Taxation

Policy Responses to Tax Competition provides an in-depth exploration of how jurisdictions design taxes on mobile economic factors. Tax competition between jurisdictions that seek to attract businesses and residents presents both opportunities and challenges. It can foster government efficiency and...

Flood protection infrastructure investments, such as Army Corps of Engineers levees, can enhance resilience to flood risks amplified by climate change. We estimate levees benefits by exploiting repeat residential property transactions. In areas protected by levees, home values increase 3-4 percent....

The prospect for electric vehicles (EVs) as a climate change solution hinges on their widespread adoption across political lines. This paper uses county-level data to show that from 2012-2023, about half of all new EV registrations in the U.S. went to the 10% most Democratic counties. This...

This paper surveys the literature that links macroeconomics and climate change. We organize our review into three categories: (i) loss and damage, which assesses long-run economic costs and non-market impacts from climate change; (ii) mitigation and the energy transition, which evaluates the...

The Liberty Bond drives of World War I were nation-wide interventions aimed at increasing financial literacy and associating bond ownership with patriotism. Using data from the first year of the Survey of Consumer Finances, 1947, through 1971, we investigate whether exposure to the drives shaped...

We study the optimal design of corporate tax policy in a textbook life-cycle model featuring two key deviations: (i) firms are imperfectly competitive and (ii) households save by purchasing equity shares in a stock market. In this simple environment, the financial wealth of savers is equal to the...

We revisit the rationale for place-based policies using a canonical urban framework with agglomeration spillovers. We derive six main lessons. First, the spatial allocation is inefficient even when spillover elasticities are constant across regions. Second, under constant and positive spillover...

Property taxes represent the largest discretionary revenue source for local governments in the United States. Because these taxes are collected by applying a tax rate to an assessed value of a property, the effective tax rate on a property computed as a percentage of its value depends on the tax...

Budget set kinks are much studied in economics, including in the context of bunching estimators that assume individuals react to the true marginal tax rate. We document that individuals disproportionately left-bunch below kinks in the context of the Social Security Earnings Test where incentives...

We summarize recent methods to study optimal spatial policies. We center the discussion on policies that implement the optimal distribution of population in the presence of spatial spillovers, spatial transfers to optimally tackle redistribution between rich and poor regions, and optimal...

This paper proposes that the adoption of the modern U.S. mortgage (i.e., low down payment, long-term, and fixed-rate)led by the Federal Housing Administration (FHA) and Veterans Administration (VA) loan insurance programsset the stage for the mid-twentieth century U.S. baby boom by dramatically...

For a place-based policy to succeed, it must target the right areastypically those with lower economic development and resident well-being. The U.S. has two major place-based tax policies: the New Markets Tax Credit (NMTC), where government approved entities select investments, and Opportunity Zones...

By design, official budget estimates for legislative proposals generally exclude the proposals likely effects on levels of labor, capital, productivity, and other economic outcomes, as well as any feedback effects from changes in those outcomes to the federal budget. Policymakers would benefit from...

This paper shows that two features of wealth tax administration in Sweden(1) filing requirements and (2) pre-populated returnshave a large impact on compliance even in an environment with highly-developed third-party reporting through information returns. Up to 1993, all taxpayers had to fill in...

In Decarbonizing Heat: The Impact of Heat Pumps and a Time-of-Use Heat Pump Tariff on Energy Demand (NBER Working Paper 33036), researchers Louise Bernard, Andy Hackett, Robert D. Metcalfe, and Andrew Schein study the impact of heat pumps, a low-carbon alternative to gas boilers, on household energy...

How do environmental goods and policies shape spatial patterns of economic activity? How will climate change modify these impacts over the coming decades? How do agglomeration, commuting, and other spatial forces and policies affect environmental quality? We distill theoretical and empirical...

This paper characterizes the optimal taxation of top earners in a world with externalities. It takes a reduced-form approach that spans a broad class of models where top earners create externalities on the economy. The model allows for a flexible relationship between top earnings and the...

We study how government policies and corporate commitments to decarbonize interact under two externalities: environmental damages and green innovation spillovers. Unconstrained carbon taxes and innovation subsidies could achieve first-best outcomes, but when government policies face constraints,...

The Inflation Reduction Act (IRA) relied heavily on electric vehicle (EV) subsidies to advance its goal of decarbonizing the US transportation sector. In The Effects of Buy American: Electric Vehicles and the Inflation Reduction Act (NBER Working Paper 33032), Hunt Allcott, Reigner Kane, Maximilian...

In 2013, the Portuguese government offered foreign retirees relocating to Portugal a 10-year tax exemption on their foreign-source pension income, provided their country of origin had a tax treaty with Portugal. As the number of immigrant retirees grew, the amount of forgone income taxes grew,...

We survey various ethical issues related to the use of pollution pricing. While pollution pricing, for example in the form of Pigouvian taxes or cap-and-trade systems, is widely used in environmental economics modeling, many moral and ethical assumptions lie behind those models, and many ethical...

We study the optimal taxation of expenditures that generate income while also serving a consumption function. We characterize the Pareto optimal income tax deduction for such mixed-purpose expenditures within a generalized Atkinson-Stiglitz model. Pareto optimality requires a partial deduction for...

Tax benefits tied to children form a central component of the social safety net in the United States. To participate in these programs, taxpayers must claim a child on their tax return. We study the claiming of children on tax returns by drawing on health insurance information returns to establish...

This paper investigates the relationship between tax progressivity and compliance. We leverage a major progressive tax reform in a large Argentine municipality. First, we use a quasi-experimental design to estimate the causal effect of changes in a households own tax rates on its tax compliance....

Property tax revenues the largest discretionary source of revenue for local governments - adjust at a pace that is inconsistent with property values in the US. We show that this form of revenue smoothing may be rooted in the political economy of municipalities. Measures of local budget stressors...

This paper provides evidence that asset testing of social transfers substantially depresses the liquid wealth of the poor. Our setting is Denmark where the low-income elderly receive an annual payment (around $3,000) if their end-of-year liquid wealth is below a threshold (around $15,000). Using...

Approximately $76 billion in out-of-pocket medical spending was deducted as an itemized medical deduction (IMD) in 2021, resulting in about $9 billion in federal forgone tax revenue. We use data from U.S. tax returns to examine how these tax savings are distributed across income and age, how the...

A central issue in international taxation is the extent to which multinational corporations shift profits to low-tax jurisdictions. Policy analysis is obscured by difficulties in quantifying foreign earnings using existing datasets, which can be affected by measurement error. This paper sheds new...

Minimum tax rules constrain only the lowest-tax jurisdictions. Because higher minimum tax rates expand the circle of affected countries and therefore the impact of any further changes, there can be dominated regions over which no parameter values would make a minimum tax efficient. Applying a Taylor...

Many multinational firms (MNEs) pay low or no corporation tax in high-tax countries because they shift taxable income to tax havens. We incorporate nonconvex costs of profit shifting and unobserved heterogeneity in profit-shifting ability in the MNEs' value maximization problem to study responses of...

This paper examines the impact of industrial policies (IPs) on innovation in the global automobile industry. We compile the first comprehensive dataset linking global IPs with patent data related to the auto industry from 2008 to 2023. We document a major shift in policy focus: by 2022, nearly half...

Governments use short-time work (STW) schemes to subsidize job preservation during crises. We study the take-up of STW and its effects on worker outcomes and firm behavior using German administrative data from 2009 to 2021. Establishments utilizing STW tend to have higher wages, be larger, and have...

We investigate the impact of a permanent unconditional cash transfer called Citizens Basic Income in the city of Maric, Brazil. At the time of the study, the program made monthly household-level transfers of USD 180 PPP on average to about a fourth of the citys residents. The program is unique in...

The Inflation Reduction Act could deliver more than $1 trillion in tax expenditures and outlays targeting clean energy deployment, but considerable uncertainty characterizes the economic, emissions, energy, and fiscal implications of the law. I review the features of the political system governing...

We examine how the well-being of those with few resources changed, amidst economic disruption and large, transitory government transfers. We find that in the years leading up to the pandemic and in 2020, the patterns for income and consumption poverty were very similar. In 2021 and 2022, however,...

This paper provides new insights into the nature of entrepreneurship using a novel panel dataset based on U.S. administrative data from the Internal Revenue Service and the Social Security Administration. These data are used to analyze patterns of income growth and determinants of entrepreneurial...

We study electric vehicle (EV) tax credits in the US Inflation Reduction Act (IRA), the largest climate policy in US history, with three goals. First, we provide the first ex-post microeconomic welfare analysis of this central component of the IRA. Event studies around changes in eligibility for EV...

Heat pumps have been proposed as the leading technology in the electrification of domestic heat and therefore could play a crucial part in the transition to low-carbon energy systems. However, there is very little causal evidence of the impact of heat pumps on energy demand and the impact of...

Protracted periods in foster care can lead to negative long-term outcomes for children. Many states have tried to shorten foster care stays by moving children into either permanent adoptive homes or kinship care. While foster parents receive financial support for the children in their care, adoptive...

Switzerland could be considered as something of a test case for international corporate-tax policy coordination. It is a federation of 26 fiscally autonomous cantons that have been taxing corporate profits more or less independently for over a century. We document and discuss corporate taxation in...

The substantial decline in the cost of wind and solar generation over recent decades has significantly altered the energy landscape. With these technologies becoming economically viable, even without stringent decarbonization policies, the role of interregional transmission has become increasingly...

In recent years, important and headline-grabbing findings have emerged from research using individual income tax data for statistical purposes. Demand for these microdata, accessible under the tax administration authority of the Internal Revenue Code and through the IRS Statistics of Income (SOI)...

We summarize the economics of recycling municipal solid waste. OECD data suggest that aggregate recycling rates in member countries have plateaued in recent decades. United States recycling rates for some materials remain low, even after decades of learning and participation. Major new policies may...

Standard optimal capital tax theory abstracts from modeling asset prices, making it unsuitable for thinking about capital gains and wealth taxation. We study optimal redistributive taxation in an environment with asset price changes, adopting the modern finance view that asset prices fluctuate not...

We offer a child-centric framework for reparations with considerations for policy and implications for child descendants of enslaved African Americans. We apply economic theory of human capital integrated with the theories of bioecological developmental systems to illustrate the multilayered aspects...

We characterize a planner's optimal allocation of consumption and capital in an overlapping generations model with exogenous government purchases, privately-observed idiosyncratic shocks to the depreciation rate of capital, and a proportional cost of reversing investment to transform used capital to...

Research on privacy enhancing approaches for sharing data has grown significantly over the past two decades. This increased interest has led to extensive theoretical and methodological research, but the number of practical applications of privacy enhancing technologies has lagged far behind. This...