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1. Tax Administration versus Tax Rates: Evidence from Corporate Taxation in Indonesia

   https://doi.org/10.1257/aer.20201237  

   Basri, M. Chatib; Felix, Mayara; Hanna, Rema; Olken, Benjamin A. (December 2021, American Economic Review)

   We compare two approaches to increasing tax revenue: tax administration and tax rates. We show that when Indonesia moved top regional firms into “medium taxpayer offices,” with high staff-to-taxpayer ratios, tax revenue more than doubled. Examining nonlinear changes to corporate income tax rates, we estimate an elasticity of taxable income of 0.579. Combining these estimates, improved tax administration is equivalent to raising top rates on all firms by 8 percentage points. On net, improved tax administration can have significant returns for developing countries. (JEL H25, H26, K34, O17) 

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2. Learning Optimal Tax Design in Nonatomic Congestion Games

   Cui, Qiwen; Fazel, Maryam; Du, Simon S (September 2024, Advances in Neural Information Processing Systems)

   In multiplayer games, self-interested behavior among the players can harm the social welfare. Tax mechanisms are a common method to alleviate this issue and induce socially optimal behavior. In this work, we take the initial step of learning the optimal tax that can maximize social welfare with limited feedback in congestion games. We propose a new type of feedback named equilibrium feedback, where the tax designer can only observe the Nash equilibrium after deploying a tax plan. Existing algorithms are not applicable due to the exponentially large tax function space, nonexistence of the gradient, and nonconvexity of the objective. To tackle these challenges, we design a computationally efficient algorithm that leverages several novel components: (1) a piece-wise linear tax to approximate the optimal tax; (2) extra linear terms to guarantee a strongly convex potential function; (3) an efficient subroutine to find the exploratory tax that can provide critical information about the game. The algorithm can find an \eps-optimal tax with O(\beta F^2/eps^2) sample complexity, where \beta is the smoothness of the cost function and F is the number of facilities. 

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3. Multiply robust difference-in-differences estimation of causal effect curves for continuous exposures

   https://doi.org/10.1093/biomtc/ujaf015  

   Hettinger, Gary; Lee, Youjin; Mitra, Nandita (February 2025, Biometrics)

   ABSTRACT Researchers commonly use difference-in-differences (DiD) designs to evaluate public policy interventions. While methods exist for estimating effects in the context of binary interventions, policies often result in varied exposures across regions implementing the policy. Yet, existing approaches for incorporating continuous exposures face substantial limitations in addressing confounding variables associated with intervention status, exposure levels, and outcome trends. These limitations significantly constrain policymakers’ ability to fully comprehend policy impacts and design future interventions. In this work, we propose new estimators for causal effect curves within the DiD framework, accounting for multiple sources of confounding. Our approach accommodates misspecification of a subset of intervention, exposure, and outcome models while avoiding any parametric assumptions on the effect curve. We present the statistical properties of the proposed methods and illustrate their application through simulations and a study investigating the heterogeneous effects of a nutritional excise tax under different levels of accessibility to cross-border shopping. 

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4. High Marginal Tax Rates on the Top 1 Percent? Lessons from a Life-Cycle Model with Idiosyncratic Income Risk

   https://doi.org/10.1257/mac.20150170  

   Kindermann, Fabian; Krueger, Dirk (April 2022, American Economic Journal: Macroeconomics)

   This paper argues that high marginal labor income tax rates on top earners are an effective tool for social insurance even when households have high labor supply elasticity, households make dynamic savings decisions, and policies have general equilibrium effects. We construct a large-scale overlapping generations model with uninsurable labor productivity risk, show that it has a realistic wealth distribution, and numerically characterize the optimal top marginal rate. We find that marginal tax rates for top 1 percent earners of 79 percent are optimal as long as the model earnings and wealth distributions display a degree of concentration as observed in US data. (JEL D15, D31, H21, H24, H55, J22, J31) 

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5. Policy composition and adoption duration: Capturing conflict in the legislative process

   https://doi.org/10.1111/psj.12457  

   Chen, Catherine; Heikkila, Tanya; Weible, Christopher M.; Yordy, Jill; Yi, Hongtao; Berardo, Ramiro; Kagan, Jennifer (January 2022, Policy Studies Journal)

   Abstract The way in which public policies are composed may lead to conflicts that manifest in an extended policymaking duration. This paper explores the associations between policy composition and the relative duration for policies to be adopted in 15 U.S. state legislatures. We treat policy passage duration as an indicator of policy conflicts in the legislative process. We adapt the institutional grammar tool (IGT) to examine how 168 oil and gas development policies are composed and gauge the association between the content of these policies and the speed of their adoption. We find policies that are more stringent, contain more constitutive rules, target issues related to oil and gas operations or tax and finance take relatively longer to pass. These findings offer theoretical insights into the relationships between policy composition and policy adoption duration. They also provide methodological insights on measuring policy design components using a semi‐automated application of the IGT. 

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