Ideas have consequences

The NYTimes:

...about 5,000 babies, of the 70,000 or so who would otherwise be born during the first week in January, may have their arrival dates accelerated partly for tax reasons.

...

They found that people who stood to gain the most from the tax breaks were also the ones who gave birth in late December most frequently. When the gains were similar, high-income parents who, presumably, are more likely to be paying for tax advice produced more December babies than other parents.

...

Induced births and Caesarean sections are considerably more expensive than natural births on average. There are clearly cases when labor needs to be induced for a baby's health or the mother's. It's much less clear, however, that the health care system should be subsidizing parents' desire for a smaller tax bill.

The health effects of scheduled births are also murky. A big study led by a researcher at the Centers for Disease Control and Prevention found that voluntary Caesareans increase the risk of infant mortality. Another study found that weekday births are slightly more risky than weekend ones, all else equal, suggesting that a drug-induced birth can also cause health problems. The differences are small, but the stakes are big enough to take any change seriously.

I liked this article, because it clearly showed so many economic truths.

1. People respond to incentives. The most basic principle of economics. It shouldn't surprise us that people are inducing labor in order to save money.
2. Ideas have consequences. It's simple fact that when the government tries to do something, there are unintended ramifications.
3. Social engineering is complicated and should generally be avoided. "Targeted tax cuts" (Al Gore's phrase in 2000, you might recall) are rarely as clearly and cleanly targeted as they sound. They usually benefit the rich (as the article notes), who are much more likely to do tax planning. I've never seen any empirical data, but I would surmise that "tax loopholes"/"targeted tax cuts" are probably about as loaded to upper incomes as rate cuts are (the ones that Democrats deride as "tax cuts for the rich"). But of course, if you ever want to cut tax rates, then upper incomes will always save the most in gross dollar amounts. That's because the rich pay most of the income tax revenue.

Ok, the second half of part 3 was a normative opinion. The rest weren't.

I do hope that the legislature keeps incentives in mind when it considers appraisal caps. I am not confident.

Hat tip to Greg Mankiw.

Posted by Evan @ 12/20/06 01:52 PM

 
 

Previous Entry | Home | Next Entry



Comments

No comments yet

Add Comments

No flames or impolite behavior. HTML will be stripped. URLs will be transformed into hyperlinks.

 


Comments must be approved before being published.

SITE MENU

+ Rick Perry vs World
+ About Me

+ Archives

+ Email:
  perryvsworld* at *gmail dot com

DISCLAIMER

All content © Rick Perry vs. World and the respective authors.

Rick Perry vs. World is powered by Nucleus.

Site design and Nucleus customization by Kevin Whited.


ARCHIVES

+December 2014
+November 2014
+October 2014
+September 2014
+August 2014
+July 2014
+June 2014
+May 2014
+April 2014
+March 2014
+February 2014
+January 2014
+December 2013
+November 2013
+October 2013
+September 2013
+August 2013
+July 2013
+June 2013
+May 2013
+April 2013
+March 2013
+February 2013
+January 2013
+December 2012
+Online Event Registration
+November 2012
+October 2012
+September 2012
+August 2012
+July 2012
+June 2012
+May 2012
+April 2012
+March 2012
+February 2012
+January 2012
+December 2011
+November 2011
+October 2011
+September 2011
+August 2011
+July 2011
+June 2011
+May 2011
+April 2011
+March 2011
+February 2011
+January 2011
+December 2010
+November 2010
+October 2010
+September 2010
+August 2010
+July 2010
+June 2010
+May 2010
+April 2010
+March 2010
+February 2010
+January 2010
+December 2009
+November 2009
+October 2009
+September 2009
+August 2009
+July 2009
+June 2009
+May 2009
+April 2009
+March 2009
+February 2009
+January 2009
+December 2008
+November 2008
+October 2008
+September 2008
+August 2008
+July 2008
+June 2008
+May 2008
+April 2008
+March 2008
+February 2008
+January 2008
+December 2007
+November 2007
+October 2007
+September 2007
+August 2007
+July 2007
+June 2007
+ Draft Marco Rubio
+May 2007
+April 2007
+March 2007
+February 2007
+January 2007
+December 2006
+November 2006
+October 2006
+September 2006
+August 2006
+July 2006
+June 2006
+May 2006
+April 2006
+March 2006
+February 2006
+January 2006
+December 2005
+November 2005
+October 2005
+September 2005
+August 2005
+July 2005
+June 2005
+May 2005
+April 2005
+March 2005
+February 2005
+January 2005
+December 2004
+EVN
+Acton MBA
+Free online event registration
+Fix Samsung broken power button