I went to a brown bag talk at the Naval Postgraduate School yesterday and the topic was ChatGPT. The speaker, Rodrigo Nieto, gave a great, energetic talk and it was fun to watch the interaction between him and one of the members of the audience who had used ChatGPT a lot.
I had signed up with ChatGPT last month but hadn’t done much with it. So I spent a big part of the afternoon playing with it. For example, I gave it prompts to explain the harm caused by high marginal taxes, in the style of Ogden Nash, Edgar Allan Poe, and the King James Bible.
Here’s the King James Bible version:
And it came to pass that the people did cry out against the high marginal tax rates, which did burden them greatly. For the tax rates were so high that the people did lose their incentive to work and to create wealth. And the economy did suffer greatly, for the people had not the means to invest and to grow.
And the government did take a great portion of the people’s earnings, leaving them with little to sustain themselves and their families. And the rich did find ways to evade the tax, leaving the burden on the shoulders of the poor and the middle class.
And the Lord did speak, saying: “Thou shalt not burden thy people with high taxes, for they shall lose their incentive to work and to create wealth. And the economy shall suffer greatly, for there shall be no means to invest and to grow.
“And thou shalt not take a great portion of the people’s earnings, for they shall have little to sustain themselves and their families. And thou shalt not let the rich evade the tax, but shall ensure that all do bear their fair share.
“And thou shalt lower the tax rates, that the people may have the means to work and to create wealth. And the economy shall flourish, and the people shall prosper.”
And the people did listen to the Lord, and they did lower the tax rates. And the economy did flourish, and the people did prosper. And there was joy and peace in the land.
The one part that was off was this:
And the rich did find ways to evade the tax, leaving the burden on the shoulders of the poor and the middle class.
If you know anything about the progressive tax system, you know that “the rich,” which pretty much everyone understands to mean “high-income people,” bear a huge burden from high marginal tax rates. The burden is in the form of both taxes paid and deadweight loss.
Interestingly and disappointingly, but understandably, both the Ogden Nash and the Edgar Allan Poe poems had a similar thought: the idea that rich people successfully avoid taxes is widespread.
READER COMMENTS
robc
Jan 27 2023 at 10:00am
I would love to see the Ogden Nash one. Especially if its a one liner.
David Henderson
Jan 27 2023 at 5:55pm
Ask and ye shall receive. Oh, wait, that sounds like the King James Bible.
Here it is:
High marginal tax rates, they do distort, Like a funhouse mirror, they contort, They take our earnings and our wealth, Leaving us feeling poor and dealt
With high rates, we work less, it’s true, For the government takes a bigger share too, And incentives for growth and success, Are hindered by this heavy tax mess.
The rich, they find ways to avoid, Leaving the burden for the rest of us to be deployed, A system that’s unfair and unjust, Leaves us feeling like we’re being bust
But there’s a solution, it’s clear to see, Lower rates for all, so we can be free, To work hard and earn, and not be held back, By the distorting effect of a high tax tack.
So let’s call for a change, let’s be heard, Lower rates, and let the economy stir, And let’s not be held back by high tax fears, For a better future for all is what appears.
Richard W Fulmer
Jan 27 2023 at 11:39am
I don’t think that ChatGPT will replace economists tomorrow. I asked the following questions and got conflicting answers:
What are the benefits of regulations that specify means rather than goals?
ChatGPT
Regulations that specify means rather than goals can have several benefits:
Clarity and predictability: Regulations that specify means rather than goals can provide clear and specific guidance on how to comply with the regulation, making it easier for businesses and individuals to understand and comply with the regulation.
Flexibility: Regulations that specify means rather than goals can allow for more flexibility in how the regulation is implemented. This can allow businesses and individuals to find the most cost-effective and efficient way to comply with the regulation.
Innovation: Regulations that specify means rather than goals can encourage innovation by allowing businesses and individuals to find new and more efficient ways to comply with the regulation.
Better results: Regulations that specify means rather than goals can help to ensure that the intended results of the regulation are achieved by focusing on the specific actions that need to be taken to achieve the desired outcome.
Avoiding unintended consequences: Regulations that specify means rather than goals can help to avoid unintended consequences that may arise from regulations that are too prescriptive or overly focused on achieving a specific goal.
Better accountability: Regulations that specify means rather than goals can provide greater accountability for the implementation of the regulation by clearly defining the specific actions that need to be taken to comply with the regulation.
It’s important to note that regulations that specify means rather than goals are not suitable for all situations, and it’s important to consider the specific context and the intended outcome when deciding how to regulate.
What are the problems with regulations that specify means rather than goals?
ChatGPT
Regulations that specify means rather than goals can have several problems:
Lack of flexibility: Regulations that specify means rather than goals can be inflexible, as they may not take into account new technologies, changes in the market or unexpected situations. This can limit the ability of businesses and individuals to respond to changing circumstances.
Inefficiency: Regulations that specify means rather than goals can lead to inefficiency, as they may require businesses and individuals to use methods that are more costly or less effective than other available options.
Lack of accountability: Regulations that specify means rather than goals can make it difficult to hold businesses and individuals accountable for achieving the intended results of the regulation.
Stifle innovation: Regulations that specify means rather than goals can stifle innovation by limiting the ability of businesses and individuals to find new and more efficient ways to comply with the regulation.
Complexity: Regulations that specify means rather than goals can be complex and difficult to understand, making it harder for businesses and individuals to comply with them.
Lack of adaptability: Regulations that specify means rather than goals can be hard to adapt to changing circumstances and lack of information about future developments, which can make it difficult to achieve the intended results of the regulation.
It’s important to note that regulations that specify means rather than goals can be problematic, but it’s also important to consider the specific context and the intended outcome when deciding how to regulate. A balance between specifying means and goals can be the best solution.
David Henderson
Jan 27 2023 at 5:53pm
Wow, that’s a hoot! The first one is awful–literally says things that are false. The second one is not bad.
Vivian Darkbloom
Jan 27 2023 at 12:40pm
At the very least, ChatGPT should be programmed to distinguish the difference between evading and avoiding tax…
David Henderson
Jan 27 2023 at 5:48pm
Good point. I don’t know, however, if that’s how it works. Last month, 2 Hoover scholars who seemed to know what they were talking about told me that ChatGPT scrapes the internet for information. As we used to say in the 1970s, GIGO.
Vivian Darkbloom
Jan 28 2023 at 2:58am
You may be correct that ChatGPT is programmed to “scrape the internet” for information. If so, the point is shouldn’t ChatGPT be programmed to scrape the top of the barrel rather than the bottom for its information? The internet is full of potentially good *and* bad inputs. How does it, if at all, discriminate?
Richard W Fulmer
Jan 27 2023 at 6:15pm
Please explain the laws of supply and demand in the style of Dr. Seuss.
ChatGPT
The laws of supply and demand are quite fun,
Like a game of give and take, it’s begun.
When folks want something, that’s the demand,
And sellers bring it, that’s their command.
But when too many folks want it, oh my,
The price goes up, watch it fly high!
On the other hand, if no one wants it,
Sellers will lower the price, bit by bit.
Now, when sellers have too much to sell,
The supply is high and prices will dwell.
But when sellers have too little to spare,
The supply is low, prices will flare.
So, the price goes up and down, you see,
Depending on how much is wanted and how much is free.
It’s a dance of give and take, you see,
The laws of supply and demand, as fun as can be!
The rhyme is a bit strained in the fourth verse, but not bad overall.
Richard W Fulmer
Jan 27 2023 at 6:17pm
Please explain comparative advantage in the style of J. R. R. Tolkien.
ChatGPT
In the land of trade and commerce, a truth there doth abide, A principle that guides us, as we journey far and wide.
It’s called comparative advantage, and it’s worth its weight in gold, For it shows us how to prosper, in a way that’s wise and bold.
You see, each land and each nation, has its own unique skill, Some excel at farming, others, in manufacturing still.
Now, if a land produces wheat, at a lower cost than another, It has a comparative advantage, and it should trade with its brother.
For by specializing in what they do best, and trading with the rest, All will benefit and prosper, in a way that’s truly blessed.
So, let us heed this wisdom, as we trade across the land, For comparative advantage, shall guide us to the promised land.
robc
Jan 28 2023 at 10:36am
I would have been impressed if it have answered in Elvish.
Warren Platts
Jan 28 2023 at 3:05pm
Wasn’t it Warren Buffett himself who said that he paid less taxes than his secretary?
David Henderson
Jan 28 2023 at 3:57pm
Yes, it was Buffett who said he paid a lower tax rate. That’s because his income is almost all in the form of long-term capital gains. Interestingly, if I recall correctly, his solution wasn’t to tax people like his secretary less or people like him more (he didn’t want to raise the tax rate on capital gains) but to tax other high-income people more.
More to the point, since you’re commenting on my statement about high-income people, they do pay a substantially higher percent of their income in taxes than the rest of us.
vince
Jan 28 2023 at 6:13pm
That’s true until you get to taxable income over $5 million. Then the rate drops, at least according to IRS statistics of income for 2020.
For those making 2-5 million, the rate is 30.2 percent. For those above 10 million, it’s 27.6 percent. IOW, the most wealthy are basically paying the long term capital gains and qualified dividend rate and the net investment income tax.
It’s worth pointing out that returns with taxable income above $10 million are only .016 percent of all filed returns.
Richard W Fulmer
Jan 28 2023 at 4:18pm
I gave Chat GPT Thomas Sowell’s famous quote:
And it replied:
Brilliant.
Thomas Lee Hutcheson
Jan 29 2023 at 10:53pm
That high income people avoid taxes is a widespread notion becasue it is true of what most people think of as “income.” Most people think of our ex-president as “high income” even though hi average tax rate was zero for some recent years.
robc
Jan 30 2023 at 11:56am
People regularly confuse income and wealth.
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