Over at the Washington Post’s Wonkblog, Jim Tankersley presents a detailed description of Hillary Clinton’s economic plan. Here’s the meat of it:
Her plan includes spending more than $1 trillion to rebuild U.S. infrastructure, allow students to attend college without incurring debt and help working families afford day care for their children and take paid leave to raise them. She thinks such spending would create jobs and accelerate economic growth, help low- and middle-income students gain skills that are increasingly necessary for high-wage work, and reverse a recent trend of women leaving the U.S. workforce.
She would raise taxes on the highest earners and impose a new minimum effective tax rate for them, to pay for those programs and to curb inequality. She would add to the Obama administration’s wave of new regulations on Wall Street. And she would change the tax code to discourage companies from moving operations overseas, while encouraging them to share profits with workers and invest more in long-term opportunities.
Basically, I can’t determine whether that plan would help, hurt, or not do very much at all. Infrastructure projects selected based on return on investment could help a little; projects selected based on political clout could hurt a little. There’s no way to distinguish between the two of them in the abstract.
Similarly with education. Another million actuaries might help a little; another million art majors are unlikely to.
Will increasing the marginal personal income tax rates on the highest income earners realize additional revenue? Or reduce income inequality? Historically, there’s been very little relationship between the highest marginal income tax rate and the amount of revenue realized. The tax code is a lot more complicated than that.
There’s more than one way to “share profits”. Why have workers (particularly unionized workers) tended not to invest in the companies they work for? If they had, they might be sharing those companies’ profits. Why has executive compensation grown so explosively over the last 25 years? I think it’s because of Clinton era tax reforms. It certainly coincides with them.
To my eye most of the plan consists of articles of faith, calling for professions of faith rather than analysis. There are much more straightforward and efficient ways of addressing the ills the planks of the plan are purportedly intended to address. A Pigouvian tax levied on beneficiaries of managed trade agreements with the proceeds distributed to those hurt by the agreements would remediate the harm. Giving money to the poor would do more to promote income equality than taxing the rich. The greatest single thing we could do to help the working poor would be to reduce or eliminate the payroll tax. And so on.
Unfortunately, none of those will ever be proposed by the leadership of either political party. They don’t fall within the tenets of their faiths. They’re heresy.
