Taxes

Prof. Jonathan Gruber speaks with Newsweek reporter Jasmine Laws about the increase in cigarette taxes in various states across the United States. “There is a large body of economic evidence that shows that higher taxes will reduce smoking – particularly among the young and the poor,” says Gruber. “The downside is that the poor will pay more for cigarettes, stretching their budgets, but that is largely offset by the fact that they will smoke less. If the revenues are used to fund smoking cessation efforts among the poor, which have shown to be effective, this is a great policy opportunity." 

Writing for The Boston Globe, President Emeritus L. Rafael Reif examines how the proposed endowment tax on colleges and universities will likely “raise the cost of a college education and hurt US competitiveness.” Reif notes that universities use income from their endowments to provide financial aid for students and support research. “Without financial aid, students from less wealthy backgrounds would not be able to attend the country’s great private universities,” writes Reif. “This would be not just a loss to them but also to the nation itself, which benefits when talented people from all backgrounds have the same opportunity to rise based on academic achievement.”

Writing for the Financial Times, Prof. Fiona Murray highlights the importance of developing a new approach to capital gains tax increases. “By focusing on the underlying behaviors we want to incentivize, we can structure taxes more effectively,” explains Murray. “When we provide tax breaks to companies for spending on R&D, we do it to spur behavior we know is good for the overall health of the economy.” 

Writing for The Boston Globe, Research Scientist James Aloisi, director of the MIT Transit Research Consortium, highlights the current difficulties facing transportation funding, arguing for congestion pricing as a “highly agile and strategic revenue tool.” "Congestion pricing is one of the most feasible approaches to replacing the gas tax," writes Aloisi, "and providing a stable, fair, and equitable approach to raising revenue for both transit and roadways."

Prof. David Autor speaks with New York Times reporter Jim Tankersley about the economic implications of President Biden’s decision to codify and escalate tariffs on Chinese goods. Autor’s “latest research warns of the economic perils of poorly designed trade policy, but it also explains why presidents might keep pursuing it,” explains Tankersley. 

Prof. Esther Duflo will present her research on poverty reduction and her “proposal for a global minimum tax on billionaires and increased corporate levies to G-20 finance chiefs,” reports Andrew Rosati for Bloomberg. “The plan calls for redistributing the revenues to low- and middle-income nations to compensate for lives lost due to a warming planet,” writes Rosati. “It also adds to growing calls to raise taxes on the world’s wealthiest to help its most needy.”

Writing for The Hill, Sloan Prof. Catherine Wolfram and UCLA Prof. Kimberly Clausing explore why they feel U.S. politicians should embrace carbon pricing. “2025 will be a big year for Congress to tackle longstanding fiscal issues and further climate policy efforts,” they write. “Before this can happen, politicians need to hear timely arguments backed by up-to-date evidence.”

Prof. Jonathan Gruber, MIT Innovation Fellow Brian Deese and Stanford doctoral student Ryan Cummings write for The New York Times about the health benefits of new weight-loss drugs and the risk they pose to American taxpayers. “The magnitude of potential benefit and potential cost — roughly $15,000 per year per person — posed by these drugs suggests that policymakers may have no alternative but to step in and bring their costs in line with their social benefits,” they write. “If policymakers succeed in doing so, we could build a model for drug price negotiation that enables an extraordinary medical breakthrough to improve both our health and our fiscal position.”

A study by MIT researchers shows that “workers have cost employers a 25% tax rate, while the rate of software and equipment has stood around 5%,” write Diego Areas Munhoz and Samantha Handler for Bloomberg. “This lopsidedness in tax code gives employers more reason to invest in automating goods like machines and computer software instead of workers.”

A new white paper by Prof. Daron Acemoglu and graduate student Andrea Mandera finds that the U.S. tax code incentivizes companies to invest in automation rather than employees, reports Peter Coy for Bloomberg. “Favorable taxation of capital leads to excessive automation,” explains Acemoglu.

Writing for Forbes, research affiliate Thomas Davenport examines the feasibility of robot taxation based on a debate at MIT Technology Review’s Emtech Next conference. “At some point we may need to replace the tax revenue from human jobs lost to automation,” writes Daveport. “If that day ever comes, I hope that the tax revenues issue is the most critical one we have to deal with.”

Prof. Emeritus and Nobel laureate Peter Diamond speaks with Meghna Chakrabarti of On Point about U.S. Rep. Alexandria Ocasio-Cortez’s proposal to increase the top marginal tax rate to 70 percent. “That will raise a lot of money that we could [use to] address some of our shortfalls and that will help us prepare for the large costs coming from climate change,” says Diamond of the proposal.

Vox reporter Emily Stewart writes that a working paper co-authored by MIT researchers finds that companies that benefited from recent tax cuts were more likely to announce new benefits for workers. Stewart writes that the researchers found, “companies with larger expected tax savings were likelier to announce a boost for workers. So were companies with political action committees that donate to Republicans more than Democrats.”

In an article for Bloomberg News, Prof. Daron Acemoglu writes about how countries that democratize tend to see faster rates of economic growth. Acemoglu notes that what tends to spur economic growth is how, “democracies increase taxes and spend more on education and health, preparing the economy to achieve greater productivity in the decades to come.”

Robert C. Pozen, a senior lecturer at Sloan, writes for The Boston Globe about how the new tax act would create potentially major fiscal challenges for “cities with large unfunded liabilities for pension benefits and retiree health care.” He addresses several ways in which cities might make adjustments to mitigate the losses, citing data from JP Morgan.