Today will be the third and last day of the National Tax Association’s 107th Annual Meeting, being held in Santa Fe. It’s been nice to see lots of old friends here, from economics, law, and accounting. Obviously economists are the largest group, but the law contingent is significant these days, and a bunch of junior people appear to be making it a regular thing, which is great both for them and the NTA. There is some tendency for the economists and lawyers to do things separately, but there is also a fair amount of interaction, and in any event the optimal mixing percentage is less than 100 percent given distinct professional interests and styles.
Next year’s NTA Annual Meeting will be held in Boston, which is certainly easier to get to for many of us than Santa Fe, and the program chairs will be Matthew Weinzierl of the Harvard Business School and Dhammika Dharmapala of the University of Chicago Law School.
With lots of good panels in each time slot, one had to miss a lot of good things. (I also ended up missing the Georgia O’Keefe Museum, even though it’s right next door.) But there were four general sessions, each meriting a brief mention here.
The first day’s lunch speaker was Joe Stiglitz. He argues that, with proper use of Pigovian taxes such as a carbon tax, along with Henry George land or site value taxes, the U.S. government can raise more than enough revenue over the long run without doing serious economic harm. He also pointedly dissented from academic uses of the 1976 Atkinson-Stiglitz theorem regarding equal commodity taxation to draw pro-consumption tax, anti-income tax, conclusions. But when asked what would be wrong with using a progressive consumption tax plus inheritance/gift tax, in lieu of a capital income tax that may have a hard time getting away from realization problems, his answer appeared to focus mainly on rents, which would in principle generally be reached under a progressive consumption tax and also, to the extent not spent during their lifetimes by those earning the rents, by the inheritance/gift tax.
Stiglitz criticized Thomas Piketty’s economic analysis (as distinct from statistical analysis) in Capital in the Twenty-First Century on the ground that Piketty has confused “capital,” in the sense of productive inputs, with “wealth,” in the sense of the market value of existing resources. To illustrate (using his example), suppose that in France there is a huge run-up in the value of real estate – reflecting, say, the global popularity of Paris and the French Riviera as attractive destinations. This increases the wealth held by people in France (ignoring the issue of French versus overseas ownership of French land). But it does nothing to increase the capital that can be deployed in economic production. So while the landowners would presumably now be earning r (the normal return) on a higher valuation, they would not have increased productive resources in the economy, hence there would be no tendency for the increased wealth – unlike increased capital being deployed productively – to bid down r.
Perhaps this is enough for one post, so I will add a second one on the other general sessions at this year’s NTA.