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Brief, Tax Policy, Economic Growth
Mariko Paulson
Senator Elizabeth Warren’s Wealth Tax: ...

  • Senator Elizabeth Warren has proposed a wealth tax equal to 2 percent of net worth above $50 million and 6 percent of net worth above $1 billion, which her campaign estimates would raise $3.75 trillion over 10 years.

  • PWBM estimates that the proposal would raise about $2.7 trillion over fiscal years 2021-2030, not including macroeconomic effects. Including macroeconomic effects, PWBM estimates that the proposal would raise about $2.3 trillion over the same period.

  • PWBM projects that the proposal would reduce GDP by 0.9 percent in 2050 under the standard budget scoring convention that additional revenues reduce the deficit. If the revenues were instead spent on public investments, PWBM projects GDP in 2050 would fall between 1.0 and 2.1 percent, depending on the productivity of the investment. Average hourly wages in the economy in 2050, including wages earned by households not directly subject to the wealth tax, would fall between 0.8 and 2.3 percent due to the reduction in private capital formation.

Senator Elizabeth Warren’s Wealth Tax: Budgetary and Economic Effects
Blog Post, Tax Policy
Mariko Paulson
The Revenue-Maximizing Capital Gains Tax Rate: ...

Under current law, PWBM estimates that a 33% capital gains tax rate maximizes revenue, but this rate increases to 42% if stepped-up cost basis at death were eliminated.

Blog Post, Tax Policy, Economic Growth
Mariko Paulson
Policy Options: Increase Tax Rates on Capital ...

We estimate the budgetary and economic effects of increasing the top rate on long-term capital gains and qualified dividends from 20 percent to 24.2 percent, which is enacted on January 1st, 2021. We project that it will raise around $60 billion of additional revenue on a conventional basis over the 10-year budget window and increase GDP by 0.1 percent by 2050.

Blog Post, Tax Policy, Economic Growth
Mariko Paulson
Policy Options: A 1% Value-Added Tax

We estimate the budgetary and economic effects of a new broad-based 1 percent value-added tax (VAT) with a progressive universal rebate calculated based on earnings, which is enacted on January 1st, 2021. We project that it will raise $700 billion of additional revenue on a conventional basis over the 10-year budget window and increase GDP by 0.8 percent by 2050.

Blog Post, Tax Policy, Economic Growth
Mariko Paulson
Policy Options: A Carbon Tax of $30 per ton

We estimate the budgetary and economic effects of a new carbon tax of $30 per ton of emissions, which is enacted on January 1st, 2021, rising by inflation plus 5 percent through 2050. We project that it raises $1.6 trillion of additional revenue on a conventional basis over the 10-year budget window and increases GDP by 2.2 percent by 2050.

Brief

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Mortality in the United States: Past, Present, and Future

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Mortality in the United States: Past, Present, and Future
  • The United States experienced an unprecedented decline in mortality during the twentieth century, thanks to improvements in public health, medical advances, and behavioral changes.
  • But mortality and life expectancy improvements have been uneven across age and socioeconomic status.
  • Future changes in mortality will affect the federal budget outlook. However, projections of mortality and life expectancy are highly uncertain. This uncertainty creates additional risk for the nation’s transfer programs to the elderly, which already account for half of government outlays.

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The Effects of Immigration on the United States’ Economy

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The Effects of Immigration on the United States’ Economy

  • While some policymakers have blamed immigration for slowing U.S. wage growth since the 1970s, most academic research finds little long run effect on Americans’ wages.

  • The available evidence suggests that immigration leads to more innovation, a better educated workforce, greater occupational specialization, better matching of skills with jobs, and higher overall economic productivity.

  • Immigration also has a net positive effect on combined federal, state, and local budgets. But not all taxpayers benefit equally. In regions with large populations of less educated, low-income immigrants, native-born residents bear significant net costs due to immigrants’ use of public services, especially education.

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Emergent Changes in American Demography and Social Organization

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Emergent Changes in American Demography and Social Organization
  • The American Family is changing in response to the pressures and opportunities facing young individuals.
  • Many children today are being raised by single parents, which is associated with a lower transmission of skills to succeeding generations.
  • Technological advances and public provision of social protection benefits appear to be contributing to the decline of the nuclear family.

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The Economic Determinants of Fertility Choices

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The Economic Determinants of Fertility Choices
  • The demographic transition toward an older population is ongoing in America and Europe. The transition began earlier in Europe where fertility rates have declined much more. Will America follow in Europe’s footsteps?
  • Procreation and family formation appears influenced by the social and economic conditions facing young adults. Younger American women appear to be postponing childbirth. Will this reduce future American TFR to still lower levels?
  • Government policies influence the economic environment and affect fertility choices indirectly. Social Security and various retiree health programs have likely reduced fertility, making their own financing more difficult.

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Fertility in the United States: Hanging On?

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Fertility in the United States: Hanging On?
  • The baby bust of the 1960s saw the U.S. total fertility rate (TFR) dip to just below the 2.1 live births per woman needed to prevent population decline.
  • U.S. TFR fell again after the Great Recession of 2008-09, which eroded women’s and couples’ economic ability to bear and raise children.
  • Large and persistent declines in European fertility to well below the 2.1 threshold is a worrisome precursor: America’s budget problem of funding elder-care would worsen if the U.S. TFR meets with the same fate as that of Europe.

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