Lily Batchelder (NYU) presents Efficiency and Tax Incentives: The Case for Refundable Credits, 59 Stan. L. Rev. ___ (2006) (with Fred T. Goldberg, Jr. & Peter R. Orszag) at Tel Aviv University today as part of its Tax Policy Colloquium: Here is the abstract:

Recent policy discussions have revealed increasingly heated debate about whether refundable tax credits are an appropriate part of the tax system. This Article seeks to reframe this debate by setting aside distributional and administrative objectives and focusing instead on a relatively overlooked issue: the efficient form for tax incentives. Based in part on original empirical findings, it concludes that the arguments put forward by refundable credit opponents generally are unpersuasive on their own terms or fail to counter efficiency-based justifications for refundable credits. In particular, we argue that uniform refundable credits are the most efficient way to structure tax incentives designed to encourage behavior generating positive externalities, absent evidence that the externalities or elasticities associated with the behavior vary by income class. The efficiency benefits of refundable credits are further magnified by their tendency to smooth household income and macroeconomic demand. In light of these findings, we conclude that serious consideration should be given to restructuring existing tax incentives, and designing new ones, as uniform refundable tax credits.