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1. 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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2. The impact of consumer credit access on self-employment and entrepreneurship

   https://doi.org/https://doi.org/10.1016/j.jfineco.2021.03.004  

   KyleHerkenhoff, Gordon M.Phillips (July 2021, Journal of financial economics)

   null (Ed.)

   We examine how consumer credit affects entrepreneurship by linking three million earnings and pass-through tax records to credit reports. In the cross-section, we show that self-employment without employees and employer firm ownership increase monotonically with credit limits and credit scores. We then isolate individuals who have had discrete increases in credit limits after the exogenous removal of bankruptcy flags to measure the effects of personal credit on entrepreneurship. Following bankruptcy flag removal, individuals are more likely to start a new employer business and borrow extensively. Those who own businesses with employees borrow $40,000 more after bankruptcy flag removal, a 33% gain relative to the sample average. 

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3. The persistence of household energy insecurity during the COVID-19 pandemic

   https://doi.org/10.1088/1748-9326/ac90d7  

   Konisky, David M.; Carley, Sanya; Graff, Michelle; Memmott, Trevor (September 2022, Environmental Research Letters)

   Abstract This study analyzes household energy insecurity in the United States during the first year of the COVID-19 pandemic. Previous research is limited by mostly cross-sectional research designs that do not allow scholars to study the persistency of this specific type of material hardship. We fill this gap by analyzing data from an original, nationally-representative, panel survey of low-income households. We find high levels of energy insecurity during the first year of the COVID-19 pandemic, especially during the initial months when the economic dislocation was at its height, and that many low-income households experienced it on multiple occasions during this period. We also identify disparities: households with people of color, very low-income, children aged five years and younger, with someone who relies on an electronic medical device, and those living in deficient housing conditions were more likely to experience energy insecurity. Households with these characteristics were also more likely to suffer from energy insecurity on a persistent basis through the first year of the pandemic. 

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4. Capitalists in the Twenty-First Century*

   https://doi.org/10.1093/qje/qjz020  

   Smith, Matthew; Yagan, Danny; Zidar, Owen; Zwick, Eric (July 2019, The Quarterly Journal of Economics)

   Abstract How important is human capital at the top of the U.S. income distribution? A primary source of top income is private “pass-through” business profit, which can include entrepreneurial labor income for tax reasons. This article asks whether top pass-through profit mostly reflects human capital, defined as all inalienable factors embodied in business owners, rather than financial capital. Tax data linking 11 million firms to their owners show that top pass-through profit accrues to working-age owners of closely held mid-market firms in skill-intensive industries. Pass-through profit falls by three-quarters after owner retirement or premature death. Classifying three-quarters of pass-through profit as human capital income, we find that the typical top earner derives most of her income from human capital, not financial capital. Growth in pass-through profit is explained by both rising productivity and a rising share of value added accruing to owners. 

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5. On Bunching and Identification of the Taxable Income Elasticity

   https://doi.org/10.1086/714446  

   Blomquist, Sören; Newey, Whitney K.; Kumar, Anil; Liang, Che-Yuan (August 2021, Journal of Political Economy)

   The elasticity of taxable income with respect to the net of tax rate is a key parameter for predicting the effect of tax reform or designing an income tax. Bunching at kinks and notches in a single budget set has been used to estimate the taxable income elasticity. We show that when the distribution of preferences is unrestricted the amount of bunching at a kink or a notch is not informative about the size of the taxable income elasticity, and neither is the entire distribution of taxable income for a convex budget set. Kinks do provide information about the size of the elasticity when a priori restrictions are placed on the preference distribution. They can identify the elasticity when the preference distribution is completely and correctly specified across the kink and provide bounds under restrictions on the preference distribution. We find wide estimated bounds in an empirical example using data like Saez (2010) based on upper and lower bounds for the preference density. 

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