39 karma · joined May 15, 2020
My point is only that the elasticity is above 1, since if it were below 1 then there would be literally no justification for deductions. In that case, 1% reduction in tax revenue from deductions would lead to a less than 1% increase in giving, so the government could increase aggregate funding for charities by killing deductions and issuing grants. Elasticity >1 opens the door for deductions being sensible depending on objectives and use of funds by gvt vs. charities.
Note this is not a spending multiplier, so the comparison with government spending multipliers is irrelevant. The relevant comparison there would be, for example, GDP (or ideally the "social") impact of each dollar in charitable spending. I don't know what that is and it probably varies by charity.
But could be distributional issues as well depending on where the rich choose to donate — lots of that money is probably implicit transfers from government revenues to the Met
Also, it's hard to tell whether peer review actually improves paper quality by comparing published / unpublished papers in a world with peer review, where everyone is writing with the knowledge they'll be intensely scrutinized. Without some sort of detailed review process -- even one that's potentially deeply flawed -- researchers would have fewer incentives to be careful.
Not sure I understand what you’re saying on (ii). I think you’re saying that if countries have to compete for business, then, holding fixed their statutory tax rate, they have an incentive to improve bureaucratic efficiency to increase resources available (given the statutory tax rate). But I think the issue is you get competition on the statutory rate, which pushes rates towards zero. I actually think a minimum tax which binds and hence constrains the statutory rate could provide a great incentive along the lines youre talking about to optimize bureaucracy.
On (iii), I’m guessing a minimum tax wouldn’t bind in countries willing to explicitly expropriate FDI. Also having a minimum could limit the scope to vary effective rates for individual companies as carrots / sticks, which if anything could reduce corruption.
Second, this argument only makes sense if you think tax competition leads to “innovation” in tax policy, but it’s not clear why that would be the case. Almost any kind of tax structure is jurisdictional and would be undone by zero-sum competition between countries.
Third, would this hurt developing countries? Right now this is a voluntary agreement between developed countries to achieve a common goal, so that complaint isn’t super relevant. Think of multilateral tariff reduction agreements —- it’s often a good idea to unilaterally put up tariffs if everyone else lowers them, which can result in a high-tariff equilibrium even if each player would like lower global tariffs. Multilateral agreements are the way to achieve the collectively desired outcome that can’t be achieved in a decentralized way.
But a global minimum tax could be also be a good idea for lower income countries, if it’s not set too high. Typically the economic incentives are there to locate especially production in the developing world. If all developing countries had the same minimum tax, then companies couldn’t play developing countries off one another to get lower tax. Lower income countries would reap more gains from globalization and have more funds to eg invest in infrastructure and development.
We hope that this work highlights potential dangers of allowing officials to trade in individual stocks, and encourage more robust legislation that would limit the sort of activity you're describing. Obviously very idealistic, but that's the goal.
This is an active topic in our research pipeline -- specifically, whether holdings in private companies are going up among officials. Returns in private companies are certainly less transparent, so this might be the way to go if an official wanted to obfuscate.