Selected Publications

Optimal Taxation When Children’s Abilities Depend on Parents’ Resources

With Matthew Weinzierl. National Tax Journal 2016, 69(1), 11-40 (lead article; winner of the Musgrave Prize for the best paper in the National Tax Journal in 2016).

Abstract

Empirical research suggests that parents, and therefore tax policy that affects them, can have a significant effect on their children’s future earnings abilities. We take a first step toward characterizing how this intergenerational link matters for tax policy design. We find that the utilitarian welfare-maximizing policy in this context would be more redistributive toward low-income parents than under current U.S. tax policy. The additional income under such a policy would increase the probability that low-income children move up the economic ladder, and we estimate that it would thereby generate an aggregate welfare gain equivalent to 1.75 percent of lifetime consumption.

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