay raise is basically a small bump, versus what one might be paid if brought in as a manager/higher title.
You are supposed to take the promotion, update your linkedin, and find a real position with that title elsewhere for more money.