Word has just come out of Washington that Ed Kleinbard has been named the new Chief of Staff of the Joint Committee on Taxation. In the interest of full disclosure, I should note that Ed is a personal friend, which naturally colors my views. But our being friends reflects, among other factors, my admiration for the abilities that he will bring to the job. So I don't think it should induce any skepticism about my endorsement.
JCT chief is unquestionably a very challenging role. Friends with inside-the-Beltway knowledge about tax politics have gone so far as to call it the single worst job in America. Hyperbole perhaps, but they have a point. I hope I'm not breaching confidences if I say that I am among the people who was asked about possible interest in seeking the job. I rapidly, indeed instantaneously, concluded that I did not, even though the suggestion was flattering to one with my background as a former JCT staffer, due to what I know about the position and (perhaps more importantly) what I know about myself. This would not have been the right job for me, particularly in terms of my temperament but also my skill set, even if I otherwise wanted it.
Some people who know Ed are not convinced that he has the right temperament for it either. In the NYC practice world, he is not famous for genially tolerating stupidity or sloppy thinking, both of which one can expect to encounter frequently around Capital Hill. But he has spent more than thirty years working with clients, colleagues in the Bar, and government officials, among others, all with great success. His charisma and charm will carry him through so far as the world is concerned - I'd be more worried that his high standards will affect his enjoyment of the job than his success and effectiveness.
A couple of downsides to the job these days. First, JCT has been all but wiped out as a real player in recent years. This reflects a host of factors, including the growth of other tax staffs, more rapid turnover on the Hill with consequent loss of institutional memory and commitment, and the fact that lobbyists have such enormous power these days and have gotten so far inside the process. (As I'm currently reading Harry Potter 7, this brings to mind Voldemort's penetration of the Ministry.) The only recent JCT chief who could really overcome this was Ken Kies, but that reflected his personal connections and influence, much more than anything institutionally rooted. Second, this is not a propitious time for significant tax legislation, given the gridlock arising from the Democrats' thin majority (and Republican obstructionism of substantive measures in all areas) plus the character of (or should I say in) the White House. But perhaps 2009 will be a propitious time - there certainly will be plenty to do (whether or not Congress is able to do it), what with expiring provisions and the rising threat of the fiscal gap. Hard to tell what to expect before the 2008 elections.
On the positive side, I can't see why Senator Baucus and Congressman Rangel would have named Ed to the job, rather than someone blander and safer, unless they wanted to make use of his energy and knowledge. There certainly is room for an energetically run JCT to take the lead in analyzing issues, identifying legislative options, and so forth. Take the carried interest debate. Under Ed, I could well imagine the JCT having taken the lead in offering a comprehensive analysis of the issues and competing views, developing and evaluating proposals, etcetera. Not playing a partisan role but teeing up the issue properly so it can be better discussed and understood, and so that realistic options of all sorts will be on the table. Obviously, no JCT chief can do this, even assuming adequate staffing levels and time, if the committee chairs don't want it done. But their picking Ed strikes me as hopeful evidence that perhaps they do want it done. Again, why pick him otherwise.
So I'm very glad about this appointment from the standpoint of the public interest, and more guardedly glad about it from the standpoint of a friend and fellow member of the NYC tax policy community (which will have to do without Ed for a while).
Wednesday, August 01, 2007
Thursday, July 26, 2007
One nice thing about returning to NYC
Our cats, although well cared for while we were away, appear to have missed us terribly. I infer this because, ever since our reunion with them, they have been expressing their burning love for us (to the extent consistent with the feline temperament). They also have made it clear that they keenly remember all the details of their daily feeding rituals.
Hedge funds / carried interests
During my month out of the country, I was sufficiently in touch via the Internet & e-mail to realize how dominant the hedge funds / carried interests issue has remained in Washington tax policy thinking. This bemused me a bit, on the view that, of all the important things in our society that tax policy can affect, this doesn't necessarily rise to the top as Issue # 1. As always happens when an issue takes off politically, symbolism is clearly an important part, here relating to the general trend of rising inequality in the U.S., in particular or at least at the very top, and the policymaking trend in recent years of doing less to address inequality rather than more. The hedge fund managers with their multi-million dollar paydays and deferred 15 percent tax rate are just one piece of the larger picture, but are naturally felt to stand for the whole thing.
Not to deny that there is significant money at stake here. And the transactionally related issue of the Blackstone IPO slicing a big hole in the previously prevailing rule that publicly traded entities are taxed as C corporations adds to the importance of what's going on with the hedge funds, as that could conceivably reshape the choice of entities landscape a bit. So the issues certainly merit attention, even if their comparative prominence is a bit peculiar.
While I feel strongly impelled to comment on publicly prominent tax issues like this one, I do have an "art for art's sake" side that prefers issues to be intellectually interesting rather than publicly prominent (albeit that actual social importance counts heavily in my metric as well). But I am starting to think that the issues here are indeed pretty interesting for their own sake, on the conceptual as well as the practical design level.
One seemingly under-appreciated issue in debate so far concerns the significance of the corporate tax to how we think about the hedge fund managers who pay little tax on huge compensation deals. Suppose the manager gets $100 million, is taxed only at the 15 percent capital gains rate, perhaps a couple of years down the road, and that the other partners are tax-exempt so that their not deducting the fee is irrelevant. There is still one more level to consider, if what the partnership does is invest in C corporations. What about the corporate-level tax on those corporations? Does it matter to the analysis?
Let's start outside the hedge fund realm with Bill Gates. He builds a hugely profitable company (and suppose for simplicity that he owns 100%), but suppose further that he pays himself no salary or dividends and profits purely from stock appreciation. We then have a rising billionaire who appears to be paying no tax.
Suppose, however, that Microsoft is being taxed on its annual economic income at the full statutory rate. This would seem to make the problem go away (leaving aside the question of whether the rate structure is progressive enough). After all, if we taxed Microsoft under a flow-through approach like that used for partnerships, we would think of Gates as reporting all its income and paying tax on it. Likewise if we had an integrated corporate tax with shareholder-level credits for corporate-level tax paid, assuming the corporate rate and his were the same. So the only reason Bill Gates appears to be getting away with murder, under actual law, is that he does not bear the nominal incidence of the corporate tax since Microsoft is treated as a separate taxpayer. (Questions of the economic incidence of the corporate tax would be unchanged by placing the nominal incidence of the tax on him as in the flow-through or corporate integration scenarios.)
Obviously, this view places heavy emphasis on Microsoft's being fully taxed. Corporate-level tax planning might defeat this result. Also, it assumes that we have no reason to like a two-level corporate tax.
How does it apply to hedge funds and carried interests? I am still learning (from Victor Fleischer and others) about what's really happening on the ground in this area, and I note Victor's comment, from his widely-circulated "Two and Twenty" draft, that a hedge fund is a "compensation scheme masquerading as an asset class." But let's consider for now four categories of business activity that fairly commonly use this structure. Two that have been less commented on are oil and gas activities and real estate activities, on which it is enough for now to note that these activities often receive highly preferential tax treatment - weakening the argument that corporate-level taxation does the trick, although arguably converting the nature of the problem from inequity to inefficiency.
The other two categories that have been widely mentioned are (1) the classic hedge funds that try, a la Long-Term Capital Management, to exploit market inefficiencies in stock pricing to generate profits for the investors, and (2) private equity funds that take ownership positions in under-performing companies, raise the stock value, and then flip the stock. In distinguishing these two, I don't mean to imply either that everyone is a clean case of one or the other, or that statutory rules could be drafted that conveniently and accurately sliced the world into these two categories - only that they are conceptually different.
In both cases, the carried interest rule may mean that the manager, who has the market power vis-a-vis his investors to extract most of the economic return, conceptually has labor income on his efforts that is taxed at only the 15 percent capital gains rate. But does the corporate-level tax on the companies that issued the underlying stocks make up for this?
I'm still just starting to think about this, and reader feedback is welcome. But the private equity fund case strikes me as pretty close to the Bill Gates example. The restructuring generates extra corporate-level income that is taxed if the corporate tax is well-functioning. If this is fine when you continue to hold the stock, selling it and paying tax at 15 percent while the corporate-level tax continues certainly doesn't make things worse.
But the hedge fund manager who outsmarts the market by anticipating in advance where value is headed looks to me a bit different. He (or she) hasn't increased corporate profitability, but merely discerned it faster. This may have social benefits, as it is part of having an efficient marketplace in which people can get the portfolios they want and in which money moves around to track true value, but the private gain from being one second faster than anyone else (and thereby generating a huge profit) substantially exceeds the social gain. Lots of it is simply an externality, via the shift of profits from those who discern value a bit more slowly to those who discern it a bit faster. And this analysis doesn't apply to the private equity fund case unless we view that as a tournament-style competition to be the one who gets to add the value.
One way of looking at it is that the private equity fund manager's efforts really are taxed by the corporate tax system (again, assuming its effectiveness), while the hedge fund trader's efforts aren't taxed in this sense. But, since we could easily start splitting hairs about whether it matters that the values discerned by the hedge fund manager are after-tax values (since this is what investors presumably care about), perhaps it's clearer to say instead that there is an incentive to over-invest in what the hedge fund manager does, but not necessarily in what the private equity manager does, so we should want to tax the former at a higher rate than the latter. Once again, of course, I have transmuted the distributional issue into one of efficiency, reflecting that, when activities are lightly taxed, they attract extra input that may bid down the pre-tax return.
Final point for now: the point about inequity being converted into inefficiency depends on efficient markets. But is this entirely the right assumption here? Capital markets do strange things that the standard Chicago-style ECMH (efficient capital markets hypothesis) cannot easily explain. The hedge fund managers, of course, are directly posited to be exploiting market inefficiencies. Or else perhaps they are being paid in some cases on the fiction that they can do better than monkeys throwing darts at the wall to determine investment choice. In general, how competitive is this market, with its arguably strangely uniform structure for arranging compensation? I don't want to argue here against using conventional economic tools to understand what is going on here, but the possibility of big anomalies should not be prematurely ruled out.
Not to deny that there is significant money at stake here. And the transactionally related issue of the Blackstone IPO slicing a big hole in the previously prevailing rule that publicly traded entities are taxed as C corporations adds to the importance of what's going on with the hedge funds, as that could conceivably reshape the choice of entities landscape a bit. So the issues certainly merit attention, even if their comparative prominence is a bit peculiar.
While I feel strongly impelled to comment on publicly prominent tax issues like this one, I do have an "art for art's sake" side that prefers issues to be intellectually interesting rather than publicly prominent (albeit that actual social importance counts heavily in my metric as well). But I am starting to think that the issues here are indeed pretty interesting for their own sake, on the conceptual as well as the practical design level.
One seemingly under-appreciated issue in debate so far concerns the significance of the corporate tax to how we think about the hedge fund managers who pay little tax on huge compensation deals. Suppose the manager gets $100 million, is taxed only at the 15 percent capital gains rate, perhaps a couple of years down the road, and that the other partners are tax-exempt so that their not deducting the fee is irrelevant. There is still one more level to consider, if what the partnership does is invest in C corporations. What about the corporate-level tax on those corporations? Does it matter to the analysis?
Let's start outside the hedge fund realm with Bill Gates. He builds a hugely profitable company (and suppose for simplicity that he owns 100%), but suppose further that he pays himself no salary or dividends and profits purely from stock appreciation. We then have a rising billionaire who appears to be paying no tax.
Suppose, however, that Microsoft is being taxed on its annual economic income at the full statutory rate. This would seem to make the problem go away (leaving aside the question of whether the rate structure is progressive enough). After all, if we taxed Microsoft under a flow-through approach like that used for partnerships, we would think of Gates as reporting all its income and paying tax on it. Likewise if we had an integrated corporate tax with shareholder-level credits for corporate-level tax paid, assuming the corporate rate and his were the same. So the only reason Bill Gates appears to be getting away with murder, under actual law, is that he does not bear the nominal incidence of the corporate tax since Microsoft is treated as a separate taxpayer. (Questions of the economic incidence of the corporate tax would be unchanged by placing the nominal incidence of the tax on him as in the flow-through or corporate integration scenarios.)
Obviously, this view places heavy emphasis on Microsoft's being fully taxed. Corporate-level tax planning might defeat this result. Also, it assumes that we have no reason to like a two-level corporate tax.
How does it apply to hedge funds and carried interests? I am still learning (from Victor Fleischer and others) about what's really happening on the ground in this area, and I note Victor's comment, from his widely-circulated "Two and Twenty" draft, that a hedge fund is a "compensation scheme masquerading as an asset class." But let's consider for now four categories of business activity that fairly commonly use this structure. Two that have been less commented on are oil and gas activities and real estate activities, on which it is enough for now to note that these activities often receive highly preferential tax treatment - weakening the argument that corporate-level taxation does the trick, although arguably converting the nature of the problem from inequity to inefficiency.
The other two categories that have been widely mentioned are (1) the classic hedge funds that try, a la Long-Term Capital Management, to exploit market inefficiencies in stock pricing to generate profits for the investors, and (2) private equity funds that take ownership positions in under-performing companies, raise the stock value, and then flip the stock. In distinguishing these two, I don't mean to imply either that everyone is a clean case of one or the other, or that statutory rules could be drafted that conveniently and accurately sliced the world into these two categories - only that they are conceptually different.
In both cases, the carried interest rule may mean that the manager, who has the market power vis-a-vis his investors to extract most of the economic return, conceptually has labor income on his efforts that is taxed at only the 15 percent capital gains rate. But does the corporate-level tax on the companies that issued the underlying stocks make up for this?
I'm still just starting to think about this, and reader feedback is welcome. But the private equity fund case strikes me as pretty close to the Bill Gates example. The restructuring generates extra corporate-level income that is taxed if the corporate tax is well-functioning. If this is fine when you continue to hold the stock, selling it and paying tax at 15 percent while the corporate-level tax continues certainly doesn't make things worse.
But the hedge fund manager who outsmarts the market by anticipating in advance where value is headed looks to me a bit different. He (or she) hasn't increased corporate profitability, but merely discerned it faster. This may have social benefits, as it is part of having an efficient marketplace in which people can get the portfolios they want and in which money moves around to track true value, but the private gain from being one second faster than anyone else (and thereby generating a huge profit) substantially exceeds the social gain. Lots of it is simply an externality, via the shift of profits from those who discern value a bit more slowly to those who discern it a bit faster. And this analysis doesn't apply to the private equity fund case unless we view that as a tournament-style competition to be the one who gets to add the value.
One way of looking at it is that the private equity fund manager's efforts really are taxed by the corporate tax system (again, assuming its effectiveness), while the hedge fund trader's efforts aren't taxed in this sense. But, since we could easily start splitting hairs about whether it matters that the values discerned by the hedge fund manager are after-tax values (since this is what investors presumably care about), perhaps it's clearer to say instead that there is an incentive to over-invest in what the hedge fund manager does, but not necessarily in what the private equity manager does, so we should want to tax the former at a higher rate than the latter. Once again, of course, I have transmuted the distributional issue into one of efficiency, reflecting that, when activities are lightly taxed, they attract extra input that may bid down the pre-tax return.
Final point for now: the point about inequity being converted into inefficiency depends on efficient markets. But is this entirely the right assumption here? Capital markets do strange things that the standard Chicago-style ECMH (efficient capital markets hypothesis) cannot easily explain. The hedge fund managers, of course, are directly posited to be exploiting market inefficiencies. Or else perhaps they are being paid in some cases on the fiction that they can do better than monkeys throwing darts at the wall to determine investment choice. In general, how competitive is this market, with its arguably strangely uniform structure for arranging compensation? I don't want to argue here against using conventional economic tools to understand what is going on here, but the possibility of big anomalies should not be prematurely ruled out.
Tuesday, July 24, 2007
Back in NYC
Yesterday I returned from a month in Singapore & SE Asia (with spouse & kids), responsible for the paucity of recent posts. Definitely an interesting experience.
Singapore, where we spent the first 2 weeks, is better as a place to live than touristically. But there are a few good sites there. Most memorable, perhaps, was a feature at their aquarium that my kids were not alone in liking. The Singapore aquarium has a petting tank (!) with various small sharks and rays, including sting rays (presumably juveniles from their size) that have had their stingers removed.
The sharks pretty much just sit there on the bottom of the tank - these apparently don't have to keep moving in order to breathe - and let you feel their skin, which feels a bit like that of a snake. But the rays, which feel amazingly silky and smooth, keep surfacing and butting their heads against you in the hope of being fed small bits of fish. Quite a novel experience.
The other activity in Singapore that I enjoyed most was going to neighborhoods such as Chinatown, Little India, and Arab Street to wander around & then dine in small restaurants with very good and authentic food.
The class I was teaching in Singapore ended up being a great experience. It made me a lot more anxious than teaching usually does, because I was going solo for 3-1/4 hours a day, 4 days in a row on successive weeks, trying to teach very complex economic and tax policy ideas to a class of 17 or so students who were very good, and also very engaged, but who had next to no background either in tax law & policy or in public economics. This made it feel, the evening before each class, like I was going to be high-diving without a net. Would I be able to explain things well? Would the class run too fast or slow? Definitely an intense experience, but one that worked out really well. I felt that I was in reasonably good form on 7 of the 8 days, with a couple going really well. And on the day that I thought went badly, it was clear that I was unhappy about this & not blaming them, establishing a bit of credit for good faith.
After that stage we flew to Ho Chi Minh City, aka Saigon. For an American who grew up during the Vietnam War, definitely a notable experience to be there. It's a hectic and chaotic place. Crossing the street is a bit like playing a video game, only lots more dangerous. Continual hubbub with cars and millions of motorbikes. No one yields more than an inch short of collision. Touristically not that great from the standpoint of individually memorable sites, although the War Remembrance Museum was interesting. But my wife and I have always liked the aspect of traveling where you are trying to navigate in a foreign city, e.g., just trying to find a travel agent's office, and thus dealing with the map, crossing the streets, seeing the life there, going to markets, etc. So from that standpoint it was quite good for us though not for our kids.
Our big mistake on the trip was falling between two stools, the one that would have worked for my wife & me and the one that was best for our kids. E.g., if you go Ho Chi Minh or Hanoi (which we did later, see below), a central touristic focus should be getting out of town to some interesting sites nearby. From HCM, the obvious place to go is the Mekong Delta. From Hanoi, Sapa (mountains and hill tribes) and Halong Bay (limestone caves). But these side trips didn't seem feasible from the kids' standpoint, so we ended up just going to HCM and Hanoi.
Anyway, from HCM we proceeded to Siem Reap, Cambodia, the access point for Angkor Wat. We saw lots of amazing temples in different states of preservation. We also had a riverboat tour, seeing very poor people who live on the river or near it. Cambodia is a desperately poor country, beyond anything we'd seen apart from hill tribes in Thailand some years ago, and our guide was telling us about the corruption there, which has led him to be a tour guide even though he has a law degree. Highly recommended as a travel site.
Hanoi was less ramshackle than Saigon, a bit more appealing aesthetically (e.g., it has a nice lake in the center of town, maybe a mile walk to circumnavigate). Crossing the street here is even harder than in Saigon, however. One memorable bit involved the marketplace where they sell roast dog. Think of a skinned & barbecued whole pig if you've seen that, only it's definitely a dog, the whole body, which they slice with a giant cleaver if someone just wants part ... Our kids declined to go see this, and I can't say I blamed them, but I myself wouldn't have missed it.
Our final stage, definitely chosen for the kids though we enjoyed it too, was a beach resort in Phuket. The place we went, Le Meridien Phuket, has a private beach, so you can avoid the insane hubbub that makes most of Phuket so unpleasant, although for dinner you pretty much have to deal with it. One high point, I suppose, was taking second place in the resort's weekly ping pong championship. 15-year old Abdul of Bahrain, a tall, gangly kid who had a devastating forehand slam and seemingly a 20-foot wingspan, was the winner, although I had two match points against him. Good PR for America that I lost?
It is a bit awkward to be an American abroad in the age of Bush. I kept introducing myself as from New York City, to which they would answer "Oh, you're American." I realized that hardly anyone out there would understand the cultural distinction that I meant to draw by identifying myself as a New Yorker, rather than as an American, but I kept on trying anyway.
Singapore, where we spent the first 2 weeks, is better as a place to live than touristically. But there are a few good sites there. Most memorable, perhaps, was a feature at their aquarium that my kids were not alone in liking. The Singapore aquarium has a petting tank (!) with various small sharks and rays, including sting rays (presumably juveniles from their size) that have had their stingers removed.
The sharks pretty much just sit there on the bottom of the tank - these apparently don't have to keep moving in order to breathe - and let you feel their skin, which feels a bit like that of a snake. But the rays, which feel amazingly silky and smooth, keep surfacing and butting their heads against you in the hope of being fed small bits of fish. Quite a novel experience.
The other activity in Singapore that I enjoyed most was going to neighborhoods such as Chinatown, Little India, and Arab Street to wander around & then dine in small restaurants with very good and authentic food.
The class I was teaching in Singapore ended up being a great experience. It made me a lot more anxious than teaching usually does, because I was going solo for 3-1/4 hours a day, 4 days in a row on successive weeks, trying to teach very complex economic and tax policy ideas to a class of 17 or so students who were very good, and also very engaged, but who had next to no background either in tax law & policy or in public economics. This made it feel, the evening before each class, like I was going to be high-diving without a net. Would I be able to explain things well? Would the class run too fast or slow? Definitely an intense experience, but one that worked out really well. I felt that I was in reasonably good form on 7 of the 8 days, with a couple going really well. And on the day that I thought went badly, it was clear that I was unhappy about this & not blaming them, establishing a bit of credit for good faith.
After that stage we flew to Ho Chi Minh City, aka Saigon. For an American who grew up during the Vietnam War, definitely a notable experience to be there. It's a hectic and chaotic place. Crossing the street is a bit like playing a video game, only lots more dangerous. Continual hubbub with cars and millions of motorbikes. No one yields more than an inch short of collision. Touristically not that great from the standpoint of individually memorable sites, although the War Remembrance Museum was interesting. But my wife and I have always liked the aspect of traveling where you are trying to navigate in a foreign city, e.g., just trying to find a travel agent's office, and thus dealing with the map, crossing the streets, seeing the life there, going to markets, etc. So from that standpoint it was quite good for us though not for our kids.
Our big mistake on the trip was falling between two stools, the one that would have worked for my wife & me and the one that was best for our kids. E.g., if you go Ho Chi Minh or Hanoi (which we did later, see below), a central touristic focus should be getting out of town to some interesting sites nearby. From HCM, the obvious place to go is the Mekong Delta. From Hanoi, Sapa (mountains and hill tribes) and Halong Bay (limestone caves). But these side trips didn't seem feasible from the kids' standpoint, so we ended up just going to HCM and Hanoi.
Anyway, from HCM we proceeded to Siem Reap, Cambodia, the access point for Angkor Wat. We saw lots of amazing temples in different states of preservation. We also had a riverboat tour, seeing very poor people who live on the river or near it. Cambodia is a desperately poor country, beyond anything we'd seen apart from hill tribes in Thailand some years ago, and our guide was telling us about the corruption there, which has led him to be a tour guide even though he has a law degree. Highly recommended as a travel site.
Hanoi was less ramshackle than Saigon, a bit more appealing aesthetically (e.g., it has a nice lake in the center of town, maybe a mile walk to circumnavigate). Crossing the street here is even harder than in Saigon, however. One memorable bit involved the marketplace where they sell roast dog. Think of a skinned & barbecued whole pig if you've seen that, only it's definitely a dog, the whole body, which they slice with a giant cleaver if someone just wants part ... Our kids declined to go see this, and I can't say I blamed them, but I myself wouldn't have missed it.
Our final stage, definitely chosen for the kids though we enjoyed it too, was a beach resort in Phuket. The place we went, Le Meridien Phuket, has a private beach, so you can avoid the insane hubbub that makes most of Phuket so unpleasant, although for dinner you pretty much have to deal with it. One high point, I suppose, was taking second place in the resort's weekly ping pong championship. 15-year old Abdul of Bahrain, a tall, gangly kid who had a devastating forehand slam and seemingly a 20-foot wingspan, was the winner, although I had two match points against him. Good PR for America that I lost?
It is a bit awkward to be an American abroad in the age of Bush. I kept introducing myself as from New York City, to which they would answer "Oh, you're American." I realized that hardly anyone out there would understand the cultural distinction that I meant to draw by identifying myself as a New Yorker, rather than as an American, but I kept on trying anyway.
Monday, July 02, 2007
The Libby pardon
A clear obstruction of justice and act of monstrous if utterly unsurprising hypocrisy. I believe it is literally impossible to support this act unless you do not believe in the rule of law. Then again, that covers about 80 percent of the D.C. policy elite, such as the pathetic David Brooks, who has already fired up a yes-sir column.
Wednesday, June 27, 2007
You're only as good as your last class
One funny thing about teaching, even after 20 years, is how each class goes differently. So you never quite entirely get past the highs and lows. I've been doing this intensive-schedule tax policy class at Singapore, where you go for 3-1/4 hours (with only short breaks) 4 days in a row. Then, after a long weekend, four more days in a row.
I thought my first two classes went well. Fired up for the first one, sluggish start then strong recovery for the second. But today, for the third class, which (like the others) started at 12 pm local time, I decided at about 8 this morning that I didn't like my layout for the first third of the class. So I spent what should have been my usual morning prep time revising that portion. Bad idea. I showed up for class not having done adequate day-of-class review of the last two-thirds. Result, even though I know the material quite well: much harder to explain things coherently and clearly, and to keep in mind what sorts of threads to pick up and which to avoid.
Oh well. Tomorrow is another day.
UPDATE: Well, I feel it's been going better recently.
I thought my first two classes went well. Fired up for the first one, sluggish start then strong recovery for the second. But today, for the third class, which (like the others) started at 12 pm local time, I decided at about 8 this morning that I didn't like my layout for the first third of the class. So I spent what should have been my usual morning prep time revising that portion. Bad idea. I showed up for class not having done adequate day-of-class review of the last two-thirds. Result, even though I know the material quite well: much harder to explain things coherently and clearly, and to keep in mind what sorts of threads to pick up and which to avoid.
Oh well. Tomorrow is another day.
UPDATE: Well, I feel it's been going better recently.
Monday, June 25, 2007
Singapore
Five days ago, I arrived with my family in Singapore, after a very long flight (more than 24 hours, door to door). We're now acclimated, to the extent of having a temporary subscription to the Singapore version of netflix.com, and have been wandering the very humid city seeing the sights. I think I want to go into the import business, so that U.S. people can sample dragonfruit, a very strange-looking and aptly named import from Vietnam that, once cut open, tastes something like a crisper, tarter version of a kiwi.
Amazing construction boom in Singapore - it's radically transformed since my one other visit here, back in 1990. Without intending any sort of endorsement of anything, it's amazing, as a U.S. citizen, to be in a place that actually appears to be well-governed. Not exactly what I am used to these days.
Yesterday I taught my first session of an intensive 26-hours-over-8-class-days plunge through Tax Policy, and felt pretty good about it - excellent students, from all over the world. I don't know if it's something I said, probably not, but when I was explaining welfarism I got a question to the effect of: Why would anyone believe that anything other than people's subjective wellbeing is important? Hard for me to answer as that's the way I look at it as well.
Amazing construction boom in Singapore - it's radically transformed since my one other visit here, back in 1990. Without intending any sort of endorsement of anything, it's amazing, as a U.S. citizen, to be in a place that actually appears to be well-governed. Not exactly what I am used to these days.
Yesterday I taught my first session of an intensive 26-hours-over-8-class-days plunge through Tax Policy, and felt pretty good about it - excellent students, from all over the world. I don't know if it's something I said, probably not, but when I was explaining welfarism I got a question to the effect of: Why would anyone believe that anything other than people's subjective wellbeing is important? Hard for me to answer as that's the way I look at it as well.
If J.K. Rowling weren't alive and read this, she'd be spinning in her grave
My kids and I decided to try to think of the dumbest possible ending to the Harry Potter series. Although there are many possibilities, here's our favorite so far:
Right at the peak of Harry's climactic showdown with Voldemort, he wakes up in his plush bedroom with the Dursleys and realizes that - it was all a dream! Even the Dursleys being mean to him!
"Oh, Aunt Petunia, I've had the strangest dream!" And he tried to tell her about it, but the words failed, although he managed to express how sad a lot of it had been, and how mean his loving family.
"Well, it's all over now, Harrykins," said his beaming aunt, smothering him with kisses. "Would you like some extra porridge? Dudley insisted on leaving it for you."
Fade to black.
Right at the peak of Harry's climactic showdown with Voldemort, he wakes up in his plush bedroom with the Dursleys and realizes that - it was all a dream! Even the Dursleys being mean to him!
"Oh, Aunt Petunia, I've had the strangest dream!" And he tried to tell her about it, but the words failed, although he managed to express how sad a lot of it had been, and how mean his loving family.
"Well, it's all over now, Harrykins," said his beaming aunt, smothering him with kisses. "Would you like some extra porridge? Dudley insisted on leaving it for you."
Fade to black.
Monday, June 18, 2007
Abu Ghraib
An article by Seymour Hersh in this week's New Yorker makes it clear that the military engaged in a massive cover-up regarding higher-level involvement in and knowledge about the torture at Abu Ghraib and elsewhere. By higher-up, I mean it's clear to the forcibly retired General Taguba that Bush and Rumsfeld were likely involved in ordering torture, deliberately ignoring the evidence that their wishes were being all too fully carried out, and then squelching the investigation so that it would only reach the low-level grunts.
I've said it before in this blog. We often hear about torture as a means, as in the ticking time-bomb scenario. But to these people, torture is the end, not a means to some other end.
Why? Mainly just to establish that they can, because if you can do this then you can do anything.
Any other reasons? Well, one might ask why Bush as a tweener or adolescent dynamited frogs, as he apparently did. The child is father of the man.
I've said it before in this blog. We often hear about torture as a means, as in the ticking time-bomb scenario. But to these people, torture is the end, not a means to some other end.
Why? Mainly just to establish that they can, because if you can do this then you can do anything.
Any other reasons? Well, one might ask why Bush as a tweener or adolescent dynamited frogs, as he apparently did. The child is father of the man.
Hedge fund managers again
Funny how issues arise in Washington and become all-consuming for their designated 15 minutes. Right now, it's hedge fund managers, along with the Blackstone deal that somehow cleverly avoids corporate status under federal income tax law for what is effectively a publicly traded firm. (I'm not up to speed at this point on just how they manage this.)
Back on the hedge fund point, which I blogged on recently, I got an invitation from wsj.com to participate in an on-line two-person blog forum this week discussing the merits of the proposed legislation that would get rid of the managers' ability to take most of their compensation at a 15% marginal rate. They said I could blog pro or con, and the whole thing would be wrapped up within a few days. Tempting, and I definitely would have liked to do it (I would have blogged pro the legislation) so long as the opposing debater was a responsible grown-up not a Norquistian freak.
But I had to pass as I will be on the road, flying to Singapore to teach Tax Policy at the NYU @ National University of Singapore program, at the time when the exchange is supposed to take place.
One point I would have made is that, under a properly designed consumption tax, the hedge fund managers would definitely be taxable at the full statutory rate, whether directly or indirectly. Say it's a consumed income tax with yield-exempt savings accounts allowed only for "arm's length," i.e., third party market transactions. The managers would have to expense, and would pay a positive tax, upon consumption, on their more than market interest rate of return (assuming they're good enough to add value through their labor). A properly designed X-tax or flat tax would likewise avoid providing the benefit of the low rate, although exactly how this would work out as a practical matter, in light of these rules' generally disregarding financial instruments and eliminating double taxation of corporate equity-financed income, would take a bit more figuring out than I have time for pre-trip. E.g., we might have to think of it as operating via the corporate-level tax on the underlying equities. But clearly a 15% tax rate on substantially positive real returns that conceptually are labor income would not be the fruit of any well-designed and properly operating progressive consumption tax.
I am starting to think this issue requires a bit more thought than I have time for right now. But that's the great thing about blogging as opposed to scholarship and even journalism - tentative first drafts are allowed, as I see it.
Back on the hedge fund point, which I blogged on recently, I got an invitation from wsj.com to participate in an on-line two-person blog forum this week discussing the merits of the proposed legislation that would get rid of the managers' ability to take most of their compensation at a 15% marginal rate. They said I could blog pro or con, and the whole thing would be wrapped up within a few days. Tempting, and I definitely would have liked to do it (I would have blogged pro the legislation) so long as the opposing debater was a responsible grown-up not a Norquistian freak.
But I had to pass as I will be on the road, flying to Singapore to teach Tax Policy at the NYU @ National University of Singapore program, at the time when the exchange is supposed to take place.
One point I would have made is that, under a properly designed consumption tax, the hedge fund managers would definitely be taxable at the full statutory rate, whether directly or indirectly. Say it's a consumed income tax with yield-exempt savings accounts allowed only for "arm's length," i.e., third party market transactions. The managers would have to expense, and would pay a positive tax, upon consumption, on their more than market interest rate of return (assuming they're good enough to add value through their labor). A properly designed X-tax or flat tax would likewise avoid providing the benefit of the low rate, although exactly how this would work out as a practical matter, in light of these rules' generally disregarding financial instruments and eliminating double taxation of corporate equity-financed income, would take a bit more figuring out than I have time for pre-trip. E.g., we might have to think of it as operating via the corporate-level tax on the underlying equities. But clearly a 15% tax rate on substantially positive real returns that conceptually are labor income would not be the fruit of any well-designed and properly operating progressive consumption tax.
I am starting to think this issue requires a bit more thought than I have time for right now. But that's the great thing about blogging as opposed to scholarship and even journalism - tentative first drafts are allowed, as I see it.
Saturday, June 16, 2007
Tell a vision
Today's pre-Father's Day treat for me was an afternoon in Central Park seeing what was billed as the last concert ever by the great late-70s NYC rock band, Television. If you're not familiar with them, imagine a punk rock (for lack of a better word) version of Derek & the Dominoes, only a thousand times more original and interesting.
They were preceded by the Dragons of Zynth, best described as venturesome & imaginative but not all that compelling, and the Apples in Stereo, reasonably fun candy-coated Beach Boys-influenced indie pop. The day started warm and sunny but then rained steadily through the Apples' show, notwithstanding that (or perhaps because?) most of their songs have lyrics about how the sun is shining.
Then a long wait, the sun came back, and finally Television came on. I have waited to see them for thirty years, so a half-hour of roadie set-up wasn't too bad. I did see Tom Verlaine, the group's leader, with a back-up band in DC some time in the early 1980s, but it wasn't the same.
Worse news, the group's second lead guitarist, Richard Lloyd, wasn't there - apparently in the hospital; hope he's okay. That kills the whole point, I thought initially - one of Television's amazing features is the tradeoff between two guitarists who play very different lead styles. And indeed the replacement did nothing but strum rhythm and play fills, so there was something missing, but still it was one of the best concerts I've seen.
Verlaine plays in his own head, more than to the audience. Kept tuning and re-tuning his guitar at first, and complained about the lack of a sound check and that the City's sound system was "crap." Though this came out as good-humored, not petulant, and he did seem to like having a large and appreciative crowd that knew many of the songs. Great rhythm section, melodic and distinctive lead playing, he gets just amazing sounds in the high ranges, memorable riffs, the songs have an architecture, and even if ten minutes long they are always going somewhere. The songs and playing do what the group's name promises.
UPDATE: For those who are interested, Richard Lloyd's website reports: "I am sorry to report that Richard is currently unwell. He has been in hospital Intensive Care for 8 days with pneumonia as a primary medical problem. This has responded to treatment and he has shown some improvement and is now free of the breathing apparatus."
They were preceded by the Dragons of Zynth, best described as venturesome & imaginative but not all that compelling, and the Apples in Stereo, reasonably fun candy-coated Beach Boys-influenced indie pop. The day started warm and sunny but then rained steadily through the Apples' show, notwithstanding that (or perhaps because?) most of their songs have lyrics about how the sun is shining.
Then a long wait, the sun came back, and finally Television came on. I have waited to see them for thirty years, so a half-hour of roadie set-up wasn't too bad. I did see Tom Verlaine, the group's leader, with a back-up band in DC some time in the early 1980s, but it wasn't the same.
Worse news, the group's second lead guitarist, Richard Lloyd, wasn't there - apparently in the hospital; hope he's okay. That kills the whole point, I thought initially - one of Television's amazing features is the tradeoff between two guitarists who play very different lead styles. And indeed the replacement did nothing but strum rhythm and play fills, so there was something missing, but still it was one of the best concerts I've seen.
Verlaine plays in his own head, more than to the audience. Kept tuning and re-tuning his guitar at first, and complained about the lack of a sound check and that the City's sound system was "crap." Though this came out as good-humored, not petulant, and he did seem to like having a large and appreciative crowd that knew many of the songs. Great rhythm section, melodic and distinctive lead playing, he gets just amazing sounds in the high ranges, memorable riffs, the songs have an architecture, and even if ten minutes long they are always going somewhere. The songs and playing do what the group's name promises.
UPDATE: For those who are interested, Richard Lloyd's website reports: "I am sorry to report that Richard is currently unwell. He has been in hospital Intensive Care for 8 days with pneumonia as a primary medical problem. This has responded to treatment and he has shown some improvement and is now free of the breathing apparatus."
Sunday, June 10, 2007
Two excellent CDs I've been listening to lately
The first is the Unicorns' Who Will Cut Our Hair When We're Gone, which I bought some time back and played a lot for a while but have recently taken out again. Despite an at times almost too high whimsy level, one of the handful of best new releases of the last several years.
The other is Ray Davies' Other People's Lives, which I didn't play much the first time around. It's really quite good although the playing (his vocals aside) is, if solid, a bit generic. Still standing as one of the finest songwriters of the rock era, and I'd rate this outing above any other release of the last ten years by any of the old war horses with the exception of Dylan's Modern Times.
The other is Ray Davies' Other People's Lives, which I didn't play much the first time around. It's really quite good although the playing (his vocals aside) is, if solid, a bit generic. Still standing as one of the finest songwriters of the rock era, and I'd rate this outing above any other release of the last ten years by any of the old war horses with the exception of Dylan's Modern Times.
Friday, June 08, 2007
The most important story of our generation (at least until tomorrow)
I admit it to my shame, while preparing lecture notes for summer teaching I have been checking in periodically on the Paris Hilton news. So far, it turns out that she was handcuffed and has been crying, and that 96% of those responding to a CNN poll are agin her. No word yet on what the judge is going to do. Give her credit for one thing, she is helping to bring us together.
About the summer teaching: I will be doing a course on Tax Policy in Singapore, at a newly established NYU @ National University of Singapore program there, starting in a couple of weeks. 3-plus hours a day, Monday through Thursday for two weeks, then two weeks' vacation with family in Vietnam and Cambodia, perhaps with a resort in Thailand thrown in as well. This may affect blogging, though I will have internet access most of the time.
The class will be an interesting challenge, given the packed-in intensity of doing it in so short a time period, plus the fact that I don't as yet know what to expect from the students. I want to spend the time discussing & explaining a bunch of things that I think are really interesting and important, but there isn't always suitable reading that covers what I'd like. The subjects for the 8 days are (1) public economics background, (2) horizontal equity, (3) progressivity, (4) income versus consumption tax, (5) corporate taxation, (6) corporate tax shelters, (7) international taxation, and (8) deficits / long-term budget measures and issues.
The complexities of trying to plan open-endedly for varying possibilities in class dynamics make it all the harder to resist checking periodically for new Paris updates.
About the summer teaching: I will be doing a course on Tax Policy in Singapore, at a newly established NYU @ National University of Singapore program there, starting in a couple of weeks. 3-plus hours a day, Monday through Thursday for two weeks, then two weeks' vacation with family in Vietnam and Cambodia, perhaps with a resort in Thailand thrown in as well. This may affect blogging, though I will have internet access most of the time.
The class will be an interesting challenge, given the packed-in intensity of doing it in so short a time period, plus the fact that I don't as yet know what to expect from the students. I want to spend the time discussing & explaining a bunch of things that I think are really interesting and important, but there isn't always suitable reading that covers what I'd like. The subjects for the 8 days are (1) public economics background, (2) horizontal equity, (3) progressivity, (4) income versus consumption tax, (5) corporate taxation, (6) corporate tax shelters, (7) international taxation, and (8) deficits / long-term budget measures and issues.
The complexities of trying to plan open-endedly for varying possibilities in class dynamics make it all the harder to resist checking periodically for new Paris updates.
Wednesday, June 06, 2007
I have learned to purr
At least, that's how Ursula, our small brown tabby, appears to interpret the sound of my electric shaver. When she hears it in the morning, she runs upstairs and jumps up onto the bed, ready for a lovefest.
Friday, June 01, 2007
I knew it
This morning at breakfast I saw the NY Times headline, "Bush Proposes Goals on New Greenhouse Emissions," and I said to my wife: "You know, I bet this is fake." I figured that it must actually be an attempt to take some of the heat off Bush on his foot-dragging regarding global warming, while at the same time actually doing more deliberate foot-dragging.
It turns out that I was right, not that I feel I should get much credit for insight here; it was pretty obvious. Bush is actually calling for a new round of meetings, to make sure nothing can get done yet, in pursuit of "aspirational goals," i.e., no actual adoption of any policies that would have any effect.
It's a strange thing, and people who have read my past words on Bush will simply have to take this on faith, but I was actually hoping I was wrong about Bush this time. I still get this atavistic impulse occasionally - indeed, frequently - where I find myself wishing for a moment that just this one time he'll surprise me positively. But the rule remains - everything he does is bad, and everything he does is in bad faith. I can't think of any other U.S. President of whom this was more than, say, 50 to 60 percent true, but for him it's verging on 100 percent.
One exception, actually - whatever one thinks in the end about his immigration policy, it doesn't seem entirely to fit the simple formula. But I am at a loss to think of any other exception.
It turns out that I was right, not that I feel I should get much credit for insight here; it was pretty obvious. Bush is actually calling for a new round of meetings, to make sure nothing can get done yet, in pursuit of "aspirational goals," i.e., no actual adoption of any policies that would have any effect.
It's a strange thing, and people who have read my past words on Bush will simply have to take this on faith, but I was actually hoping I was wrong about Bush this time. I still get this atavistic impulse occasionally - indeed, frequently - where I find myself wishing for a moment that just this one time he'll surprise me positively. But the rule remains - everything he does is bad, and everything he does is in bad faith. I can't think of any other U.S. President of whom this was more than, say, 50 to 60 percent true, but for him it's verging on 100 percent.
One exception, actually - whatever one thinks in the end about his immigration policy, it doesn't seem entirely to fit the simple formula. But I am at a loss to think of any other exception.
Political economy of FASB decisions
I haven't as yet tried to use this site as a research tool, but perhaps I should, so here goes.
In the article I'm working on concerning tax and accounting measures of income, an important issue is the political economy of how the two income bases are set. I certainly feel up to speed on the general issue of Congress and tax policy decisions, but the manner in which GAAP standards are set for financial accounting is more opaque to me. Yes, I can easily learn more about exactly how the Financial Accounting Standards Board (FASB) operates, and I know a bit about the broader political setting - e.g., threatened Congressional interventions from the 1990s on concerning the treatment for financial accounting purposes of managerial stock options.
What I want, and am not at the moment entirely clear on how best to get, is a better feel for the real politics of the FASB process. For example, literature that I have seen gives me the overall sense that people think the process is better insulated from crass political intervention, e.g., by particular interest groups, than the process of determining taxable income. Of course, that sets the bar pretty low. I have also heard the view expressed that the accounting profession is pretty responsive, through FASB just as in client work, to the interests of managers as a group, leading to the kind of industry capture scenario that one would of course fear relative to the optimistic scenario where FASB responds more to official professional ideals by seeking unstintingly to serve investors and the cause of capital market transparency.
Any guidance that readers could offer me, be it anecdotal or systematic, informal or scholarly, would be most welcome, whether offered in the comments section here or off-line (my e-mail address is easy to find). Thanks.
In the article I'm working on concerning tax and accounting measures of income, an important issue is the political economy of how the two income bases are set. I certainly feel up to speed on the general issue of Congress and tax policy decisions, but the manner in which GAAP standards are set for financial accounting is more opaque to me. Yes, I can easily learn more about exactly how the Financial Accounting Standards Board (FASB) operates, and I know a bit about the broader political setting - e.g., threatened Congressional interventions from the 1990s on concerning the treatment for financial accounting purposes of managerial stock options.
What I want, and am not at the moment entirely clear on how best to get, is a better feel for the real politics of the FASB process. For example, literature that I have seen gives me the overall sense that people think the process is better insulated from crass political intervention, e.g., by particular interest groups, than the process of determining taxable income. Of course, that sets the bar pretty low. I have also heard the view expressed that the accounting profession is pretty responsive, through FASB just as in client work, to the interests of managers as a group, leading to the kind of industry capture scenario that one would of course fear relative to the optimistic scenario where FASB responds more to official professional ideals by seeking unstintingly to serve investors and the cause of capital market transparency.
Any guidance that readers could offer me, be it anecdotal or systematic, informal or scholarly, would be most welcome, whether offered in the comments section here or off-line (my e-mail address is easy to find). Thanks.
Rutles anniversary
Yes, it was only 40 years ago today that the Rutles released "Sergeant Rutter's Only Darts Club Band," which remains a millstone in pop music history.
As you may recall, their first album was made in twenty minutes; their second took even longer.
The Rutles will be remembered long after Beethoven is forgotten - but not until.
As you may recall, their first album was made in twenty minutes; their second took even longer.
The Rutles will be remembered long after Beethoven is forgotten - but not until.
Friday, May 25, 2007
My talk last week at the International Tax Policy Forum
Last Friday, I gave a talk on my worldwide welfare paper at the International Tax Policy Forum. This is a group, organized and funded by U.S. multinationals, that sponsors and disseminates research on international tax policy issues. Needless to say, there is a particular point of view that they strongly prefer, not entirely unrelated to the interests of the funders. But they are a high-brow group that takes an interest in good quality research, rather than hackery. Making this easier is a belief that the empirics, properly understood, genuinely favor them.
When I present a paper there that they don't agree with, as happened this time, the aim is to influence the author to think differently, not to attack. Certainly a savvy strategy, and I have to admit not entirely unsuccessful this time. Perhaps all the more successful here because my paper has the structure, in my mind, of "If A, then B," whereas they are arguing not A, and hence not challenging the paper's argument, which rests on saying: Let's assume A for present purposes, as it is a widespread and potentially plausible view, and see where it leads.
A, in this case, is the traditional view of international tax policy, dating back at least to Peggy Musgrave's work more than 40 years ago, in which the normative guideposts are:
(1) national neutrality (a country acting unilaterally benefits from merely allowing deductions for foreign taxes paid, and should address double taxation of cross-border investment only if other countries are willing to do so as well), and
(2) possible mutual welfare gains from cooperating to address double taxation, via the efficiency enhancements achieved by promoting capital export neutrality or capital import neutrality, which unfortunately counsel very different policies in particular settings.
Given this structure, my paper discusses how the choice between (1) and (2) involves a prisoner's dilemma, and what implications this has. Normally, prisoner's dilemmas require that the players can't witness each other's behavior, but I argue that it applies to setting international tax policy even though it takes place in broad daylight.
This is unambiguously the right way to look at the issues, I would argue, if we had a worldwide residence-based tax on individuals who were fairly immobile. But once you have entity-level taxation that turns on the fiction of corporate residence, the argument I was getting at ITPF was that the normative framework may radically shift. I agree with the logic of these arguments, and again one could view them as orthogonal to my paper except that, if universally and unambiguously true enough in practice, the logic discussed in my paper might not even be worth exploring. This is something I mean to take up more in the future.
A core empirical question, we agreed, is whether outbound investments by resident taxpayers that the home country is considering how to tax are substitutes or complements for investing at home. In the (counter-factual) case of a worldwide residence-based tax on individuals, they have to be substitutes. I have $X to invest, and unless I respond by saving more (which is probably not to be much expected in this setting), then every dollar I invest abroad is thereby not invested at home.
By contrast, a U.S. multinational that is trying to raise funds from people who can invest it anywhere and with anyone may well be in the world of complements not substitutes. A good cross-border investment opportunity may simply mean that they can raise more capital to play with. If the country in which the company is deemed a resident increases the tax, those who are ultimately the sources of the capital may simply respond by investing via another company in another country. And this in turn may affect the next move made by whichever company got the investment dollar. So the complementarity scenario becomes a plausible alternative to the substitution scenario.
These guys at ITPF are good. They've got me thinking. Or rather, since I was already familiar with the general intellectual landscape here, they've got me thinking a bit more.
When I present a paper there that they don't agree with, as happened this time, the aim is to influence the author to think differently, not to attack. Certainly a savvy strategy, and I have to admit not entirely unsuccessful this time. Perhaps all the more successful here because my paper has the structure, in my mind, of "If A, then B," whereas they are arguing not A, and hence not challenging the paper's argument, which rests on saying: Let's assume A for present purposes, as it is a widespread and potentially plausible view, and see where it leads.
A, in this case, is the traditional view of international tax policy, dating back at least to Peggy Musgrave's work more than 40 years ago, in which the normative guideposts are:
(1) national neutrality (a country acting unilaterally benefits from merely allowing deductions for foreign taxes paid, and should address double taxation of cross-border investment only if other countries are willing to do so as well), and
(2) possible mutual welfare gains from cooperating to address double taxation, via the efficiency enhancements achieved by promoting capital export neutrality or capital import neutrality, which unfortunately counsel very different policies in particular settings.
Given this structure, my paper discusses how the choice between (1) and (2) involves a prisoner's dilemma, and what implications this has. Normally, prisoner's dilemmas require that the players can't witness each other's behavior, but I argue that it applies to setting international tax policy even though it takes place in broad daylight.
This is unambiguously the right way to look at the issues, I would argue, if we had a worldwide residence-based tax on individuals who were fairly immobile. But once you have entity-level taxation that turns on the fiction of corporate residence, the argument I was getting at ITPF was that the normative framework may radically shift. I agree with the logic of these arguments, and again one could view them as orthogonal to my paper except that, if universally and unambiguously true enough in practice, the logic discussed in my paper might not even be worth exploring. This is something I mean to take up more in the future.
A core empirical question, we agreed, is whether outbound investments by resident taxpayers that the home country is considering how to tax are substitutes or complements for investing at home. In the (counter-factual) case of a worldwide residence-based tax on individuals, they have to be substitutes. I have $X to invest, and unless I respond by saving more (which is probably not to be much expected in this setting), then every dollar I invest abroad is thereby not invested at home.
By contrast, a U.S. multinational that is trying to raise funds from people who can invest it anywhere and with anyone may well be in the world of complements not substitutes. A good cross-border investment opportunity may simply mean that they can raise more capital to play with. If the country in which the company is deemed a resident increases the tax, those who are ultimately the sources of the capital may simply respond by investing via another company in another country. And this in turn may affect the next move made by whichever company got the investment dollar. So the complementarity scenario becomes a plausible alternative to the substitution scenario.
These guys at ITPF are good. They've got me thinking. Or rather, since I was already familiar with the general intellectual landscape here, they've got me thinking a bit more.
Why do people become teachers?
This is not a question about academics such as myself. We're a different kettle of fish, as stuff happening outside the classroom, in particular scholarly and other writing, is so central to our career choice.
Rather, I'm ruminating here about K through 12 teachers, only slicing off the upper and lower ends. Those who work with very young children are also a distinctive group, while high school teachers remain as yet outside my experience as a parent.
For those who remain in the grouping, I have noticed three basic types. The first are the people who actually want to be teachers. Motivations may vary, but sometimes I discern a sense of "I'm going to be the sort of person I wish had been there for me, but wasn't." Obviously, this is the type one wants one's children to have. There are plenty of them, but they are unfortunately not as common as one would like - certainly below 50 percent, in my experience as a parent.
Those in Type 2 want a white-collar job, no hard physical labor, that sounds good when you tell people you're doing it. And they want something that doesn't take too much hard-core professional training, and that doesn't require specialized skills of a kind that are too easy to test for objectively. Their chief goal professionally is advancement with as little challenge and trouble as possible.
Type 3 wants inferiors, in size, age, and knowledge, from whom to demand admiration. This type is potentially even worse than Type 2.
Needless to say, Types 2 and 3 attempt to masquerade as Type 1. The best diagnostic I know is that Types 2 and 3 are generally humorless.
Rather, I'm ruminating here about K through 12 teachers, only slicing off the upper and lower ends. Those who work with very young children are also a distinctive group, while high school teachers remain as yet outside my experience as a parent.
For those who remain in the grouping, I have noticed three basic types. The first are the people who actually want to be teachers. Motivations may vary, but sometimes I discern a sense of "I'm going to be the sort of person I wish had been there for me, but wasn't." Obviously, this is the type one wants one's children to have. There are plenty of them, but they are unfortunately not as common as one would like - certainly below 50 percent, in my experience as a parent.
Those in Type 2 want a white-collar job, no hard physical labor, that sounds good when you tell people you're doing it. And they want something that doesn't take too much hard-core professional training, and that doesn't require specialized skills of a kind that are too easy to test for objectively. Their chief goal professionally is advancement with as little challenge and trouble as possible.
Type 3 wants inferiors, in size, age, and knowledge, from whom to demand admiration. This type is potentially even worse than Type 2.
Needless to say, Types 2 and 3 attempt to masquerade as Type 1. The best diagnostic I know is that Types 2 and 3 are generally humorless.
Saturday, May 19, 2007
Ruminations of an anti-Yankee fan
In all of sports, my anti-Yankee sentiments are second only, and barely, to my pro-Mets sentiments. The two are of course tightly linked, and go back to 1964, when a pint-sized version of the person now typing this was the only Mets fan on his Bronx block. So the sentiments are pretty foundational; even the Mule from Asimov's Foundation series might have a hard time modifying them now.
The Yankees have certainly had some bad luck this year. Do I feel sorry for them? Well, first of all, they need at least 10 or 15 more years of luck this bad before I will say it's evened out. Second, they've ended up on top too many times for me to be convinced they are really scotched for this year. In fact, for all I know they may win their next ten. Third, as of this April their payroll stood at $195M, versus $143M for the Red Sox and $117M for the Mets. They have since added Roger Clemons, which even with his late start should add $20M or so. So they are more than $70M ahead of the Red Sox in spending, and nearly $100M ahead of the Mets. To put it another way, there are more than 20 teams whose payrolls, added to the Mets', are still less than theirs. One certainly ought to be able to buy a bit of insurance that way. So no, I am considerably short of feeling sorry for the Yankees.
The Yankees have certainly had some bad luck this year. Do I feel sorry for them? Well, first of all, they need at least 10 or 15 more years of luck this bad before I will say it's evened out. Second, they've ended up on top too many times for me to be convinced they are really scotched for this year. In fact, for all I know they may win their next ten. Third, as of this April their payroll stood at $195M, versus $143M for the Red Sox and $117M for the Mets. They have since added Roger Clemons, which even with his late start should add $20M or so. So they are more than $70M ahead of the Red Sox in spending, and nearly $100M ahead of the Mets. To put it another way, there are more than 20 teams whose payrolls, added to the Mets', are still less than theirs. One certainly ought to be able to buy a bit of insurance that way. So no, I am considerably short of feeling sorry for the Yankees.
Wednesday, May 16, 2007
Nixon Frost
Last night I saw Nixon Frost, the play about the famous interviews, starring Frank Langella as the Trickster (updating his performance as Dracula?). Most enjoyable; Nixon is the gift that just keeps giving, and I feel sorry for those too young to have experienced him. The current parallels are of course unavoidable, e.g., the scandals and the view of Presidential power, but one can't stop thinking about how vile, stupid, uncomplicated, uninteresting, and unworthy current pretenders to the Nixon throne are compared to the man himself. Nixon had a lot in him, and some of it (like some of his presidency) was actually quite good. The rest may have been bad but was fascinating. None of this is true today, when we have venomous little scorpions instead of Macbeth.
Despite the innate appeal, I thought the playwright's recent movie, The Queen was in some ways more illuminating. Nixon is of course one of the all-time great real world characters, and has been taken in all sorts of directions involving varying degrees of poetic license. Here it was a bit linear, and the payoff was the famous moment in the Frost-Nixon interview on Watergate where he breaks down a bit into an on-camera catharsis, which the play suggests he at least half-wanted to do. This verged on being a bit too much of a typical final-scene chew-the-scenery Big Moment, although Langella did it well and I gather it actually happened. (I saw the interviews back when, but would have to see the big scene again to evaluate whether or not the play over-milked Nixon's emotional level here.)
Not to sound too harsh, though, and highly recommended, at a minimum to all Nixon fans.
Despite the innate appeal, I thought the playwright's recent movie, The Queen was in some ways more illuminating. Nixon is of course one of the all-time great real world characters, and has been taken in all sorts of directions involving varying degrees of poetic license. Here it was a bit linear, and the payoff was the famous moment in the Frost-Nixon interview on Watergate where he breaks down a bit into an on-camera catharsis, which the play suggests he at least half-wanted to do. This verged on being a bit too much of a typical final-scene chew-the-scenery Big Moment, although Langella did it well and I gather it actually happened. (I saw the interviews back when, but would have to see the big scene again to evaluate whether or not the play over-milked Nixon's emotional level here.)
Not to sound too harsh, though, and highly recommended, at a minimum to all Nixon fans.
Tuesday, May 15, 2007
Tax break for managers of private investment funds
There's been much controversy lately about the tax break for managers of private investment funds that is currently under review by the Senate Finance Committee. The basics, first brought to general public attention (and certainly mine) by U of Illinois law prof Victor Fleischer, who presented his paper on the subject at the 2006 NYU Tax Policy Colloquium, are as follows. Managers of these funds typically get a standard return equaling 2% annually of the money they are managing plus 20% of the capital gain they eventually generate. The former is taxed as ordinary income, but the latter is taxed as capital gain. As Victor pointed out, this means that much of the managers' labor income is being taxed at 15% rather than 35%, even though these are some of the highest-paid people in the U.S. today.
Economically speaking, the managers' 20% return is a mix of labor income and a risky return to saving. The reason they get compensated so richly for playing with other people's money is that they are at least believed to have the ability to make big bucks, such that the investors are happy even after giving away the "2 and 20." It would be pure labor income if the managers could lock in and be paid the expected value of the 20% interest right up front. (This is of course unfeasible on measurement and liquidity grounds along with its incentive effects on what the manager does.) But even for the true investment component keep in mind that they are getting the tax benefit of deferral until sale.
What are these funds doing, exactly? While I know nothing first-hand, I gather that they run the gamut from (a) the straight hedge fund that figures out clever strategies to exploit market inefficiencies and generate above-market risk-adjusted returns to (b) takeover firms that find under-performing companies and restructure them to be more profitable, and thus rapidly salable for a big turnover profit.
Economically speaking, (b) is generally more valuable to the economy than (a). While (a) may increase market efficiency, the private return from figuring out how to beat out other investors by buying and selling at just the right time exceeds the social return. Not that I have any problem with such activity, but it definitely doesn't need to be subsidized.
By contrast, (b) may have some broader social payoffs, although the question here, from the standpoint of incentives, is whether there are positive externalities - i.e., gain beyond that captured by the entrepeneurs who sell for a big turnover profit. Note also that one would be less bullish about this activity if the improved performance came, say, from improved tax planning strategies or the one-shot gain from implicitly reneging on deferred compensation arrangements with rank and file workers, rather than from, say, rationalizing production and marketing processes.
I raise these broader issues of the social value associated with particular types of economic activity, although often one can and should ignore such issues in setting tax policy, because incentive arguments are important to the debate concerning the taxation of the 20% carried interest. The incentive case for giving managers a low tax rate is limited to some portion of the activity in category (b), although even for the best case scenario it is unclear why we should expect substantial positive externalities, i.e., social returns that aren't captured by the remake artists who make so much money for having done such a good job. I'd certainly like to think that I create value when I publish or teach. And lots of other workers in our economy can say the same. But presumably I'm paid for the value I create, and I am sadly unconvinced that I can make a powerful case for applying a lower tax rate to myself than the one that everyone else bears.
A week or two ago, the Wall Street Journal published an editorial, unless it was an op-ed (what's the difference most of the time in the WSJ these days?) arguing against making the managers pay the ordinary 35% rate. What a surprise. No comment needed. But today the Los Angeles Times published an editorial to the same effect. I figure that this is a bit more noteworthy since it wasn't as crushingly obvious that the Times would take this tack. Hence, worth a response.
I did not find the editorial very persuasive. After inaccurately describing the tax break as for takeover firms, rather than for the broader category of private investment firms, it rolls out the usual hardware about enterpeneurship and risk-taking and creating jobs and how crucial all this is to the health of the economy. The main problem with this argument, other than the poor fit between the affected firms and the claimed external social benefit, is the poor fit between the capital gains preference and the aim of addressing risk-taking.
A flat rate tax system with full loss refundability at the generally applicable marginal rate would not discourage risk-taking. Even the positive expected tax on the risk premium could be offset by investing on a riskier pre-tax basis in order to get where one wants after-tax. Since we don't have such a system, the tax system actually does discourage risk-taking, which is unfortunate, even without an externalities story, as it imposes deadweight loss beyond that implicit in taxing productive economic activity. For the big-time entrepeneurs, graduated marginal rates, although they discourage risk-taking, are not very important. These guys are way into the top bracket anyway. What matters a lot more is loss nonrefundability, in particular at the business (as opposed to the investor) level. That is, companies pay tax on profits, but do not get any tax benefit from net losses if they don't at some point have sufficient profits from other operations. A recent paper by Alan Auerbach, presented at the 2007 NYU Tax Policy Colloquium (see here) suggests that this problem is growing increasingly important.
The obvious solution to that problem is greater loss refundability. But this involves a dilemma. The one good reason for nonrefundability is to limit the tax benefit from phony tax losses. But if you can't measure income accurately, then distinguishing between the real losses that we want to allow and the phony ones that we still want to limit is tricky indeed. So, while we may not be at the optimum today, especially if (as Auerbach's paper suggests) the problem of real losses is growing more important due to a change in business dynamics, it's unclear exactly where we ought to go.
But a special capital gains rate for some set of investment fund managers is very poorly focused indeed on this underlying problem.
The L.A. Times op-ed admits that the effectiveness of using capital gains rates to encourage socially valuable entrepeneurship is "open to some debate." However, the only response it deems appropriate is "a simpler tax code that defines clearly the behavior it is trying to encourage." Big internal contradiction here. A simpler tax code would not result from trying to define the true value-creating entrepeneurs, e.g., those who are enough by way of making companies more profitable rather than merely outguessing the market by five minutes. That would undoubtedly be a complicated rule, inevitably drawing various objective bright lines about control percentage, ownership period, etc., that would further distort economic behavior and benefit mainly the accountants and lawyers who were in charge of making sure that particular investments qualified for the low rate. Almost certainly a bad idea.
There actually is one good rationale for the capital gains preference. It relates to lock-in, or the tax discouragement of selling appreciated capital assets, given that one can avoid the current tax by continuing to hold them. In view of this problem, a capital gains preference can actually raise revenue relative to full taxation, although I gather (from my memory of disputes and dueling revenue estimates from the time of the Bush I Administration) that the revenue-maximizing rate is more likely to be in the range of about 30% rather than 15%. (Although note that the optimal rate is likely to be lower than the revenue-maximizing rate.)
Anyway, this rationale seems singularly inapplicable to the investment fund managers if the stuff their firms hold is generally likely, in keeping with their business model, to be turned over quickly in any event, and if the investors in the funds, who get the remaining 80% of the turnover profits, are indeed getting the capital gains rate.
Bottom line: the Senate Finance Committee should press ahead with some version of its proposal, although I suppose Bush will just veto it anyway.
Economically speaking, the managers' 20% return is a mix of labor income and a risky return to saving. The reason they get compensated so richly for playing with other people's money is that they are at least believed to have the ability to make big bucks, such that the investors are happy even after giving away the "2 and 20." It would be pure labor income if the managers could lock in and be paid the expected value of the 20% interest right up front. (This is of course unfeasible on measurement and liquidity grounds along with its incentive effects on what the manager does.) But even for the true investment component keep in mind that they are getting the tax benefit of deferral until sale.
What are these funds doing, exactly? While I know nothing first-hand, I gather that they run the gamut from (a) the straight hedge fund that figures out clever strategies to exploit market inefficiencies and generate above-market risk-adjusted returns to (b) takeover firms that find under-performing companies and restructure them to be more profitable, and thus rapidly salable for a big turnover profit.
Economically speaking, (b) is generally more valuable to the economy than (a). While (a) may increase market efficiency, the private return from figuring out how to beat out other investors by buying and selling at just the right time exceeds the social return. Not that I have any problem with such activity, but it definitely doesn't need to be subsidized.
By contrast, (b) may have some broader social payoffs, although the question here, from the standpoint of incentives, is whether there are positive externalities - i.e., gain beyond that captured by the entrepeneurs who sell for a big turnover profit. Note also that one would be less bullish about this activity if the improved performance came, say, from improved tax planning strategies or the one-shot gain from implicitly reneging on deferred compensation arrangements with rank and file workers, rather than from, say, rationalizing production and marketing processes.
I raise these broader issues of the social value associated with particular types of economic activity, although often one can and should ignore such issues in setting tax policy, because incentive arguments are important to the debate concerning the taxation of the 20% carried interest. The incentive case for giving managers a low tax rate is limited to some portion of the activity in category (b), although even for the best case scenario it is unclear why we should expect substantial positive externalities, i.e., social returns that aren't captured by the remake artists who make so much money for having done such a good job. I'd certainly like to think that I create value when I publish or teach. And lots of other workers in our economy can say the same. But presumably I'm paid for the value I create, and I am sadly unconvinced that I can make a powerful case for applying a lower tax rate to myself than the one that everyone else bears.
A week or two ago, the Wall Street Journal published an editorial, unless it was an op-ed (what's the difference most of the time in the WSJ these days?) arguing against making the managers pay the ordinary 35% rate. What a surprise. No comment needed. But today the Los Angeles Times published an editorial to the same effect. I figure that this is a bit more noteworthy since it wasn't as crushingly obvious that the Times would take this tack. Hence, worth a response.
I did not find the editorial very persuasive. After inaccurately describing the tax break as for takeover firms, rather than for the broader category of private investment firms, it rolls out the usual hardware about enterpeneurship and risk-taking and creating jobs and how crucial all this is to the health of the economy. The main problem with this argument, other than the poor fit between the affected firms and the claimed external social benefit, is the poor fit between the capital gains preference and the aim of addressing risk-taking.
A flat rate tax system with full loss refundability at the generally applicable marginal rate would not discourage risk-taking. Even the positive expected tax on the risk premium could be offset by investing on a riskier pre-tax basis in order to get where one wants after-tax. Since we don't have such a system, the tax system actually does discourage risk-taking, which is unfortunate, even without an externalities story, as it imposes deadweight loss beyond that implicit in taxing productive economic activity. For the big-time entrepeneurs, graduated marginal rates, although they discourage risk-taking, are not very important. These guys are way into the top bracket anyway. What matters a lot more is loss nonrefundability, in particular at the business (as opposed to the investor) level. That is, companies pay tax on profits, but do not get any tax benefit from net losses if they don't at some point have sufficient profits from other operations. A recent paper by Alan Auerbach, presented at the 2007 NYU Tax Policy Colloquium (see here) suggests that this problem is growing increasingly important.
The obvious solution to that problem is greater loss refundability. But this involves a dilemma. The one good reason for nonrefundability is to limit the tax benefit from phony tax losses. But if you can't measure income accurately, then distinguishing between the real losses that we want to allow and the phony ones that we still want to limit is tricky indeed. So, while we may not be at the optimum today, especially if (as Auerbach's paper suggests) the problem of real losses is growing more important due to a change in business dynamics, it's unclear exactly where we ought to go.
But a special capital gains rate for some set of investment fund managers is very poorly focused indeed on this underlying problem.
The L.A. Times op-ed admits that the effectiveness of using capital gains rates to encourage socially valuable entrepeneurship is "open to some debate." However, the only response it deems appropriate is "a simpler tax code that defines clearly the behavior it is trying to encourage." Big internal contradiction here. A simpler tax code would not result from trying to define the true value-creating entrepeneurs, e.g., those who are enough by way of making companies more profitable rather than merely outguessing the market by five minutes. That would undoubtedly be a complicated rule, inevitably drawing various objective bright lines about control percentage, ownership period, etc., that would further distort economic behavior and benefit mainly the accountants and lawyers who were in charge of making sure that particular investments qualified for the low rate. Almost certainly a bad idea.
There actually is one good rationale for the capital gains preference. It relates to lock-in, or the tax discouragement of selling appreciated capital assets, given that one can avoid the current tax by continuing to hold them. In view of this problem, a capital gains preference can actually raise revenue relative to full taxation, although I gather (from my memory of disputes and dueling revenue estimates from the time of the Bush I Administration) that the revenue-maximizing rate is more likely to be in the range of about 30% rather than 15%. (Although note that the optimal rate is likely to be lower than the revenue-maximizing rate.)
Anyway, this rationale seems singularly inapplicable to the investment fund managers if the stuff their firms hold is generally likely, in keeping with their business model, to be turned over quickly in any event, and if the investors in the funds, who get the remaining 80% of the turnover profits, are indeed getting the capital gains rate.
Bottom line: the Senate Finance Committee should press ahead with some version of its proposal, although I suppose Bush will just veto it anyway.
Nobody likes a whiner
The above is a quote from Bill Murray's character in the delightful, though I gather little-known, "Quick Change."
Brought to mind by the release of the new Wilco album. Jeff Tweedy can indeed be a whiner. But worse, based on the admittedly limited evidence of 30-second samples on iTunes, his new release sounds downright boring. Which is just as pitchforkmedia.com, though not popmatters.com, would have it. It's hard to tell this way, but 30 seconds a song was enough to sell me on Yankee Hotel Foxtrot, back in the day.
By contrast, the new Elliott Smith release, New Moon, is excellent even though one would ordinarily be suspicious of multiple posthumous offerings.
Brought to mind by the release of the new Wilco album. Jeff Tweedy can indeed be a whiner. But worse, based on the admittedly limited evidence of 30-second samples on iTunes, his new release sounds downright boring. Which is just as pitchforkmedia.com, though not popmatters.com, would have it. It's hard to tell this way, but 30 seconds a song was enough to sell me on Yankee Hotel Foxtrot, back in the day.
By contrast, the new Elliott Smith release, New Moon, is excellent even though one would ordinarily be suspicious of multiple posthumous offerings.
Saturday, May 12, 2007
These guys are good
That didn't take long. Today, the day after my 50th birthday, I got a letter from AARP, with membership card already printed in my name and dues card ready to go. What, they couldn't get it to me yesterday?
They bring to mind the Chinese restaurant a couple of blocks away. Order from them and the doorbill rings almost as soon as you hang up the phone. One wonders if they wiretap their customers' homes so they can have the orders ready.
If I do join AARP, which is unlikely at the moment, I wonder how much extra it would cost to get them to send the AARP Magazine in a plain brown paper bag. Don't want the neighbors seeing it & such.
They bring to mind the Chinese restaurant a couple of blocks away. Order from them and the doorbill rings almost as soon as you hang up the phone. One wonders if they wiretap their customers' homes so they can have the orders ready.
If I do join AARP, which is unlikely at the moment, I wonder how much extra it would cost to get them to send the AARP Magazine in a plain brown paper bag. Don't want the neighbors seeing it & such.
Friday, May 11, 2007
Some random TV notes
Now that the summer has truly come in the main sense that matters to an academic - graduation was earlier today - I am plugging away on my tax & accounting article, which I feel is going well, but one needs to just do it for a while before stepping back and applying perspective. Between sections, or when a new part is thrashing around a bit before taking its proper shape, distractions, including self-created ones if nothing else comes up, are always welcome. So herewith a couple of notes prompted by TV viewing last night.
First, it's just amazing what the Pistons did to the Bulls in game 3 of their second round series. Detroit started the series with two unexpected blowouts, then the Bulls seemed to be making a counter-statement by pushing to a 19 point lead early in the third quarter, and it just didn't matter. The Detroit team of the last few years, along with the one that won two championships before Michael Jordan's breakthrough, is the best basketball team I've ever seen with no superstars. Or, they're the best I've ever seen at overcoming long stretches where they are pitifully unable to score. Somehow it just doesn't matter when they start to clamp down.
Second note pertains to Survivor, still the only network TV series that I have watched regularly in the past twenty-five years. My wife and I would have quit a few years back except that our kids wanted to keep watching, so it became a family thing to do. But after several years in the doldrums, it's actually taken on new life, whether or not anyone has noticed. The producers have made the tactical elements more complicated and tricky, for example by adding a hidden immunity item that one has to decide whether to play before knowing whether one needs to or not, and this has paid off dramatically at least twice this season. They've also managed to induce more fluid, less stable alliances. And the cultural norms of the contestants have evolved to accept greater opportunism towards alliance partners. Finally, the last two seasons have had greater racial and ethinc diversity in the cast, and this as well has paid off in terms of the range of interesting characters. So, while it's too late for this season if you're not already watching, and while who knows if next season will be any good, the current one (ending Sunday) has actually been one of the best ever.
First, it's just amazing what the Pistons did to the Bulls in game 3 of their second round series. Detroit started the series with two unexpected blowouts, then the Bulls seemed to be making a counter-statement by pushing to a 19 point lead early in the third quarter, and it just didn't matter. The Detroit team of the last few years, along with the one that won two championships before Michael Jordan's breakthrough, is the best basketball team I've ever seen with no superstars. Or, they're the best I've ever seen at overcoming long stretches where they are pitifully unable to score. Somehow it just doesn't matter when they start to clamp down.
Second note pertains to Survivor, still the only network TV series that I have watched regularly in the past twenty-five years. My wife and I would have quit a few years back except that our kids wanted to keep watching, so it became a family thing to do. But after several years in the doldrums, it's actually taken on new life, whether or not anyone has noticed. The producers have made the tactical elements more complicated and tricky, for example by adding a hidden immunity item that one has to decide whether to play before knowing whether one needs to or not, and this has paid off dramatically at least twice this season. They've also managed to induce more fluid, less stable alliances. And the cultural norms of the contestants have evolved to accept greater opportunism towards alliance partners. Finally, the last two seasons have had greater racial and ethinc diversity in the cast, and this as well has paid off in terms of the range of interesting characters. So, while it's too late for this season if you're not already watching, and while who knows if next season will be any good, the current one (ending Sunday) has actually been one of the best ever.
Thursday, May 10, 2007
Major landmark
Tomorrow I turn, ahem, 50 years old. This is a pretty big landmark, reached by most individuals no more than once. It's strange to have been young all one's life, strongly conditioning one's self-image, and then increasingly to find that one is no longer so. That being said, I weigh the same and am in better aerobic shape than when I was a college or law student. I also would make short work of my past self if we played, say, racquet sports against each other. But alas, all this requires eating a lot less and exercising a lot more. I also increasingly get all sorts of aches and pains that I didn't know as well back then. Some days you just don't feel that good, once you reach this stage. I now have to do regular exercise and stretching routines for nearly every body part that is potentially injurable in sporting activities. I also need reading glasses unless the print is large and/or the lighting great. And dessert now often inspires something of the same mute horror that I assume mice bring to thinking about cats.
"Youth is wasted on the young" may be trite, but that doesn't mean it's true. (It's not.) Certainly it would have helped me, back in the past, to know some of the things I know now, but then again my tolerances have changed so as to remain age-appropriate. (Being a student was okay back then, but I'd hate to relive it now.) I'd say I'm a lot more contented now, albeit more careworn because I have more responsibilities. At and to this point, various life issues (personal and career) that were unpredictable thirty years ago have gone in what I feel were good directions. Who knows if this would still be true if one could turn back the clock and play it out again. If offered that deal, I would definitely say no and keep what I have.
I was lucky not to experience much death among people I was close to, for a very long time. Lately, not so lucky, as is inevitable when you keep going. Still, I'm hoping for a respite, and also for a very long time before my own decay gets too advanced. And with that cheerful thought, accompanied by a lot of genuine gratitude for so much of the past and present, I will close these reflections.
"Youth is wasted on the young" may be trite, but that doesn't mean it's true. (It's not.) Certainly it would have helped me, back in the past, to know some of the things I know now, but then again my tolerances have changed so as to remain age-appropriate. (Being a student was okay back then, but I'd hate to relive it now.) I'd say I'm a lot more contented now, albeit more careworn because I have more responsibilities. At and to this point, various life issues (personal and career) that were unpredictable thirty years ago have gone in what I feel were good directions. Who knows if this would still be true if one could turn back the clock and play it out again. If offered that deal, I would definitely say no and keep what I have.
I was lucky not to experience much death among people I was close to, for a very long time. Lately, not so lucky, as is inevitable when you keep going. Still, I'm hoping for a respite, and also for a very long time before my own decay gets too advanced. And with that cheerful thought, accompanied by a lot of genuine gratitude for so much of the past and present, I will close these reflections.
Thursday, May 03, 2007
Finally
Yesterday afternoon, at about 2 pm, I finally got the chance to start my summer research & writing. No exams to grade, as I spent a good part of the semester grading weekly papers in my colloquium, but lots of underbrush that I had to clear before finally getting started.
My first project for the summer & fall (when I'll be on sabbatical but in residence here at NYU) concerns the issue of book-tax differences, permitting publicly traded companies to report low taxable income and high accounting income, in each case potentially through dubious manipulation. Many have proposed requiring book-tax conformity, a notion that has some real problems despite its appeal. Rather than just taking a particular stance, I am hoping to bring a bit more analytical depth to the issues that are raised.
Other topics on my agenda include penalties for taking ex post erroneous tax positions (I have an SSRN-posted paper on this, but hope to dig deeper), possibly something on the estate or inheritance tax/generation-skipping tax set of issues, and possibly something on generational equity, a topic on which I've heretofore focused on measurement issues while putting off consideration of the philosophical merits. That might even turn out to be a book, but then again it might not even end up being an article. On vera.
But all this may have to wait a bit. I'm off today to Chicago, where tomorrow at a tax practice-related conference (at Chicago Kent Law School) I will be discussing the economic substance doctrine in tax law, in terms likely to be more encouraging to the IRS people in attendance than to some of the Chicago practitioners, who I recall as a bit Wild West-style and anti-government compared to the New York practitioners.
My first project for the summer & fall (when I'll be on sabbatical but in residence here at NYU) concerns the issue of book-tax differences, permitting publicly traded companies to report low taxable income and high accounting income, in each case potentially through dubious manipulation. Many have proposed requiring book-tax conformity, a notion that has some real problems despite its appeal. Rather than just taking a particular stance, I am hoping to bring a bit more analytical depth to the issues that are raised.
Other topics on my agenda include penalties for taking ex post erroneous tax positions (I have an SSRN-posted paper on this, but hope to dig deeper), possibly something on the estate or inheritance tax/generation-skipping tax set of issues, and possibly something on generational equity, a topic on which I've heretofore focused on measurement issues while putting off consideration of the philosophical merits. That might even turn out to be a book, but then again it might not even end up being an article. On vera.
But all this may have to wait a bit. I'm off today to Chicago, where tomorrow at a tax practice-related conference (at Chicago Kent Law School) I will be discussing the economic substance doctrine in tax law, in terms likely to be more encouraging to the IRS people in attendance than to some of the Chicago practitioners, who I recall as a bit Wild West-style and anti-government compared to the New York practitioners.
Monday, April 30, 2007
Movie starring my three cats
I'm not expecting it to be made any time soon, but if it is, and if we can ransack the last 60 years of U.S. film history, casting won't be a problem.
Shadow would obviously be played by Spencer Tracy. Ursula, by Audrey Hepburn. As for Buddy, a.k.a. The Rascal and a Half (call him a rascal and you have told 2/3 of the truth) - I'm sorry to say this, fella, but while my wife suggested Jim Carrey, I am currently thinking more in terms of Frank Gorshin. You know, played the Riddler on the Batman TV show. Also a memorable performance (whether you want to remember it or not) in Where The Boys Are, a trasho early 60s beach blanket movie.
Frank's, I mean Buddy's, latest antics related to some tulips that a relative brought to a family gathering tonight. Buddy likes tulips - the greens, actually, i don't think the flowers do much for him. This time, I knew what to expect because I had brought home tulips (as a change from roses) on Valentine's Day. That time, it was just a big misunderstanding, really - I think he simply believed I had brought home the flowers for him, although told repeatedly by word and gesture, admittedly in a cooing tone of voice, that this was not in fact so.
Round Two to me, I think, based on where I put the tulips this time. But we will see tomorrow morning. Although they're in a hard-to-reach place he has the guts of, well, a cat burglar.
Of course, when he starts rolling around with his paws up in the air, it's hard not to agree to give him that extra close-up.
UPDATE (the following day): Upon further review, I think I need to withdraw that comment about Round Two going to me. Upon coming downstairs this morning, I observed a tulip on the floor, a second tulip still in the vase but with its stem broken, and signs of extensive gnawing on the tulip greens. Buddy had also upchucked some greens. This is so regularly the result of his gnawing on them that I wonder if it is the aim. (Does the neoclassical model apply to cats?)
Apparently a 3-1/2 foot jump onto a 4 inch landing proved less of an obstacle to ol' Budzo than I had anticipated. So the corrected tulips score is Buddy 2, Shaviro 0.
Shadow would obviously be played by Spencer Tracy. Ursula, by Audrey Hepburn. As for Buddy, a.k.a. The Rascal and a Half (call him a rascal and you have told 2/3 of the truth) - I'm sorry to say this, fella, but while my wife suggested Jim Carrey, I am currently thinking more in terms of Frank Gorshin. You know, played the Riddler on the Batman TV show. Also a memorable performance (whether you want to remember it or not) in Where The Boys Are, a trasho early 60s beach blanket movie.
Frank's, I mean Buddy's, latest antics related to some tulips that a relative brought to a family gathering tonight. Buddy likes tulips - the greens, actually, i don't think the flowers do much for him. This time, I knew what to expect because I had brought home tulips (as a change from roses) on Valentine's Day. That time, it was just a big misunderstanding, really - I think he simply believed I had brought home the flowers for him, although told repeatedly by word and gesture, admittedly in a cooing tone of voice, that this was not in fact so.
Round Two to me, I think, based on where I put the tulips this time. But we will see tomorrow morning. Although they're in a hard-to-reach place he has the guts of, well, a cat burglar.
Of course, when he starts rolling around with his paws up in the air, it's hard not to agree to give him that extra close-up.
UPDATE (the following day): Upon further review, I think I need to withdraw that comment about Round Two going to me. Upon coming downstairs this morning, I observed a tulip on the floor, a second tulip still in the vase but with its stem broken, and signs of extensive gnawing on the tulip greens. Buddy had also upchucked some greens. This is so regularly the result of his gnawing on them that I wonder if it is the aim. (Does the neoclassical model apply to cats?)
Apparently a 3-1/2 foot jump onto a 4 inch landing proved less of an obstacle to ol' Budzo than I had anticipated. So the corrected tulips score is Buddy 2, Shaviro 0.
Monday, April 23, 2007
2008 Tax Policy Colloquium
My co-convenors for the 2008 Tax Policy Colloquium are now set. I will be conducting the colloquium with Kevin Hassett of the American Enterprise Institute for the first seven weeks of the semester, and with Mihir Desai of the Harvard Business School for the last seven weeks. Both will be fun and exciting, as well as very different, colleagues for myself and everyone else who is involved with our colloquium.
Time to accessorize?
Some very nice quilts are available here.
In offering this plug, which reflects my having actually seen the pictured items, I admit I'm biased, but no more so than Paul Wolfowitz, and raising, I think, fewer ethical issues than his actions have.
In offering this plug, which reflects my having actually seen the pictured items, I admit I'm biased, but no more so than Paul Wolfowitz, and raising, I think, fewer ethical issues than his actions have.
AMT maneuverings
According to today's Washington Post, the Democrats are planning to provide AMT relief through a package that would exempt from the AMT people earning less than $250,000, reduce the bite in the $250,000 to $500,000 range, and reclaim the lost revenues from people earning more than $500,000. (Importantly. how this would be done is left unspecified.)
Talking points in hand, the Democrats speak of restoring the original focus of the AMT, providing tax relief on a more progressive (or "middle class") basis than did President Bush, and getting rid of the AMT's "parent penalty."
Republicans respond that taxing rich people is a "job killer" and that the AMT is too esoteric for anyone to care, especially as it hasn't really hit yet, etcetera.
This probably isn't a problem for the Democrats, however. If they are thinking strategically, as I would think they must be, the idea has to be to pass the AMT relief, let Bush veto it, and then blame Bush when the AMT tsunami really hits. Sounds like a feasible political strategy to me.
Unfortunately, it's just one more example of the decline of U.S. politics, from a system that could actually address problems to one simply based on blame-shifting and chicken games.
It's hard to blame the Democrats for this, as they really have no alternative with the Bush Administation in place. But if things don't get better under the next Administration, which depends on both parties, things could get pretty grim.
Talking points in hand, the Democrats speak of restoring the original focus of the AMT, providing tax relief on a more progressive (or "middle class") basis than did President Bush, and getting rid of the AMT's "parent penalty."
Republicans respond that taxing rich people is a "job killer" and that the AMT is too esoteric for anyone to care, especially as it hasn't really hit yet, etcetera.
This probably isn't a problem for the Democrats, however. If they are thinking strategically, as I would think they must be, the idea has to be to pass the AMT relief, let Bush veto it, and then blame Bush when the AMT tsunami really hits. Sounds like a feasible political strategy to me.
Unfortunately, it's just one more example of the decline of U.S. politics, from a system that could actually address problems to one simply based on blame-shifting and chicken games.
It's hard to blame the Democrats for this, as they really have no alternative with the Bush Administation in place. But if things don't get better under the next Administration, which depends on both parties, things could get pretty grim.
Friday, April 20, 2007
Final NYU Tax Policy Colloquium of 2007
Yesterday (Thursday 4/19) was the final NYU Tax Policy Colloquium of the spring 2007 semester. We went out on a good note with a paper by Christina Fong of Carnegie-Mellon University, concerning reciprocity norms and the welfare system. (See the April 19 date here.)
I've had this experience several times before over the years - we invite someone not personally known to our group and who also does not start out knowing anything about our group (or mixed law school / public economics types generally), and it works out very positively for everyone, with more of a sense of moving forward than you can get with old friends. Christina is a serious and thoughtful economist with strong interests in behavioral economics, decision theory, reciprocity and other non-monetary goals, etc., much in the spirit of work in the tradition running from Herbert Simon to George Loewenstein (who is also at Carnegie Mellon).
This was the Colloquium's twelfth year, and the second full one since the tragic death of David Bradford. What's exciting for me is the feeling that we've built an ever-changing yet somehow stable community that is serious but open-minded and permeable, as well as strongly opposed to any rigidity or orthodoxy, even (or especially) those consonant with our own views. Many thanks to Rosanne Altshuler and Alan Auerbach for their efforts in co-teaching it with me this year. They were both delightful colleagues and made great contributions.
Every year is different, but I am confident that next year will be great as well. I hope shortly to have word on whom I will be doing it with.
I've had this experience several times before over the years - we invite someone not personally known to our group and who also does not start out knowing anything about our group (or mixed law school / public economics types generally), and it works out very positively for everyone, with more of a sense of moving forward than you can get with old friends. Christina is a serious and thoughtful economist with strong interests in behavioral economics, decision theory, reciprocity and other non-monetary goals, etc., much in the spirit of work in the tradition running from Herbert Simon to George Loewenstein (who is also at Carnegie Mellon).
This was the Colloquium's twelfth year, and the second full one since the tragic death of David Bradford. What's exciting for me is the feeling that we've built an ever-changing yet somehow stable community that is serious but open-minded and permeable, as well as strongly opposed to any rigidity or orthodoxy, even (or especially) those consonant with our own views. Many thanks to Rosanne Altshuler and Alan Auerbach for their efforts in co-teaching it with me this year. They were both delightful colleagues and made great contributions.
Every year is different, but I am confident that next year will be great as well. I hope shortly to have word on whom I will be doing it with.
Alternative minimum tax
As per an earlier post, Lee Sheppard was kind enough to quote me in her article in the 4/16/07 Tax Notes concerning the AMT. So why don't I repay the favor, or alternatively add to it, by quoting her.
"'Given how irresponsible the Bush tax cuts were, it is just as well that they were not all realized,' commented Daniel Shaviro of the NYU School of Law. 'We're paying for the Bush tax cuts in installments.'
"Shaviro's comment is important. The panelists agreed that, to a great extent, the revenue from the AMT is masking the true cost of the Bush tax cuts ...
"'Should we have just one tax system? Should we repeal the regular income tax?' Shaviro asked rhetorically. He emphasized that what matters is not what the system is called but what it looks like. [Note: This is my rebuttal of Michael Graetz's in my view misconceived talking point about how we should repeal the regular tax rather than the AMT.] Shaviro pleaded guilty to having worked the technical aspects of the AMT while at the [Joint Committee on Taxation] during the 1986 tax reform. The drafters did not expect that the inclusion of personal exemptions, credits, and miscellaneous deductions in AMT preferences would become so important.
"'What do you do with the big items?' he continued. Shaviro, a Manhattan resident, argued that while personal exemptions, credits, and miscellaneous deductions should not be limited, there was a case to be made for the AMT's 'partial indirect repeal' of the state and local tax deduction. Other big items that require further consideration are the mortgage interest deduction and the exclusion for employer-provided medical coverage - both of which the president's tax reform panel had to propose cutting back to repeal the AMT and preserve the Bush tax cuts."
"'Given how irresponsible the Bush tax cuts were, it is just as well that they were not all realized,' commented Daniel Shaviro of the NYU School of Law. 'We're paying for the Bush tax cuts in installments.'
"Shaviro's comment is important. The panelists agreed that, to a great extent, the revenue from the AMT is masking the true cost of the Bush tax cuts ...
"'Should we have just one tax system? Should we repeal the regular income tax?' Shaviro asked rhetorically. He emphasized that what matters is not what the system is called but what it looks like. [Note: This is my rebuttal of Michael Graetz's in my view misconceived talking point about how we should repeal the regular tax rather than the AMT.] Shaviro pleaded guilty to having worked the technical aspects of the AMT while at the [Joint Committee on Taxation] during the 1986 tax reform. The drafters did not expect that the inclusion of personal exemptions, credits, and miscellaneous deductions in AMT preferences would become so important.
"'What do you do with the big items?' he continued. Shaviro, a Manhattan resident, argued that while personal exemptions, credits, and miscellaneous deductions should not be limited, there was a case to be made for the AMT's 'partial indirect repeal' of the state and local tax deduction. Other big items that require further consideration are the mortgage interest deduction and the exclusion for employer-provided medical coverage - both of which the president's tax reform panel had to propose cutting back to repeal the AMT and preserve the Bush tax cuts."
Monday, April 16, 2007
Moth-eaten comments
Until today, "moth-eaten" was a word I mainly used metaphorically. But today, it became startlingly literal.
I was getting dressed in my hotel room for the AMT panel on C-Span 3 that I mentioned in my previous post, just 20 minutes to go and with a 5-minute walk to get there, when I realized that my suit pans were, well, no longer feasible to wear in public. They're from a summer suit I had't worn since early last fall, and evidently I didn't check before hanging them in my garment bag. Certainly a grim moment when one is on the road, about to be televised, and has no time to go to a men's clothing store.
Luckily, as it turned out, we did the panel seated at a table that left viewers none the wiser that I was wearing rumpled jeans. And, for what it's worth, a co-panelist told me that William Bennett has been known to do panels looking splendid from the waist up and decidedly less so below. (Maybe he lost his dress pants at the craps table?)
On the panel itself, I tried to be lively enough to hold the TV viewership (all 30 of them). I suppose the word "moronic" doesn't frequently turn up on televised PowerPoint slides, but it did this time, in reference to having a tax system with gratituously built-in instability. (I used it to describe a situation, not any particular actors.) And I did not stint on the pessimism about our political system's capacity to respond to problems these days - this not to be lively, but because it's how I currently see things.
I was getting dressed in my hotel room for the AMT panel on C-Span 3 that I mentioned in my previous post, just 20 minutes to go and with a 5-minute walk to get there, when I realized that my suit pans were, well, no longer feasible to wear in public. They're from a summer suit I had't worn since early last fall, and evidently I didn't check before hanging them in my garment bag. Certainly a grim moment when one is on the road, about to be televised, and has no time to go to a men's clothing store.
Luckily, as it turned out, we did the panel seated at a table that left viewers none the wiser that I was wearing rumpled jeans. And, for what it's worth, a co-panelist told me that William Bennett has been known to do panels looking splendid from the waist up and decidedly less so below. (Maybe he lost his dress pants at the craps table?)
On the panel itself, I tried to be lively enough to hold the TV viewership (all 30 of them). I suppose the word "moronic" doesn't frequently turn up on televised PowerPoint slides, but it did this time, in reference to having a tax system with gratituously built-in instability. (I used it to describe a situation, not any particular actors.) And I did not stint on the pessimism about our political system's capacity to respond to problems these days - this not to be lively, but because it's how I currently see things.
Friday, April 13, 2007
Cheap publicity stunt
Get your TIVOs and DVD recorders primed and ready now, if not sooner. It turns out that the AEI conference on the alternative minimum tax, at which I will be appearing, is going to be televised on C-Span 3. That's Monday, April 16, at 9 am. I am the second speaker, after Len Burman, and should be on at around 9:20 or 9:30, complete with Power Point slides. My remarks will include some reasonably lively bits.
I also gather that Monday's Tax Notes Magazine will have an article by Lee Sheppard concerning the NYU panel on the AMT on which I spoke last Tuesday. Lee features a couple of things I said in the middle of the piece and at the end. Bad form to thank her, I suppose, but I like how her article comes out although we're not 100% in agreement. (Then again, maybe not far below 100%.)`
I also gather that Monday's Tax Notes Magazine will have an article by Lee Sheppard concerning the NYU panel on the AMT on which I spoke last Tuesday. Lee features a couple of things I said in the middle of the piece and at the end. Bad form to thank her, I suppose, but I like how her article comes out although we're not 100% in agreement. (Then again, maybe not far below 100%.)`
He's gotta dance to keep from crying
Received earlier today from a friend:
"This is one of the best lines I’ve ever seen in a review about an aged rocker (from the NY Times on 4/11):
'How [Iggy Pop] re-enacts fear, rage, sex, abject boredom, universal love and lethal cynicism, while dancing with originality, remembering lyrics and maintaining the delicate middle-state between having pants on and not having pants on, is why he is he, and you are merely you.'”
Hey, it's a thankless job, but someone has to do it. Evidently Iggy is soldiering on notwithstanding the brutal 1.0 (on a scale from 0 to 10) that pitchforkmedia.com gave to his reunion album with the Stooges.
"This is one of the best lines I’ve ever seen in a review about an aged rocker (from the NY Times on 4/11):
'How [Iggy Pop] re-enacts fear, rage, sex, abject boredom, universal love and lethal cynicism, while dancing with originality, remembering lyrics and maintaining the delicate middle-state between having pants on and not having pants on, is why he is he, and you are merely you.'”
Hey, it's a thankless job, but someone has to do it. Evidently Iggy is soldiering on notwithstanding the brutal 1.0 (on a scale from 0 to 10) that pitchforkmedia.com gave to his reunion album with the Stooges.
Thursday, April 12, 2007
Shakespearean sonnet
For no particular reason, I'll take this opportunity to post a Shakespearean styled sonnet I wrote as a joke many, many years ago about a friend. (Some friend, huh? But it was all meant in good fun. Or else as a formal exercise.) To protect the guilty (myself), I have changed the individual's name to "Johnson," which bears no resemblance to the actual name. So any actual Johnsons out there, please don't tell me you think I wrote it about you.
I find the Johnson tedious and slow
If his wit sparkles, why then, so does mud
His glance is vacant, and as if to show
His foolishness, he sounds like Elmer Fudd.
His ignorance is like the vasty deep
And yet presumes he far beyond his ken
Resentful is he, envious and cheap
He slobbers more than ordinary men
He is morose, and gloomy as a Turk
The women find him duller than a stone
To talk with him is hard and joyless work
Speak fair, and he will answer with a groan.
And yet the sight of Johnson brings me bliss
For, next to his, how great MY happiness.
I find the Johnson tedious and slow
If his wit sparkles, why then, so does mud
His glance is vacant, and as if to show
His foolishness, he sounds like Elmer Fudd.
His ignorance is like the vasty deep
And yet presumes he far beyond his ken
Resentful is he, envious and cheap
He slobbers more than ordinary men
He is morose, and gloomy as a Turk
The women find him duller than a stone
To talk with him is hard and joyless work
Speak fair, and he will answer with a groan.
And yet the sight of Johnson brings me bliss
For, next to his, how great MY happiness.
Tuesday, April 10, 2007
Alternative minimum tax discussions at NYU and AEI
This afternoon at 4, I'll be participating in a panel discussion at NYU Law School, with economists Len Burman and Rosanne Altshuler along with colleague Lily Batchelder, concerning the alternative minimum tax (AMT). Then Len and I, among others, will be discussing the AMT at the American Enterprise Institute in Washington next Monday (April 16) at 9 am.
One of the points I plan to make across the two sessions (where my remarks will be quite differently focused) is that there actually is a case for having an AMT, but only in what turns out to be an alternative political economy universe. I wrote about this back in the day (1987 in Taxes Magazine, and a 1989 U of Chicago Law Review article called "Selective Limitations on Tax Benefits"), making the following two points:
(1) If a provision like the AMT mainly denies tax benefits that ought to be disallowed generally, one would have to be craxy NOT to want to trade it in for straightforward base-broadening and no special rule or back-up tax system. E.g., if the AMT denies half the tax benefits from stupid provision X, replacing the AMT with straightforward, across-the-board 50% reduction in the scope of X is likely to be much better policy.
(2) If such a trade-in for the indirect base-broadening effects of the AMT is not politically feasible, then having it might be better than repealing it, depending on the relative magnitude of the distortions it reduces by cutting back X and the new ones it creates via its specialized method of operation.
At the time, I thought it plausible that this line of thought might make a decent case for having some sort of AMT, albeit based purely on the political economy problem of trade-in's unfeasibility. But 20 years later the AMT doesn't seem to be functioning that way, except via the historical legacy of its denying itemized deductions for state and local taxes. Its denying the full benefit of, say, the 2001 rate cuts is not quite the same proposition. Its hit on personal exemptions and on the so-called miscellaneous itemized deductions makes the effective composite tax base worse, not better.
The question now is simply how to get rid of it without making the fiscal gap even bigger or overall distribution less progressive. And here the answer is simple: there is no way to do this until we have two responsible political parties capable of bargaining with each other, reasonably and in good faith and with a shared commitment to solving problems. 2009, anyone?
One of the points I plan to make across the two sessions (where my remarks will be quite differently focused) is that there actually is a case for having an AMT, but only in what turns out to be an alternative political economy universe. I wrote about this back in the day (1987 in Taxes Magazine, and a 1989 U of Chicago Law Review article called "Selective Limitations on Tax Benefits"), making the following two points:
(1) If a provision like the AMT mainly denies tax benefits that ought to be disallowed generally, one would have to be craxy NOT to want to trade it in for straightforward base-broadening and no special rule or back-up tax system. E.g., if the AMT denies half the tax benefits from stupid provision X, replacing the AMT with straightforward, across-the-board 50% reduction in the scope of X is likely to be much better policy.
(2) If such a trade-in for the indirect base-broadening effects of the AMT is not politically feasible, then having it might be better than repealing it, depending on the relative magnitude of the distortions it reduces by cutting back X and the new ones it creates via its specialized method of operation.
At the time, I thought it plausible that this line of thought might make a decent case for having some sort of AMT, albeit based purely on the political economy problem of trade-in's unfeasibility. But 20 years later the AMT doesn't seem to be functioning that way, except via the historical legacy of its denying itemized deductions for state and local taxes. Its denying the full benefit of, say, the 2001 rate cuts is not quite the same proposition. Its hit on personal exemptions and on the so-called miscellaneous itemized deductions makes the effective composite tax base worse, not better.
The question now is simply how to get rid of it without making the fiscal gap even bigger or overall distribution less progressive. And here the answer is simple: there is no way to do this until we have two responsible political parties capable of bargaining with each other, reasonably and in good faith and with a shared commitment to solving problems. 2009, anyone?
Musical oldies and newbies
I recently sprung (via an Amazon affiliated seller with a good price) for the 3-disk expanded reissue of "The Kinks Are the Village Green Preservation Society," released in 1968 and long since renowned as the Kinks' best album notwithstanding its initially being a flop. I had resisted this record for a long time, and then bought only the basic disk, on the view that nostalgia about meat pies and apothecaries isn't really my thing. But apart from its musical merits, which are very strong in the mid to late 60s hard-driving folk-rock vein, it's really not an exercise in insular English nostalgia as most accounts would have it, but rather a portrait of nostalgia's failure to make the narrator (Ray Davies) feel any less miserable. This certainly makes it more interesting than it would otherwise be, and the reissue has about a full CD's worth of good additional material that was not otherwise widely available.
On a more contemporary note, I'm seeking more information about whether Blonde Redhead's newly released "23" is worthwhile.
On a more contemporary note, I'm seeking more information about whether Blonde Redhead's newly released "23" is worthwhile.
Wednesday, April 04, 2007
Interesting tidbit
ABC News is reporting that the U.S., for the last two years, has been advising and funding a "Pakistani tribal militant group responsible for a series of deadly guerrilla raids inside Iran." The group "has taken responsibility for the deaths and kidnappings of more than a dozen Iranian soldiers and officials." Their preferred M.O. is to kidnap people, then execute them on camera, though it's unclear whether they did this in a recent slaying of "at least 11 members of the Iranian Revolutionary Guard riding on a bus in the Iranian city of Zahedan." All in all, they sound like really nice fellas.
This means that the U.S. is a state sponsor of terrorism. It also means that the U.S. has committed acts of war against Iran, predating and so far as we know exceeding anything the Iranians have done in Iraq.
I doubt it will be more widely reported or kept in mind, however.
This means that the U.S. is a state sponsor of terrorism. It also means that the U.S. has committed acts of war against Iran, predating and so far as we know exceeding anything the Iranians have done in Iraq.
I doubt it will be more widely reported or kept in mind, however.
Tuesday, April 03, 2007
Shadow's fifteen seconds
Thanks to my wife's efforts, our cat Shadow is now enjoying (?) his moment of Internet stardom.
Silly-ass McCain
After his stunt at the Baghdad market, John McCain is certainly America’s premier buffoon, at least outside the Bush Administration. He has all the moral seriousness of Bertie Wooster without Jeeves. He’ll soon be challenging Bello for top billing at the Ringling Brothers Barnum & Bailey Circus. Or maybe he’ll end up touring county fairs, biting the heads off chickens and sitting on the ducking post. Remake of “The Blue Angel,” perhaps? He’d be good as Emil Jannings in the final scene.
At least this stunt is just farce, albeit not at all funny to the Iraqis who regularly spend time in the market he proclaimed safe after visiting it for ten minutes with his body armor, 100 soldiers in Humvees, 3 attack helicopters, 2 Apache gunships, and sharpshooters stationed in the buildings all around (all on top of the pre-dawn sweep and diversion of traffic). McCain only recently did much worse than farce, back in fall 2006 when he pretended to negotiate with the Bush Administration about the torture legislation and then promptly caved on the whole thing, thereby betraying his own personal history and anything honorable that he had ever seriously stood for.
The saddest things about McCain are twofold. First, despite all the hype about the “Straight Talk Express” and such, I think he actually had some integrity at some point. It simply has all been consumed by his ambition and desperation. I am reminded of Hubert Humphrey, who embarrassed himself in the 1972 Presidential campaign, trying halfheartedly to do George Wallace Lite, because the ambition and desperation had eaten up everything else, like one of Sauron’s victims bearing a lesser Ring of Power. Second, if you sell out and torch your integrity and honor in order to win, it kind of helps if you actually do win – at least that saves you from being ridiculous. To sell out and still lose badly, as I suspect McCain will, is to lose everything. I wonder, once it is all over, if (unlike Bush or Cheney) he will actually be able to grasp the totality of his humiliation.
I actually met the man once, in circumstances that certainly embarrassed me more than him. It was probably the year 2000, and I had a book out recently (probably Making Sense of Social Security Reform). I was halfheartedly trying to get it media exposure. (The problem is that I’m always more interested in writing my new project than promoting my old one.) I got a call from a booker on Good Morning America, ostensibly giving me a chance to appear on a segment with Senator McCain and to mention my book. The booker, some sort of junior intern who (it turned out) was just trying to get 60 people or so to agree to show up in Midtown NYC before 6 in the morning, told me that I would definitely get to ask him a question. She would have said yes if I had asked whether, by showing up, I would get to host the show for a few weeks.
When I got there, it transpired that I was just one of 60 people who could submit a question on an index card, about 3 of which (the more vacuous the better) would be read by the host to the Senator. But by the time I realized that I should just leave I had already been herded with the rest into the studio for the live gig. I did get to look anonymously disgruntled on national television for a second or two when the camera swept past me a couple of times.
When it was over, McCain worked the crowd shaking hands. Somehow it transpired that, although I had already shaken his hand once, he was heading towards the exit and I was still standing nearby. Thinking that I wanted a second go, he said to me angrily: “I already shook your hand!”
I ended up with a Good Morning America t-shirt plus a story to tell my Tax class a few hours later.
Payback is sweet, Senator, even if it wasn’t your fault.
At least this stunt is just farce, albeit not at all funny to the Iraqis who regularly spend time in the market he proclaimed safe after visiting it for ten minutes with his body armor, 100 soldiers in Humvees, 3 attack helicopters, 2 Apache gunships, and sharpshooters stationed in the buildings all around (all on top of the pre-dawn sweep and diversion of traffic). McCain only recently did much worse than farce, back in fall 2006 when he pretended to negotiate with the Bush Administration about the torture legislation and then promptly caved on the whole thing, thereby betraying his own personal history and anything honorable that he had ever seriously stood for.
The saddest things about McCain are twofold. First, despite all the hype about the “Straight Talk Express” and such, I think he actually had some integrity at some point. It simply has all been consumed by his ambition and desperation. I am reminded of Hubert Humphrey, who embarrassed himself in the 1972 Presidential campaign, trying halfheartedly to do George Wallace Lite, because the ambition and desperation had eaten up everything else, like one of Sauron’s victims bearing a lesser Ring of Power. Second, if you sell out and torch your integrity and honor in order to win, it kind of helps if you actually do win – at least that saves you from being ridiculous. To sell out and still lose badly, as I suspect McCain will, is to lose everything. I wonder, once it is all over, if (unlike Bush or Cheney) he will actually be able to grasp the totality of his humiliation.
I actually met the man once, in circumstances that certainly embarrassed me more than him. It was probably the year 2000, and I had a book out recently (probably Making Sense of Social Security Reform). I was halfheartedly trying to get it media exposure. (The problem is that I’m always more interested in writing my new project than promoting my old one.) I got a call from a booker on Good Morning America, ostensibly giving me a chance to appear on a segment with Senator McCain and to mention my book. The booker, some sort of junior intern who (it turned out) was just trying to get 60 people or so to agree to show up in Midtown NYC before 6 in the morning, told me that I would definitely get to ask him a question. She would have said yes if I had asked whether, by showing up, I would get to host the show for a few weeks.
When I got there, it transpired that I was just one of 60 people who could submit a question on an index card, about 3 of which (the more vacuous the better) would be read by the host to the Senator. But by the time I realized that I should just leave I had already been herded with the rest into the studio for the live gig. I did get to look anonymously disgruntled on national television for a second or two when the camera swept past me a couple of times.
When it was over, McCain worked the crowd shaking hands. Somehow it transpired that, although I had already shaken his hand once, he was heading towards the exit and I was still standing nearby. Thinking that I wanted a second go, he said to me angrily: “I already shook your hand!”
I ended up with a Good Morning America t-shirt plus a story to tell my Tax class a few hours later.
Payback is sweet, Senator, even if it wasn’t your fault.
Thursday, March 29, 2007
Five commentators not in search of an author
Now that the brutal winter weather has finally passed, I made the mistake the other week of – well, the fates must have considered it crowing on my part – that, in twelve years, the NYU Tax Policy Colloquium has never once lost a session due to speaker unavailability. The obvious threat being that winter storms would prevent someone from coming in. (We meet from January through April.) We have had some close calls, and quite a few storms would have canceled us if they had come on the wrong day of the week (or if we’d had an out of town speaker in a given week), but never once a cancellation.
Sure enough, no sooner did I laud this fact then something happened. Our scheduled speaker this week was Kirk Stark of UCLA Law School, with a very interesting paper (if still in preliminary form) on fiscal equalization, or national programs transferring resources from rich states to poor states. He says that nearly all federations in the world other than the U.S. have such a program, and the U.S. at least formally doesn’t. (Which is not to deny that we might have the effective equivalent via differently labeled programs.) To see the paper, check out the March 29 date here.
Anyway, on Tuesday night Kirk contacted me to say that he unfortunately couldn’t come because he has the flu. One can certainly sympathize. I am just getting over a horrendous cold, which I would assume was rather like what he had only minus the fever, and even in my state I wouldn’t have wanted to board a transcontinental flight. With a fever it would have been unthinkable.
My first thought was that we would have to cancel today’s session. But then it occurred to me (with the help of my co-convenor, Alan Auerbach) that we could go on anyway. The NYU colloquium has an unusual format, in which the author doesn’t actually present the paper. Instead, we do and the author responds to our critiques of various issues. So one could say (it was the obvious joke that several people independently thought of) that this is simply the perfection or logical culmination of our method – no author whatsoever.
Not true, of course, and we would rather have had Kirk here. But with the help of several special commentators I enlisted to ensure multiple perspectives (Rosanne Altshuler, Jack Mintz, and Brian Galle), we actually had a pretty good session. Hence (counting Alan and me) the five commentators not in search of an author, from my title for this posting.
Bottom line conclusion of the session, without Kirk there to defend his view: to start with a bit of background, the paper proposes fiscal equalization based on tax capacity (i.e., potential revenue at a given level of “effort”) to respond to a fiscal federalism problem of inducing migration from poor to rich jurisdictions if public goods are like lump sum grants in their incidence but are financed by means-based taxes. This is merely a subset of the general fiscal federalism case for keeping redistribution to the highest level of government and having lower levels stick to providing competitive tax-benefit packages, with user fee style financing, a la the Tiebout model (named for Charles Tiebout’s famous 1956 paper).
We were unpersuaded that the paper’s proposed cure, payments to poor states (effectively financed by rich states) that seek to equalize taxing capacity fit logically with the diagnosis. Migration depends on fiscal effort, not fiscal capacity. (People move to Greenwich, CT, if the paper’s analysis is right, to get nice parks that richer people pay for, based on what Greenwich does, not what it could do.) And we thought the case is much stronger for equalizing, say, education outlays (where there is a positive externality plus an agency cost problem if parents don’t fully represent the interests of their children) than for government-provided consumer goods generally.
The paper offers an intriguing if preliminary political analysis, suggesting we don’t have fiscal equalization in the U.S. because (a) Blue States don’t want it since it transfers $$ to Red States, and (b) Red States don’t want it because their elites are anti-government and don’t want $$ given to their poorer citizens. But it’s hard to see why unrestricted cash grants to their governments wouldn’t appeal to Red State elites. Why not take free money? Better explanations, we thought, involved (a) path dependence – the U.S. started from a more decentralized status & so the thing would have had to be affirmatively introduced, plus (b) those who might have wanted it had more direct and appealing routes to getting the same thing (e.g., farm subsidies instead of $$ that depend on a complicated fiscal formula that could go the other way next year). Even the claim that we don’t currently have it, while other federations do, might conceivably be truer in form than in substance.
Anyway, not to tempt the fates yet again, but we still haven't lost a session due to speaker unavailability.
Sure enough, no sooner did I laud this fact then something happened. Our scheduled speaker this week was Kirk Stark of UCLA Law School, with a very interesting paper (if still in preliminary form) on fiscal equalization, or national programs transferring resources from rich states to poor states. He says that nearly all federations in the world other than the U.S. have such a program, and the U.S. at least formally doesn’t. (Which is not to deny that we might have the effective equivalent via differently labeled programs.) To see the paper, check out the March 29 date here.
Anyway, on Tuesday night Kirk contacted me to say that he unfortunately couldn’t come because he has the flu. One can certainly sympathize. I am just getting over a horrendous cold, which I would assume was rather like what he had only minus the fever, and even in my state I wouldn’t have wanted to board a transcontinental flight. With a fever it would have been unthinkable.
My first thought was that we would have to cancel today’s session. But then it occurred to me (with the help of my co-convenor, Alan Auerbach) that we could go on anyway. The NYU colloquium has an unusual format, in which the author doesn’t actually present the paper. Instead, we do and the author responds to our critiques of various issues. So one could say (it was the obvious joke that several people independently thought of) that this is simply the perfection or logical culmination of our method – no author whatsoever.
Not true, of course, and we would rather have had Kirk here. But with the help of several special commentators I enlisted to ensure multiple perspectives (Rosanne Altshuler, Jack Mintz, and Brian Galle), we actually had a pretty good session. Hence (counting Alan and me) the five commentators not in search of an author, from my title for this posting.
Bottom line conclusion of the session, without Kirk there to defend his view: to start with a bit of background, the paper proposes fiscal equalization based on tax capacity (i.e., potential revenue at a given level of “effort”) to respond to a fiscal federalism problem of inducing migration from poor to rich jurisdictions if public goods are like lump sum grants in their incidence but are financed by means-based taxes. This is merely a subset of the general fiscal federalism case for keeping redistribution to the highest level of government and having lower levels stick to providing competitive tax-benefit packages, with user fee style financing, a la the Tiebout model (named for Charles Tiebout’s famous 1956 paper).
We were unpersuaded that the paper’s proposed cure, payments to poor states (effectively financed by rich states) that seek to equalize taxing capacity fit logically with the diagnosis. Migration depends on fiscal effort, not fiscal capacity. (People move to Greenwich, CT, if the paper’s analysis is right, to get nice parks that richer people pay for, based on what Greenwich does, not what it could do.) And we thought the case is much stronger for equalizing, say, education outlays (where there is a positive externality plus an agency cost problem if parents don’t fully represent the interests of their children) than for government-provided consumer goods generally.
The paper offers an intriguing if preliminary political analysis, suggesting we don’t have fiscal equalization in the U.S. because (a) Blue States don’t want it since it transfers $$ to Red States, and (b) Red States don’t want it because their elites are anti-government and don’t want $$ given to their poorer citizens. But it’s hard to see why unrestricted cash grants to their governments wouldn’t appeal to Red State elites. Why not take free money? Better explanations, we thought, involved (a) path dependence – the U.S. started from a more decentralized status & so the thing would have had to be affirmatively introduced, plus (b) those who might have wanted it had more direct and appealing routes to getting the same thing (e.g., farm subsidies instead of $$ that depend on a complicated fiscal formula that could go the other way next year). Even the claim that we don’t currently have it, while other federations do, might conceivably be truer in form than in substance.
Anyway, not to tempt the fates yet again, but we still haven't lost a session due to speaker unavailability.
Monday, March 26, 2007
Ironic waiver?
One of the interesting threads in the attorney scandal is that White House officials did lots of their communicating via Republican National Committee e-mails rather than White House e-mails. E.g., there is a report that Rove does 95% of his e-mailing via the RNC address.
Trivial though this may sound, there is also reason to believe that a lot of this has been done deliberately to evade legal requirements pertaining to recording and retention of official communications.
How does this play into the executive privilege claims? The natural analogy is attorney-client privilege, which is easily blown by the parties who want to claim it in various circumstances where they failed to treat a communication as confidential and as within the attorney-client relationship. Plus, there is no privilege where the attorney is providing not legal advice but something else (e.g., investment or tax accounting advice). It's a truism among knowledgeable practitioners that far less is actually covered by the privilege than lawyers tend to think while they are going about their daily business.
Obviously, there is next to no legal precedent on the boundaries of executive privilege, compared to the centuries of cases et al regarding the attorney-client privilege. But the privileges are similarly motivated cousins, and analogies from the latter are by no means irrelevant to thinking about the former. And if you think there's a special public purpose to letting the president get confidential advice, there's also a special public purpose to preventing him from evading oversight.
The easy and obvious point is that anything Rove sent out in an e-mail from his RNC address is not privileged. Call it a foot fault, if you like, but that's just tough, and doesn't call for sympathy given his likely unclean hands in using the RNC address.
A further interesting question is the extent to which using RNC e-mails to communicate stuff about meetings with Bush et al should be viewed as a further waiver of other executive privilege claims, at the limit on everything pertaining to the meetings and topics discussed in the RNC e-mails. On this point I would have to defer to those more knowledgeable than I am about how the attorney-client privilege is interpreted and applied.
But it strikes me as possible that we have an argument for a total waiver situation, even leaving aside the point that the attorney-client privilege does not cover criminal activity (relevant here given the strong inference of obstruction of justice as the cornerstone of the entire caper).
I certainly hope these arguments will be fully raised and vetted both in public debate and in any litigation on Bush's privilege claims.
Trivial though this may sound, there is also reason to believe that a lot of this has been done deliberately to evade legal requirements pertaining to recording and retention of official communications.
How does this play into the executive privilege claims? The natural analogy is attorney-client privilege, which is easily blown by the parties who want to claim it in various circumstances where they failed to treat a communication as confidential and as within the attorney-client relationship. Plus, there is no privilege where the attorney is providing not legal advice but something else (e.g., investment or tax accounting advice). It's a truism among knowledgeable practitioners that far less is actually covered by the privilege than lawyers tend to think while they are going about their daily business.
Obviously, there is next to no legal precedent on the boundaries of executive privilege, compared to the centuries of cases et al regarding the attorney-client privilege. But the privileges are similarly motivated cousins, and analogies from the latter are by no means irrelevant to thinking about the former. And if you think there's a special public purpose to letting the president get confidential advice, there's also a special public purpose to preventing him from evading oversight.
The easy and obvious point is that anything Rove sent out in an e-mail from his RNC address is not privileged. Call it a foot fault, if you like, but that's just tough, and doesn't call for sympathy given his likely unclean hands in using the RNC address.
A further interesting question is the extent to which using RNC e-mails to communicate stuff about meetings with Bush et al should be viewed as a further waiver of other executive privilege claims, at the limit on everything pertaining to the meetings and topics discussed in the RNC e-mails. On this point I would have to defer to those more knowledgeable than I am about how the attorney-client privilege is interpreted and applied.
But it strikes me as possible that we have an argument for a total waiver situation, even leaving aside the point that the attorney-client privilege does not cover criminal activity (relevant here given the strong inference of obstruction of justice as the cornerstone of the entire caper).
I certainly hope these arguments will be fully raised and vetted both in public debate and in any litigation on Bush's privilege claims.
Sunday, March 25, 2007
Interesting literary series
One Sunday when I was uncharacteristically free to wander around a Barnes & Noble (actual not virtual), I spotted a very interesting fiction series, "Femmes Fatales," published by the Feminist Press at the City University of New York. The series consists of selected pulp or genre novels written by female authors in the 1930s through the 1950s. So far I've read two, both of which were made into famous (but much less interesting) movies: Dorothy Hughes' "In a Lonely Place" and Vera Caspary's "Laura." Both are among the best detective/mystery/murder genre fiction that I've ever read; usually I find the genre tolerable but boring.
Give the Feminist Press credit, even if their forewords and afterwords are a bit predictable in exactly the academic vein would expect. The female writer's perspective in these two novels genuinely makes them much more interesting than they would otherwise be. (Plus, these appear to be particularly inspired outings by generally capable writers.) "In a Lonely Place" is far darker than the Humphrey Bogart movie - narrated by a male serial killer of women but not the misogynistic genre exercise one would expect from that. Also one of the best uses I can remember of the unreliable narrator device. "Laura" is less extreme, but also much fuller than the admittedly atmospherically effective Preminger film. Good use of multiple narrators, interesting twists even if one knows them from the movie. Laura is a single woman pursuing a career, not getting married as soon as she is supposed to, and surrounded by manipulative, immature men. The murder plot is a device (although a very good one) rather than the subject of real interest, notwithstanding the twists and suspense.
I like to vary my reading, so at the moment I'm embarked on the Rory Stewart book about walking through Afghanistan, but I will probably return to this series soon.
Give the Feminist Press credit, even if their forewords and afterwords are a bit predictable in exactly the academic vein would expect. The female writer's perspective in these two novels genuinely makes them much more interesting than they would otherwise be. (Plus, these appear to be particularly inspired outings by generally capable writers.) "In a Lonely Place" is far darker than the Humphrey Bogart movie - narrated by a male serial killer of women but not the misogynistic genre exercise one would expect from that. Also one of the best uses I can remember of the unreliable narrator device. "Laura" is less extreme, but also much fuller than the admittedly atmospherically effective Preminger film. Good use of multiple narrators, interesting twists even if one knows them from the movie. Laura is a single woman pursuing a career, not getting married as soon as she is supposed to, and surrounded by manipulative, immature men. The murder plot is a device (although a very good one) rather than the subject of real interest, notwithstanding the twists and suspense.
I like to vary my reading, so at the moment I'm embarked on the Rory Stewart book about walking through Afghanistan, but I will probably return to this series soon.
Tuesday, March 20, 2007
Cover-up
It's the old Watergate playbook. Bush's response leaves little doubt in my mind that he was personally involved in obstructing justice, both negatively by shutting down the Lam investigation and positively by seeking unfounded indictments of Democrats on sham charges.
Why not just send them all to Gitmo as enemy combatants?
Why not just send them all to Gitmo as enemy combatants?
Sunday, March 18, 2007
More feline excitement
Yesterday Buddy ambled into the dining room with a gray object in his mouth that, upon inspection, proved to be a live mouse rather than an inanimate cat toy. With a little encouragement, he agreed to carry it back into a small, unoccupied bedroom for further proceedings.
Buddy and Shadow then caucused with the poor creature for a couple of hours. It spent a lot of time in their mouths, but they would drop it every now and then, only to swat at it and pick it up again as soon as it showed signs of life. Pretty much like tag team wrestling, only it didn't have a teammate. Poor thing must have thought it was at Guantanamo or something, and I felt quite sorry for it though agreeing that its life should be forfeit under the circumstances.
They eventually lost interest when it stopped moving for good. At this point I deposited it in the trash outside. Unclear whether an autopsy would have identified shock, internal bleeding, or heart attack as the cause of death. But the grand jury would have had a clear basis to indict for first degree murder.
Buddy and Shadow then headed to their food bowls for refreshment (they had no interest in eating the mouse), and remained too stirred up to nap for a couple of hours.
Two movies I always think about when I observe this type of activity are (1) The Incredible Shrinking Man (Grade B 1950s sci fi in which a man, hiding in his daughter's dollhouse, is attacked by his cat once he has shrunk to being a few inches tall), and (2) the Nightmare on Elm Street [CORRECTION - thanks to a reader!] movies. Freddy Krueger is rather cat-like, from a mouse's perspective, what with his playfulness and retractable razor blades on his fingers.
Later on, Buddy was purring, kneading with his paws, and rolling over as I thanked him for the trouble-free vermin removal. As they say in the NBA, you can't teach size.
Buddy and Shadow then caucused with the poor creature for a couple of hours. It spent a lot of time in their mouths, but they would drop it every now and then, only to swat at it and pick it up again as soon as it showed signs of life. Pretty much like tag team wrestling, only it didn't have a teammate. Poor thing must have thought it was at Guantanamo or something, and I felt quite sorry for it though agreeing that its life should be forfeit under the circumstances.
They eventually lost interest when it stopped moving for good. At this point I deposited it in the trash outside. Unclear whether an autopsy would have identified shock, internal bleeding, or heart attack as the cause of death. But the grand jury would have had a clear basis to indict for first degree murder.
Buddy and Shadow then headed to their food bowls for refreshment (they had no interest in eating the mouse), and remained too stirred up to nap for a couple of hours.
Two movies I always think about when I observe this type of activity are (1) The Incredible Shrinking Man (Grade B 1950s sci fi in which a man, hiding in his daughter's dollhouse, is attacked by his cat once he has shrunk to being a few inches tall), and (2) the Nightmare on Elm Street [CORRECTION - thanks to a reader!] movies. Freddy Krueger is rather cat-like, from a mouse's perspective, what with his playfulness and retractable razor blades on his fingers.
Later on, Buddy was purring, kneading with his paws, and rolling over as I thanked him for the trouble-free vermin removal. As they say in the NBA, you can't teach size.
Thursday, March 15, 2007
More on law school academic culture
Today I was in Philadelphia, at Penn Law School, presenting my paper "Beyond the Pro-Consumption Tax Consensus." One anthropological question I got, from an economist in attendance, is why law profs' papers often over-claim, e.g., by generalizing a particular economic model with restrictive assumptions to serve as a source of very broadly stated real world conclusions. (I should note that this is what I was critiquing in my paper, not exemplifying; the question in a sense was why my paper needed to be written.)
I think it's partly from the nature of law review publication, where you need to make big claims in order for student editors to figure they should publish it. A second cause is the enthusiasm of the convert, where law profs are coming into another discipline in order to make use of it. A third is that simply using a given economic model, even if one over-claims from it, can represent an advance if people in law were unaware of it.
In conversation at dinner following the dinner, I emphasized the law review element, but with an internal feeling that I was indeed over-claiming for this explanation. As I was rightly asked, aren't people calculating past publication to their peer readers. (And I noted in an earlier post the strategy I've heard about whereby you over-claim so the law review will accept your piece and then take out the offending language once you're in the door.)
Upon reflection, there's also something distinct in law school academic culture (possibly derived in part from the law review editing experience, which so many law profs had) that applies to judgments by one's peers, as opposed to student editors. This is the paradigm of shifting the paradigm, often in Yale Law School type form to trumpet a cute little syllogism as a universal precept in lieu of more serious and careful analysis.
I remember in my days on the University of Chicago Law School faculty, when lateral hiring prospects were up for consideration, when the question would be asked of someone who evidently had done good work: "Yes, but has he/she shifted the paradigm for anything?"
At which point I would always think: "Fine, but what if the previous paradigms were just as good or better?"
I think it's partly from the nature of law review publication, where you need to make big claims in order for student editors to figure they should publish it. A second cause is the enthusiasm of the convert, where law profs are coming into another discipline in order to make use of it. A third is that simply using a given economic model, even if one over-claims from it, can represent an advance if people in law were unaware of it.
In conversation at dinner following the dinner, I emphasized the law review element, but with an internal feeling that I was indeed over-claiming for this explanation. As I was rightly asked, aren't people calculating past publication to their peer readers. (And I noted in an earlier post the strategy I've heard about whereby you over-claim so the law review will accept your piece and then take out the offending language once you're in the door.)
Upon reflection, there's also something distinct in law school academic culture (possibly derived in part from the law review editing experience, which so many law profs had) that applies to judgments by one's peers, as opposed to student editors. This is the paradigm of shifting the paradigm, often in Yale Law School type form to trumpet a cute little syllogism as a universal precept in lieu of more serious and careful analysis.
I remember in my days on the University of Chicago Law School faculty, when lateral hiring prospects were up for consideration, when the question would be asked of someone who evidently had done good work: "Yes, but has he/she shifted the paradigm for anything?"
At which point I would always think: "Fine, but what if the previous paradigms were just as good or better?"
Wednesday, March 07, 2007
Lock him up and throw away the key?
I'm bemused by all the sympathy for Lewis Libby now that he has been convicted. One actually should feel some measure of sympathy for him, and indeed for all convicted criminals, even murderers, if the consequences of the verdict will cause them to suffer, even deservedly. (As Libby no doubt will, at least psychically, if he goes to prison, even if it's relatively soft time.) Sympathy for human pain should be universal, whether or not one always acts on it.
The sympathy for Libby appears to be comparative, however, as if he, compared to other convicted felons, especially deserves a break. This view I cannot share.
The perjury and obstruction here were part of a conspiracy by a cabal to take the United States to war on false pretenses, and meanwhile to bully and besmirch all whistle-blowers and critics. It was part and parcel of the most gratuitous foreign policy disaster in U.S. history. (Vietnam, by contrast, was more or less bound to happen given the broader public mindset at the time, although it's true that the Gulf of Tonkin episode has elements in common with all this.) The harm these people have done is incalculable. And the conspirators, while hyping phony evidence about WMD, were prepared to undermine actual U.S. intelligence about WMD around the world by outing an important CIA specialist on this topic.
The sympathy for Libby appears to be comparative, however, as if he, compared to other convicted felons, especially deserves a break. This view I cannot share.
The perjury and obstruction here were part of a conspiracy by a cabal to take the United States to war on false pretenses, and meanwhile to bully and besmirch all whistle-blowers and critics. It was part and parcel of the most gratuitous foreign policy disaster in U.S. history. (Vietnam, by contrast, was more or less bound to happen given the broader public mindset at the time, although it's true that the Gulf of Tonkin episode has elements in common with all this.) The harm these people have done is incalculable. And the conspirators, while hyping phony evidence about WMD, were prepared to undermine actual U.S. intelligence about WMD around the world by outing an important CIA specialist on this topic.
My article, Beyond the Pro-Consumption Tax Consensus
Readers may recall that I posted this article here. I have since rewritten it to make it, I hope, a lot more accessible and reader-friendly, as well as to make some of the conclusions a bit crisper and more general.
The piece has now been accepted by the Stanford Law Review. Joe Bankman will be writing a brief reply, reflecting that my article is in part a critique or response to his article in Stanford (co-authored by David Weisbach), entitled "The Superiority of an Ideal Consumption Tax Over an Ideal Income Tax."
My personal feeling is that the Bankman-Weisbach article significantly advanced the legal tax policy literature and that mine does as well.
The piece has now been accepted by the Stanford Law Review. Joe Bankman will be writing a brief reply, reflecting that my article is in part a critique or response to his article in Stanford (co-authored by David Weisbach), entitled "The Superiority of an Ideal Consumption Tax Over an Ideal Income Tax."
My personal feeling is that the Bankman-Weisbach article significantly advanced the legal tax policy literature and that mine does as well.
Another musical note
Raves keep appearing everywhere I turn for the new Arcade Fire album, which made both the NY Times Magazine and the front page of its Sunday Arts & Leisure section.
But I keep seeing the word "bombastic" here and there in references to the album, along with half-apologetic, half-aggressive comments that, well, if you're too set on irony and too unsympathetic to Springsteen-style sentiment-blasting it might not be for you.
I certainly don't think my own palette or palate is limited to irony, although it's a coloring or flavor that I like. The Wrens' Meadowlands, my favorite album of the last few years, certainly emphasizes feeling rather than irony. But I found the first Arcade Fire album simply too bombastic and a bit over-wrought; hence, I think I will sit this one out.
But I keep seeing the word "bombastic" here and there in references to the album, along with half-apologetic, half-aggressive comments that, well, if you're too set on irony and too unsympathetic to Springsteen-style sentiment-blasting it might not be for you.
I certainly don't think my own palette or palate is limited to irony, although it's a coloring or flavor that I like. The Wrens' Meadowlands, my favorite album of the last few years, certainly emphasizes feeling rather than irony. But I found the first Arcade Fire album simply too bombastic and a bit over-wrought; hence, I think I will sit this one out.
Tuesday, March 06, 2007
Smart Cat; or, The Mystery of the Mangled Meat
The other day, I came down to make breakfast and found 2 chewed-up pieces of steak lying on the ground. These were leftovers from my kids' dinner the night before, and I was quite sure I had left them in the garbage can with the lid closed, but life is busy and you just go on.
I also knew the most likely culprit - Shadow, aka the Big Fella (an honorific title; he's only 10 pounds). Normally the best-behaved of beasts, he is a bit gaga when it comes to cooked meats. I figured that perhaps the lid of the garbage can hadn't been shut.
Tonight I was removing meat from its packaging, in the course of making something for dinner, and Shadow walked up to the garbage can, pushed the lid up, and shoved his head inside. Case closed, so far as the other night is concerned. Of course, before we laud his intellect too much for figuring out how to get into the trash, we should keep in mind that there was no meat in there yet, and that I was right next to him watching. So he can forget about future opportunities to extract meat from the garbage overnight.
Still, impressive in its own way.
Oh, yes. Shadow is toothless by this stage in his career (he is going on 16 years old). I'm not sure what good any of this did him anyway.
I also knew the most likely culprit - Shadow, aka the Big Fella (an honorific title; he's only 10 pounds). Normally the best-behaved of beasts, he is a bit gaga when it comes to cooked meats. I figured that perhaps the lid of the garbage can hadn't been shut.
Tonight I was removing meat from its packaging, in the course of making something for dinner, and Shadow walked up to the garbage can, pushed the lid up, and shoved his head inside. Case closed, so far as the other night is concerned. Of course, before we laud his intellect too much for figuring out how to get into the trash, we should keep in mind that there was no meat in there yet, and that I was right next to him watching. So he can forget about future opportunities to extract meat from the garbage overnight.
Still, impressive in its own way.
Oh, yes. Shadow is toothless by this stage in his career (he is going on 16 years old). I'm not sure what good any of this did him anyway.
Saturday, March 03, 2007
More music appreciation
I've been greatly enjoying selected tracks from Andy Partridge's Fuzzy Warbles, volumes 7-8, available on ITunes so one can select judiciously. Partridge, the main figure in the apparently now-defunct XTC, has issued eight volumes of outtakes and home recordings (9 if you buy the entire package & get a bonus CD), many of which are either casual maunderings or demos of songs that sound better in the XTC released catalog. But if you use the 30-second sample feature on ITunes plus the customer reviews on ITunes and Amazon, you can figure out which ones are worth having.
One way of describing the good songs (and I gleaned 90-100 very good minutes out of the 8 Fuzzy Warbles volumes) is that it sounds like what Paul McCartney might have been doing over the last decade if he had kept his talent and not become so self-conscious and pompously silly.
One way of describing the good songs (and I gleaned 90-100 very good minutes out of the 8 Fuzzy Warbles volumes) is that it sounds like what Paul McCartney might have been doing over the last decade if he had kept his talent and not become so self-conscious and pompously silly.
Thursday, March 01, 2007
New article posted
I have posted another article on SSRN, entitled Why Worldwide Welfare as a Normative Standard in U.S. Tax Policy? I actually wrote this article last August, and it will be appearing soon in the Tax Law Review, but I didn't realize until a friend pointed this out the other day that I hadn't posted it.
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