The Unbroken Window

I just finished reading a new NBER paper that talks about how subsidies for “green” products can be “welfare improving” if people have systematically biased beliefs or other misperceptions about how energy efficient their purchase of durables really is. Here is the paper. Here is the abstract: We show how the traditional logic of Pigouvian [...]

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Each Monday I peruse the latest working papers in my profession. Here is this morning’s treat: A Theory of Optimal Capital Taxation by Thomas Piketty, Emmanuel Saez  -  #17989 (PE) Abstract: This paper develops a realistic, tractable theoretical model that can be used to investigate socially-optimal capital taxation.  We present a dynamic model of savings [...]

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OK, so I exaggerate, but here’s the image: If virtually half of Americans pay no income taxes, then it is impossible for them to “receive the gains” from any income tax reductions. And when we have a progressive tax system, it is virtually impossible for reductions in taxes to be progressive, they have to be [...]

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“Infrastructure” is among the most popular goods for which folks think the federal government ought to have a heavy hand in producing. Let’s think a little bit more about this. A few observations that came to mind while driving to work on a totally un-congested highway that runs right through downtown Rochester and connects the [...]

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Warren Meyer, aka “Coyote” is coming to visit us next Thursday – hence my increasing references to his site. He runs a private recreation management company and I began reading his site to learn more about the challenges of operating a for-profit business that works in the environmental arena. Here is his latest illustration of [...]

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Tim Taylor has yet another fine post today, this time summarizing the incidence of taxes when marginal income tax rates were high in 1958 versus today when they are, across the board, lower. Here are some highlights: At the bottom, across this time period, roughly 20% of all tax returns owed no tax, and so [...]

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One might reasonably make a case for taxing higher education, particularly if one views the acquisition of bachelor’s degrees to be much like an arms race. Suppose I proposed to increases taxes on colleges and I come out publicly and say, “we are going to institute a 20% tuition tax on college attendence; however, students [...]

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My readers should spend time reading Tim Taylor’s fine blog regularly. Today he discusses very clearly and coolly the possible reasons why economists disagree on what the “optimal” top tax marginal rate is. In that post he discusses that part of the reason for disagreement is some disagreement about what the “marginal utility of an [...]

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The neo-conservatives report on income taxes: What changes here isn’t the solvency of the trust fund. What changes is where the money comes from. Payroll taxes mainly come from the middle and working classes. The general fund is supported by income taxes, which mainly come from the well-off and the rich. So, generally speaking, a [...]

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I suppose I am guilty of it, but tax guru Emmanuel Saez (one of the guys who work the IRS data to illustrate the rising income inequality in the US) just wrote a second paper in a few months with the implied (or direct) conclusion: raise taxes on the rich. Of course, it is all [...]

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