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Discussion Paper
Tax Buyouts: Raising Government Revenues without Increasing Labor Tax Distortions
At a time of increasing fiscal pressures both here and abroad, it seems important to consider ways of raising government revenues without discouraging people from working. This post describes a revenue raising plan—a tax “buyout”—that does just that. The buyout would give you, the taxpayer, the option each year of paying a lump sum to the government in exchange for a given reduction in your marginal tax rate that year. In effect, you would use the lump sum payment to buy yourself a lower marginal tax rate, which would in turn give you more incentive to work. The buyout would be risk ...
Individuals, married couples respond differently to U.S. income tax changes
Changes in effective income taxes can impact labor supply with different outcomes for married couples and singles, and changes can have a particularly notable impact on married women.
Working Paper
What Do Survey Data Tell Us about US Businesses?
This paper examines the reliability of survey data on business incomes, valuations, and rates of return, which are key inputs for studies of wealth inequality and entrepreneurial choice. We compare survey responses of business owners with available data from administrative tax records, brokered private business sales, and publicly traded company filings and document problems due to nonrepresentative samples and measurement errors across several surveys, subsamples, and years. We find that the discrepancies are economically relevant for the statistics of interest. We investigate reasons for ...
Journal Article
A Taxing Question for the Fed
The Fed has long emphasized uncertainty in assessing the economic effects of tax cuts. Both history and theory might help explain why
Working Paper
Tax Progressivity, Economic Booms, and Trickle-Up Economics
We propose a method to decompose changes in the tax structure into orthogonal components measuring the level and progressivity of taxes. Similar to tax shocks found in the existing empirical literature, the level shock is contractionary. The tax progressivity shock is expansionary: Increasing tax progressivity raises (lowers) disposable income at the bottom (top) end of the income distribution by shifting the tax burden from the bottom to the top. If agents' marginal propensity to consume falls with income, the rise in consumption at the bottom more than compensates for the decline in ...
Journal Article
Interview: Alan Auerbach
Alan Auerbach enrolled in college at Yale planning to focus on math and science. But in his second year, he figured he should sign up for a course in something else for the sake of the school's distribution requirements. So he tried introductory economics without having a clear idea of what economics was — and discovered he enjoyed it.
The Impact of Tax Differences on Intrafirm Patent Transactions
An analysis of global patent transfers found that international tax differences impact patent transactions between parent companies and foreign subsidiaries.
Journal Article
Recent and Near-Term Fiscal Policy: Headwind or Tailwind?
The federal government routinely uses government spending and taxes to help offset the highs and lows of the U.S. business cycle. While government spending typically increases during a recession, the magnitude of the fiscal expansion during the pandemic recession was outsized compared with the average historical pattern. This likely contributed to real economic growth and possibly inflation during the recovery. Over the next few years, U.S. fiscal policy is expected to be roughly neutral, providing neither a tailwind nor headwind to the overall economy.
Could More Progressive Taxes Increase Income Inequality?
One paper posits that making taxes more progressive could boost lower-income households initially, but more money would eventually float to those with higher incomes.
Unpacking Discrepancies in American and Irish Royalty Reporting
Ireland’s elimination of a controversial tax avoidance strategy appears to be driving a recent increase in royalty payments from Ireland to the U.S.