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Full-Text Articles in Tax Law
Tax, Command -- Or Nudge?: Evaluating The New Regulation, Brian Galle
Tax, Command -- Or Nudge?: Evaluating The New Regulation, Brian Galle
Georgetown Law Faculty Publications and Other Works
This Article compares for the first time the relative economic efficiency of “nudges” and other forms of behaviorally-inspired regulation against more common policy alternatives, such as taxes, subsidies, or traditional quantity regulation. Environmental economists and some legal commentators have dismissed nudge-type interventions out of hand for their failure to match the revenues and informational benefits taxes can provide. Similarly, writers in the law and economics tradition argue that fines are generally superior to non-pecuniary punishments.
Drawing on prior work in the choice-of-instruments literature, and contrary to this popular wisdom, I show that nudges may out-perform fines, other Pigouvian taxes, or …
Carrots, Sticks, And Salience, Brian Galle
Carrots, Sticks, And Salience, Brian Galle
Georgetown Law Faculty Publications and Other Works
This Article considers the second-best design of Pigouvian taxes and subsidies in the presence of agents who are imperfectly aware of the instrument. Until very recently, the price instrument literature has assumed perfect rationality, and even the handful of prior attempts to account for “hidden” prices focus mainly on the income tax. I extend these efforts in several directions. First, I show that the best available instrument for correcting negative externalities is often one whose price is partially adjusted upwards -- or, in the case of subsidies, downwards -- to counter-act the neglect of irrational actors. In addition, I argue …
The Hidden Limits Of The Charitable Deduction: An Introduction To Hypersalience, Lilian V. Faulhaber
The Hidden Limits Of The Charitable Deduction: An Introduction To Hypersalience, Lilian V. Faulhaber
Georgetown Law Faculty Publications and Other Works
Behavioral economics introduced the concept of salience to law and economics. In the area of tax policy, salience refers to the prominence of taxes in the minds of taxpayers. This article complicates the literature on salience and taxation by introducing the concept of “hypersalience,” which is in many ways the mirror image of hidden taxation. While a revenue-raising tax provision must be hidden for taxpayers to underestimate their tax bill, a revenue-reducing tax provision – such as a deduction, exclusion, or credit – must be more than fully salient for taxpayers to underestimate their tax bill. In other words, the …