Publications

PEER-REVEIWED PUBLICATIONS

"Investment Differences Between Public and Private Firms:  Evidence From U.S. Tax Returns"
With Naomi Feldman, Elena Patel, Nirupama Rao, Michael Stevens, and Jesse Edgerton
Journal of Public Economics, Vol. 196, Issue C, April 2021. 

Using tax data, we compare the investment behavior of public and private firms for a representative sample of all U.S. corporations. We find that while both types of firms invest similarly in physical capital, public firms out-invest private firms in R&D. Compared to observationally-similar private firms, public firms invest roughly 50% more in R&D relative to their asset bases. Further, public firms dedicate 7.4 percentage points more of their investments to R&D than private firms. This stronger public firm R&D investment is muted when shareholder earnings pressures are heightened, but not so much as to overcome the baseline investment advantage.

"The Long-Term Effects of Financial Aid: Evidence from California's Cal Grant"
With Eric Bettinger, Oded Gurantz, Bruce Sacerdote, and Michael Stevens
American Economic Journal: Economic Policy, Vol. 11, No. 1, 64-94, February 2019.

We examine the long-term impacts of California’s state-based financial aid by tracking students’ educational and labor force outcomes for up to 14 years after high school graduation. We identify program impacts by exploiting variation in eligibility rules using GPA and family income cutoffs that are ex ante unknown to applicants. Aid eligibility increases undergraduate and graduate degree completion, and for some subgroups, raises longer-run annual earnings and the likelihood that young adults reside in California. Aid eligibility has no impact on take-up of the Pell or federal tax credits for higher education.  These findings suggest that the net cost of financial aid programs may frequently be overstated, though our results are too imprecise to provide exact cost-benefit estimates. 

"The Economic Impact of Hurricane Katrina on its Victims: Evidence from Individual Tax Returns"
With Tatyana Deryugina and Steven Levitt
American Economic Journal: Applied Economics, 10(2), 202-33, April 2018.

Hurricane Katrina destroyed over 200,000 homes and led to massive economic and physical dislocation. Using a panel of tax return data, we provide one of the first comprehensive analyses of the hurricane’s long-term economic impact on its victims. Hurricane Katrina had large and persistent impacts on where people live, but small and surprisingly transitory effects on employment and income. Within just a few years, Katrina victims’ incomes actually surpass that of controls from similar unaffected cities. The strong economic performance of Hurricane Katrina victims is particularly remarkable given that the hurricane struck with essentially no warning.

"How Income Changes During Unemployment: Evidence from Tax Return Data"
With Sara LaLumia
Journal of Human Resources, 52(2), Spring 2017.

We use a panel of tax returns spanning 1999 to 2011 to provide evidence on household experiences during unemployment. A period of unemployment is associated with a 20 percent reduction in annual household wage earnings. Unemployment insurance compensates for half of lost wages. Households also partially compensate using a variety of income sources. Distributions from retirement accounts increase in the short run. Self-employment income and disability insurance payments increase over longer periods. More generous UI benefits crowd out wage income and are associated with increased retirement account distributions. This combination of responses is consistent with UI benefits lengthening unemployment spells.

"How Do Corporate Tax Bases Change When Corporate Tax Rates Change? With Implications for Tax Rate Elasticities"
With Joel Slemrod
International Tax and Public Finance, 23(3), 401–433, June 2016.

We construct a new database of extensive margin changes to multiple aspects of corporate tax bases for OECD countries between 1980 and 2004.We use our data to systematically document the tendency of countries to implement policies that both lower the corporate tax rate and broaden the corporate tax base. This correlation informs our interpretation of previous estimates of the relationship between corporate tax rates and corporate tax revenues, which typically do not include comprehensive measures of the corporate tax base definition. We then re-examine the relationship between corporate tax rates and corporate tax revenues. We find that accounting for unobserved heterogeneity attenuates the relationship between corporate tax rates and corporate tax revenues, and increases the implied revenue-maximizing tax rate. Controlling for our new tax base measures does not substantively impact the magnitude of this relationship.

"Taxpayer Confusion: Evidence from the Child Tax Credit"
With Naomi Feldman and Peter Katuscak
American Economic Review, 106(3), 807-35, Mar. 2016.
Research highlight from the AEA.

We develop an empirical test for whether households understand or misperceive their marginal tax rate. Our identifying variation comes from the loss of the Child Tax Credit when a child turns 17. Using this age discontinuity, we find that despite this tax liability increase being lump-sum and predictable, households reduce their reported wage income upon discovering they have lost the credit. This finding suggests that households misinterpret at least part of this tax liability change as an increase in their marginal tax rate. This evidence supports the hypothesis that tax complexity can cause confusion and leads to unintended behavioral responses.

"The Dividend Clientele Hypothesis: Evidence from the 2003 Tax Act."
American Economic Journal: Economic Policy, 6(1), 114-36, Feb. 2014.

This paper provides evidence that dividend and capital gains tax rates importantly influence household portfolio choices. Using data from the Surveys of Consumer Finances around the 2003 dividend tax reductions, I estimate the relationship between taxes and household portfolio dividend yields. I find that a one percentage point decrease in the dividend tax rate relative to the long-term capital gains tax rate causes household portfolio dividend yields to increase by 0.04 percentage points. The results suggest that high income households significantly increased their portfolio dividend yields in responses to the 2003 dividend tax rate reductions.

OTHER WORK

"Racial Disparities in the Tax Treatment of Capital Income in the Federal Individual Income Tax."
With Janet Hotzblatt and Robert McClelland
Tax Policy Center Research Report, 2023.
https://www.taxpolicycenter.org/publications/racial-disparities-treatment-capital-income-federal-individual-income-tax