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Topic subjectRE: You: There is no economic model relating taxes and investment...
Topic URLhttp://board.okayplayer.com/okp.php?az=show_topic&forum=4&topic_id=13354908&mesg_id=13355311
13355311, RE: You: There is no economic model relating taxes and investment...
Posted by PimpTrickGangstaClik, Fri Nov-08-19 02:44 PM
>Doing a bunch of Finance equations about a single investor
>and a single investment and a made up tax rate is not an
>Economic model, it's just Accounting.

lol. What I did was a very, very, basic economic model of investment under uncertainty that went against your claim that taxes aren't related to investment.
Didn't realize you wanted a "real" model.
People have already done that

Tax Policy and Investment Behavior
http://piketty.pse.ens.fr/files/HallJorgenson67.pdf
"Our basic conclusion is that tax policy is highly effective in changing the level and timing of investment expenditure"

And empirical evidence:
The Effect of Corporate Taxes on Investment and Entrepreneurship
https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1091238
"We present cross-country evidence that effective corporate tax rates have a large and significant adverse effect on corporate investment and entrepreneurship."


The Effect of Corporate Taxation on Investment and Financial Policy: Evidence from the DPAD
https://www.aeaweb.org/articles?id=10.1257/pol.20150378
A 1 percentage point reduction in the effective corporate income tax rate via the DPAD increases investment by 4.7 percent of installed capital


>Throwing out the term
>Basic Economics like it proves anything at all relevant to
>this debate when you don't even know what Basic Economics is
>is problematic. They don't even start throwing Taxes in to
>economic models at any basic level of learning it, because it
>is entirely to do with assumptions, and introducing taxes
>requires the introduction of a whole bunch of other
>complicated shit.

We talk about taxes in Introductory Micro and Macroeconomics. It is basic economics.



But like your example, and like your quotes
>from that article, you find it nice and easy to leave out the
>stuff that's hard or negates your point. Like the fact that
>most investment in anything innovative/risky is done by those
>with a wealth level under the mark where this tax will take
>affect.

Could be true. Entrepreneurs tend to be younger and are not initially super wealthy. So a case could be made that taxes won't affect innovative activity. But it could also be the case that funding for innovation comes from investment within corporations (think of medical innovation), venture capitalists (think Silicon Valley).
Again to my main point, this is something that needs to be thoroughly thought through.



Or pretending that losses don't provide any taxable
>benefit to these people claimed against their income. And not
>realizing that in your example, the risk associated with that
>investment does not actually change regardless of what level
>of tax you introduce, especially relative to all other
>investments, which has to be considered to anyone who actually
>knows anything about Economics as a broadly generalized
>attempt to model "everything" not just one flip of a coin,
>which is way too specific to be called economics.

No clue what you're talking about here. Risk stayed constant to illustrate the effect of changing on thing: taxes.
Again, my example was just to simply illustrate that taxes can affect investment. Of course I'm not going to spend months on a formal model for OKP. It has already been shown before with many other "real" models.