Taxes Innovation And Economic Growth

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Zach Oberzan

Article 1- Taxes Innovation and Economic Growth

1.1) The rapid progress made over the past 250 years could well turn out to be a unique episode in human history. It is only about the United States through 2007. Also talks about the declining rate of frontier growth rate. Economic growth is due to technology advances, which he relates to the three industrial revolutions. It would be hard to have another industrial revolution because many improvements can only happen once. For example the speed of travel would be hard to increase. Innovation doesn’t have the same potential to create growth in the future as in the past. There is inevitability to subtraction from growth implied by headwinds.

1.2) I would consider a 1.7% growth rate good. Any increase is good. Before the Industrial Revolutions the growth rate was constant at 0.2% and nothing changed it. Due to an industrial revolution between the time period 1850-1929 the growth rate started at about 0.3% and increased to about 1%. Historically given those two time periods 1.7% is a lot better then both of them. The growth rate has also been decreasing slowly, so if we could keep it at 1.7% that would be great. In the article it is projected that by 2100 growth rate will be back at 0.2%

1.3) We should lower our expectations to around 1% to 2% because it seems a lot more reasonable. According to Robert Gordon the rate will just decrease because he thinks it is very unlikely to have another industrial revolution to occur, which would increase growth rate.

2.1) $80,000 x 0.2 + $1,920,000 x 0.4 = $768,000

2.2b)
1. The y intercept is the percent of average annual GDP per capita growth. When top marginal tax rate equals zero, this is the percent change in GDP. 2. The slope says when the top marginal tax rate increases so does the average annual GDP per capita growth. If the tax rate increases by 1% then the GDP would increase by about 0.17%.
3. I would expect a negative slope because I would think that the higher the top marginal tax rate would result to lower average annual GDP per capita growth.

2.3a) Measuring the patents can measure inventions, which can lead to an increase in growth rate.

2.3c)
1. The y intercept is the percentage of average annual patents growth. When top marginal tax rate is at zero, this is the percent change in patents. 2. The slope says when the top marginal tax rate increases the average annual patents will decrease. If the tax rate
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