Hot-Button Tax Policy Questions: A Session of New Insights and Evidence Organized by the National Tax Association
Sunday, Jan. 5, 2020 8:00 AM - 10:00 AM (PST)
- Chair: Matthew Weinzierl, Harvard Business School
Tax Reform Made Me Do It!
AbstractThis paper examines corporations’ actions, and statements about actions, following the tax law change known as the Tax Cuts and Jobs Act (TCJA). Specifically, we examine four different outcomes—bonuses (or other actions that benefit workers), announcements of new investments, share repurchases, and dividend announcements. We find that 4% of public firms in our sample announced in Q1 2018 they would pay some portion of their tax savings toward workers. In terms of investment, we find that 22% of the S&P 500 firms in our sample mentioned in earnings conference calls that they would increase investment because of the TCJA. We find a general increase in share repurchases following the passage of the TCJA, but the increase is extremely concentrated in a small number of firms. We find only nine firms that announced a new share repurchase plan explicitly attributed the new plan to the TCJA. In regression analysis, we find that both political and economic variables explain TCJA-linked announcements. The analysis suggests that firms with greater expected tax savings from the TCJA are those most likely to announce payments to workers and plans to increase investment. Firms with a Political Action Committee that donates more to Republican candidates are also more likely to announce benefits to employees.
The Labor Market Impacts of Universal and Permanent Cash Transfers: Evidence from the Alaska Permanent Fund
AbstractWhat are the effects of universal and permanent cash transfers on the labor market? Since 1982, all Alaskan residents have been entitled to a yearly cash dividend from the Alaska Permanent Fund. Using data from the Current Population Survey and a synthetic control method, we show that the dividend had no effect on employment, and increased part-time work by 1.8 percentage points (17 percent). Although theory and prior empirical research suggests that individual cash transfers decrease household labor supply, we interpret our results as evidence that general equilibrium effects of widespread and permanent transfers tend to offset this effect, at least on the extensive margin. Consistent with this story, we show suggestive evidence that tradable sectors experience employment reductions, while non-tradable sectors do not. Overall, our results suggest that a universal and permanent cash transfer does not significantly decrease aggregate employment.
What Is the Optimal Lottery Tax?
AbstractPublicly-sponsored lotteries in the US collect more than $60 billion annually in revenues, and are alternatively viewed as either a regressive tax on consumers who misunderstand their low expected value, or as sensible way to raise revenue for valuable public goods while generating consumer surplus. This paper studies the question of whether lotteries are welfare-enhancing, and if so, what is the optimal implicit tax rate on them? We present a model of lottery demand sufficiently flexible to allow for demand that is driven either by bias or by normatively valid consumer preferences, and we characterize the optimal implicit lottery tax (which may be infinite, corresponding to a ban) in terms of empirically estimable sufficient statistics. We then estimate these statistics using observational data on sales and lottery prizes over time, and using a new experimental survey of lottery consumption preferences.
University of California-Irvine
University of California-San Diego
- H2 - Taxation, Subsidies, and Revenue
- H3 - Fiscal Policies and Behavior of Economic Agents