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   https://doi.org/10.3386/w27109  

   Akcigit, Ufuk; Stantcheva, Stefanie (November 2021, Innovation and Public Policy)

   Goolsbee, Austan; Jones, Benjamin (Ed.)

   Tax policies are a wide array of tools, commonly used by governments to influence the economy. In this paper, we review the many margins through which tax policies can affect innovation, the main driver of economic growth in the long-run. These margins include the impact of tax policy on i) the quantity and quality of innovation; ii) the geographic mobility of innovation and inventors across U.S. states and countries; iii) the declining business dynamism in the U.S., firm entry, and productivity; iv) the quality composition of firms, inventors, and teams; and v) the direction of research effort, e.g., toward applied versus basic research, or toward dirty versus clean technologies. We give ideas drawn from research on how the design of policy can allow policy makers to foster the most productive firms without wasting public funds on less productive ones. 

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2. On the Potential and Limitations of Few-Shot In-Context Learning to Generate Metamorphic Specifications for Tax Preparation Software

   https://doi.org/10.18653/v1/2023.nllp-1.23  

   Srinivas, Dananjay; Das, Rohan; Tizpaz-Niari, Saeid; Trivedi, Ashutosh; Pacheco, Maria L (January 2023, Association for Computational Linguistics)

   Due to the ever-increasing complexity of in- come tax laws in the United States, the num- ber of US taxpayers filing their taxes using tax preparation software (henceforth, tax soft- ware) continues to increase. According to the U.S. Internal Revenue Service (IRS), in FY22, nearly 50% of taxpayers filed their individual income taxes using tax software. Given the legal consequences of incorrectly filing taxes for the taxpayer, ensuring the correctness of tax software is of paramount importance. Meta- morphic testing has emerged as a leading solu- tion to test and debug legal-critical tax software due to the absence of correctness requirements and trustworthy datasets. The key idea behind metamorphic testing is to express the proper- ties of a system in terms of the relationship between one input and its slightly metamor- phosed twinned input. Extracting metamor- phic properties from IRS tax publications is a tedious and time-consuming process. As a response, this paper formulates the task of gen- erating metamorphic specifications as a transla- tion task between properties extracted from tax documents—expressed in natural language—to a contrastive first-order logic form. We per- form a systematic analysis on the potential and limitations of in-context learning with Large Language Models (LLMs) for this task, and outline a research agenda towards automating the generation of metamorphic specifications for tax preparation software. 

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3. FBBVA Lecture 2023 . The Importance of Modeling Income Taxes over Time: U.S. Reforms and Outcomes

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   Borella, Margherita; De_Nardi, Mariacristina; Pak, Michael; Russo, Nicolo; Yang, Fang (September 2023, Journal of the European Economic Association)

   Abstract The structure of taxes and their burden have undergone large and frequent changes over time. We provide a brief history of U.S. federal income tax reform since the 1960s, calculate effective federal income tax rates for each wave of the Panel Study of Income Dynamics, and discuss how effective taxation changed from 1969 to 2016. We show that most tax regimes are short-lived and that the variation in taxes over time and across groups is large. We also use an estimated dynamic model of couples and singles to show that the various tax regimes that we estimate imply very different labor market and saving behavior. These findings stress the importance of studying and modeling tax changes over time and across groups. 

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

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   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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5. Lessons from the Biggest Business Tax Cut in US History

   https://doi.org/10.1257/jep.38.3.61  

   Chodorow-Reich, Gabriel; Zidar, Owen; Zwick, Eric (August 2024, Journal of Economic Perspectives)

   Williams, Heidi (Ed.)

   We assess the business provisions of the 2017 Tax Cuts and Jobs Act, the biggest corporate tax cut in US history. We draw five lessons. First, corporate tax revenue fell by 40 percent due to the lower rate and more generous expensing. Second, firms with larger declines in their effective tax wedge increased investment relatively more. In aggregate, we suggest a loose consensus from the literature that total tangible corporate investment increased by 11 percent. Third, the business tax provisions increased economic growth and wages by less than advertised by the Act’s proponents, with long-run GDP higher by less than 1 percent and labor income by less than $1,000 per employee. Fourth, provisions that increase foreign investment by US-based multinationals also boost their domestic operations. Fifth, some of the expired and expiring provisions, such as accelerated depreciation, generate more investment per dollar of tax revenue than others. 

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