This conference is supported by the Lynde and Harry Bradley Foundation
Approximately 10 percent of school-age children in the United States are enrolled in private schools, relieving public school systems and the taxpayers who support them of the financial burden of the cost of their education. At present, the tax code does not allow families who provide this financial relief an income tax deduction, even though such relief is a gift to governments for exclusively public purposes and thus is analogous to a charitable donation. Using the public use microdata sample of the American Community Survey and the NBER Internet Taxsim calculator, Samwick shows that granting families who enroll their children in private schools an income tax deduction equal to the per-pupil expenditures in their public school district would have cost the federal government an average of $7.75 billion per year over the 2006-10. This is less than one percent of federal income tax revenues. Because private school enrollment, public school expenditures, and marginal tax rates all increase with taxpayer income, the dollar benefits of this change are positively related to income. At the margin, high-income taxpayers would receive about 35 cents in federal and state tax relief for each dollar of per-pupil expenditures foregone.
Mulligan calculates monthly time series for the overall safety net's statutory marginal labor income tax rate as a function of skill and marital status. Marginal tax rates increased significantly for all groups between 2007 and 2009, and dramatically for unmarried household heads. The relationship between incentive changes and skill varies by marital status. Unemployment insurance and related expansions contribute to the patterns by skill, while food stamp expansions contribute to the patterns by marital status. Remarkably, group changes in hours worked per capita line up with the statutory measures of incentive changes.
This paper was distributed as Working Paper 18426, where an updated version may be available.
Alesina and Ardagna offer three results in their paper. First, in line with the previous literature they confirm that fiscal adjustment based mostly on the spending side is less likely to be reversed. Second, spending based fiscal adjustments have caused smaller recessions than tax based fiscal adjustment. Finally, certain combinations of policies have made it possible for spending based fiscal adjustments to be associated with growth in the economy, even on impact rather than with a recession. Thus, expansionary fiscal adjustments are possible.
This paper was distributed as Working Paper 18423, where an updated version may be available.