If Entitlement Reform is Too Hard, Lawmakers Can Take Baby Steps

The Washington Post reports that the U.S. deficit is headed to $1 trillion this year, the highest level since 2012. Republicans were furious about the large deficits under President Obama while he sought little to no spending constraint, but recently their focus has been elsewhere. How can we steer the fiscal outlook back toward sanity? As I see it, there are two options.

The Partisan Divide Over the Carbon Tax is all Smoke

Republican lawmakers who oppose a carbon tax are usually motivated by a belief that their constituents will get a raw deal. But standard political commentary on carbon taxation focuses on the higher costs for goods such as gasoline and electricity. Looking at who wins and who loses from a revenue-neutral carbon tax — one that also cuts existing taxes on work — yields a very different answer.

New State-Level Estimates of the Economic Burden of the Opioid Epidemic

No one disputes that opioid abuse has caused an epidemic in our country, one that costs tens of billions, if not hundreds of billions, of dollars per year. Less well known, but of vital importance to policymakers, is how these costs are distributed. Opioid abuse rates and deaths vary considerably from state to state, as do the costs associated with this epidemic. But researchers have generally focused on the economic impact of the crisis in the aggregate, at the US level. In a new analysis, I estimate the cost at the state level and find substantial variation across the country. Here, I offer a preview of my findings, which will be released in full next month.

Tax Code in Transition: How to Treat Accumulated Untaxed Foreign Earnings

Lawmakers are on the verge of fundamentally updating the international provisions of the US tax code. Currently, we have a worldwide system, under which profits US firms earn abroad are subject to US tax minus a credit for foreign taxes paid and subject to a deferral until repatriation. In an effort that began in 2011 with draft legislation from former Ways and Means Chairman Dave Camp, Republicans have been determined to transform the US tax code into a territorial system, under which active income earned abroad is generally exempt from US tax.

Fiscal Reform Lessons from the Anglosphere

Congress is deeply entrenched in an effort to reform the federal tax code. Central to this effort is a desire to lower the U.S. corporate tax rate from 35 percent to 20 percent — a level on par with the rest of the developed world. Policymakers are keenly aware of the competitive advantages this change could bring based on similar rate changes across Europe and around the globe.

How Much Economic Growth Can Tax Reform Deliver? Part III

I believe that the current US tax code imposes drag on US economic growth and alternatives to the current system could result in an increase in the capital stock, a boost in worker productivity, and thus an increase in wages. This positive economic result would occur slowly over time as new investment is deployed and workers adopt to new opportunities.

Relax, the Housing Market will be Fine After Tax Reform

The prospect of major tax reform that broadens the tax base and lowers tax rates has the residential housing industry in panic mode. The National Association of Realtors recently called the House tax bill “an outright assault on homeownership in America.” Separately, a study commissioned by the Realtors warns that comprehensive tax reform would result in an average drop in home values of 10%. But the reality is that the housing market will be fine if the House Republican tax plan is enacted.