Thursday, October 04, 2012

Debate Feedback

We covered tax incidence in micro the other day. One of the examples I use is the luxury tax that congress imposed on yachts during Bush I. In that case, congress thought that they could tax the rich by taxing things rich people bought. The actual result was taxing the boat building companies out of business. I also pointed out that the luxury tax experience was the reason that President Obama's proposed tax on private jets never went anywhere.

During the debate, President Obama mentioned almost as an aside that he still thought taxing private jets was a good idea because "they can afford it." Several of my students picked up on that and wondered why the President didn't understand tax incidence.