Spencer Bastani, Daniel Waldenström, 20 June 2022

How does people’s ability influence their taxpaying behavior? This column links administrative tax and military enlistment registers in Sweden to measure how cognitive ability matters for income tax responsiveness. The authors find that individuals in the top decile of the ability distribution react twice as strong to a large and salient kink point in the tax code than the average individual, and three times as strong as individuals in the bottom ability decile. This ability gradient reflects both income shifting among high-ability businesses owners and labour supply responses among high-ability wage earners.

Giovanni Dell'Ariccia, Deniz Igan, Paolo Mauro, Hala Moussawi, Alexander F. Tieman, Aleksandra Zdzienicka, 04 March 2020

During the Global Crisis, governments rescued banks with capital injections, asset purchases, and guarantees. Until now, we have had no clear idea what happened to that taxpayer money. This column uses bank-level data to compile a comprehensive accounting of the costs of, and returns on, these interventions. While initial public support cost $1.6 trillion, the total fiscal impact has been $250 billion – on average less than 1% of GDP.

Edward Kane, 30 January 2013

Do financial institution managers only owe enforceable duties of loyalty, competence and care to their stockholders and explicit creditors, but not to taxpayers or government supervisors? This column argues that in the current information and ethical environments, regulating accounting leverage cannot adequately protect taxpayers from regulation-induced innovation. We ought to aim for establishing enforceable duties of loyalty and care to taxpayers for managers of financial firms. Authorities need to put aside their unreliable, capital proxy: they should measure, control, and price the ebb and flow of safety-net benefits directly.

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