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Saturday, 26 December

05:00

Saturday Quiz – December 26, 2015 Bill Mitchell – billy blog

Welcome to the Special Boxing Day Billy Blog Saturday Quiz. The quiz tests whether you have been paying attention over the last seven days. See how you go with the following questions. Your results are only known to you and no records are retained.

1. A hallmark of the neo-liberal period has been the declining share of wages in national income which in part meant that economic growth became more dependent on credit to maintain growth in consumption spending. Increasing the wage share will require that real wages grow in the coming years.



2. In a stock-flow consistent macroeconomics, the sectoral balance stocks all sum to zero.

...

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Wednesday, 23 December

17:36

Bracket creep: How to get the answer you want John Quiggin

NATSEM recently released modelling showing that discretionary tax cuts have more than offset bracket creep since 2005 (that is, taxes are lower than if the income tax scales had been indexed to the CPI or a wage index). The Centre for Independent Studies replied with a study pointing out that you get the opposite conclusion by looking at the period since 2013. Why 2013?

We chose 2013 as the starting year because this is when the last change to tax thresholds occurred

Well, yes. If you pick a period in which there have been no discretionary tax cuts, you will certainly find that discretionary tax cuts have not outweighed bracket creep. As author Michael Potter observes

This shows the importance of the starting year.

There’s no need to check the CIS numbers: given the setup, only one answer is possible.

Correction Michael Potter advises that the CIS study includes the impact of the tax changes in 2012-13, making it possible in principle that these could have offset bracket creep. But the 2012-13 changes weren’t a general tax cut aimed at offsetting bracket creep. They offered small tax cuts for low income earners to offset the very modest impact of the carbon price/tax. These were clawed back by higher marginal rates so that upper income earners (appropriately) bore the full cost of the carbon price. The key point, stated below, is that the Howard-Rudd tax cuts introduced after the 2007 election were so large that they have more than cancelled out all the subsequent bracket creep.

Addressing the issue more seriously, the flattening of tax scales under the Howard-Rudd tax cuts, combined with weak growth i...

Tuesday, 22 December

21:46

Uncharted Waters for the Renminbi in 2016 The Diplomat » Pacific Money

Moves by China's central bank and the IMF have seen the renminbi enter a new era.

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