CPPC: Senator Amy Klobuchar: Drug Price Bills Will Likely Advance As Amendments to Larger Bills

Posted on by Brad DeLong

Should-Read: CPPC: Senator Amy Klobuchar: Drug Price Bills Will Likely Advance As Amendments to Larger Bills | CPPC | Home: “Senator Klobuchar began with… 1 out of 4 Americans have either cut their prescription drugs in half…

…skipped taking medications, or otherwise avoided the prescriptions they need because of drug costs. This crisis is systemic—Martin Shkreli is… just the tip of the iceberg. Privately, she told us, many Republican members of Congress are worried about drug prices and saying that something has to be done. She came prepared with a ready list of solutions… CREATES Act… [to] end regulatory abuses and promote access to generic drugs, an end to pay-for-delay (in which brand-name companies pay their generic rivals not to bring lower-cost alternative drugs to market), two bills that would allow Medicare Part D to negotiate lower drug prices, and a bill with Senator John McCain that would allow importation of cheaper drugs from other countries. Republican Senator Chuck Grassley of Iowa supports the CREATES Act and believes that it will pass; the challenge is to get the bill out of committee…. Klobuchar suggested that these bills will most likely advance as amendments to other, larger health care bills, and urged the attendees at the forum to keep advocating for reform…

Gary Cox: Should Read: Political Institutions, Economic Liberty, and the Great Divergence

Posted on by Brad DeLong

Gary Cox: Should-Read: Political Institutions, Economic Liberty, and the Great Divergence: “Max Weber proposed that politically autonomous cities were ‘critical to Europe’s economic rise…

…because [they] allowed for the provision of secure property rights free from the ambitions of princely rulers (Stasavage 2014, p. 337).

Other institutionalists have argued that parliaments were key to Europe’s rise, because they too protected property rights against grasping monarchs (North and Weingast 1989; De Long and Shleifer 1993; Acemoglu et al. 2005). Skeptics have countered that both town councils and national parliaments were prone to capture by rent-extracting special interests, thereby impeding development (Epstein 2000; Volckart 2002; Stasavage 2014; Ogilvie and Carus 2014).

Another explanation holds that Europe’s persistent political fragmentation drove the continent’s divergence, by increasing merchants’ exit options and forcing rulers to compete (Baechler 1975; Landes 1999; Jones 2003; Vaubel 2008). Skeptics have countered that fragmentation also fostered over-taxation, free riding, and endemic warfare, all bad for development (Rosenthal 1992; Epstein 2000; Rosenthal and Wong 2011).

In this article, I argue that Europe’s political fragmentation interacted with her institutional innovations to foster substantial areas of “economic liberty,” where European merchants could organize production freer of central regulation, faced fewer central restrictions on their shipping and pricing decisions, and paid lower tariffs and tolls than their counterparts elsewhere in Eurasia. When fragmentation afforded merchants multiple politically independent routes on which to ship their goods, European rulers refrained from imposing onerous regulations and levying arbitrary tolls, lest they lose mercantile traffic to competing realms. Fragmented control of trade routes magnified the spillover effects of political reforms. If parliament curbed arbitrary regulations and tolls in one realm, then neighboring rulers might have to respond in kind, even if they themselves remained without a parliament.

Greater economic liberty, fostered by the interaction of fragmentation and reform, unleashed faster and more inter-connected urban growth. To document this, I examine patterns of urban growth over the period 600–1800 ce in five major Eurasian regions: Western Europe, Eastern Europe, the Islamic World, East Asia, and South Asia….”

In conversation with Kimberly Clausing

Posted on by Emilie Openchowski

“Equitable Growth in Conversation” is a recurring series where we talk with economists and other social scientists to help us better understand whether and how economic inequality affects economic growth and stability.

In this installment, Equitable Growth’s Executive Director and Chief Economist Heather Boushey talks with Kimberly A. Clausing, the Thormund A. Miller and Walter Mintz Professor of Economics at Reed College. They discuss tax reform, changes to the corporate income tax, and who gains when taxes on capital are cut.

[Editor’s note: This conversation took place on Monday, September 25, 2017.]

Heather Boushey: Hi, Kim. Welcome! This is so great to have you here today.

Kimberly Clausing: I’m happy to be here.

Boushey: I’m going to get right into it. The White House recently released some more guidance [previews of the Administration’s Unified Framework] on its tax plans but not really anything specific. The ball is now with Congress, so I’m going to try and keep this conversation at a high level.

Often here in Washington, D.C., when the economic policymaking community talks about taxes, it’ll say that the federal government needs to change the tax rate and broaden the base, increasing the amount of income that is taxed. So, when it comes to the corporate tax, what in your view actually needs to be fixed? Is it the tax rate or is it the base?

Clausing: I think the tax rate is important for some companies, but companies in the United States pay a lot of different tax rates, and for some of them, effective tax rates are very low. For the big multinational companies, the federal statutory rate [of 35 percent] bears little resemblance to what they’re actually paying. And many of those big companies have even gone on the record in saying that they don’t care primarily about the statutory tax rate; they care more about other things. But many smaller companies that pay closer to the statutory rate do care a lot about the rate.

One of the really interesting features of our business landscape today is that there’s a lot of concentration of activity and profit at the very top of business ladder, just like there’s a concentration of income at the very top of our income distribution. If you look at the top 1 percent of corporate returns, big corporations account for the vast majority of all the profit, more than 90 percent. And those firms are disproportionally multinational, and they’re disproportionately likely to have profits derived from intangibles assets. And these companies are able to reduce their tax burdens in part by shifting income out of the United States toward other countries. And my work suggests such profit shifting is presently costing the U.S. government more than $100 billion each year in lost tax revenue.

So, I think good corporate-tax reform could both lower the tax rate and increase the tax base, and that would please economists and policy wonks. But it’s not clear that the corporate community is driven by both of those objectives.

Boushey: Tell me a little bit more of why so many of those firms at the top of distribution do not pay the statutory rate.

Clausing: Some of the base narrowing comes from simple things such as the research and experimentation tax credit, the production activities deduction, and other various provisions that lower the tax rate. But the biggest driver is international profit shifting.

Companies such as General Electric Co., for instance, have used the rules of our tax system to move income that really should be in the U.S. tax base to other jurisdictions—often in tax-havens. As a consequence, their effective tax rates are often in the single-digits. In General Electric’s case, its effective rate is nearly zero over the past decade or so here in the United States. Yet the company is still earning billions of dollars over that period throughout the world. It’s just that most of the income is being artificially moved offshore. And so, when you look at its taxes paid on U.S. income, it’s quite low.

Boushey: As we broaden the base, are there ways to do this so that we get around that problem?

Clausing: Yes. There are a couple of things that policymakers could do. For instance, one of the largest tax expenditures in the business area is deferral, which is this idea that you don’t have to pay U.S. tax on your foreign income until it’s repatriated. The companies that benefit from this want to remove that repatriation tax entirely and create a super-highway of tax avoidance where there’s no speed limit and you can simply shift profits to the islands [tax havens such as the Cayman Islands or Bermuda] and never worry about the U.S. government taxing it.

But a more effective way to proceed would be to still tax that income. We can combine taxation of foreign income with a lower rate (and a tax credit for foreign taxes paid), but we’ll actually collect the tax due at that lower rate. On a revenue-neutral basis, policymakers could probably lower the corporate tax rate to about 25 or 26 percent, get rid of deferral, and end up with the same amount of revenue. Basically, what would happen is that tax revenue would go up for the multinational firms that are shifting their income out of the U.S. tax base, and tax revenue would fall for domestic companies that aren’t using these techniques, and those two effects would cancel out.

Now, that approach is extremely unpopular with the multinational business community. One option short of that idea, but still moving in that direction, would be a per-country minimum tax, where you basically limit U.S. taxation of foreign income to countries with very low tax rates. So, if a multinational firm earns income in a tax-haven jurisdiction such as Switzerland or Luxembourg, then the United States applies a minimum tax as the income is earned. If these big firms’ profits haven’t been taxed substantially abroad, then the U.S. federal government reserves the right to tax it at some other rate.

The Obama administration championed this sort of per-country minimum tax regime, suggesting a minimum tax rate of 19 percent, but it wasn’t very popular with the business community. From its perspective, whatever tax rate is chosen for the minimum tax, it will still be a lot higher than zero. So, there are going to be political problems getting that idea through Congress. Still, it is a promising approach.

Boushey: Walk us through this kind of international profit shifting. What’s the scale? Is this the biggest problem we need to solve? Are there other problems that are just as big or is this one above and beyond any other?

Clausing: I think that this is the biggest tax base problem on the corporate side. My estimates suggest this costs the U.S. government about $100 billion a year, which is pretty big.

Boushey: You could invest in a lot of infrastructure with that.

Clausing: Yes, and there are other ways that our corporate tax base has eroded. Look at the interest deductibility provisions, for instance. Those imply that many companies actually face a negative corporate tax rate on debt financed investments, which also lowers tax revenues in the business sector. Also, there is the lost tax revenue from pass-through income, which also is calculated to cost about $100 billion from the domestic side of business income. There’s a nice study by eight economists, five from the U.S. Treasury Department, that shows that the average tax rate paid by pass-throughs is 19 percent, which is far lower than the statutory corporate rate.

Boushey: One of the arguments that you hear time and time again for why Congress needs to reduce the corporate tax rate is that doing so will boost investment in overall economic growth. Tell us a little bit about how strongly investment would react to a reduction in the tax rate at the corporate side?

Clausing: On the corporate side, there are a couple of considerations to keep in mind. One is that the distribution of corporate income within the tax base is highly skewed, with about three-quarters of it due to excess profits or rents. What are excess profits or rents? Well, there’s a normal return of capital, which enables a company to pay the interest costs or the equity costs of raising capital, but any income earned above that normal return is an excess profit.

For those firms that have a lot of excess profits—the Googles and Apples and General Electrics of the world—they are earning more than we normally expect for business activity. It’s not clear that giving them a windfall is going to lead to new investments. They already have more than enough after-tax profits from which to make investments.

If policymakers believe more after-tax profits are the way to suddenly spur investment, we might ask why it hasn’t already happened, since these kinds of firms are sitting on piles of cash. It’s unclear that giving them a bigger pile of cash is going to spur investment. We need companies to have desirable investments. And often what’s stopping them is not the absence of funds, but the absence of viable investments they want to make. If policymakers really think after-tax profits are what’s needed to drive investment, then we should already be in an investment nirvana, since lately we’ve had much higher profits than we’ve ever had in the past 50 years of our history.

Boushey: And yet our investment rate is quite low right now.

Clausing: Right. That’s why I don’t think after-tax profits are the answer.

Boushey: When talking to business owners, there is a wide range of things that drive their investment decisions—everything from consumer demand or where they sit in the supply chain or the quality of infrastructure around them that makes it possible to leverage their investment. Is there anything that you want to add to that list?

Clausing: When you get into tax reform debates, the business community acts as if tax is the only thing that drives its competitiveness, whereas investment decisions and competitiveness are really driven by a lot of other factors. Infrastructure, the education of the workforce, the health of the middle class—these are all crucial things for business success and competitive businesses. And, from a policy perspective, it is likely more important to focus on these factors than on making after-tax profits that are already historically high even higher. And funding education and infrastructure requires government revenue.

So, at a minimum, policymakers should pursue revenue-neutral reform, but there’s actually a case for revenue-gaining reform right now. If you look in the next decade, we are going to have 2 percentage points of GDP in additional deficits because of our commitments to the baby boomer generation’s Medicare and Social Security benefits. Also, to expand business investment opportunities, the federal government needs to make investments in infrastructure and education and in a healthy middle class.

Also, right now the U.S. economy is amid a historically long expansion, which means we’re due for a recession before long. That in itself will drive up deficits, so this seems like a particularly poor time to reduce the revenue stream for all those reasons.

Boushey: If a tax reduction in the statutory rate isn’t going to do much to boost investment, explain to us how it will actually boost the wage of the workers. President Trump and the Republican leaders in Congress claim that tax reform will boost the middle class.

Clausing: They are relying on this idea that corporate tax cuts raise investments, which raise worker productivity, and then higher worker productivity translates into higher wages. You’ll notice several things have to happen for corporate tax cuts to cause a wage increase, and each step entails some faith and some luck.

Start with the fact that the corporate tax base is mostly excess profits, so we’re not sure that extra profits are going to stir extra investment. But even if it did serve to boost investment, that would still have to translate into a wage increase for workers. The evidence on this point is pretty thin on the ground. There is some evidence from Europe that if companies with excess profits receive tax cuts, they’ll share those with their workers, but that’s not the same as causing a wage increase for workers as a whole. If policymakers give Google a big tax cut and Google employees get paid more, that’s nice for the Google employees but it’s not necessarily helping the workers in the economy as a whole.

And we have so many easier ways to help workers directly that it seems odd to rely on such an indirect mechanism. Extending the earned income tax credit is a great way to target the employment and wages at the bottom of the income distribution. Or how about giving the middle class a tax cut by lopping a couple of percentage points off the payroll tax? All of those would go straight to the workers. We have mechanisms in place already that target workers directly, so it seems odd to rely on this very indirect mechanism.

Boushey: So, it doesn’t seem like lowering the statutory tax rate is actually going to spur the kinds of investments that are going to get us to that point where productivity gains translate into higher wages for workers.

Clausing: There are better ways to target worker productivity structured around R&D investments, infrastructure investments, and education investments.

Boushey: My last questions. What’s a piece of research on this topic that doesn’t exist today that you would like to see, and what’s the question on business taxation you really wish we had more evidence on?

Clausing: I’d like to see a lot more research on the excess profits question. How important are excess profits in the modern picture of business activity? A lot of anecodotal data suggests this is a very important issue in today’s global economy, but I don’t think we have a clear picture of just how important.

I also think that there’s some promise in getting a better picture of profit-shifting behavior if we get access to better data on these questions. One of the things that the OECD [Organisation for Economic Co-operation and Development] and the G-20 [Group of Twenty] has worked on is a “Base Erosion and Profit Shfiting” initiative. And one of their items for action is to improve the public access to data on profit shifting. For example, if there were more researcher access to tax data of multinational company earnings, we could get closer to figuring out what’s happening inside the multinational firms.

Also, another one of the recommendations of that OECD group is for country by country reporting, where firms would have to tell each country government where they are earning off their profits. And just by shedding light on what’s going on, this helps curtail some of the profit-shifting activities. And if we made that reporting public as well, it shines a light on the activities of the company. The companies themselves don’t want it—they make the argument that this will basically give away some of their business secrets. But you have to ask, why is how much income you’re booking in the Caymans a business secret? Isn’t that itself a problem?

And if you are really too embarrassed to admit to the public that 90 percent of the company’s income is being booked on an island, then don’t do that in the first place. So, I think there are ways to use corporate social responsibility motives and transparency. More information will help harness the power of consumers and workers and shareholders so that we can better allocate our purchasing and investment and employment decisions. So, I think that would be a minor step forward.

Boushey: To clarify something: So, all that money that’s sitting on those islands—is it literally just sitting there? Or is it being loaned out and invested in boosting economic capacity somewhere?

Clausing: It is being invested—in fact if you look at the data, about 50 percent of it is back in U.S. financial markets—so, you’re certainly allowed to make types of investments with this money. You’re not allowed to return it to your shareholders as dividends or share repurchases, but you can invest it in a financial institution, and that often makes the funds available to U.S. capital markets.

This repatriation issue is an important one because we are distorting repatriation decisions by having this repatriation tax. But I don’t think we’re dramatically changing the investments found in the United States. The companies that have profits abroad can borrow against them to finance any desired investment. And some of the money isn’t really truly abroad—it’s invested in U.S. assets. To the extent that U.S. investment opportunities are high, we will draw more of the capital into the United States regardless.

Boushey: Interesting.

Clausing: But there are still good reasons to get rid of that distortion—I think either ending deferral or the per-country minimum tax would be an important move in that direction. Of course, the territorial system gets rid of this distortion too, but then you run the risk of exacerbating our large profit-shifting problem unless you’re serious about base protection.

Boushey: I think we’re probably out of time. Thank you so much, Kim.

Clausing: You’re welcome. It was a pleasure talking with you.

Must-Read: Raymond Fisman, Keith Gladston, Ilyana Kuziemko, and Suresh Naidu: Do Americans want to tax capital? Evidence from online surveys

Posted on by Brad DeLong

Must-Read: Raymond Fisman, Keith Gladston, Ilyana Kuziemko, and Suresh Naidu: Do Americans want to tax capital? Evidence from online surveys: “We provide, to our knowledge, the first investigation of individuals’ preferences over jointly taxing income and wealth…

…via a survey on Amazon’s Mechanical Turk. We provide subjects with a set of hypothetical individuals’ incomes and wealth and elicit subjects’ preferred (absolute) tax bill for these individuals. Our method allows us to unobtrusively map both income earned and accumulated wealth into desired tax levels.

Our regression results yield roughly linear desired tax rates on income of about 14 percent. Respondents’ suggested tax rates indicate positive desired wealth taxation. When we distinguish between sources of wealth we found that, in line with recent theoretical arguments, subjects’ implied tax rate on wealth is three percent when the source of wealth is inheritance, far higher than the 0.8 percent rate when wealth is from savings. We show these tax rates are consistent with reasonable parameterizations of recent theoretical optimal wealth tax formulae.

Should-Read: Simon Wren-Lewis: The lesson monetary policy needs to learn

Posted on by Brad DeLong

Should-Read: Simon Wren-Lewis: The lesson monetary policy needs to learn: “The main problem with monetary policy…

…In 2009, when central banks would have liked to stimulate further but felt that interest rates were at their lower bound, they should have issued a statement that went something like this:

We have lost our main instrument for controlling the economy. There are other instruments we could use, but their impact is largely unknown, so they are completely unreliable. There is a much superior way of stimulating the economy in this situation, and that is fiscal policy, but of course it remains the government’s prerogative whether it wishes to use that instrument. Until we think the economy has recovered sufficiently to raise interest rates, the economy is no longer under our control.

I am not suggesting QE did not have a significant positive…. But its use allowed governments to imagine that ending the recession was not their responsibility, and that what I call the Consensus Assignment was still working. It was not: QE was one of the most unreliable policy instruments imaginable.

The criticism that this would involve the central bank exceeding its remit and telling politicians what to do is misplaced. Members of the ECB spent much of the time telling politicians the opposite, Mervyn King did the same in a more discreet way, while Ben Bernanke eventually said in essence something milder than the above….

A better criticism is that a statement of that kind would not have made any difference…. But this is about the future, and who knows what the political circumstances will be then. It is important that governments acknowledge that the Consensus Assignment no longer works if central banks believe there is a lower bound for interest rates, and this has to start by central banks admitting this. Economists like Paul Krugman, Brad DeLong and myself have been saying these things for so long and so often, but I think central banks still have problems fully accepting what this means for them.

Must-Read: Martin Sandbu: Bolder rethinking needed on macroeconomic policy

Posted on by Brad DeLong

Must-Read: The extremely thoughtful Martin Sandbu writes:

Martin Sandbu: Bolder rethinking needed on macroeconomic policy: “Top economists need to dig deeper after policy failures of past decade…

…Peterson Institute conference on “Rethinking Macroeconomic Policy”… I recommend everyone to take a look — but with a disappointment spoiler up front. For while some of the world’s most brilliant economists took part, which alone makes it worth a view, the promised “rethinking” was often more incremental (even marginal) than radical. The opening paper and presentation by Olivier Blanchard and Larry Summers is a tour de force in terms of stating where the debate stands today in a range of key policy areas. They were followed by former Federal Reserve chair Ben Bernanke, who headlined the panel on monetary policy….

Western economies are far from where central bankers thought they would have been by now, still either below capacity or not convincingly at full capacity. Worse yet, they do not understand why. In this context, one might have hoped for some deep soul-searching in a conference of this calibre. In terms of concrete “deliverables”, there were few new proposals for how to do monetary policy differently. The main contribution was Bernanke’s discussion of complementing the current framework of targeting inflation rates by targeting price levels. Targeting levels rather than rates of change has the advantage of built-in “memory”: in a situation where prices have fallen short of expectations….

Most profoundly, there was little sense of urgency that more radical rethinking was needed. Adam Posen, who convened the conference, was one of few who made a point out of this. He suggested that it was both ahistorical to think of asset purchases by central banks as unconventional (which implies that central bank action has been less innovative since the financial crisis than central bankers like to claim) and that more radical policy change was needed…. When Blanchard asked panellists whether, if conditions are “back to normal” 10 years from now, they thought central banks would think any differently about monetary policy, the shared expectation seemed to be that a normalisation of the economy would and should lead to a normalisation of policy thinking too, but with a preparedness for a possible return to abnormal situations. That view is oddly forgetful of recent history….

Expecting future monetary policy to be largely as before, with some newly exploited crisis tools in the toolbox, rather takes as given that monetary policy has performed close to the best it could have done both before and after the crisis. That is, if nothing else, a self-flattering view for monetary policymakers to take. But it is not very reassuring. For central bankers, as for everyone else, admitting one has got things badly wrong is a prerequisite for doing better.

Should-Read: Darrick Hamilton: Post-racial rhetoric, racial health disparities, and health disparity consequences of stigma, stress, and racism

Posted on by Brad DeLong

Should-Read: Darrick Hamilton: Post-racial rhetoric, racial health disparities, and health disparity consequences of stigma, stress, and racism: “High achieving black Americans… still exhibit large health disparities…

…We discuss how the post-racial, politics of personal responsibility and “neoliberal paternalism” troupes discourage a public responsibility for the conditions of the poor and black Americans, and, instead, encourage punitive measures to “manage…surplus populations” of the poor and black Americans. We introduce an alternative frame and integrate it with John Henryism as a link to better understand the paradox above…

Should-Read: Larry Summers: Hassett’s flawed analysis of the Trump tax plan

Posted on by Brad DeLong

Should-Read: Larry Summers has had it with Kevin Hassett. Me? I am not surprised that Kevin has taken this road. But, then, I read Dow 36000 20 years ago. I am surprised that people are surprised:

Larry Summers: Hassett’s flawed analysis of the Trump tax plan: “Kevin Hassett… accuses me of an ad-hominem attack…

…I am proudly guilty of asserting that it is some combination of dishonest, incompetent and absurd. TV does not provide space to spell out the reasons why, so I am happy to provide them here.

I believe strongly in civility in public policy debates, and before the Trump administration do not believe I have ever used words like dishonest in disagreeing with the policy analyses of other economists. Part of my rationale for speaking so strongly here is that Mr Hassett called into question the integrity of the Tax Policy Center, a group staffed by highly respected former civil servants, by calling their work “scientifically indefensible” and “fiction”…. Hassett throws around the terms scientific and peer reviewed, yet there is no peer-reviewed support for his central claim that cutting the corporate tax rate from 35 per cent to 20 per cent would raise wages by $4,000 per worker….

Hassett’s “conservative” claim that the cut will raise wages by $4,000 in an economy with 150m workers is a claim that workers will benefit by $600bn or 300 per cent of the tax cut. To my knowledge, such a claim is unprecedented in analyses of tax incidence. Mr Hassett, though, doubles down by holding out the further possibility that wages might rise by $9,000….

Regressions of wage growth on tax rates cannot be understood as causal without a theory of the level of tax rates…. The observation that low tax rates coincide with significant growth in eastern Europe is of dubious relevance to the US…. If a PhD student submitted the CEA analysis as a term paper in public finance, I would be hard pressed to give it a passing grade. I predict that as debates on tax policy unfold there will be many serious Republican economists who endorse parts of the Trump plan. I doubt that any will associate themselves with the CEA analysis. If Mr Hassett wishes to preserve the CEA’s reputation and his own, next time he will not attack honest analysts and will himself be much more careful.

Do Americans think we should tax wealth?

Posted on by Emilie Openchowski
The exterior of the Internal Revenue Service, or IRS, building in Washington.

The United States relies heavily on property taxes to finance state and local government spending, but unlike five other OECD nations, it has no recurring tax on total wealth, which would include not only property but also other financial and nonfinancial assets. Yet recent scholarly work has highlighted the high and increasing level of wealth inequality in the United States, which a wealth tax may help ameliorate. By one estimate, 22 percent of American wealth was held by the top 0.1 percent of owners in 2012.

So, how do Americans feel about taxing wealth? Recent research by Raymond Fisman, Keith Gladstone, Ilyana Kuziemko, and Suresh Naidu tackles this question by surveying individuals about their preferences for taxing income and wealth.

The authors estimate what a tax-rate schedule would look like based on the survey responses. They conclude that respondents’ preferences are consistent with a flat tax rate on income between 13 percent and 15 percent and a positive tax rate on wealth of approximately 1.2 percent. Interestingly, when respondents are told the tax will be on wealth derived from savings, their responses imply a preferred tax rate of about 0.8 percent. However, when they are told the wealth is inherited, their suggested rate climbs to 3 percent.

When the researchers asked respondents about how they made their choices, subjects cited the simplicity of a flat tax rate on income and wealth, and that they were concerned about the double taxation of wealth, stating it was already taxed when it was earned. Notably, respondents did not mention any efficiency concerns such as the possibility that high taxes would discourage savings or work, which suggests that they do not see a tax schedule that includes a positive tax on wealth as having the potential to reduce economic growth.

Fisman and his co-authors also point out that most of the theoretical work on capital taxation is inconsistent with individuals’ preferences for taxing wealth. Given that the public appears to have a desire to tax wealth, further research that aims to explain this discrepancy may be a valuable contribution.

Should-Read: Letter in Support of the Nomination of Kevin Hassett to be Chairman of the Council of Economic…

Posted on by Brad DeLong

Should-Read: What were they thinking of, signing this? Wasn’t Kevin Hassett’s behavior since 100% predictable?

Letter in Support of the Nomination of Kevin Hassett to be Chairman of the Council of Economic…: “Alan J. Auerbach… Martin N. Baily… Dean Baker…

…Robert J. Barro… Ben S. Bernanke… Jared Bernstein… Alan S. Blinder… Michael J. Boskin… Arthur C. Brooks… John H. Cochrane… Karen Dynan… Janice Eberly… Douglas W. Elmendorf… Martin S. Feldstein… Jason Furman… William G. Gale… Ted Gayer… Austan D. Goolsbee… Alan Greenspan… Robert E. Hall… Douglas J. Holtz-Eakin… R. Glenn Hubbard… Randall S. Kroszner… Alan B. Krueger… Edward P. Lazear… Lawrence Lindsey… N. Gregory Mankiw… Donald B. Marron… Peter R. Orszag… Adam S. Posen… James Michael Poterba… Christina D. Romer… Harvey S. Rosen… Cecilia Elena Rouse… Jay C. Shambaugh… Robert J. Shapiro… Betsey Stevenson… James H. Stock… Michael R. Strain… Phillip Swagel… John B. Taylor… Laura D. Tyson… Justin Wolfers… Mark M. Zandi…