I shared this shower musing about a year ago:
why not index tax rates to GDP growth? The government has no trouble indexing the yield on TIPS to inflation. Why not set a baseline tax rate that's operative at, say, 3% GDP growth, adjustable down in a set ratio all the way to, say, a 3% contraction, and adjustable up all the way to, say 6% annual growth? Economic velocity will determine our GAIT (Growth Adjusted Income Tax).Yesterday, contemplating the possible gridlock-induced expiration of all the Bush tax cuts (no way...), Johnson proposed:
That’s a big fiscal adjustment, to be sure. But it could well be buffered by a temporary payroll tax cut, linked to employment relative to population. As employment recovers, the payroll tax cut would fade away.Of course, he's talking about timing the exit from a temporary stimulative (or counter-contractionary) tax cut, not permanently adjustable income tax rates. But still.