Tuesday, November 21st, 2017 9:47 am

Tax Reform

Question A: If the US enacts a tax bill similar to those currently moving through the House and Senate — and assuming no other changes in tax or spending policy — US GDP will be substantially higher a decade from now than under the status quo.

Responses
 

Source: IGM Economic Experts Panel
www.igmchicago.org/igm-economic-experts-panel

Responses weighted by each expert's confidence

Source: IGM Economic Experts Panel
www.igmchicago.org/igm-economic-experts-panel

Question B: If the US enacts a tax bill similar to those currently moving through the House and Senate — and assuming no other changes in tax or spending policy — the US debt-to-GDP ratio will be substantially higher a decade from now than under the status quo.

Responses
 

Source: IGM Economic Experts Panel
www.igmchicago.org/igm-economic-experts-panel

Responses weighted by each expert's confidence

Source: IGM Economic Experts Panel
www.igmchicago.org/igm-economic-experts-panel

Question A Participant Responses

Participant University Vote Confidence Comment Bio/Vote History
Acemoglu Daron Acemoglu MIT Uncertain 6
The simplification of the tax code could be beneficial, but it is more than offset by its highly regressive nature.
Bio/Vote History
         
Alesina Alberto Alesina Harvard Did Not Answer
Bio/Vote History
         
Altonji Joseph Altonji Yale Did Not Answer
Bio/Vote History
         
Auerbach Alan Auerbach Berkeley Uncertain 7
Bio/Vote History
         
Autor David Autor MIT Disagree 5
Tax policy appears to have little effect at the margin on GDP growth in OECD countries.
Bio/Vote History
         
Baicker Katherine Baicker Chicago Did Not Answer
Bio/Vote History
         
Banerjee Abhijit Banerjee MIT Disagree 7
Bio/Vote History
         
Bertrand Marianne Bertrand Chicago Uncertain 5
Bio/Vote History
         
Brunnermeier Markus Brunnermeier Princeton Uncertain 3
It is more likely that GDP will be somewhat higher
Bio/Vote History
         
Chetty Raj Chetty Stanford Disagree 9
Bio/Vote History
         
Chevalier Judith Chevalier Yale Disagree 5
Bio/Vote History
         
Cutler David Cutler Harvard Strongly Disagree 5
Bio/Vote History
         
Deaton Angus Deaton Princeton Strongly Disagree 7
Bio/Vote History
         
Duffie Darrell Duffie Stanford Agree 5
A reduced corporate tax reduction is likely to grow GDP. Whether the overall tax plan is distributionally fair is another matter.
Bio/Vote History
         
Edlin Aaron Edlin Berkeley Disagree 7
Bio/Vote History
         
Eichengreen Barry Eichengreen Berkeley Strongly Disagree 8
Bio/Vote History
         
Einav Liran Einav Stanford Uncertain 1
Bio/Vote History
         
Fair Ray Fair Yale Uncertain 5
Bio/Vote History
         
Finkelstein Amy Finkelstein MIT Disagree 8
Bio/Vote History
         
Goldberg Pinelopi Goldberg Yale Uncertain 5
Bio/Vote History
         
Goolsbee Austan Goolsbee Chicago Strongly Disagree 10
Of course not. Does anyone care about actual evidence anymore?
Bio/Vote History
         
Greenstone Michael Greenstone Chicago Disagree 5
Bio/Vote History
         
Hall Robert Hall Stanford Uncertain 3
Though there is merit in cutting the corp tax and other capital taxes, with no other changes in policy, the fed gov will collapse.
Bio/Vote History
         
Hart Oliver Hart Harvard Uncertain 5
The incentive effects are unclear to me. Some of the simplifications make sense but many of the changes look like hand-outs to the rich.
Bio/Vote History
         
Holmström Bengt Holmström MIT Uncertain 6
Bio/Vote History
         
Hoxby Caroline Hoxby Stanford Did Not Answer
Bio/Vote History
         
Hoynes Hilary Hoynes Berkeley Disagree 8
Bio/Vote History
         
Judd Kenneth Judd Stanford Uncertain 7
Bio/Vote History
         
Kaplan Steven Kaplan Chicago Uncertain 8
Bio/Vote History
         
Kashyap Anil Kashyap Chicago Disagree 1
doubt it will substantially change things either way
Bio/Vote History
         
Klenow Pete Klenow Stanford Uncertain 4
Expensing of investment would provide a bigger boost to the capital stock and GDP 10 years from now, per dollar of revenue lost.
Bio/Vote History
         
Levin Jonathan Levin Stanford Uncertain 3
Bio/Vote History
         
Maskin Eric Maskin Harvard Uncertain 6
Bio/Vote History
         
Nordhaus William Nordhaus Yale Disagree 5
Keynesian effect will have disappeared. Higher debt will probably outweigh lower corporate tax rates. Unlikely that nothing else will change
Bio/Vote History
         
Saez Emmanuel Saez Berkeley Disagree 8
Bio/Vote History
         
Samuelson Larry Samuelson Yale Strongly Disagree 8
Other factors swamp the importance of details of the tax code in determining GDP.
Bio/Vote History
         
Scheinkman José Scheinkman Princeton Disagree 6
Bio/Vote History
         
Schmalensee Richard Schmalensee MIT Strongly Disagree 5
Bio/Vote History
         
Shapiro Carl Shapiro Berkeley Strongly Disagree 8
Bio/Vote History
         
Shimer Robert Shimer Chicago Disagree 7
Bio/Vote History
         
Thaler Richard Thaler Chicago Disagree 3
Aside from the redistribution of wealth, hard to see this changing much.
Bio/Vote History
         
Udry Christopher Udry Yale Strongly Disagree 5
Bio/Vote History
         

Question B Participant Responses

Participant University Vote Confidence Comment Bio/Vote History
Acemoglu Daron Acemoglu MIT Strongly Agree 8
How could it be otherwise?
Bio/Vote History
         
Alesina Alberto Alesina Harvard Did Not Answer
Bio/Vote History
         
Altonji Joseph Altonji Yale Did Not Answer
Bio/Vote History
         
Auerbach Alan Auerbach Berkeley Agree 7
Bio/Vote History
         
Autor David Autor MIT Strongly Agree 8
Since growth is likely to be little affected, debt to GDP will rise substantially, absent offsetting policies -- which are rarely enacted
Bio/Vote History
         
Baicker Katherine Baicker Chicago Did Not Answer
Bio/Vote History
         
Banerjee Abhijit Banerjee MIT Agree 7
Bio/Vote History
         
Bertrand Marianne Bertrand Chicago Agree 5
Bio/Vote History
         
Brunnermeier Markus Brunnermeier Princeton Agree 8
Bio/Vote History
         
Chetty Raj Chetty Stanford Agree 9
Bio/Vote History
         
Chevalier Judith Chevalier Yale Agree 7
Bio/Vote History
         
Cutler David Cutler Harvard Strongly Agree 9
Bio/Vote History
         
Deaton Angus Deaton Princeton Strongly Agree 7
Bio/Vote History
         
Duffie Darrell Duffie Stanford Strongly Agree 5
By design, the plan increases debt by $1.5 trillion, net of increased-revenue effects. That seems to imply that debt to GDP will rise.
Bio/Vote History
         
Edlin Aaron Edlin Berkeley Agree 8
Bio/Vote History
         
Eichengreen Barry Eichengreen Berkeley Agree 8
Bio/Vote History
         
Einav Liran Einav Stanford Uncertain 1
Bio/Vote History
         
Fair Ray Fair Yale Strongly Agree 7
Bio/Vote History
         
Finkelstein Amy Finkelstein MIT Strongly Agree 8
Bio/Vote History
         
Goldberg Pinelopi Goldberg Yale Agree 5
Bio/Vote History
         
Goolsbee Austan Goolsbee Chicago Strongly Agree 10
Cut taxes. Lose money. Repeat.
Bio/Vote History
         
Greenstone Michael Greenstone Chicago Agree 5
Bio/Vote History
         
Hall Robert Hall Stanford Strongly Agree 8
Spending is on a relentless increase relative to revenue. Within 10 years, the fed gov will lose access to credit.
Bio/Vote History
         
Hart Oliver Hart Harvard Agree 7
It seems unlikely that the optimistic growth figures are correct and so the budget deficit will rise unless government cuts are made.
Bio/Vote History
         
Holmström Bengt Holmström MIT Strongly Agree 4
Bio/Vote History
         
Hoxby Caroline Hoxby Stanford Did Not Answer
Bio/Vote History
         
Hoynes Hilary Hoynes Berkeley Strongly Agree 8
Bio/Vote History
         
Judd Kenneth Judd Stanford Strongly Agree 8
Bio/Vote History
         
Kaplan Steven Kaplan Chicago Agree 3
Bio/Vote History
         
Kashyap Anil Kashyap Chicago Agree 5
especially worry about the lost revenue from the pass-through loopholes
-see background information here
Bio/Vote History
         
Klenow Pete Klenow Stanford Strongly Agree 6
Bio/Vote History
         
Levin Jonathan Levin Stanford Agree 4
Bio/Vote History
         
Maskin Eric Maskin Harvard Agree 7
Bio/Vote History
         
Nordhaus William Nordhaus Yale Strongly Agree 9
This is at least is clear. No way the growth effects will be strong enough to offset the revenue losses.
Bio/Vote History
         
Saez Emmanuel Saez Berkeley Strongly Agree 9
Bio/Vote History
         
Samuelson Larry Samuelson Yale Strongly Agree 8
The prospect of 5% GDP growth is absurdly unrealistic, and in its absence everyone agrees the proposed tax reform will contribute to debt.
Bio/Vote History
         
Scheinkman José Scheinkman Princeton Agree 5
Provided one agrees that an increase in debt of 5 to 10 percentage points of GDP is substantial.
Bio/Vote History
         
Schmalensee Richard Schmalensee MIT Strongly Agree 5
Bio/Vote History
         
Shapiro Carl Shapiro Berkeley Strongly Agree 10
Bio/Vote History
         
Shimer Robert Shimer Chicago Strongly Agree 8
Bio/Vote History
         
Thaler Richard Thaler Chicago Agree 6
Bio/Vote History
         
Udry Christopher Udry Yale Agree 7
Bio/Vote History
         

10 New Economic Experts join the IGM Panel


For the past two years, our expert panelists have been informing the public about the extent to which economists agree or disagree on important public policy issues. This week, we are delighted to announce that we are expanding the IGM Economic Experts Panel to add ten new distinguished economists. Like our other experts, these new panelists have impeccable qualifications to speak on public policy matters, and their names will be familiar to other economists and the media.

To give the public a broad sense of their views on policy issues, each new expert has responded to a selection of 16 statements that our panel had previously addressed. We chose these 16 statements, which cover a wide range of important policy areas, because the original panelists' responses to them were analyzed in a paper comparing the views of our economic experts with those of the American public. You can find that paper, by Paola Sapienza and Luigi Zingales, here. The paper, along with other analyses of the experts' views, was discussed during the American Economic Association annual meetings, and the video can be found here.

The new panelists' responses to these statements can be seen on their individual voting history pages. Our ten new economic experts are:

Abhijit Banerjee (MIT)
Markus K. Brunnermeier (Princeton)
Liran Einav (Stanford)
Amy Finkelstein (MIT)
Oliver Hart (Harvard)
Hilary Hoynes (Berkeley)
Steven N. Kaplan (Chicago)
Larry Samuelson (Yale)
Carl Shapiro (Berkeley)
Robert Shimer (Chicago)


Please note that, for the 16 previous topics on which these new panelists have voted, we left the charts showing the distribution of responses unchanged. Those charts reflect the responses that our original panelists gave at the time, and we have not altered them to reflect the views of the new experts.

We have also taken this opportunity to ask our original panelists whether they would vote differently on any of the statements we have asked about in the past. Several experts chose to highlight statements to which they would currently respond differently. In such cases, you will see this "revote" below the panelist's original vote. We think you will enjoy seeing examples of statements on which some experts have reconsidered.

As with the 16 previous statements voted on by new panelists, these "revote" responses are not reflected in the chart that we display showing the distribution of views for that topic: all the charts for previous questions reflect the distribution of views that the experts expressed when the statement was originally posed.

About the IGM Economic Experts Panel

This panel explores the extent to which economists agree or disagree on major public policy issues. To assess such beliefs we assembled this panel of expert economists. Statistics teaches that a sample of (say) 40 opinions will be adequate to reflect a broader population if the sample is representative of that population.

To that end, our panel was chosen to include distinguished experts with a keen interest in public policy from the major areas of economics, to be geographically diverse, and to include Democrats, Republicans and Independents as well as older and younger scholars. The panel members are all senior faculty at the most elite research universities in the United States. The panel includes Nobel Laureates, John Bates Clark Medalists, fellows of the Econometric society, past Presidents of both the American Economics Association and American Finance Association, past Democratic and Republican members of the President's Council of Economics, and past and current editors of the leading journals in the profession. This selection process has the advantage of not only providing a set of panelists whose names will be familiar to other economists and the media, but also delivers a group with impeccable qualifications to speak on public policy matters.

Finally, it is important to explain one aspect of our voting process. In some instances a panelist may neither agree nor disagree with a statement, and there can be two very different reasons for this. One case occurs when an economist is an expert on a topic and yet sees the evidence on the exact claim at hand as ambiguous. In such cases our panelists vote "uncertain". A second case relates to statements on topics so far removed from the economist's expertise that he or she feels unqualified to vote. In this case, our panelists vote "no opinion".

The Economic Experts Panel questions are emailed individually to the members of the panel, and each responds electronically at his or her convenience. Panelists may consult whatever resources they like before answering.

Members of the public are free to suggest questions (see link below), and the panelists suggest many themselves. Members of the IGM faculty are responsible for deciding the final version of each week’s question. We usually send a draft of the question to the panel in advance, and invite them to point out problems with the wording if they see any. In response, we typically receive a handful of suggested clarifications from individual experts. This process helps us to spot inconsistencies, and to reduce vagueness or problems of interpretation.

The panel data are copyrighted by the Initiative on Global Markets and are being analyzed for an article to appear in a leading peer-reviewed journal.

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