Sunday, May 28, 2023

Two new papers on SSRN

I have posted two new papers on SSRN, comprising my new writing so far this year.

One is entitled "Time Is, Time Was: Evaluating the Use of the Life Cycle Model as a Fiscal Policy Tool.." It's available here.

The abstract goes something like this:

What time periods should we use in tax and other fiscal policy to evaluate people’s circumstances, and thus to determine either how they are being treated, or how they ought to be? This question is both fundamental and pervasive.
Standard economic reasoning offers grounds for entirely basing one’s thinking on lifetime models. In particular, the closely related permanent income and life cycle hypotheses support employing a purely lifetime perspective in evaluating people’s circumstances and treatment. The resulting model posits that people make decisions on a lifetime basis, seeking to optimize lifetime utility in the face of both (1) period-specific declining marginal utility of consumption, and (2) whatever preferences they happen to have as between consumption in different periods. Accordingly, in the presence of complete markets (including a lack of borrowing constraints), the question of when one earns a given dollar ostensibly makes no difference regarding when one spends it on consumption. And equivalently, when one pays a given dollar of tax will make no difference regarding how much one spends in any period.
This model applies the same basic logic as a two-goods model in an Economics 101 casebook (featuring, say, pizza and movies), but in a far more complex setting in which its application is considerably more challenging. Despite its ruthless simplification, it likely has some degree of descriptive accuracy. People surely do make some plans across very long time horizons, such as early-life career choice, and subsequent planning (however imperfect it may be) for retirement.
Yet the factors that undermine life cycle view’s accuracy and normative relevance are not limited to borrowing constraints. Also of crucial importance are people’s tendency to treat different periods as effectively separate, and a number of other constraints that would prevent them (even if so minded) from equalizing the marginal utility of consumption as between periods.
In sum, therefore, the life cycle model is not sufficiently descriptively accurate to be treated as more than an important orienting benchmark. Like such other “it doesn’t matter” theories as the Coase Theorem, the Efficient Markets Hypothesis, and the Modigliani-Miller Theorem, its value lies more in its showing us where to look for falsifying conditions, than in its actual empirical validity.

The other is entitled "Ancillary Benefits and Income Versus Consumption Taxation in Liam Murphy's and Thomas Nagel's The Myth of Ownership." It's available here. And the abstract:

Nearly twenty years after the publication of Liam Murphy’s and Thomas Nagel’s landmark book, The Myth of Ownership, it is instructive to revisit the tax base debate (concerning the relative abstract merits of income and consumption taxation) that were prominent in my own interactions with them at the time. In retrospect, I believe that they were right to question the simplistic models that might appear to establish the clear theoretical superiority of “ideal” consumption taxes over “ideal” income taxes. However, our debate at the time also focused on their claim that unconsumed wealth’s ancillary benefits to the wealth-holder – for example, its augmenting one’s “security, political power, and social standing” – importantly contradicted the models' treatment of “savings and wealth [as entirely] subsidiary to consumption and deriv[ing] their value entirely from it.” In retrospect, our mutual sense at the time that ancillary benefits stood at the heart of the income versus consumption tax debate now appears to be misplaced. While what one makes of such benefits may be analytically relevant, it is probably less important than questions of political risk and of lifetime versus shorter-period distributional assessment.

Both will be appearing in edited volumes, relating respectively to an upcoming tax conference at Oxford and a 20-years-later set of responses to Murphy and Nagel.

Thursday, May 25, 2023

SSRN follies

Earlier today, I decided to post on the Social Science Research Network (SSRN) two papers that I have written since the start of the year. Once they're up, I planned to link them here and make minor efforts to publicize them to potentially interested readers.

But one of them has been pulled by SSRN due to bizarro malfunctioning on their part that I have as not yet been able to get them to correct.

The paper at issue is called "Ancillary Benefits and Income Versus Consumption Taxation in Liam Murphy's and Thomas Nagel's The Myth of Ownership." It revisits my friendly disagreement with the authors, about twenty years ago, and my rethinking of my views since that time, regarding the relative merits of income and consumption taxes.

Here is the first email I got from SSRN about it:

"The SSRN Processing Team has added the following comment to your submission, Ancillary Benefits and Income Versus Consumption Taxation in Liam Murphy's and Thomas Nagel's The Myth of Ownership (Abstract ID 4459236):

"SSRN's medical screening process has begun. While under review, your paper will be temporarily removed from public view and your My Papers page."

Here is my response:

"This makes no sense. Why would this paper require "medical screening"? It has nothing more to do with medical issues than it does with the Man on the Moon. Please restore the paper for public viewing ASAP."

I also called SSRN and spoke to a live human who said she would get a further response from their reviewers. It came within a couple of hours, and read as follows:

"Dear Daniel,

"Your paper or analysis may be framed around a legal, economic, or other topic question; however, if the data that is used in the analysis is medical or health related, we must use caution around both patient and health information. We conduct medical screening on any such papers that include medical or health data to provide complete transparency and to follow best practices around any health data. Due to the caution that is required around health care or medical preprints for prevention of harm and to meet required reporting standards, SSRN screens these papers to ensure they have appropriate declarations around competing interests and funding as well as ethical approval and trial registration, where appropriate."

Here is how I responded:

"I’m sorry to have to repeat this, but nothing in the paper is IN ANY WAY WHATSOEVER medical or health related. It’s about philosophers and tax policy.

"My paper does NOT use any data - much less data that is medical or health related. It is not within a billion miles of having anything to do with patient or health information. There is absolutely nothing even remotely related to medical content OF ANY KIND.

"Please correct its erroneous suspension as soon as possible."

[Added 5 minutes later:] Now, looking back at all this, I think I've finally guessed the nature of the problem. If  you do a Google search for "ancillary benefits" (a phrase which is in my paper title), you can get something like this:

"Ancillary benefits are secondary health benefits provided alongside group health insurance to cover things like prescriptions and medical bills incurred during hospital stays."

 By contrast, when I speak of "ancillary benefits" in the paper, I am referring to Murphy's and Nagel's discussion of the benefits people may enjoy by reason of wealth-holding other than getting to consume the wealth - for example, its augmenting one's "security, political power, and social standing."

While this makes the whole thing less incomprehensible, I am not at present finding it very mollifying. 

Friday, May 12, 2023

2023 NYU Tax Policy Colloquium

The 2023 NYU Tax Policy Colloquium will have 6 public sessions, each of them on a Tuesday afternoon from 4:25 to 6:25 pm (and to be followed by a small group dinner). Our speakers will be as follows:

September 12: Christine Kim, Cardozo Law School

September 26: Rebecca Kysar, Fordham Law School (visiting at NYU)

October 10: Jeremy Bearer-Friend, George Washington Law School

October 24: Kimberly Clausing, UCLA Law School

November 14: Ajay Mehrotra, Northwestern Law School

November 28: Edward Fox, University of Michigan Law School.

As an aside, while future years are a bit up in the air right now, it is possible that I will resume having weekly public sessions of the Tax Policy Colloquium (with the class meeting in the mornings to discuss the papers before the public session), even on a solo basis without a co-teacher, in which case we'll be back to having 13 papers a year instead of 6.