The McCain campaign has been arguing that their proposal to allow companies to expense equipment purchases in the first year of use would come at no added budgetary cost. See, for example, here.
I am told that Doug Holtz-Eakin has been making this argument to reporters and at various public forums. Presumably he is arguing (a) that if you don't discount future dollars at the interest rate, the present value of expensing is the same as that for depreciation, and/or (b) once one has fully reached the steady state, if the amount invested each year is constant (a dubious assumption indeed), then the dollars deducted under expensing may be the same as those deducted under a slower depreciation rule.
Now, since I would favor a progressive consumption tax in the best of all possible worlds, I am in principle fine with expensing. (The big issue it poses in such a world is anomalous effects if Congress changes the tax rate between the date when the expensing deduction was claimed and that when the resulting income is taxed.) In our current, ostensibly income tax, world, my main problems with it are (a) inter-asset distortions, if it's given for some things but not others, and (b) inconsistency between consumption tax treatment on the inclusion side via expensing and income tax treatment on the deduction side via interest deductions (if the counter-party isn't including the interest income at the same marginal rate).
This is a sufficiently refined level of argument about the merits of expensing that it should be clear I am not a foaming-at-the-mouth foe of the idea.
But if Holtz-Eakin is claiming publicly, as I gather he is, that adopting it would have a zero revenue cost, then despite being an expert in the area who has written about these topics for years he is saying things that any second-year law student knows, after taking Tax I, to be trivially fallacious.
This is a good example of why I would never want to work on a political campaign. I hope he is duly ashamed of himself, but have no idea if he is.
To my mind, making clearly false claims in public is a much worse sin, from an economic adviser, than Goolsbee-gate from the days of the Ohio primary (which featured an economist saying sensible things in private rather than nonsense in public).
Friday, April 25, 2008
Thursday, April 24, 2008
Final NYU Tax Policy Colloquium of 2008
Today Jason Furman presented a paper on healthcare, rightly (I'd say) lambasting the bizarre Cogan-Hubbard-Kessler plan to combat moral hazard in healthcare by increasing it, and proposing his own plan which is hardly bullet-proof (and presumably unenactable) yet has some clear virtues.
Brad DeLong once said in a post that the big issue among healthcare economists is whether the problem is moral hazard (people over-spending because they aren't paying in full hence don't require marginal benefit equal to marginal cost) or adverse selection (failure of insurance markets to permit risk pooling and actuarially fair pricing, on balance, for diverse groups). Jason, to his credit, sees both as problems not just one.
Cogan-Hubbard-Kessler (henceforth CHK) seem to think the big problem is moral hazard from over-insurance, largely caused by the fact that the income tax permits exclusion of employer-provided health insurance but not deduction of medical expenses, creating an incentive to over-insure. Hence they propose to make all healthcare expenses deductible, thereby externalizing the moral hazard / over-insurance problem from employer-provided healthcare to everything.
One point that doesn't seem to have occurred to CHK is that the incentive to over-insure goes ONLY to the difference between non-deductibility and coverage at the value of the income tax exclusion. Say the marginal tax rate (MTR) is 42%, taking account not only of federal income tax marginal rates but state & local income taxes (though they are to a degree deductible) and payroll taxes (although on the Social Security part one may accrue benefits along with tax liabilities). Under their theory, they should predict that the co-payment required for routine expenses, to the extent these are over-insured in response to the tax incentives, is 58%. Higher co-pays can't be explained by their theory since they go beyond the tax benefit. And without higher co-pays than this, they have no theoretical basis for expecting moral hazard to be reduced.
Anyway, CHK want to reduce moral hazard by increasing it, in the sense that it gets peeled out of employer-provided healthcare since you get a federal co-payment based on the MTR even if it is uninsured. But they are addressing a problem that should not exist by their lights, given the absence of any tax incentive to go beyond the federal tax saving in designing the co-pay. So their diagnosis must be wrong in order for their prescription to seem superficially appealing.
Perhaps they want to bring the current employer-provided healthcare system more generally crashing down, but that would strike me as a bit reckless and rash. Albeit, no more so than the fiscal implications of their plan, which (in conventional Republican style these days) would add a vast sum to the fiscal gap. But who's counting anyway?
Jason's plan is to provide refundable credits that aren't tied to the amount you actually pay - you get it for having qualifying insurance without regard to how much you pay. So you pay at the margin both for the amount of qualifying health insurance that you select and for outlays outside the plan. Hence moral hazard is addressed, along with adverse selection if the plan in other respects is successful.
One perplexity posed by the paper is that it suggests that, at the margin, healthcare outlays provide zero marginal healthcare benefits, because consumers (when economizing because their share of the cost has been increased) can't choose properly between reducing the healthcare that actually provides benefits and that which is pure waste or affirmatively harmful. This is not theoretically implausible, since consumers (myself included) are poorly informed and have to rely on doctors whose incentives and ideology may be a bit off, but the evidence for it is weak, and if it is true a much more radical response than anything Jason suggests might be in order. It might suggest that we can't rely on consumer preferences at all here, and/or that healthcare should be taxed like pollution even if health insurance is subsidized.
Jason is not on the side of the debate that says universal mandates should definitely be used, but the answer to that one was perhaps beyond our institutional expertise as a group (which is not to say that the experts all agree).
This is it for the year, so far as the NYU Tax Policy Colloquium is concerned. I'll miss it, albeit cherishing my newfound time and freedom. A great year, reflecting the efforts of my co-conveners (Kevin Hassett and Mihir Desai) along with the substantial contributions of both regular and sporadic attendees. We'll be back next January, with Alan Auerbach as my co-convener, and 13 of our speakers are already set. But more on that later.
On Sunday I head to Israel for a week. I'll be giving two talks which presumably will be listed on Tax Prof Blog. One concerns my tax & accounting paper, and the other a paper to be written later this summer called "The Intellectual State of the Play in U.S. International Taxation." Back in the USA at a horrifically early hour on Monday, May 5. Then in mid-June I leave to teach for two weeks in Singapore again (followed by two weeks vacation in Vietnam), and before that happens I need to finish my book in progress, "The U.S. Corporate Tax - What is It, and Where Is It Headed?" Maybe the Coen brothers will want an option on that one, since it has a bit of suspense, but in the interim the Urban Institute Press will be publishing it. All kidding aside, I do feel good about that book, and hope it can combine informing a lay audience (such as law and business school students) with being enlightening to policymakers and serious academics.
Tuesday, April 22, 2008
Free gas for everyone throughout the Labor Day weekend!!
Now that Hillary Clinton has jumped on the McCain bandwagon with regard to suspending the gasoline tax, I think it's time to up the ante.
Why stop at merely eliminating the tax? Zero is so arbitrary as a floor. We could get even more financial relief to Americans during the vacation season, and even more fiscal stimulus, by adopting a gasoline subsidy.
Say, ten cents a gallon for starters. Maybe with a special bonus for cars that are gas-guzzlers, since they'll be paying more at the pump even after getting the subsidy. And maybe with free gas for everyone throughout the Labor Day weekend!!
Better still, let's make the subsidy an income tax credit for gasoline purchases, so that it still qualifies as a "tax cut."
Next up, tax credits for running your air conditioner.
Why stop at merely eliminating the tax? Zero is so arbitrary as a floor. We could get even more financial relief to Americans during the vacation season, and even more fiscal stimulus, by adopting a gasoline subsidy.
Say, ten cents a gallon for starters. Maybe with a special bonus for cars that are gas-guzzlers, since they'll be paying more at the pump even after getting the subsidy. And maybe with free gas for everyone throughout the Labor Day weekend!!
Better still, let's make the subsidy an income tax credit for gasoline purchases, so that it still qualifies as a "tax cut."
Next up, tax credits for running your air conditioner.
Monday, April 21, 2008
Heads up for Tax Notes readers
My Senate Finance testimony from last Tuesday (April 15) appeared today in print at 119 Tax Notes 313 (April 21, 2008). Non-subscribers can still read my testimony here.
Sunday, April 20, 2008
Where did the shame go?
I've always respected economist Douglas Holtz-Eakin, who is McCain's top economics adviser other than the public faces whom I fervently hope are just window-dressing, such as Phil Gramm and Jack Kemp. Holtz-Eakin is almost the only academic or policy intellectual (apart from Jack Goldsmith) to have a prominent Republican-appointed job in George W. Bush-era Washington and come out with his reputation enhanced, rather than besmirched. He brought honesty and candor, at least to the extent he could given the broader circumstances, to his job as head of the Congressional Budget Office.
This just makes it all the more nauseating to see him flacking for McCain's insane, almost criminally irresponsible, plans to cut taxes by $3.3 trillion over the next 8 years - to be financed, of course, by eliminating waste and abuse. When you look at the U.S. fiscal gap and McCain's expensive foreign policy plans plus the zero prospect that he will be able to take on entitlements issues (even in the unlikely event that he wants to), supporting such a plan is almost akin to saying that you want the U.S. to face a catastrophic fiscal meltdown within the next 10 to 15 years.
Back-of-the-envelope guess: I would be surprised if the infinite horizon fiscal gap estimate for McCain's proposed tax changes doesn't exceed the infinite horizon funding shortfall within Social Security. And it is more front-loaded, hence more of the damage would become irrevocable sooner.
When you work in a campaign, I suppose you get to this pass one step at a time. But it would really be nice if Holtz-Eakin could take a deep breath, step back for a second, and look at what he is doing with the eyes that I know he used to have. This is bad for his reputation, and it should be.
No-one ever resigns out of principle in Washington any more. But that is part of the problem.
UPDATE: This informative article notes that the Urban-Brookings Tax Policy Center estimates McCain's tax cuts at $5.7 trillion for the 8 years. The Center for Budget and Policy Priorities comes out at $5 trillion. But not to worry, Holtz-Eakin has identified potential tax savings that, if only they weren't politically impregnable, would make back maybe $3 billion a year. So he is well within reach of being one half of a percent of the way towards paying for it.
The revised estimate, by the way, makes it clear that the McCain tax cuts would add vastly more to the U.S. fiscal gap than the entire Social Security shortfall. Indeed, they'd get more than half the way there in a mere 8 years.
If economists could be disbarred for bad practice, I'd be ready to open the file on this one.
FURTHER UPDATE: A recent press release from the Center on Budget and Policy Priorities shows the 75-year cost of extending the Bush tax cuts as being 3-1/2 times the size of the Social Security shortfall during that period. And McCain of course wants to go far beyond merely extending the Bush tax cuts.
This just makes it all the more nauseating to see him flacking for McCain's insane, almost criminally irresponsible, plans to cut taxes by $3.3 trillion over the next 8 years - to be financed, of course, by eliminating waste and abuse. When you look at the U.S. fiscal gap and McCain's expensive foreign policy plans plus the zero prospect that he will be able to take on entitlements issues (even in the unlikely event that he wants to), supporting such a plan is almost akin to saying that you want the U.S. to face a catastrophic fiscal meltdown within the next 10 to 15 years.
Back-of-the-envelope guess: I would be surprised if the infinite horizon fiscal gap estimate for McCain's proposed tax changes doesn't exceed the infinite horizon funding shortfall within Social Security. And it is more front-loaded, hence more of the damage would become irrevocable sooner.
When you work in a campaign, I suppose you get to this pass one step at a time. But it would really be nice if Holtz-Eakin could take a deep breath, step back for a second, and look at what he is doing with the eyes that I know he used to have. This is bad for his reputation, and it should be.
No-one ever resigns out of principle in Washington any more. But that is part of the problem.
UPDATE: This informative article notes that the Urban-Brookings Tax Policy Center estimates McCain's tax cuts at $5.7 trillion for the 8 years. The Center for Budget and Policy Priorities comes out at $5 trillion. But not to worry, Holtz-Eakin has identified potential tax savings that, if only they weren't politically impregnable, would make back maybe $3 billion a year. So he is well within reach of being one half of a percent of the way towards paying for it.
The revised estimate, by the way, makes it clear that the McCain tax cuts would add vastly more to the U.S. fiscal gap than the entire Social Security shortfall. Indeed, they'd get more than half the way there in a mere 8 years.
If economists could be disbarred for bad practice, I'd be ready to open the file on this one.
FURTHER UPDATE: A recent press release from the Center on Budget and Policy Priorities shows the 75-year cost of extending the Bush tax cuts as being 3-1/2 times the size of the Social Security shortfall during that period. And McCain of course wants to go far beyond merely extending the Bush tax cuts.
Thursday, April 17, 2008
NYU Tax Policy Colloquium on David Gamage's Optimal Tax Theory Meets Tax Avoidance
I guess I've been doing these colloquium sessions for long enough now that, at some level of generality, nearly everything I encounter has happened before. The genre for today's session, which happens at least every other year or so (maybe more), was being initially really irked by a paper, leading to skirmishing at lunch (today, including eye-rolling by all 3 of us), followed by a turn for the better after hammering it out. For this to work, one has to try to be open-minded, and to voice objections clearly (up to the limits of civility, the franker the better), but also to convey wanting to increase mutual understanding, not win a battle. Also, as a matter of social dynamics, I think one really needs somehow the group of 3 - two conveners (in this case, myself and Mihir Desai) along with the author. One-on-one seems to develop worse dynamics and less engagement.
Anyway, Gamage's paper irked me as I read it in advance because it seemed to combine making very aggressive claims about errors and omissions in the prior literature (including renowned articles by Nobel economists) with not being entirely clear or persuasive about what was new. The issue goes to how taking account of certain tax-responsive behaviors, such as reducing taxable income through adjustments to behavior other than reducing work or saving, might, if they have a certain cost structure, lead us to think very differently about optimal instruments. The early draft we read suggests we might like "double taxation" of various kinds, but the true thrust turned out to be considerably different.
I don't quite have the energy, as I write this late at night, to go through all the permutations of where the discussion led us. But in sum, if avoidance (i.e., tax-responsive real behavior particular to the institutional details of exactly how we are collecting the tax) turns out to have a rising marginal cost structure, then in some cases we might want to have as many separate collection points as possible, all else equal.
As a collectively developed analogy put it, to combat fare-jumping in the NYC subway, we might want to collect half of the fare when you enter and the other half when you leave, if in practice this means people will no longer find it worthwhile to jump over the turnstile and risk spraining their knees. Leaving for later (i.e., for Gamage as he works on the draft) the question of how generalizable and important to real world situations this insight is. I honestly don't know how this will come out, but I certainly wish him the best, and am reasonably hopeful that he will either develop the analysis in a more clearly useful fashion or turn to something else.
Another new publication
Yet another article that I wrote for a conference a couple of years ago is now on the verge of coming out. In "Simplifying Assumptions: How Might the Politics of Consumption Tax Reform Affect (Impair) the End Product?" I try to examine the political economy scenarios that would be necessary for a consumption tax to be enacted replacing the current income tax. I was asked by the conference organizers to assume that such a thing would actually happen, notwithstanding my skepticism on this point. I reach fairly pessimistic conclusions about whether the instrument that actually passed Congress would be something to feel terribly good about.
I certainly can't complain about how long it took the conference volume to come out, given that another roughly contemporaneous conference volume that Alan Auerbach and I are co-editing is taking even longer. (This is a book to be entitled "Institutional Foundations of Public Finance," collecting some generally excellent papers from a conference held at NYU in May 2006 in honor of the late David F. Bradford. Coming out at some point this year from the Harvard University Press.)
The volume in which my "Simplifying Assumptions" paper is coming out is Fundamental Tax Reform: Issues, Choices, and Implications," edited by John W. Diamond and George R. Zodrow. It is available (for advance ordering) for $36 here or $45 here. (Which to buy? - sounds like a tough choice.)
I certainly can't complain about how long it took the conference volume to come out, given that another roughly contemporaneous conference volume that Alan Auerbach and I are co-editing is taking even longer. (This is a book to be entitled "Institutional Foundations of Public Finance," collecting some generally excellent papers from a conference held at NYU in May 2006 in honor of the late David F. Bradford. Coming out at some point this year from the Harvard University Press.)
The volume in which my "Simplifying Assumptions" paper is coming out is Fundamental Tax Reform: Issues, Choices, and Implications," edited by John W. Diamond and George R. Zodrow. It is available (for advance ordering) for $36 here or $45 here. (Which to buy? - sounds like a tough choice.)
Wednesday, April 16, 2008
The real tax policy significance of Paris Hilton
Having seen her on one of the big TV screens in the health club when I was working out this morning, I'm reminded of how I think her symbolic significance to tax policy debates is sometimes (to my taste at least) misstated.
Proponents of estate or inheritance taxation sometimes see her as the poster child for their position in the debate. The idea being that she is the canonical undeserving heir who is wealthy simply because, from the financial standpoint (whether or not more generally) she had good luck in the choice-of-parents lottery. Hence, the implicit argument goes, we should want to tax away her undeserved good fortune, whether just to finance lower taxes on those who are more productive and deserving, or also on the Andrew Carnegie surmise that receiving a huge inheritance is actually a curse not a benefit.
Not exactly to defend her, but whenever I hear this usage it occurs to me that she has actually generated huge earnings in recent years. So, from a conventional economic standpoint that relies on market measures of earnings, she actually is a large-scale producer rather than a member of the "idle rich."
But this in turn points out another symbolic use. Within a standard optimal income tax framework, even ignoring the inherited dollars that she got to spend, her earnings make her a canonical example of someone with high "ability." So the real reminder that we get from her example is what "ability" really means in this framework - that it is about something external, relating to one's potential interactions with the environment in which one finds oneself, rather than something purely internal such as (genetically or otherwise derived) intelligence, taste, acting and singing ability, or charm.
So we might call an income, consumption, or earnings tax a "Paris Hilton tax" and mean the same thing (but with a bit more topspin) as if we called it a "Bill Gates tax."
Proponents of estate or inheritance taxation sometimes see her as the poster child for their position in the debate. The idea being that she is the canonical undeserving heir who is wealthy simply because, from the financial standpoint (whether or not more generally) she had good luck in the choice-of-parents lottery. Hence, the implicit argument goes, we should want to tax away her undeserved good fortune, whether just to finance lower taxes on those who are more productive and deserving, or also on the Andrew Carnegie surmise that receiving a huge inheritance is actually a curse not a benefit.
Not exactly to defend her, but whenever I hear this usage it occurs to me that she has actually generated huge earnings in recent years. So, from a conventional economic standpoint that relies on market measures of earnings, she actually is a large-scale producer rather than a member of the "idle rich."
But this in turn points out another symbolic use. Within a standard optimal income tax framework, even ignoring the inherited dollars that she got to spend, her earnings make her a canonical example of someone with high "ability." So the real reminder that we get from her example is what "ability" really means in this framework - that it is about something external, relating to one's potential interactions with the environment in which one finds oneself, rather than something purely internal such as (genetically or otherwise derived) intelligence, taste, acting and singing ability, or charm.
So we might call an income, consumption, or earnings tax a "Paris Hilton tax" and mean the same thing (but with a bit more topspin) as if we called it a "Bill Gates tax."
Another musical note
Some time ago I purchased CD 1 of the 3-CD "69 Love Songs" by the Magnetic Fields (aka NYC songwriter Stephin Merritt plus associated musicians). It didn't quite take, but earlier this year I purchased their/his latest, "Distortion," which is a stylistic homage to the Jesus and Mary Chain that I preferred to the original. A fave on this new record is the hilarious "California Girls," which has a slightly different viewpoint than the Beach Boys song of that name. (Fitting into the concept here because J & MC were in some ways a Beach Boys homage with static and electronic distortion layered on top.) Sample lyrics: "Looking down your perfect noses at me and my kind / Did you really think that we won't mind? ... You will hear me say, as the pavement whirls / I hate California girls." [Sung by a woman so that it conveys jealousy rather than misogyny.]
Anyway, this led me to try 69 Love Songs, Part 1 again, and this time I liked it enough to spring for the last 2 volumes and 46 tracks, which I am now eagerly awaiting.
Robert Christgau aptly remarked of 69 Love Songs that to complain that it doesn't sound sincere is like complaining about a great jazz musician that he plays too many notes. That's what Merritt is selling. The album is a review / pastiche / homage / satire / compendium / commentary concerning love songs (as opposed to love) in all sorts of genres, with what are often astonishingly clever and witty lyrics - Noel Coward-level at times although with a different sensibility.
Anyway, this led me to try 69 Love Songs, Part 1 again, and this time I liked it enough to spring for the last 2 volumes and 46 tracks, which I am now eagerly awaiting.
Robert Christgau aptly remarked of 69 Love Songs that to complain that it doesn't sound sincere is like complaining about a great jazz musician that he plays too many notes. That's what Merritt is selling. The album is a review / pastiche / homage / satire / compendium / commentary concerning love songs (as opposed to love) in all sorts of genres, with what are often astonishingly clever and witty lyrics - Noel Coward-level at times although with a different sensibility.
Really stupid tax policy ideas
McCain's proposal to suspend the gas tax for the summer (but who knows if it would ever really come back?) deserves some sort of prize. That one is going to be hard to top.
Tuesday, April 15, 2008
Senate Finance Committee testimony
Today (April 15, natch) was the day. Here is the link to my full written testimony. The three main points I covered were base-broadening, rationalizing business taxation, and filing and compliance simplification for lower and middle class taxpayers.
In some other parallel universe, I will tell my enthralled grandkids "Yep, I was the lead-off witness at the first Senate Finance Committee hearing that led to the great Tax Reform Act of 2009." Not as likely, alas, in the one we actually inhabit. While I would settle for the universe where it happens except for the realistic detail that the grandkids don't care, I don't think we are in that one either.
Turnout by the Senate Finance Committee members exceeded the insiders' over-under, totaling 7 at the peak. Someone had forecast only 5 because the farm bill was in conference, or something like that. Senator Baucus, the Chair of the Committee, showed up for a bit despite the farm bill because he wanted to make the point that tax reform is a big priority for him. Others who asked questions included Bingamon, Wyden, Kerry, and Bunning. Occasionally a question would take the form of "Isn't it true that my bill, which I already know you like, would be a good idea?" At one point I leaned over and whispered to Michael Graetz: "Objection, leading the witness." But other questions had more of an information-evoking flavor, I suppose.
The panel had a lot of consensus, except that Jason Furman questioned studies Graetz and I mentioned suggesting that these days the incidence of the corporate tax may fall on labor due to international capital mobility. And Jason spoke up for traditional capital export neutrality, which Graetz noted is in question these days after I had ducked the question a bit by noting the proposal (by economists Rosanne Altshuler and Harry Grubert) to enact a "burden-neutral" repeal of deferral, thus keeping overall U.S. tax burdens on outbound investment about the same but without all the wasteful tax planning associated with playing deferral or subpart F games.
I'll confess that I thought for a second of Robert DeNiro in "Analyze This!" saying to a petrified Billy Crystal that "I'm going to be seeing a lot of you!" when a couple of our hosts made the same suggestion to us in connection with the possibility that Congress in 2009 will be seriously pursuing fundamental tax reform. But there really doesn't seem to be much buzz about the topic even though the stars arguably are aligning in various ways (rising AMT liability, expiring tax cuts, etc.).
One thing I could imagine them taking up, however, is simplification for lower and middle class taxpayers, meaning greatly eased filing. This has some aspects of win-win, although inevitably some people's taxes would go up if the substantive law changed in a revenue-neutral fashion. It is bound to have foes however done, but has the potential (for once) for politicians to score points because they actually deserve to. I am reminded of the fact that renewing driver's licenses used to be an excruciating experience and then was made simple. Not all that unrealistic an analogy for most wage-earners' tax returns, albeit not entirely lacking in tough choices.
In some other parallel universe, I will tell my enthralled grandkids "Yep, I was the lead-off witness at the first Senate Finance Committee hearing that led to the great Tax Reform Act of 2009." Not as likely, alas, in the one we actually inhabit. While I would settle for the universe where it happens except for the realistic detail that the grandkids don't care, I don't think we are in that one either.
Turnout by the Senate Finance Committee members exceeded the insiders' over-under, totaling 7 at the peak. Someone had forecast only 5 because the farm bill was in conference, or something like that. Senator Baucus, the Chair of the Committee, showed up for a bit despite the farm bill because he wanted to make the point that tax reform is a big priority for him. Others who asked questions included Bingamon, Wyden, Kerry, and Bunning. Occasionally a question would take the form of "Isn't it true that my bill, which I already know you like, would be a good idea?" At one point I leaned over and whispered to Michael Graetz: "Objection, leading the witness." But other questions had more of an information-evoking flavor, I suppose.
The panel had a lot of consensus, except that Jason Furman questioned studies Graetz and I mentioned suggesting that these days the incidence of the corporate tax may fall on labor due to international capital mobility. And Jason spoke up for traditional capital export neutrality, which Graetz noted is in question these days after I had ducked the question a bit by noting the proposal (by economists Rosanne Altshuler and Harry Grubert) to enact a "burden-neutral" repeal of deferral, thus keeping overall U.S. tax burdens on outbound investment about the same but without all the wasteful tax planning associated with playing deferral or subpart F games.
I'll confess that I thought for a second of Robert DeNiro in "Analyze This!" saying to a petrified Billy Crystal that "I'm going to be seeing a lot of you!" when a couple of our hosts made the same suggestion to us in connection with the possibility that Congress in 2009 will be seriously pursuing fundamental tax reform. But there really doesn't seem to be much buzz about the topic even though the stars arguably are aligning in various ways (rising AMT liability, expiring tax cuts, etc.).
One thing I could imagine them taking up, however, is simplification for lower and middle class taxpayers, meaning greatly eased filing. This has some aspects of win-win, although inevitably some people's taxes would go up if the substantive law changed in a revenue-neutral fashion. It is bound to have foes however done, but has the potential (for once) for politicians to score points because they actually deserve to. I am reminded of the fact that renewing driver's licenses used to be an excruciating experience and then was made simple. Not all that unrealistic an analogy for most wage-earners' tax returns, albeit not entirely lacking in tough choices.
Monday, April 14, 2008
James Banks and Peter Diamond weigh in on the income vs. consumption tax debate
Economists James Banks of University College, London, and the renowned Peter Diamond of MIT have posted a new paper, called "The Base for Direct Taxation."
The abstract says in part:
"The essay presents the Atkinson-Stiglitz and Chamley-Judd results that capital income should not be taxed, but concludes that the required conditions are too restrictive and not robust enough for policy purposes. Hence there should be some role for including capital income as a part of the tax base. The essay discusses some empirical underpinnings for two key elements in the conclusion - differences in savings propensities and the shape of earnings (and uncertainty about earnings) over the lifetime. The conclusion that capital income should be taxed does not lead to the conclusion that the tax base should be total income, the sum of labour income and capital income."
I couldn't resist forwarding a copy to my good friends Joe Bankman and David Weisbach, since the paper appears to line up more on my side than theirs in our recent exchange in the Stanford Law Review. But that is not to prejudge what effect, if any, a careful reading would have on one's assessment of the overall merits (and in truth my position and theirs are pretty close - we both would favor a progressive consumption tax, holding constant the political implementation variables).
The abstract says in part:
"The essay presents the Atkinson-Stiglitz and Chamley-Judd results that capital income should not be taxed, but concludes that the required conditions are too restrictive and not robust enough for policy purposes. Hence there should be some role for including capital income as a part of the tax base. The essay discusses some empirical underpinnings for two key elements in the conclusion - differences in savings propensities and the shape of earnings (and uncertainty about earnings) over the lifetime. The conclusion that capital income should be taxed does not lead to the conclusion that the tax base should be total income, the sum of labour income and capital income."
I couldn't resist forwarding a copy to my good friends Joe Bankman and David Weisbach, since the paper appears to line up more on my side than theirs in our recent exchange in the Stanford Law Review. But that is not to prejudge what effect, if any, a careful reading would have on one's assessment of the overall merits (and in truth my position and theirs are pretty close - we both would favor a progressive consumption tax, holding constant the political implementation variables).
Tax filing
I'm done, but I didn't make it under the wire by very much. I use Turbo Tax, as doing it by hand would be intolerable (think of the AMT alone, or for that matter leaving one item out of adjusted gross income and then, once one finds it, having to do umpteen calculations all over again).
Kind of an unpleasant process, haunted by fear that I am forgetting something, and subject to the usual feelings of being glad to get a refund or sad to still owe $$ even though in principle only the total paid really matters (leaving aside the time value of money on the one hand and penalties for under-paying on the other).
Turbo Tax appears to have screwed up this year by not automatically dealing with New York State estimated tax for next year. Had to do that myself. I am not well inclined towards them in any event, given their odious behavior in the Ready Return fight in California (where they raised bogus arguments to help kill a program that would have given Californians for free, at a state government cost of pennies, a set of services that Intuit would rather sell for $50).
Kind of an unpleasant process, haunted by fear that I am forgetting something, and subject to the usual feelings of being glad to get a refund or sad to still owe $$ even though in principle only the total paid really matters (leaving aside the time value of money on the one hand and penalties for under-paying on the other).
Turbo Tax appears to have screwed up this year by not automatically dealing with New York State estimated tax for next year. Had to do that myself. I am not well inclined towards them in any event, given their odious behavior in the Ready Return fight in California (where they raised bogus arguments to help kill a program that would have given Californians for free, at a state government cost of pennies, a set of services that Intuit would rather sell for $50).
Friday, April 11, 2008
Official witness list for my Senate Finance testimony next week
The panel, meeting on Tuesday, April 15, at 10 a.m. in room 215 of the Dirksen Senate Office Building, has the title "Tax: Fundamentals in Advance of Reform." The witness list (order as given in the listing I saw), is as follows:
Daniel N. Shaviro, Wayne Perry Professor of Taxation, New York University School of Law, New York, NY
Michael Graetz, Justus S. Hotchkiss Professor of Law, Yale Law School, New Haven, CT
Jason Furman, Director, The Hamilton Project, Brookings Institution, Washington, DC
Robert Carroll, Vice President for Economic Policy, The Tax Foundation, Washington, DC
Daniel N. Shaviro, Wayne Perry Professor of Taxation, New York University School of Law, New York, NY
Michael Graetz, Justus S. Hotchkiss Professor of Law, Yale Law School, New Haven, CT
Jason Furman, Director, The Hamilton Project, Brookings Institution, Washington, DC
Robert Carroll, Vice President for Economic Policy, The Tax Foundation, Washington, DC
Tax policy colloquium on "Long-Term Objectives for Government Debt"
At yesterday's NYU Tax Policy Colloquium, my past and future co-convenor Alan Auerbach presented "Long-Term Objectives for Government Debt," a paper he wrote for a conference in Sweden (arranged by a new government entity there, the Swedish Fiscal Policy Council).
Whew, this is going to be a tough one, I thought, when I saw the first page, which starts: "Finanspolitiska radet are en myndighet som har till uppgift att gora ... " etc. Okay, just kidding there. That actually is the first bit after the title page, but it comes from the soon-to-be-published book's credits, and it's the only part that's written in Swedish rather than English.
Alan identifies the three main issues associated with budget deficits and public debt as generational equity, economic efficiency or performance, and fiscal sustainability, which he identifies with a possibility of a fiscal disaster such as default or hyper-inflation. (The fourth big issue is its political economy effects, mainly reflecting political incentives to (a) defer and/or under-specify financing for government outlays and (b) pre-commit future governments' budgets because they may not share one's currently ascendant priorities. I quibbled a bit about Alan's list, notwithstanding that I have used exactly the same list in some of my writing. (Consistency being the hobgoblin of petty minds, after all.)
On generational equity, Mihir Desai argued, and I tend these days to agree, that, while the issue is important and while better information about government policy is surely welcome, it is hard to say how the policy we are actually following compares to the optimal policy. We know so little about future generations' circumstances relative to our own, and about the actual marginal costs and benefits of shifting consumption opportunities one way or the other. Sustainability, not generational equity, is actually the big enchilada so far as telling us that U.S. fiscal policy is on a dangerously bad path is concerned.
On economic efficiency or performance, I did the quibbling. As I define this category, there isn't a lot of efficiency at issue in the standard microeconomic sense. There are stabilization / counter-cyclical fiscal policy issues, though unfortunately deficits provide a poor measure given that the composition of tax and spending changes is so important (e.g., transfers to people with high versus low propensity to consume, rewarding existing investment versus new investment). And there are issues of effects on national saving, although again here composition is important and the main complaint, if fiscal policy reduces national saving, is a positive externalities story about saving.
Alan also puts in category 2 issues of tax smoothing, or having more constant tax rates over time rather than having to raise them suddenly because one has finally woken up to the sustainability problem if taxes aren't adequate over the long run given spending levels. At the risk of being a nitpicker, however, I put this in category 3, sustainability issues.
Alan views the sustainability issues discontinuously, in terms of the very real risk of a big meltdown or credit event along the lines of a run in the bank. I agree that this is the really big and growing risk or concern about our unsustainable fiscal policy - explicit or implicit default, hyper-inflation, collapse of the banking system, and so forth. As I say in Taxes, Spending, and the U.S. Government's March Toward Bankruptcy, this actually might happen, and indeed it verges on certainty of happening IF the U.S. political system can't function adequately. (It usually has in the past, but the last seven years make one a bit less optimistic.) But I would include in this category, because they are merely lesser versions of the same problem and have the same cause, lesser versions of the harm caused by deferring any serious response to sustainability problems. Examples include:
(a) foregone tax smoothing, leading to unduly high and distortionary taxes or tax rates in the future because we didn't raise them more moderately sooner,
(b) foregone consumption smoothing, such as from steep Medicare cuts in the future that cut more into essentials because more moderate cuts, hitting less vital and valuable services, weren't imposed sooner, and
(c) tough times for future elderly people whose benefits are cut late in the game, when they can no longer react by saving more, leading to their own accentuated failures of lifetime consumption smoothing.
Anodyne though it may sound, this can actually involve really bad stuff that was completely avoidable. And again, we basically agree about all of this - more of a semantic debate regarding how to conceptualize it.
We also struggled with tough questions of fiscal measurement that lack good answers and probably always will. The fiscal gap - say $80 trillion or about 10 percent of the present value of all expected future GDP (these numbers are made-up, but probably within the realm of a reasonable estimate) - sounds alarming, but strictly speaking is just a statement about statements; that is, a measure of the degree to which a reasonable projection of the current policy path actually is impossible and will not happen. Mere words don't automatically hurt, however. Thus, in thinking about the problems (such as fiscal meltdown risk) implied by the fiscal gap, we need to think about softer variables such as degrees of pre-commitment or lost flexibility.
For example: Joe Stiglitz projects an Iraq war cost of $2 or 3 trillion. Medicare prescription drugs has an infinite horizon revenue cost of more than $20 trillion. But these two numbers aren't entirely comparable, because the Iraq costs are largely water under the bridge - little we can do about them now - whereas we could actually back off spending all that money on future Medicare prescription drugs. This is a point about irreversibility, not about present value or risk / variance. Alan's article introduces a couple of concepts such as "implicit liabilities" and "deferred tax assets" that attempt to advance thinking about these issues - which I agree they do, although this post is already too long for full further discussion to make sense here - but in dealing with soft variables through the medium of a fiscal measure we will never be entirely satisfied. And, how we think about something such as the Medicare prescription drugs dollars (assuming one agrees about the remaining flexibility) does in part depend on whether one is thinking more about fiscal meltdown issues or broader smoothing / optimization issues.
Whew, this is going to be a tough one, I thought, when I saw the first page, which starts: "Finanspolitiska radet are en myndighet som har till uppgift att gora ... " etc. Okay, just kidding there. That actually is the first bit after the title page, but it comes from the soon-to-be-published book's credits, and it's the only part that's written in Swedish rather than English.
Alan identifies the three main issues associated with budget deficits and public debt as generational equity, economic efficiency or performance, and fiscal sustainability, which he identifies with a possibility of a fiscal disaster such as default or hyper-inflation. (The fourth big issue is its political economy effects, mainly reflecting political incentives to (a) defer and/or under-specify financing for government outlays and (b) pre-commit future governments' budgets because they may not share one's currently ascendant priorities. I quibbled a bit about Alan's list, notwithstanding that I have used exactly the same list in some of my writing. (Consistency being the hobgoblin of petty minds, after all.)
On generational equity, Mihir Desai argued, and I tend these days to agree, that, while the issue is important and while better information about government policy is surely welcome, it is hard to say how the policy we are actually following compares to the optimal policy. We know so little about future generations' circumstances relative to our own, and about the actual marginal costs and benefits of shifting consumption opportunities one way or the other. Sustainability, not generational equity, is actually the big enchilada so far as telling us that U.S. fiscal policy is on a dangerously bad path is concerned.
On economic efficiency or performance, I did the quibbling. As I define this category, there isn't a lot of efficiency at issue in the standard microeconomic sense. There are stabilization / counter-cyclical fiscal policy issues, though unfortunately deficits provide a poor measure given that the composition of tax and spending changes is so important (e.g., transfers to people with high versus low propensity to consume, rewarding existing investment versus new investment). And there are issues of effects on national saving, although again here composition is important and the main complaint, if fiscal policy reduces national saving, is a positive externalities story about saving.
Alan also puts in category 2 issues of tax smoothing, or having more constant tax rates over time rather than having to raise them suddenly because one has finally woken up to the sustainability problem if taxes aren't adequate over the long run given spending levels. At the risk of being a nitpicker, however, I put this in category 3, sustainability issues.
Alan views the sustainability issues discontinuously, in terms of the very real risk of a big meltdown or credit event along the lines of a run in the bank. I agree that this is the really big and growing risk or concern about our unsustainable fiscal policy - explicit or implicit default, hyper-inflation, collapse of the banking system, and so forth. As I say in Taxes, Spending, and the U.S. Government's March Toward Bankruptcy, this actually might happen, and indeed it verges on certainty of happening IF the U.S. political system can't function adequately. (It usually has in the past, but the last seven years make one a bit less optimistic.) But I would include in this category, because they are merely lesser versions of the same problem and have the same cause, lesser versions of the harm caused by deferring any serious response to sustainability problems. Examples include:
(a) foregone tax smoothing, leading to unduly high and distortionary taxes or tax rates in the future because we didn't raise them more moderately sooner,
(b) foregone consumption smoothing, such as from steep Medicare cuts in the future that cut more into essentials because more moderate cuts, hitting less vital and valuable services, weren't imposed sooner, and
(c) tough times for future elderly people whose benefits are cut late in the game, when they can no longer react by saving more, leading to their own accentuated failures of lifetime consumption smoothing.
Anodyne though it may sound, this can actually involve really bad stuff that was completely avoidable. And again, we basically agree about all of this - more of a semantic debate regarding how to conceptualize it.
We also struggled with tough questions of fiscal measurement that lack good answers and probably always will. The fiscal gap - say $80 trillion or about 10 percent of the present value of all expected future GDP (these numbers are made-up, but probably within the realm of a reasonable estimate) - sounds alarming, but strictly speaking is just a statement about statements; that is, a measure of the degree to which a reasonable projection of the current policy path actually is impossible and will not happen. Mere words don't automatically hurt, however. Thus, in thinking about the problems (such as fiscal meltdown risk) implied by the fiscal gap, we need to think about softer variables such as degrees of pre-commitment or lost flexibility.
For example: Joe Stiglitz projects an Iraq war cost of $2 or 3 trillion. Medicare prescription drugs has an infinite horizon revenue cost of more than $20 trillion. But these two numbers aren't entirely comparable, because the Iraq costs are largely water under the bridge - little we can do about them now - whereas we could actually back off spending all that money on future Medicare prescription drugs. This is a point about irreversibility, not about present value or risk / variance. Alan's article introduces a couple of concepts such as "implicit liabilities" and "deferred tax assets" that attempt to advance thinking about these issues - which I agree they do, although this post is already too long for full further discussion to make sense here - but in dealing with soft variables through the medium of a fiscal measure we will never be entirely satisfied. And, how we think about something such as the Medicare prescription drugs dollars (assuming one agrees about the remaining flexibility) does in part depend on whether one is thinking more about fiscal meltdown issues or broader smoothing / optimization issues.
Wednesday, April 09, 2008
Ray Davies concert
Last night, after a very full day devoted to intensive labor on my Senate Finance testimony for next week plus sundry internal NYU matters, I returned home feeling a bit beaten down ("It's hard work," as Bush would say) but with an evening event on my schedule - a Ray Davies concert at the Beacon Theater.How au courant to be going to such a concert, some of my NYU colleagues said. Not that I was trying to be. Better just to rest after a day of long hard slogging, if that were the goal. But another colleague, who actually is somewhat au courant, used instead the word "old-fogeyish" to describe going to such a thing. (Had he seen the audience in the orchestra section of the theater he would have felt entirely vindicated.) But my true reason for going was that I hoped the concert would be interesting and fun. It was - and I felt really revived afterwards.
The biggest surprise, though I suppose it shouldn't have been, was what a showman, as well as a hungry sponge for audience acclaim and approval, Davies proved to be. Also seemingly a genuinely nice man, although that isn't the standard formula for a rock 'n' roll lead singer (and on-stage appearances can surely be deceiving). There's so much depression, scorn, and paranoia in some parts of his songwriting canon that I was expecting something a bit different. (Maybe I was succumbing as well to the romantic myth of the lonely, suffering artist.) Obviously lots of other parts of his canon express something very different than this (e.g., Days and Waterloo Sunset). But one could see how integral to his overall set of drives were his fifteen plus years (from the early 70s on) of playing dreadful arena rock so as to "give the people what they want" (as one of his album titles put it).
So there he was, actively seeking sing-alongs on all the old Kinks hits, coming back on stage when the show seemed to be over because he wanted to do just one more number, then doing another one after that, thanking the crowd, mourning the Kinks, throwing repeated verbal bouquets to the guitar playing of his estranged brother Dave, praising his current band and asking if we liked them too, etcetera.
More needy than smarmy, however. And he's still a great singer as well as one of the premier rock songwriters, with his trademark plaintive but indelible minor-key hooks that only the Beatles could really do as well. (That plus the articulate lyrics, ability to capture moods, and the memorable power-chord runs that others such as the Who stole from him.) No other songwriter from that era has come close to his recent writing except for Dylan, who still sets his own standard but really just on Modern Times.
Almost all Kinks in the first set (although two from his first solo release), then after the intermission five or so cuts from the new album starting out acoustic then returning to the full band, and finally a mix of old classics with more new stuff. Almost all of his Kinks material was from the band's first 3 or so years. Nothing from Village Green unless you count Days (which is from the same era and is on the extended reissue but not the original album). Only 3 songs from the 70s and 80s, which (Lola excepted) was a mercy. And the new material really did stand up to the old although perhaps not quite as rousing.
NYU hiring
We've now gone public on the fact that Mitchell Kane is joining the NYU law faculty. Mitch is a rising star in the international tax field and has things to say about, among other topics, recent convulsions in international tax policy thinking about the worldwide and national welfare considerations that underlie optimal (whether or not actual) rule design. I'm very glad to have him here.
Sunday, April 06, 2008
NYU Tax Policy Colloquium on "Making Social Security Work"
Last Thursday at the colloquium, Jonathan Barry Forman of U Oklahoma Law School presented (or, given our format, responded concerning) "Making Social Security Work," a chapter from his recent Urban Institute Press book, "Making America Work."
The chapter describes the Social Security fiscal crisis - which some people call large, others small, even when they agree about its actual size (a bit like arguing about whether a spill on the floor is big or small - what the heck, either way at some point we'll have to wipe it up). It offers this as motivation for fixing the system to have a level-one demogrant for seniors plus a level-two individual account, in lieu of the current benefit structure.
As Mihir Desai noted in the discussion, one could fix the Social Security fiscal gap without fundamentally changing the structure. (A bit later retirement, a bit higher payroll tax rate or ceiling, a bit slower benefit growth relative to wage levels, etc.) Or, one could change the fundamental structure, if one likes a different one better, even in the absence of any long-term fiscal problem.
More quibbling: In terms of the book's idea of rewarding, or at least not overly penalizing, work, penalizing it is basically what the fiscal system does in light of its basic distributional aim of treating Bill Gates as better-off as the readers of this blog, and them in turn as generally better off than homeless individuals. A consumption tax burdens work, as does an income tax or any other plausible base. Sure, there are some silly Social Security features that needlessly discourage work, such as the treatment of earnings by people age 62 to 66 if they have selected early retirement, or arguably the lack of a clearer tax-benefit link in the system (so that the marginal burden it imposes on work arguably seems higher than it actually is). Fundamentally, however, discouraging work up to a point is the name of the game. Why select it as a key consideration here?
Somehow, the conversation ended up devolving into the good old income tax versus consumption tax chestnut that has occupied us so often in past years' sessions (though for this year, it was a first). Forman argued that using general revenues (and thus the income tax) is more efficient than payroll tax financing because it covers a larger percentage of GDP. But, insofar as that reflects the difference between an income and a consumption tax base, one must keep in mind the tax policy and economics literature's recent finding that an income tax is likely to be less efficient because its burdening savings on top of work does not mean that it burdens work any less. Just because GDP happens to be an income measure doesn't mean we should think about efficiency in terms of the percentage of GDP covered. It's true that the income tax also reaches wages in the economist's sense that are not legally wages for payroll tax purposes. But then again it is also true that the existing income tax base has more preferences built into it than the payroll tax base (they share the preferences for fringe benefits and such, but the income tax has lots more such as home mortgage interest et al). So anyway, why should we think that income tax financing would be better? (Rate structure is a separate point.)
Anyway, just speaking for myself, I didn't think I came out of the day knowing all that much more than I had going in. But it was a lively and interesting session.
The chapter describes the Social Security fiscal crisis - which some people call large, others small, even when they agree about its actual size (a bit like arguing about whether a spill on the floor is big or small - what the heck, either way at some point we'll have to wipe it up). It offers this as motivation for fixing the system to have a level-one demogrant for seniors plus a level-two individual account, in lieu of the current benefit structure.
As Mihir Desai noted in the discussion, one could fix the Social Security fiscal gap without fundamentally changing the structure. (A bit later retirement, a bit higher payroll tax rate or ceiling, a bit slower benefit growth relative to wage levels, etc.) Or, one could change the fundamental structure, if one likes a different one better, even in the absence of any long-term fiscal problem.
More quibbling: In terms of the book's idea of rewarding, or at least not overly penalizing, work, penalizing it is basically what the fiscal system does in light of its basic distributional aim of treating Bill Gates as better-off as the readers of this blog, and them in turn as generally better off than homeless individuals. A consumption tax burdens work, as does an income tax or any other plausible base. Sure, there are some silly Social Security features that needlessly discourage work, such as the treatment of earnings by people age 62 to 66 if they have selected early retirement, or arguably the lack of a clearer tax-benefit link in the system (so that the marginal burden it imposes on work arguably seems higher than it actually is). Fundamentally, however, discouraging work up to a point is the name of the game. Why select it as a key consideration here?
Somehow, the conversation ended up devolving into the good old income tax versus consumption tax chestnut that has occupied us so often in past years' sessions (though for this year, it was a first). Forman argued that using general revenues (and thus the income tax) is more efficient than payroll tax financing because it covers a larger percentage of GDP. But, insofar as that reflects the difference between an income and a consumption tax base, one must keep in mind the tax policy and economics literature's recent finding that an income tax is likely to be less efficient because its burdening savings on top of work does not mean that it burdens work any less. Just because GDP happens to be an income measure doesn't mean we should think about efficiency in terms of the percentage of GDP covered. It's true that the income tax also reaches wages in the economist's sense that are not legally wages for payroll tax purposes. But then again it is also true that the existing income tax base has more preferences built into it than the payroll tax base (they share the preferences for fringe benefits and such, but the income tax has lots more such as home mortgage interest et al). So anyway, why should we think that income tax financing would be better? (Rate structure is a separate point.)
Anyway, just speaking for myself, I didn't think I came out of the day knowing all that much more than I had going in. But it was a lively and interesting session.
Friday, April 04, 2008
Forthcoming testimony
I've been invited to testify before the Senate Finance Committee on April 15, from 10 am to noon, regarding tax reform basics. More details to follow, but the panel seeks to lay the groundwork for thinking about fundamental reform of the income tax variety that in theory might start taking shape next year. I'm not convinced anything will, but certainly there are enough ticking time bombs out there, such as the expiring tax cuts, rise of the AMT, and exploding deficits (if, unlike the Bush Administration, we are sufficiently unsporting actually to count everything).
Others on the panel will include Michael Graetz and, most likely, an economist thought to represent more conservative views (though conceivably the three of us will agree a whole lot more than the audience expects). This will be a hectic day - by 6 pm the same night I need to be back in NYC discussing tax policy on a panel that includes both a Heritage Foundation flat-taxer and someone apparently associated with Bill Gates, Sr.'s bid to save the estate tax. Plenty of disagreement to go around there, I suppose.
Also by April 15, I'm pretty sure there's something else I'm supposed to have completed and filed. If only I could remember what it is.
Tuesday, April 01, 2008
Yes, it's April Fool's Day, and no, I wasn't born yesterday
Earlier today I got the following e-mail:
"Dear Professor Shaviro:
"We represent a very small but very wealthy nation that has asked us to approach you. This nation is about to launch a revolutionary effort to adopt some of the values of countries that have been developed economic powers throughout recent history. In particular, this nation’s ruling family is interested in a modern and explicitly progressive system of taxation.
"The ruling family is acquainted, in some cases directly, with your thinking. We (my organization is resolutely obscure, but we did great deal of research to identify you) and they have identified three candidates in total to approach: you and one other from the United States, and one from Norway.
"While the intellectual challenge of designing a system of taxation from scratch would be of the highest order, the compensation alone would be enticing. For your time in consultation amounting to let us say some 500 hours, perhaps concentrated in the summer, something in the very high six figures seems appropriate, with the possibility of a continuing relationship.
"To date, revenue from this nation's resources has made progressive taxation unnecessary, and that state of affairs continues. The family’s motivation is not to find more funding, but rather to embark on a approach that embodies concepts of economic justice that we believe you understand and can apply.
"If this opportunity interests you in any way, we would appreciate the chance to meet with you in person. You should be advised that the ruling family, while moving toward Western values in many ways, appreciates what they consider a dignified appearance: coat and tie (or burnoose), highly polished shoes or boots, carefully combed hair, and so on.
"We look forward to hearing from you."
[Followed by organization name, Wall Street address, and 800 number.]
Okay, let's get this straight. On April Fool's Day, someone simply cold-e-mails me to offer close to a million dollars for doing what all academics ostensibly dream of - getting to play philosopher king. I guess I'd better get my burnoose cleaned and pressed.
What I actually did, just out of curiosity, was (a) google the supposed organization and draw a blank, and (b) have my secretary call the 800 number, which turned out to be a porno line.
At least they didn't ask me for $10,000 or my private security codes. But I guess that million-dollar payday for getting to play philosopher king will just have to wait.
"Dear Professor Shaviro:
"We represent a very small but very wealthy nation that has asked us to approach you. This nation is about to launch a revolutionary effort to adopt some of the values of countries that have been developed economic powers throughout recent history. In particular, this nation’s ruling family is interested in a modern and explicitly progressive system of taxation.
"The ruling family is acquainted, in some cases directly, with your thinking. We (my organization is resolutely obscure, but we did great deal of research to identify you) and they have identified three candidates in total to approach: you and one other from the United States, and one from Norway.
"While the intellectual challenge of designing a system of taxation from scratch would be of the highest order, the compensation alone would be enticing. For your time in consultation amounting to let us say some 500 hours, perhaps concentrated in the summer, something in the very high six figures seems appropriate, with the possibility of a continuing relationship.
"To date, revenue from this nation's resources has made progressive taxation unnecessary, and that state of affairs continues. The family’s motivation is not to find more funding, but rather to embark on a approach that embodies concepts of economic justice that we believe you understand and can apply.
"If this opportunity interests you in any way, we would appreciate the chance to meet with you in person. You should be advised that the ruling family, while moving toward Western values in many ways, appreciates what they consider a dignified appearance: coat and tie (or burnoose), highly polished shoes or boots, carefully combed hair, and so on.
"We look forward to hearing from you."
[Followed by organization name, Wall Street address, and 800 number.]
Okay, let's get this straight. On April Fool's Day, someone simply cold-e-mails me to offer close to a million dollars for doing what all academics ostensibly dream of - getting to play philosopher king. I guess I'd better get my burnoose cleaned and pressed.
What I actually did, just out of curiosity, was (a) google the supposed organization and draw a blank, and (b) have my secretary call the 800 number, which turned out to be a porno line.
At least they didn't ask me for $10,000 or my private security codes. But I guess that million-dollar payday for getting to play philosopher king will just have to wait.
New publication
An article of mine from late 2006, "Disclosure and Civil Penalty Rules in the U.S. Legal Response to Corporate Tax Shelters," has finally been published, in Wolfgang Schon (ed.), Tax and Corporate Governance.
On second thought, if you press the link you'll see that Amazon lists it as coming out later this month.
As it is a bit pricey, anyone interested just in my chapter should e-mail me off-line.
On second thought, if you press the link you'll see that Amazon lists it as coming out later this month.
As it is a bit pricey, anyone interested just in my chapter should e-mail me off-line.
Ready for the 80s?
I'm starting to think I'm not, or at least not ready enough to purchase the new B-52s and R.E.M. albums.