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Through The Looking Glass: The Politics Of Estate Tax Reform, Edward J. Mccaffery
Through The Looking Glass: The Politics Of Estate Tax Reform, Edward J. Mccaffery
Edward J McCaffery
This brief article summarizes an argument that the estate tax reform or repeal debate has always been about money: not the government’s money from the tax, which is modest at best, but the politicians money from campaign contributions elicited to retain or repeal the tax. The article uses that theory to predict likely short term legislative developments.
Behavioral Public Finance, Edward J. Mccaffery
Behavioral Public Finance, Edward J. Mccaffery
Edward J McCaffery
These are slides from a presentation to the Gruter Institute for Law and Behavioral Research, Squaw Valley Conference, May, 2008 (at which event Michael Jensen got me to agree to post these slides as a pdf on SSRN . . . ). The task is to give an overview of what I hope to be an emerging field of behavioral public finance. Behavioral finance, as per Barberis and Thaler 2003 (and others), consists of two parts: (1) individual level heuristics and biases, which can lead to sub-optimal (inconsistent) judgment and decision-making, and (2) institutional arbitrage mechanisms. In private finance and …
Comments On Liebman And Zeckhauser, Simple Humans, Complex Insurance, Subtle Subsidies, Edward J. Mccaffery
Comments On Liebman And Zeckhauser, Simple Humans, Complex Insurance, Subtle Subsidies, Edward J. Mccaffery
Edward J McCaffery
These are brief comments on an excellent paper by Jeffrey Liebman and Richard Zeckhauser, prepared for a conference sponsored by the Urban Institute and Brookings on tax and health care policy. Liebman and Zeckhauser summarize the complexities involved in making optimal health insurance decisions, and offer generally cautionary notes about conflating these with tax law (a theme of the conference). Most importantly, Liebman and Zeckhauser suggest a positive role for employers in health care and insurance decisions, as better setters or framers of choice sets—witness 401(k) plans. In this Commentary, I applaud Leibman and Zeckhauser’s general work and particular observation, …
Good Hybrids/Bad Hybrids, Edward J. Mccaffery
Good Hybrids/Bad Hybrids, Edward J. Mccaffery
Edward J McCaffery
Hybrid income-consumption taxes seek to tax some but not all savings, the treatment of savings being the principal difference between an income and a consumption tax. Some hybrids, however, simply move the tax system towards a prepaid consumption or wage tax; others, by allowing arbitrage, risk making all taxation voluntary. A consistent, progressive postpaid consumption tax, in contrast, gets matters just right, by design: it allows ordinary savings, for times of retirement or medical or educational needs, to lower the burden of taxation, while falling on the yield to savings when it is used to elevate lifestyles. It is, in …
A New Understanding Of Tax, Edward J. Mccaffery
A New Understanding Of Tax, Edward J. Mccaffery
Edward J McCaffery
A great deal and possibly all of the mind-numbing complexity of America’s largest and least popular tax follows from the decision to have a progressive personal income tax. Proponents wanted an individual income tax notwithstanding — indeed, in large part because of — such a tax’s “double taxation” of savings. This double-tax argument is an analytic point generally attributed to Mill’s classic 1848 treatise, Principles of Political Economy. Historically, much of the support for the Sixteenth Amendment, ratified in 1913, came from Southern and Midwestern, progressive, agricultural interests, who wanted, in general, to implement a redistributive tax and, in particular, …