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New research on taxation from Harvard Business School faculty on issues including inversions, corporate tax strategies, and how to improve current tax policy.
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Designing, Not Checking, for Policy Robustness: An Example with Optimal Taxation

by Benjami Lockwood, Afras Y. Sial, and Matthew C. Weinzierl

The approach used by most economists to check academic research results is flawed for policymaking and evaluation. The authors propose an alternative method for designing economic policy analyses that might be applied to a wide range of economic policies.

State and Local Governments Peer Into the Pandemic Abyss

by Kristen Senz

State and local governments that rely heavily on sales tax revenue face an increasing financial burden absent federal aid, says Daniel Green. Open for comment; 0 Comments.

Elusive Safety: The New Geography of Capital Flows and Risk

by Laura Alfaro, Ester Faia, Ruth Judson, and Tim Schmidt-Eisenlohr

Examining motives and incentives behind the growing international flows of US-denominated securities, this study finds that dollar-denominated capital flows are increasingly intermediated by tax haven financial centers and nonbank financial institutions.

Does Our Bias Against Federal Deficits Need Rethinking?

by James Heskett

SUMMING UP. Readers lined up to comment on James Heskett's question on whether federal deficit spending as supported by Modern Monetary Theory is good or evil. Open for comment; 0 Comments.

In the Shadows? Informal Enterprise in Non-Democracies

by Kristin Fabbe, Allison Spencer Hartnett, and Steve L. Monroe

With the informal economy representing a third of the GDP in an average Middle East and North African country, why do chronically indebted regimes tolerate such a large and untaxed shadow economy? Among this study’s findings, higher rates of public sector employment correlate with greater permissibility of firm informality.

Understanding Different Approaches to Benefit-Based Taxation

by Robert Scherf and Matthew C. Weinzierl

Benefit-based taxation—where taxes align with benefits from state activities—enjoys popular support and an illustrious history, but scholars are confused over how it should work, and confusion breeds neglect. To clear up this confusion and demonstrate its appeal, we provide novel graphical explanations of the main approaches to it and show its general applicability.

Corporate Tax Cuts Don't Increase Middle Class Incomes

by Roberta Holland

New research by Ethan Rouen and colleagues suggests that corporate tax cuts contribute to income inequality. Open for comment; 0 Comments.

Corporate Tax Cuts Increase Income Inequality

by Suresh Nallareddy, Ethan Rouen, and Juan Carlos Suárez Serrato

This paper examines corporate tax reform by estimating the causal effect of state corporate tax cuts on top income inequality. Results suggest that, while corporate tax cuts increase investment, the gains from this investment are concentrated on top earners, who may also exploit additional strategies to increase the share of total income that accrues to the top 1 percent.

What’s Missing From the Debate About Trump’s Tax Plan

by Matthew Weinzierl

At the end of the day, tax policy is more about values than dollars. And it's still not too late to have a real discussion over the Trump tax plan, says Matthew Weinzierl. Open for comment; 0 Comments.

Tax Reform is on the Front Burner Again. Here’s Why You Should Care

by Sean Silverthorne

As debate begins around the Republican tax reform proposal, Mihir Desai and Matt Weinzierl discuss the first significant tax legislation in 30 years. Open for comment; 0 Comments.

The Role of Taxes in the Disconnect Between Corporate Performance and Economic Growth

by Urooj Khan, Suresh Nallareddy, and Ethan Rouen

This paper offers evidence of potential issues with the current United States system of taxation on foreign corporate profits. A reduction in the US tax rate and the move to a territorial tax system from a worldwide system could better align economic growth with growth in corporate profits by encouraging firms to invest domestically and repatriate foreign earnings.

Corporate Tax Strategies Mirror Personal Returns of Top Execs

by Roberta Holland

Top executives who are inclined to reduce personal taxes might also benefit shareholders in their companies, concludes research by Gerardo Pérez Cavazos and Andreya M. Silva. Open for comment; 0 Comments.

Popular Acceptance of Morally Arbitrary Luck and Widespread Support for Classical Benefit-Based Taxation

by Matthew C. Weinzierl

This paper presents survey evidence that the normative views of most Americans appear to include ambivalence toward the egalitarianism that has been so influential in contemporary political philosophy and implicitly adopted by modern optimal tax theory. Insofar as this finding is valid, optimal tax theorists ought to consider capturing this ambivalence in their work, as well.

Impact Evaluation Methods in Public Economics: A Brief Introduction to Randomized Evaluations and Comparison with Other Methods

by Dina Pomeranz

Dina Pomeranz examines the use by public agencies of rigorous impact evaluations to test the effectiveness of citizen efforts.

How Should Wealth Be Redistributed?

by James Heskett

SUMMING UP James Heskett's readers weigh in on Thomas Piketty and how wealth disparity is burdening society. Closed for comment; 0 Comments.

The Height Tax, and Other New Ways to Think about Taxation

by Martha Lagace

The notion of levying higher taxes on tall people—an idea offered largely tongue in cheek—presents an ideal way to highlight the shortcomings of current tax policy and how to make it better. Harvard Business School professor Matthew C. Weinzierl looks at modern trends in taxation. Key concepts include: Studies show that each inch of height is associated with about a 2 percent higher wage among white males in the United States. If we as a society are uncomfortable taxing height, maybe we should reconsider our comfort level for taxing ability (as currently happens with the progressive income tax). For Weinzierl, the key to explaining the apparent disconnect between theory and intuition starts with the particular goal for tax policy assumed in the standard framework. That goal is to minimize the total sacrifice borne by those who pay taxes. Behind the scenes, important trends are evolving in tax policy. Value-added taxes, for example, are generally seen as efficient by tax economists, but such taxes can bear heavily on the poor if not balanced with other changes to the system. Closed for comment; 0 Comments.

What Is the Government’s Role in US Health Care?

by Jim Heskett

Healthcare will grab ever more headlines in the U.S. in the coming months, says Jim Heskett. Any service that is on track to consume 40 percent of the gross national product of the world's largest economy by the year 2050 will be hard to ignore. But are we addressing healthcare cost issues with the creativity they deserve? What do you think? Closed for comment; 0 Comments.