Eric Heiser

Estimates of the amount of wealth held in US family trusts.

Switching from at-large to district elections changes the geography of and competition faced by candidates for city councils. This may change who runs for office, who wins office and they incentives they face. Understanding what exactly changes when district elections are adopted will be helpful in understanding documented effects on descriptive representation and city policies. Additionally, this project will shed light on the value of geographic representation and speak to the relative importance of empowering candidates versus empowering voters.

Recent empirical work has argued that the full deduction of business expenses may not be optimal for reasons that include tax evasion, expenses that are a combination of business expenses and consumption and considerations around the elasticity of taxable income. This paper argues for another which is that not all pre-tax profit-increasing activities are “productive”. Indeed, some activities, such as advertising and lobbying are at least partially efficiency decreasing. I argue that these activities primarily stem from either imperfect information between private entities or from imperfectly defined and/or enforced property rights. Focusing in on the advertising deduction, I establish conditions under which a uniform advertising deduction should be lower than the deduction for inputs to production and discuss how an optimal advertising deduction would vary with firm characteristics.

The $800 billion Paycheck Protection Program (PPP) provided pandemic relief to businesses retaining employees. Prior research has not directly estimated the PPP’s distributional or tax effects. Linking PPP loans to tax records, we estimate progressive effects with respect to income for both workers and business owners. Bottom-quintile incomes increased 18 percent and top-quintile incomes increased 2 percent. About half of PPP relief benefitted workers. The PPP also increased taxes and decreased unemployment compensation, reducing net program costs by one-quarter. Net costs could have been even lower (and progressivity higher) without the tax exclusion of PPP forgiveness.

How do firms respond when a tax reform changes the relative costs of inputs? We exploit a reform in Texas that broadened the corporate tax base and created a 1% tax wedge favoring both cost of goods sold (COGS) and worker compensation over other types of expenses. We find no discernible real change in inputs, and little avoidance response into worker compensation, but find a large avoidance response reclassifying costs into COGS (a 4% base reduction, with elasticity -5). Our results highlight the importance of enforceable boundaries when designing broader corporate tax bases.