Question A:
All else equal, making permanent the 2017 tax cuts that were set to expire at the end of 2025 would substantially increase federal deficits and the federal debt over the coming decade.
Responses
Responses weighted by each expert's confidence
Question B:
All else equal, making permanent the 2017 tax cuts that were set to expire at the end of 2025 would measurably increase the rate of US economic growth over the coming decade.
Responses
Responses weighted by each expert's confidence
Question C:
In the US, given Congressional budget scoring rules, temporary tax cuts generate sufficient pressure for extension as to be effectively permanent.
Responses
Responses weighted by each expert's confidence
Question A Participant Responses
| Participant | University | Vote | Confidence | Bio/Vote History |
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 Daron Acemoglu |
MIT | Bio/Vote History | ||
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 Mark Aguiar |
Princeton | Bio/Vote History | ||
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 Joseph Altonji |
Yale | Bio/Vote History | ||
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 Alan Auerbach |
Berkeley | Bio/Vote History | ||
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 David Autor |
MIT | Bio/Vote History | ||
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I know of no tax cuts in US history that have paid for themselves. That doesn't meant that cutting taxes is always a bad idea. But the fantasy that they are free persists despite all evidence to the contrary.
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 Abhijit Banerjee |
MIT | Bio/Vote History | ||
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 Dirk Bergemann |
Yale | Bio/Vote History | ||
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I am not aware of the specifics of the 2017 tax cut that you refer to, neither might the readers.
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 Marianne Bertrand |
Chicago | Bio/Vote History | ||
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 Markus Brunnermeier |
Princeton | Bio/Vote History | ||
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 Judith Chevalier |
Yale | Bio/Vote History | ||
 David Cutler |
Harvard | Bio/Vote History | ||
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 Darrell Duffie |
Stanford | Bio/Vote History | ||
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The stimulated incremental growth necessary to cover the revenue lost due to lower tax rates would need to be unexpectedly large.
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 Aaron Edlin |
Berkeley | Bio/Vote History | ||
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 Barry Eichengreen |
Berkeley | Bio/Vote History | ||
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 Liran Einav |
Stanford | Bio/Vote History | ||
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 Ray Fair |
Yale | Bio/Vote History | ||
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 Edward Glaeser |
Harvard | Bio/Vote History | ||
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 Pinelopi Goldberg |
Yale | Bio/Vote History | ||
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 Michael Greenstone |
University of Chicago | Bio/Vote History | ||
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 Oliver Hart |
Harvard | Bio/Vote History | ||
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 Bengt Holmström |
MIT | Bio/Vote History | ||
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 Caroline Hoxby |
Stanford | Bio/Vote History | ||
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 Hilary Hoynes |
Berkeley | Bio/Vote History | ||
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 Erik Hurst |
Chicago Booth | Bio/Vote History | ||
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 Kenneth Judd |
Stanford | Bio/Vote History | ||
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There were many tax cuts passed in 2017. Renewing some of them will increase the debt. This question is typical of these discussions in economics. It would be better to analyze each cut along with any synergies among the cuts.
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 Steven Kaplan |
Chicago Booth | Bio/Vote History | ||
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have not seen a detailed analysis. SALT cap being eliminated is expensive. Individual tax rates going up increases revenue. Corp tax drop, which was big in 2017 act, is unchanged.
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 Anil Kashyap |
Chicago Booth | Bio/Vote History | ||
 Pete Klenow |
Stanford | Bio/Vote History | ||
 Jonathan Levin |
Stanford | Bio/Vote History | ||
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 Eric Maskin |
Harvard | Did Not Answer | Bio/Vote History | |
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 William Nordhaus |
Yale | Bio/Vote History | ||
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 Maurice Obstfeld |
Berkeley | Bio/Vote History | ||
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 Parag Pathak |
MIT | Bio/Vote History | ||
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 Larry Samuelson |
Yale | Bio/Vote History | ||
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There is neither evidence nor relevant experience to suggest that cutting taxes in our current setting will increase tax revenue.
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 José Scheinkman |
Columbia University | Bio/Vote History | ||
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 Richard Schmalensee |
MIT | Bio/Vote History | ||
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 Fiona Scott Morton |
Yale | Bio/Vote History | ||
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 Carl Shapiro |
Berkeley | Bio/Vote History | ||
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 Robert Shimer |
University of Chicago | Bio/Vote History | ||
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 Stefanie Stantcheva |
Harvard | Did Not Answer | Bio/Vote History | |
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 James Stock |
Harvard | Did Not Answer | Bio/Vote History | |
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 Nancy Stokey |
University of Chicago | Bio/Vote History | ||
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 Chad Syverson |
Chicago Booth | Bio/Vote History | ||
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"All else equal" doing some work here, as in isolation continuing the tax cut will increase deficits relative to expiration; it has not come near to paying for itself
-see background information here |
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 Richard Thaler |
Chicago Booth | Bio/Vote History | ||
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 Christopher Udry |
Northwestern | Bio/Vote History | ||
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We've been down this road before
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Question B Participant Responses
| Participant | University | Vote | Confidence | Bio/Vote History |
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Daron Acemoglu |
MIT | Bio/Vote History | ||
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Zero taxes on capital, combined with relatively high taxes on labor are very problematic, both because of their distributional implications and also because they distort technology choice, encouraging excessive automation.
-see background information here |
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Mark Aguiar |
Princeton | Bio/Vote History | ||
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Joseph Altonji |
Yale | Bio/Vote History | ||
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Alan Auerbach |
Berkeley | Bio/Vote History | ||
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David Autor |
MIT | Bio/Vote History | ||
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The best evidence I've seen is that TCJA did increase investment. But given the size of our deficit and debt, there are more fiscally responsible ways to stimulate growth.
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Abhijit Banerjee |
MIT | Bio/Vote History | ||
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Dirk Bergemann |
Yale | Bio/Vote History | ||
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I would find some specific reference to the tax cut useful
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Marianne Bertrand |
Chicago | Bio/Vote History | ||
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Markus Brunnermeier |
Princeton | Bio/Vote History | ||
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Judith Chevalier |
Yale | Bio/Vote History | ||
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David Cutler |
Harvard | Bio/Vote History | ||
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Darrell Duffie |
Stanford | Bio/Vote History | ||
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Within a decade, lower taxes would increase earnings incentives sufficiently for this effect. In the following decades, however, the resulting higher interest expense on government debt and the increased inflation volatility would likely more than offset the initial growth.
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Aaron Edlin |
Berkeley | Bio/Vote History | ||
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Barry Eichengreen |
Berkeley | Bio/Vote History | ||
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Liran Einav |
Stanford | Bio/Vote History | ||
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Ray Fair |
Yale | Bio/Vote History | ||
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Edward Glaeser |
Harvard | Bio/Vote History | ||
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Pinelopi Goldberg |
Yale | Bio/Vote History | ||
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Michael Greenstone |
University of Chicago | Bio/Vote History | ||
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how much wil higher budget deficits raise interest rates?
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Oliver Hart |
Harvard | Bio/Vote History | ||
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Bengt Holmström |
MIT | Bio/Vote History | ||
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Caroline Hoxby |
Stanford | Bio/Vote History | ||
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Hilary Hoynes |
Berkeley | Bio/Vote History | ||
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Erik Hurst |
Chicago Booth | Bio/Vote History | ||
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Kenneth Judd |
Stanford | Bio/Vote History | ||
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Steven Kaplan |
Chicago Booth | Bio/Vote History | ||
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Again, do not have enough information.
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Anil Kashyap |
Chicago Booth | Bio/Vote History | ||
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At some point the deficits the US is running will lead to higher rates, the CBO already thinks this path will crowd out investment.
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Pete Klenow |
Stanford | Bio/Vote History | ||
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Jonathan Levin |
Stanford | Bio/Vote History | ||
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Eric Maskin |
Harvard | Did Not Answer | Bio/Vote History | |
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William Nordhaus |
Yale | Bio/Vote History | ||
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Maurice Obstfeld |
Berkeley | Bio/Vote History | ||
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Parag Pathak |
MIT | Bio/Vote History | ||
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Larry Samuelson |
Yale | Bio/Vote History | ||
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Variations of tax rates on the contemplated size do not appear to be of first order importance in explaining growth.
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José Scheinkman |
Columbia University | Bio/Vote History | ||
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Richard Schmalensee |
MIT | Bio/Vote History | ||
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Fiona Scott Morton |
Yale | Bio/Vote History | ||
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We have tried this experiment in the US many times and the empirical evidence demonstrates that this is an ineffective way to stimulate growth
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Carl Shapiro |
Berkeley | Bio/Vote History | ||
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Robert Shimer |
University of Chicago | Bio/Vote History | ||
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Stefanie Stantcheva |
Harvard | Did Not Answer | Bio/Vote History | |
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James Stock |
Harvard | Did Not Answer | Bio/Vote History | |
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Nancy Stokey |
University of Chicago | Bio/Vote History | ||
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Chad Syverson |
Chicago Booth | Bio/Vote History | ||
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This is a tough one. The evidence indicates capital accumulation benefits of 2017 TCJA, but we are entering a fiscal situation where continued large deficits might hamper long-run growth.
-see background information here |
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Richard Thaler |
Chicago Booth | Bio/Vote History | ||
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Christopher Udry |
Northwestern | Bio/Vote History | ||
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Question C Participant Responses
| Participant | University | Vote | Confidence | Bio/Vote History |
|---|---|---|---|---|
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Daron Acemoglu |
MIT | Bio/Vote History | ||
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The reason why capital taxation is so low at the moment seems to be that several temporary generous depreciation allowance statutes and other giveaways to investors then became permanent.
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Mark Aguiar |
Princeton | Bio/Vote History | ||
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Joseph Altonji |
Yale | Bio/Vote History | ||
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Alan Auerbach |
Berkeley | Bio/Vote History | ||
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David Autor |
MIT | Bio/Vote History | ||
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Only a small minority of these have ever actually been allowed to expire, as far as I know. And of course, that's the strategic plan of those who propose them.
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Abhijit Banerjee |
MIT | Bio/Vote History | ||
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Dirk Bergemann |
Yale | Bio/Vote History | ||
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Marianne Bertrand |
Chicago | Bio/Vote History | ||
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Markus Brunnermeier |
Princeton | Bio/Vote History | ||
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Judith Chevalier |
Yale | Bio/Vote History | ||
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David Cutler |
Harvard | Bio/Vote History | ||
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Darrell Duffie |
Stanford | Bio/Vote History | ||
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Permanent means forever. That's a long time..... Anyway, even if the low tax rates for each bracket were to remain constant, the higher resulting inflation and progressively of the tax schedule would eventually raise average tax rates.
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Aaron Edlin |
Berkeley | Bio/Vote History | ||
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Barry Eichengreen |
Berkeley | Bio/Vote History | ||
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Liran Einav |
Stanford | Bio/Vote History | ||
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Ray Fair |
Yale | Bio/Vote History | ||
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Edward Glaeser |
Harvard | Bio/Vote History | ||
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Pinelopi Goldberg |
Yale | Bio/Vote History | ||
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Michael Greenstone |
University of Chicago | Bio/Vote History | ||
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Oliver Hart |
Harvard | Bio/Vote History | ||
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Bengt Holmström |
MIT | Bio/Vote History | ||
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Caroline Hoxby |
Stanford | Bio/Vote History | ||
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Hilary Hoynes |
Berkeley | Bio/Vote History | ||
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I’m not sure it’s due to CBO rules but not wanting to take away tax cuts once you’ve given them.
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Erik Hurst |
Chicago Booth | Bio/Vote History | ||
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Kenneth Judd |
Stanford | Bio/Vote History | ||
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Temporary tax cuts have often been temporary. The Bush partial expensing provisions of 2002 expired in 2005. When asked why, a Bush cabinet official said "The election is over by then." It had served its purpose of temporary stimulus to help get re-elected.
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Steven Kaplan |
Chicago Booth | Bio/Vote History | ||
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It depends on the composition of Congress and the Presidency at the time of renewal.
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Anil Kashyap |
Chicago Booth | Bio/Vote History | ||
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Pete Klenow |
Stanford | Bio/Vote History | ||
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Jonathan Levin |
Stanford | Bio/Vote History | ||
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Eric Maskin |
Harvard | Did Not Answer | Bio/Vote History | |
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William Nordhaus |
Yale | Bio/Vote History | ||
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Maurice Obstfeld |
Berkeley | Bio/Vote History | ||
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Parag Pathak |
MIT | Bio/Vote History | ||
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Larry Samuelson |
Yale | Bio/Vote History | ||
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José Scheinkman |
Columbia University | Bio/Vote History | ||
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Richard Schmalensee |
MIT | Bio/Vote History | ||
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The pressure is there, but I think the statement over- states its power
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Fiona Scott Morton |
Yale | Bio/Vote History | ||
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Carl Shapiro |
Berkeley | Bio/Vote History | ||
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Robert Shimer |
University of Chicago | Bio/Vote History | ||
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Stefanie Stantcheva |
Harvard | Did Not Answer | Bio/Vote History | |
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James Stock |
Harvard | Did Not Answer | Bio/Vote History | |
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Nancy Stokey |
University of Chicago | Bio/Vote History | ||
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Chad Syverson |
Chicago Booth | Bio/Vote History | ||
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Richard Thaler |
Chicago Booth | Bio/Vote History | ||
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Christopher Udry |
Northwestern | Bio/Vote History | ||
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