Interestingly, pretty much everybody who read my last post assumed that I was endorsing what I called the “sophisticated” anti-tax case. But I didn’t endorse it. Nor did I debunk it. The reason I wrote the post was to try to tease out what I considered an important part of the anti-tax psychology, and then try to identify what empirical claim would have to be substantiated in order to justify that psychology.
So how could we determine whether that empirical claim has any basis in fact?
It’s not an easy problem. It’s a question that Jim Manzi and I debated back at The American Scene last year. You can start following that debate with Manzi’s post here, continue here, and conclude here.
Personally, I think the case that there are positive externalities to innovation – i.e., that innovators don’t capture the full value of their innovations – makes intuitive sense, but I think it’s a mistake to assume that “sprinters” of the sort I talked about are the same as “innovators.” As I argued in my post in my debate with Manzi, the most notable skill of successful “sprinters” as a class – including both the entrepreneurs and the traders – is in the allocation of capital. Which is a very important skill – but it’s also a game that rewards intimate knowledge of the rules at least as much as it rewards excellence on the field. All of which suggests (to me) that getting the rules and the refs right matters more than getting the tax rate right.
And with that, I’m off to hear Jim Manzi speak at the Manhattan Institute.