While a plausible claim, I think this claim is missing some important context

Your video is great but I’d put that more harshly fwiw. Her way of arguing is not serious.

I'm trying to err on the side of not being harsh enough. I feel the medium is too prone to harshness/dunks

Fair enough

I think where we maybe(?) disagree is about magnitudes. Case for large investmt effect of cap gains rates seems overstated given the lit, as the most relevant examples (Bell et al, my colleague Danny's paper which is dividends but impact cost of capital similarly) make clear

idk but stopping random gov subsidies would stop the next Elon

The standard economic theory says that the marginal people discouraged are also the ones who create the least value. Personally I think that misses important stuff, but it is the standard implication, and consistent with the framing about Zuckerberg etc

Correct. But least value doesn’t mean no value (unless you’re imagining starting at zero tax). And it may be the benefits of the tax outweigh the costs. That all hinges on the changes in behavior

Sure, but of course from Sarin's perspective there are potential offsetting wins like lower deficits, lower labor income distortion, more egalitarian outcomes for effective consumption (which we'd also expect to be higher than measured consumption in theory)

From my perspective too. But the framing, if taking seriously, would imply its all costs and no benefits. That's only because she framed it up in such a way that you dont' see the costs, which come from those that change behavior, the marginal

It's an incomplete treatment during the course of a conversation, sure, hardly worthy of the median or even 80th percentile dunk it's receiving

In both of my responses, I think I laid out what the additional context you should have in mind (the cost side). Hardly seems like a dunk

I'll not referring to your responses, to clarify. It's more the population of responses.

You don't want to give her the benefit of the doubt that she might understand the envelope condition implied by the 2nd last sentence of your video? And is using FB as a way of conveying that 🙂 (broadly I agree with you, but quantity of patents / startups is different to value)

I'm sure she does understand the envelope condition. I'm saying that pointing to Zuckerberg isn't as informative as some viewers may believe. So here is more context I agree most of the value comes from the superstars, non-marginal, and mention one paper that makes this point.

I dunno, if pointing to Zuckerberg conveys the first order effects (which it does), then isn't that more informative? Look, I'm playing Devil's advocate here a bit. But you're a price theory guy!

It doesn't convey the first order effect on welfare. Zuckerberg doesn't change behavior. If that was the full story, there would be no downside and only the benefits of taxation. Welfare changes from the lost investments/startups/inventions, which, starting from a positive tax, are first order losses.

Even for Zuckerberg, starting Facebook may be unaffected by taxes, but *how much* to work on it may have been.

That little mic is absurd

In those studies, how much of that distortion is due to substitution? Most of the examples compared different CGT where investors may choose between investments. It may take an impossibly low discount rate to care about future CGT if it's only income effects (like federal CGT).

Tbf it was a (somewhat) flippant comment on a superstar innovator in the context of tax policy where she started with a discussion on estate taxes… I hardly think the backlash of people attacking her crediblity on partial equilibrium marginal effects is warranted…

I really like the style of your videos—clear, direct, and with solid economic explanations. Could you share a bit about your process for making them? I’m interested in how you put them together.