Sunday featured two break-out sessions, with no large plenary sessions.
First was a 2-hour session titled “Computable General Equililibrum Models from U.S. Tax Policy Analysis.”
If memory serves me right, one of the four presenters wasn’t there, which meant the others got more time. Professor Bhattari of the University of Hull (U.K.) presented an analysis claiming that much of the problem with the economies of southern Europe is that many “intermediate goods” (e.g. electricity, which gets used by the private sector to make stuff) are supplied by state-owned companies whose wages are about a third higher than in the private sector, resulting in an oversize intermediate-goods sector.
Next was a pretty lame presentation which featured a very theoretical, mathematical model which claimed that, if the corporate income tax rate were reduced by 20% for the next 40ish years, GDP would be about 1% higher. I asked the presenter why the corporate tax rate matters at all (assuming it’s under, say, 95%), since the goal of a corporation is to maximize profit so that you’ll try to hit the same number even if a fraction gets taxed away. He replied that a lower corporate tax rate encourages investment in the corporate sector. I found his assumption highly questionable, especially in an economy that has a glut of unused savings, and in which so much corporate cash goes toward stock buybacks.
At the same time, at least the claim was that it would only affect things 1% over 40ish years, which is an effect you could never even notice. Roughly 0.03%/year is virtually impossible to spot with all the ups and downs. In addition, we have no clue what great new technologies will come along in the 2020s and 2030s…or how bad the environment will get, how badly resource depletion will bite, etc. So I suppose the main takeaway from the model is “whatever…don’t bother.”
The final presenter, professor Kotlikoff of Boston University, had the most memorable presentation, as he’d basically done a much more robust version of what I’d done as a research project in 2014 (as part of my promotion to Associate Professor). He requested that we not take photographs, sadly.
My project involved calculating effective marginal tax rates, looking at both direct taxation and lost benfits, but I made some very specific assumptions: a 35-year old person in Boston, who gets health insurance at the “silver” level through the Affordable Care act. If they had one kid, the kid was pre-school age, while additional kids were school age. etc. I acknowledged that things got really “cloudy” in real life, with all different circumstances.
Unlike me, professor Kotlikoff actually delved into the “cloudiness” breaking Americans down on many axes to try to calculate effective marginal tax rates for absolutely everyone! In my own defense, this was the work of two full-time professors (His research partner wasn’t there.) at a research university who had been working for a full decade and used specialty software.
Anyway, his analysis gave more of a “U-shaped curve” in which he had poor folks paying lower effective tax rates than I did (though worth noting that he probably was lumping in senior citizens and others of non-working non-parenting age) richer people paying higher effective tax rates, as he included taxes on gifts and bequests as hitting the person making them–there’s logic in doing that as a gift to a descendant can be viewed as spending. On the other hand, one easily could argue that it’s not a tax on you since it’s paid after you’re no longer here, and anyone who receives a large bequest should view it as hitting the birth lottery and something that wasn’t really theirs to begin with.
I’ll admit to being in a somewhat sour mood while hearing his talk–probably more sour than he deserved–because he started off with some disparaging comment about Thomas Piketty. I did ask a couple of questions about his model rather hoping to poke holes in it, but he gave good answers. It’s possible that this model is on-target (again, given the assumptions about what does and does not constitute a proper tax), though those of us in the room obviously didn’t see the thing in its entire robustness. One thing to note from his model was that, even though the wealthy had the highest marginal rates, the difference between them and the middle class was smaller than one might think. I also was wondering why he went with median tax rates and not mean–did that makes taxes on the middle and poor look lower than they are? Anyway, if my topic of research were of real long-term interest to me I’d definitely be making contact, and can’t say I absolutely won’t in the future, but frankly there’s a lot more other stuff that i want to do.
I don’t have much to say about the final panels. There was a study on environmental regulations and the innovations they may cause, but the conclusions were vague. I drifted over to a penal titled “Determinants of Firm-Level Performance: Productivity and Stock Price,” which featured, I discovered, several Clark University (Worcester, MA) graduate students who clearly all had the same adviser. One looked at the effect of a Super Bowl victory on the stock prices of locally-based companies. Another examined the role of state renewable energy standards on utilities’ stock prices. A third looked at information technolgoy and to what extent it reduces water pollution. Sadly, the conclusions of all three studies was “We found an effect, but it was very small and may not be statistically significant.”
And on that note, the conference was over and I was out of there.