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Maintaining the Strength of American Capitalism: Foreword

The American economic system has always been the foundation of our national strength. But this foundation is showing cracks—from high levels of income inequality, declining economic mobility, and persistent economic insecurity among low- and middle-income Americans.

Maintaining the Strength of American Capitalism: Introduction

A national debate about the strength and fairness of American capitalism is taking place against a backdrop of vast levels of income and wealth inequality, growing pessimism about the state of economic opportunity and mobility, increased market concentration in many sectors, and a precarious fiscal situation.

Maintaining the Strength of American Capitalism

The essays contained in this volume seek to clarify the lines of debate on some of the greatest economic policy challenges of our time and present evidence- based analysis on how to address them. It examines the hypothesis that growing market concentration is inhibiting a dynamic and competitive economy.

Fiscal Policy With High Debt and Low Interest Rates

Gale argues that although historically low interest rates reduce the cost of government borrowing, they are not­ a "get out of jail free card." Rising debt will slowly but surely make it harder to grow the economy, boost living standards, respond to wars or recessions, address social needs, and maintain the nation’s role as a global leader.

Can Innovation Policy Restore Inclusive Prosperity in America?

Van Reenen argues the U.S. should pursue a robust innovation policy composed of tax credits, direct subsidies, and human capital investments, which have been shown to spur innovation and wage growth. He proposes combining these approaches into a 10-year $1 trillion Grand Innovation Challenge, which would reinvigorate R&D investment, promote American technological leadership, and advance policy goals of inclusive growth.

Wealth Taxation: An Overview of the Issues

Viard argues that a wealth tax in the U.S. would pose administrative and constitutional challenges. As an economic matter, such a tax would decrease savings and investment, thereby lowering the capital stock, making workers less productive, and slowing wage growth. The potential revenue that would be gained is unclear.

Policy Options for Taxing the Rich

Batchelder and Kamin argue the United States must raise new revenue in order to reduce high levels of economic disparity, finance much-needed new services and investments, and address the nation's long-term fiscal needs. They present a range of options that would raise tax revenue and increase the progressivity of the federal tax system. Policymakers can pursue a combination of incremental changes to increase revenues through the current tax system along with new tax structures to generate new revenue.

New York Times: How to Get Americans to Love Capitalism Again

American capitalism is at a serious inflection point. Many Americans, including the two of us, are alarmed by enormous levels of inequality and by declining economic mobility. We are concerned that in many cases American markets are no longer the most competitive in the world. And, we worry that our country’s long-term economic strength will slowly deteriorate because of an unsustainable fiscal trajectory that leaves future generations worse off.

Harnessing the Power of Markets to Solve the Climate Problem

Author Gilbert E. Metcalf of Tufts University argues that a carbon tax should be the centerpiece of any portfolio of policies that aim to achieve zero net emissions. However, a carbon tax alone is insufficient to achieve zero net emissions, and argues that regulation, federal support for innovation, and reforming current energy tax incentives and regulatory rulemaking should be part of a comprehensive climate policy agenda.