National Bureau of Economic Research Tax Policy and the Economy – serie

This volume presents six new studies on current topics in taxation and government spending. The first study looks at the costs of income tax filing, which have risen over time because of the numerous tax forms families have to fill out when filing their taxes and because of increased costs of itemizing deductions, and explores ways to simplify filing and reduce those costs. The second study investigates the design of income tax schedules when there is uncertainty about the way taxation affects household behavior. The third study provides new and comprehensive estimates of the impact of the US Earned Income Tax Credit on the employment of low-income men and women, finding that the large majority of the various expansions of that credit over the last forty years have increased employment of single mothers. The fourth study reviews the structure of business taxation in China and describes a number of tax distortions and potential inefficiencies in the system. The next paper considers how the Affordable Care Act has affected the health insurance and labor market choices of individuals who are between the ages of 60 and 64, and it finds increases in insurance coverage and reductions in employment for some groups. The last study considers how reimbursement rates for health care providers under various government insurance programs affect providers’ willingness to take on new patients and expand their patient capacity.

This volume presents five new studies on current topics in taxation and government spending.  Natasha Sarin, Lawrence Summers, Owen Zidar, and Eric Zwick study how investors respond to taxes on capital gains, whether their incentives to invest are affected by those taxes, and whether that responsiveness has changed over time. Ethan Rouen, Suresh Nallareddy, and Juan Carlos Suárez Serrato revisit the question of whether cuts to corporate taxes increase income inequality, bringing new data and new statistical techniques to generate fresh findings. Alan Auerbach and William Gale investigate whether the advantages and disadvantages of different types of taxation are affected when interest rates stay low for long periods, as has been the case in the U.S. for many years. Nora Gordon and Sarah Reber study the distributional impact of emergency subsidies to schools made by the federal government during the recent COVID pandemic and whether those subsidies were sufficient to cover the increased school costs induced by the pandemic. Jacob Goldin, Elaine Maag, and Katherine Michelmore investigate the fiscal cost of an expansion of the U.S. child tax credit, which has been discussed extensively in policy circles recently. They take into account not only the direct expenditure on the allowance but how cost is affected by the existence of work incentives and by possible beneficial effects on childrens’ adult earnings.

Timely and authoritative research on the latest issues in tax policy.Tax Policy and the Economy publishes current academic research on taxation and government spending with both immediate bearing on policy debates and longer-term interest.This volume of Tax Policy and the Economy presents new research on important issues concerning US taxation and transfers. First, Edward L. Glaeser, Caitlin S. Gorback, and James M. Poterba examine the distribution of burdens associated with taxes on transportation. Replacing the gasoline tax with a vehicle-miles-traveled (VMT) tax would increase the burden on higher-income households, who drive more fuel-efficient cars and are more likely to own electric vehicles. User charges for airports, subways, and commuter rail are progressive, while the burden of bus fees is larger for lower-income households than for their higher-income counterparts. Next, Katarzyna Bilicka, Michael Devereux, and Irem Güçeri investigate tax shifting by multinational companies (MNCs) and the implications of a potential Global Minimum Tax (GMT). They find that MNCs shift intellectual property to tax havens, and that a large share of patenting activity takes place in tax havens where little or no R&D occurs. Tax havens are particularly important for MNCs with large subsidiary networks; such firms would likely be subject to a GMT. Mark Duggan, Audrey Guo, and Andrew C. Johnston study the role of experience rating in the Unemployment Insurance (UI) system and find that the current structure stabilizes the labor market because it penalizes firms with high rates of UI-eligible layoffs. In the fourth paper, David Altig, Laurence J. Kotlikoff, and Victor Yifan Ye calculate how retiring at different ages will affect Social Security benefit amounts, taking into account taxation and other benefits. They find that virtually all individuals aged 45 to 62 should wait until age 65 or later to maximize their Social Security benefits. Indeed, 90 percent would benefit from waiting until age 70, but only 10 percent do so. Finally, Jonathan Meer and Joshua Witter examine the potential impact of the Earned Income Tax Credit on the labor force decisions of childless adults who are eligible for a small credit after they reach age 25. Comparing labor force attachment changes just before and after this age suggests that the EITC has little impact on the labor force participation of this group.

Timely and authoritative research on the latest issues in tax policy.Tax Policy and the Economy publishes current academic research on taxation and government spending with both immediate bearing on policy debates and longer-term interest.This volume presents new research on taxation and public expenditure programs, with particular focus on how they affect economic behavior. John Guyton, Kara Leibel, Dayanand Manoli, Ankur Patel, Mark Payne, and Brenda Schafer study the disallowance of Earned Income Tax Credit (EITC) benefits as a result of IRS audits, and find that in post-audit years, audited taxpayers are less likely than similar non-audited taxpayers to claim EITC benefits. Janet Holtzblatt, Swati Joshi, Nora Cahill, and William Gale provide new empirical evidence on racial differences in the income tax penalty, or bonus, associated with a couple being married. Haichao Fan, Yu Liu, Nancy Qian, and Jaya Wen evaluate how computerizing value-added tax transactions in China affected the tax revenue collected from large manufacturing firms. Niels Johannesen, Daniel Reck, Max Risch, Joel Slemrod, John Guyton, and Patrick Langetieg study data on the ownership of foreign bank accounts and other financial accounts as reported on income tax returns. They find that many of these accounts are in tax havens, and they discuss the impact of the Foreign Account Tax Compliance Act on tax compliance and government revenue. Louis Kaplow integrates charitable giving into an optimal income tax framework, and shows that the externalities associated with such giving are key to determining its optimal tax treatment. Finally, Roger Gordon compares caps or quantity targets on emissions with carbon taxes and points out that which one dominates can be situation-specific and depend on a number of features of the economy.