Information and Incentives: The Economics of Carrots and Sticks

Prize Lecture to the memory of Alfred Nobel, December 9, 1996.Asymmetric information;

Taxing Capital? Not a Bad Idea After All!

Premi a l'excel·lència investigadora. 2010Publicat també com a : CEPR Discussion Paper - ISSN 0265-8003 Núm. 5929 (2006), p. 1-55We quantitatively characterize the optimal capital and labor income tax in an overlapping generations model with idiosyncratic, uninsurable income shocks and permanent productivity differences of households. The optimal capital income tax rate is significantly positive at 36 percent. The optimal progressive labor income tax is, roughly, a flat tax of 23 percent with a deduction of #7,200 (relative to average household income of #42,000). The high optimal capital income tax is mainly driven by the life-cycle structure of the model, whereas the optimal progressivity of the labor income tax is attributable to the insurance and redistribution role of the tax system. (JEL E13, H21, H24, H25

Genes as Tags: The Tax Implications of Widely Available Genetic Information

This paper examines how progress in genetics\u27 specifically, the proliferation of knowledge about the human genome\u27 may influence the feasibility and desirability of a tax that is based on individual human endowments or ability. The paper explores various forms that such a genetic endowment tax-and-transfer regime might take and identifies some of the benefits and costs of such a regime. The authors take no position on whether a genetic endowment tax would be desirable or not. However, one contribution of the paper is to observe that current law in the U.S., which restricts the use of genetic information by insurers and employers, is equivalent to a form of genetic endowment tax. The paper also notes that, in the absence of a government-mandated transfer policy with respect to genetic endowments, private insurance markets may arise to fill the gap, allowing individuals to purchase insurance against the possibility of a bad genetic draw