Positive and normative judgements implicit in U.S. tax policy, and the costs of unequal growth and recessions
By: Benjamin B. Lockwood, Matthew Weinzierl
Contributors: Weinzierl, Matthew, author; Harvard Business School
Series: Working paper / Harvard Business School -- 14-119; Working paper (Harvard Business School) -- 14-119.
Publisher: Harvard Business School
Published: 2014
Place of publication: Boston]
Language: eng
Number of pages: 34
Description: We use official data and standard optimal tax conditions to infer the positive and normative judgments implicit in U.S. tax policy since 1979. We find that explanations within this framework for the time path of U.S. policy require central parameters of the model, namely the elasticity of taxable income or the marginal social welfare weights on top earners, to take unconventional values. We use inferred social preferences to provide novel estimates of the welfare costs of unequal growth and recessions and find that they are sensitive to the assumed distortionary costs of taxation and the year from which preferences are derived. We explore several possible explanations for our findings with available data.
Notes: "June 2014" -- Publisher's website.

Includes bibliographical references (pages 31-34).