Columbia hosts day 1 of its tax policy conference today (program): 

Terry Moon (University of British Columbia; Google Scholar), Manufacturing Investment and Employee Earnings: Evidence from Accelerated Depreciation (with Yige Duan (Shanghai Jiao Tong University; Google Scholar)) 
Discussant: Nirupama Rao (Michigan; Google Scholar)

This paper assesses the effects of a tax policy designed to induce manufacturing investment on employee earnings. Following the accelerated depreciation policy in Canada, which lowers the costs of acquiring machinery or equipment, treated firms increase manufacturing investment and employment. However, earnings of incumbent workers at treated firms decrease on average, primarily driven by displaced or low fixed effects workers. Furthermore, both the skill ratio and skill premium increase within firm, providing evidence of skill-biased technological change. Our findings suggest that a tax policy promoting manufacturing investment may contribute to increases in wage inequality both within firm and across firms.

Shanthi Ramnath (Federal Reserve Bank, Chicago), Inducing Labor: the Impact of Health Insurance Access on Maternal Labor Supply
Discussant: Alan Auerbach (UC-Berkeley; Google Scholar)

Alex Raskolnikov (Columbia), Formal Equality and the Tax Structure
Discussant: Ariel Jurow Kleiman (USC; Google Scholar)

Laws of affluent capitalist democracies share an important trait. With few notable but limited exceptions, these laws are formally equal—they make no formal distinctions between the rich and the poor. A multi-millionaire and a minimum wage worker alike can cast only one vote, must stop at a red light, have to pay the same sales or value-added tax when they buy a new gadget, and can send their kids to a public school for free. One of the most influential political and economic theories of the past two centuries argues that formal equality is not just ubiquitous but foundational—it is what distinguishes capitalism from all economic systems that came before it.

This paper posits that formal equality is a meaningful constraint on policymaking in Western democracies and investigates the implications of this assumption for the design of the tax structure. These implications extend to the choice of tax base, the design of transfer programs, the timing of income recognition, the taxation of capital gains and inter-generational transfers, and a host of other tax and tax-adjacent policies ranging from corporate integration to the minimum wage. The overall lesson is that constraints imposed by formal equality do not necessarily make a tax-and-transfer system less progressive, but they do shape the choices faced by the advocates of progressive tax reforms, today and in the future.

David Schizer (Columbia), “Big Picture” Investing at Nonprofits: The Promise and Perils of Accounting for Future Expenses and Donations
Discussant: Josh Blank (UC-Irvine; Google Scholar) 

Joel Slemrod (Michigan; Google Scholar), Tax Identity
Discussant: Johannes Spinnewijn (London School of Economics; Google Scholar) 

Taxation based on identity has a long, sordid history, and persists to this day, usually with some subtlety. It is a relatively tame cousin of the blatant, violent, and genocidal policies that have targeted people of certain religions, races, and genders for millennia. It is, nevertheless, an issue to be confronted rather than ignored by public finance economists. This is especially true because the concept of identity played a prominent role in the US presidential election of 2024, and is likely to be at least an undercurrent to the policy debates beginning in 2025, including those concerning tax policy. Tax based on identity is difficult, although not impossible, to justify within standard optimal tax analysis, because in that framework the policy objective is usually framed as being anonymous (impartial) and eschews basing policy on disparate preferences. The most promising justification seems to be if, for example, race is systematically correlated with the failure of income to represent ability to pay. It then acts as a tag that can help achieve the desired allocation of tax burden at minimal efficiency cost. For unjustified identity-based tax policy, analysis can help to spot its existence and quantify its social welfare cost.

Editor's Note:  If you would like to receive a daily email with links to tax posts on TaxProf Blog, email me here.