On the Optimal Progressivity of the Income Tax Code

Economists throughout recent history have created models in search of answering the following question: what is the optimal income tax structure? Optimal is generally defined by some social welfare function. While liberals generally favor progressive taxes over proportional or regressive taxes for ideological reasons, this paper makes an argument for progressive taxes by employing economic…

The State of the Union

Yesterday, President Bush gave the State of the Union Address. In this post, I 1) analyze Bush’s new health care plan, 2) review some commentary from various blogs on the net, and 3) give a excerpt from the speech which directly relates to health care. Healthcare Economist’s Analysis The heart of the Bush proposal is…

FairTax Proposal

The current tax system is complex.  If a researcher would want to correctly model the current tax system, they would have to take into account the myriad of deductions in the federal tax code (e.g.: Earned Income Tax Credit, Child Tax Credit, mortgage interest deduction, etc.) as calculate these deductions for each type of household. …

Tax Collection in History

On Thursday I mentioned the Treasury Department’s plan to turn over some of the collection of delinquent taxes to private companies.  In most modern societies of the Western world, tax collectors are salaried employees of the state.  This was not always the case.  A 2006 paper by Cosgel and Miceli aims to create a model…

Privatizing Tax Collection

The New York Times reports (“IRS Enlists Help…“) that the Internal Revenue Service will begin to subcontract collection of delinquent tax payments to private firms.  The article states: “…the I.R.S. will turn over data on 12,500 taxpayers — each of whom owes $25,000 or less in back taxes — to three collection agencies. Larger debtors…

Solving the Dividend Puzzle

For most individuals, dividend taxation is higher than capital gains taxation.  In theory, one would believe that corporations would thus elect to hold all their profits as retained earnings (or repurchase outstanding shares) in order to increase the price of the stock as opposed to paying out the profits as dividends, since the tax treatment…

Bleeding Heart Libertarianism

Arnold Kling is a respected libertarian economist who has worked at the Cato Institute.  In a post for TCS Daily titled Bleeding-Heart Libertarianism, Kling makes an argument for a negative consumption tax for all individuals.  The thesis is simple and elegent, but does have some problems.  I highlight five major ones that come to mind.…

Tax Credits, the Distribution of Subsidized Health Insurance Premiums, and the Uninsured

The popular press has been decrying the existence of large numbers of Americans without medical insurance. From Indiana to Wisconsin to California, politicians are looking for a means–such as government provided health insurance–to give more residents medical insurance. Economists, however, generally speak out against the provision of private goods by the government. An interesting solution…