Abstract

http://ssrn.com/abstract=2448954
 


 



Positive and Normative Judgments Implicit in U.S. Tax Policy, and the Costs of Unequal Growth and Recessions


Benjamin Lockwood


Harvard University, Department of Economics - Littauer Center

Matthew Weinzierl


Harvard Business School - Business, Government and the International Economy Unit

June 13, 2014

Harvard Business School BGIE Unit Working Paper No. 14-119

Abstract:     
We use official data and standard optimal tax conditions to infer the positive and normative judgments implicit in U.S. tax policy since 1979. We find that explanations within this framework for the time path of U.S. policy require central parameters of the model, namely the elasticity of taxable income or the marginal social welfare weights on top earners, to take unconventional values. We use inferred social preferences to provide novel estimates of the welfare costs of unequal growth and recessions and find that they are sensitive to the assumed distortionary costs of taxation and the year from which preferences are derived. We explore several possible explanations for our findings with available data.

Number of Pages in PDF File: 35

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Date posted: June 15, 2014  

Suggested Citation

Lockwood, Benjamin and Weinzierl, Matthew, Positive and Normative Judgments Implicit in U.S. Tax Policy, and the Costs of Unequal Growth and Recessions (June 13, 2014). Harvard Business School BGIE Unit Working Paper No. 14-119. Available at SSRN: http://ssrn.com/abstract=2448954 or http://dx.doi.org/10.2139/ssrn.2448954

Contact Information

Benjamin Lockwood
Harvard University, Department of Economics - Littauer Center ( email )
1875 Cambridge Street
Cambridge, MA 02138
United States
Matthew Weinzierl (Contact Author)
Harvard Business School - Business, Government and the International Economy Unit ( email )
Soldiers Field Road
Morgan 270C
Boston, MA 02163
United States
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