Found 514 article(s) for author 'Fiscal Policy'

Tax Reform – Process Failures, Loopholes and Wealth Windfalls

Tax Reform – Process Failures, Loopholes and Wealth Windfalls. Stephen Shay, November 21, 2017, Paper, “The GOP drive for a political victory on tax reform will come at a high cost if it succeeds. The extreme reduction in capital taxation will result in windfall wealth transfers to the already wealthy. Deficit expanding tax legislation will raise pressure for higher interest rates that hinder rather than enhance economic growth. Rushed tax legislation will be rife with undiscovered loopholes that increase the windfalls and scope of the deficit. Instead of the GOP-promised economic growth and benefits for the middle class there will be increased deficits and/or paygo reductions in Medicare, defense and discretionary spending.Link

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‘It’s crazy for a president to wrap himself in the stock market’

‘It’s crazy for a president to wrap himself in the stock market. Lawrence Summers, November 8, 2017, Audio, “Larry Summers thinks it’s “crazy” that President Donald Trump spends so much time bragging about how great he’s been for the stock market.  The former Treasury secretary and current Harvard professor argues that Trump, who tweets regularly about new stock market records, is setting himself up for a crushing blow if markets tumble.Link

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Europe’s Economic Dilemma

Europe’s Economic Dilemma. Martin Feldstein, October 30, 2017, Opinion, “The European Central Bank deserves credit for the economic improvements that have occurred in the past few years. But the ECB’s policies also mean that the eurozone has no ammunition left to fight the next recession, because interest rates cannot be reduced further and fiscal policy remains in the hands of national governments.” Link

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Efficient Welfare Weights

Efficient Welfare Weights. Nathaniel Hendren, October 2017, Paper, “How should we measure economic efficiency? The canonical measure is an unweighted sum of willingnesses to pay. In contrast, this paper provides efficient welfare weights that implement the Kaldor-Hicks tests for efficiency but account for the distortionary cost of taxation. The shape of the income distribution yields bounds on these weights that suggest it is efficient to weight surplus to the poor more than to the rich. Point estimates suggest surplus to the poor should be weighted 1.5-2x more than surplus to the rich. I illustrate how to use these weights to evaluate the efficiency of government policy changes.” Link

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How aging, inequality and China make the U.S. government likely to get larger

How aging, inequality and China make the U.S. government likely to get larger. Lawrence Summers, September 12, 2017, Opinion, “Speaking at an event organized by Robert Greenstein, president of the Center for Budget and Policy Priorities, I argued last week that unless our values have changed profoundly in an anti-government direction, the balance of pressures from economic change will lead to an expansion of the federal budget relative to gross domestic product. This was also the conclusion of a paper released by Paul Van de Water of the center. Excellent summaries were provided by Al Hunt and David Leonhardt.” Link

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Popular Acceptance of Inequality due to Innate Brute Luck and Support for Classical Benefit-Based Taxation

Popular Acceptance of Inequality due to Innate Brute Luck and Support for Classical Benefit-Based Taxation. Matthew Weinzierl, September 9, 2017, Paper, “U.S. survey respondents’ views on distributive justice differ in two specific, related ways from what is conventionally assumed in modern optimal tax research. When expressing their preferences over allocations in stylized, hypothetical scenarios meant to isolate key features of the tax problem, a large share of respondents resist the full equalization of unequal outcomes due to innate brute luck that standard analyses recommend. A similar share prefer a classical benefit-based logic for taxes over the conventional logic of diminishing marginal social welfare. Moreover, these two views are linked: respondents who more strongly resist equalization are more likely to prefer the classical benefit-based principle. Though the Amazon Mechanical Turk survey population is not a representative sample of the U.S. population, robustness of these results across demographic traits and political views suggests that a large share of the American public holds views inconsistent with standard welfarist objectives.Link

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Should Governments Invest More in Nudging?

Should Governments Invest More in Nudging? John Beshears, Cass Sunstein, August 2017, Paper, “Governments are increasingly adopting behavioral science techniques for changing individual behavior in pursuit of policy objectives. The types of “nudge” interventions that governments are now adopting alter people’s decisions without coercion or significant changes to economic incentives. We calculated ratios of impact to cost for nudge interventions and for traditional policy tools, such as tax incentives and other financial inducements, and we found that nudge interventions often compare favorably with traditional interventions. We conclude that nudging is a valuable approach that should be used more often in conjunction with traditional policies, but more calculations are needed to determine the relative effectiveness of nudging.Link

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