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Article Artículo

Can We Cut the Crap on the Debt from the Tax Bill Hurting Our Kids?

The Republican tax bill is an abomination. It gives hundreds of billions of dollars in tax breaks over the next decade to the country's richest people. The Trump family alone stands to pocket more than $1 billion from the reduction in the estate tax and other provisions in the bill.

Furthermore, instead of making the tax code simpler, it creates all sorts of new gaming opportunities. Corporations will have enormous incentive to have their profits show up in tax havens, where they will be able to escape U.S. taxation altogether.

The new rules on pass-through businesses means that anyone is a complete schmuck if they don't arrange a 23 percent tax deduction by having their pay come through their own pass-through. And the repeal of the Johnson Amendment means that rich people will now be able to get taxpayers to subsidize their unlimited campaign contributions by donating to the Church of Republican Politicians.

But one argument repeatedly made by opponents of the bill — that it imposes some huge burden on children — is just painful to see. What do these people think they are saying when they make this assertion?

CEPR / December 02, 2017

Article Artículo

Taking Issue with Dani Rodrik: Trade Deficits are Different with Secular Stagnation (see Addendum)

I am a big fan of Dani Rodrik's writings on trade, and I agree with most of what he says in his NYT column today, but I do have one major disagreement. However, before going there let me emphasize some of the key points he makes in the piece.

First, Rodrik is very much on the mark in arguing that recent trade deals, like the Trans-Pacific Partnership, have very little to do with free trade. As he says, these deals are about imposing a corporate-friendly structure of regulations on both our trading partners and the U.S. (The deals have the effect of locking in laws that could otherwise be more easily altered.)

He also is right in singling out the pharmaceutical industry as the biggest villain in this story. We have been using these trade deals to ensure ever longer and stronger patents and related protections. The result is to make drugs, which would otherwise be cheap, extremely expensive. The price of drugs can be a serious burden even in rich countries, but patent protection can make life-saving drugs altogether unaffordable in developing countries. We should be looking to foster alternative, more efficient, mechanisms for financing research, not using trade deals to impose patent monopolies everywhere.

It's worth mentioning in this context the effort to impose rules on digital commerce in these trade deals. Folks following the scandals related to Facebook and Twitter's involvement in the presidential election know that we don't really have the rules down ourselves. In other words, we do not have a system in place that prevents both foreign and domestic actors from using dishonest means to influence public opinion and interfere with the democratic process. We also don't have effective systems in place to ensure the privacy of our personal data. These are really big issues that are probably worth getting sorted out before we try to shove a one-size-fits-all model on the rest of the world. 

CEPR / November 28, 2017