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Working Paper Healthcare

How Initial Conditions Can Have Permanent Effects: The Case of the Affordable Care Act

We document that states that experienced website glitches in the ACA's first year faced higher average costs that persisted into future years. These dynamics are inconsistent with the standard strategic-pricing model, which requires non-localized common knowledge about market conditions, but are consistent with price-taking. Initial conditions can have a permanent effect—including convergence to a Pareto-dominated, stable equilibrium—under conditions that we show are plausible in this setting. Changing the fine from a fixed amount to a fraction of equilibrium prices increases the likelihood of reaching a Pareto-efficient equilibrium without increasing the equilibrium fine collected.

PDF Brief Brief

The Tax Cuts and Jobs Act Extending Changes to Individual Taxes

This legacy brief is available as a downloadable PDF.

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The White Houses Trade Policies and the Economy

This legacy brief is available as a downloadable PDF.

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Incentives and Corporate Tax Cuts

This legacy brief is available as a downloadable PDF.

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Options for Universal Basic Income Dynamic Modeling

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The Omnibus Spending Bill of 2018

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PWBM Working Paper W2018-2

This legacy brief is available as a downloadable PDF.

Working Paper Tax Policy

Tax Based Switching of Business Income

Discussions of genuine tax reform often focus upon broadening the individual and corporate tax bases and lowering tax rates. These discussions also tend to assume that reform will be "revenue neutral", meaning that the new tax structure would generate the same receipts for the government as the old structure. Because firms can currently either incorporate or operate as a pass-through entity, one question that results from these discussions is how firms will react to the relative change in the corporate and non-corporate tax rates. Our results suggest that a 10 percent reduction in the tax wedge between the net corporate and individual tax rate will result in a 0.5 to 0.9 percent increase in the share of positive business income accruing to corporations.