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Faculty Publications

Tax policy

2011

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The Case For Tradable Tax Credits, Clint Wallace Oct 2011

The Case For Tradable Tax Credits, Clint Wallace

Faculty Publications

This note argues that tradable tax credits offer advantages as compared to other mechanisms the federal government can use to affect social and economic policy. Policymakers should consider the tradable tax credit as a potentially desirable form of tax incentive, rather than a necessity of political compromise as was the case in the enactment of existing tradable credits. First, the note establishes that tradable tax credits can be the economic equivalent of direct spending programs and of refundable tax credits. Next, the note examines a limited but significant set of circumstances in which the tradable tax credit can offer efficiency …