Paul Krugman is about the only person who can get me to understand macro-economics. If that’s what it’s called nowadays. You know, gigantic-scale things involving gigantic amounts of money.
Today he takes on the new Biden tax proposal and a lot more in “Biden, Yellen and the War on Leprechauns: Bribing corporations with low taxes isn’t the way to create jobs.”
Given the leprechaun reference, you’ll understand he’s talking about how corporations have established branch headquarters in Ireland where corporate taxes are very low. And, of course, he brings in the Trump tax cut bill.
Here are the two paragraphs that thoroughly knocked me out. Pay special attention to the last paragraph and the last sentence. But read the whole essay; it’s totally different from other economic analyses. Krugman is so brilliant and so affable. It’s an enchanting combination of qualities.
That is, the [Trump] tax cut’s architects insisted that corporations had been moving operations abroad to avoid U.S. taxes, and that slashing those taxes would bring millions of jobs back home.
It didn’t happen. In fact, the tax cut had no visible effect on business investment, probably because it was addressing a fake problem. U.S. corporations hadn’t been moving jobs overseas to avoid taxes; they had just been avoiding taxes.