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on Public Finance |
| By: | Jasper Boll; Emmanuel Saez; Gabriel Zucman |
| Abstract: | This paper documents the wealth of California’s billionaires and the taxes they pay. California billionaires’ wealth exceeds $2 trillion today, the equivalent of 50% of California’s GDP. It has grown 144% from 2023 to 2025, fueled by the AI boom. Over the longer run, the real wealth of California’s billionaire class—the 0.0002% richest households—has been multiplied by 30 from 1982 to 2025, while average real family income in California has about doubled. California billionaires pay about 0.2% of their wealth in California income tax ($3.2 billion/year), representing 2.4% of total California income tax revenue on average over 2023-2025. Using Securities and Exchange Commission data from Alphabet, Meta, Oracle, and Nvidia since 2004, we estimate the trajectory of wealth, income, and taxes paid by the top 4 California billionaires—Page, Brin, Zuckerberg, Ellison (through 2020), and Huang (since 2021)—focusing on their business wealth. This group alone holds nearly $1 trillion in business wealth, almost half of total California billionaire wealth. For this group, wealth growth (+322% over 2023-2025) and low taxation (0.04% of wealth in annual California income tax) are more pronounced. The proposed one-off California billionaire tax of 5%, payable over 5 years, is both small relative to California billionaires’ wealth gains and large relative to the taxes they currently pay. We estimate that it could raise about $100 billion, with comparatively minor impacts on income tax revenue. Using empirical estimates of mobility responses to wealth taxation, we find that an annual wealth tax on California billionaires could raise substantial additional revenue even after accounting for income tax losses due to mobility. |
| JEL: | H20 |
| Date: | 2026–05 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:35218 |
| By: | Andersson, Julius J.; Atkinson, Giles |
| Abstract: | We present a simple model showing how income inequality and the income elasticity of demand jointly shape the tax progressivity of indirect taxes, with rising inequality increasing the regressivity of taxes on necessities. We test the model’s predictions by analyzing the Swedish carbon tax on transport fuel. We find that the tax becomes increasingly regressive over time, closely tracking rising income inequality. We also show that the relative incidence shifts from regressive to progressive when using annual expenditure rather than annual income as the welfare measure, as expenditure is more evenly distributed. A cross-country analysis of gasoline taxes in high-income nations further supports our findings, establishing a strong correlation between higher inequality and greater regressivity. Our model helps policymakers identify when complementary redistributive measures such as lump-sum transfers may become necessary. |
| Keywords: | tax progressivity; income inequality; gasoline taxation; carbon taxation |
| JEL: | H23 H24 D31 D63 Q58 |
| Date: | 2026–06–30 |
| URL: | https://d.repec.org/n?u=RePEc:ehl:lserod:138449 |
| By: | Jun Takahashi; Yoshiyuki Nakazono; Kento Tango |
| Abstract: | Complex tax incentives, such as means-tested tax transfers, are known to distort labor supply decisions (Chetty and Saez, 2013). This study conducts a randomized experiment to examine whether providing information about income taxation induces individuals to change their labor supply. The results show that tax information provision increases stated annual earnings by an average of 0.9%, and raises the probability of planning to earn above the threshold by 4.3%. However, this increase in stated intentions does not translate into actual labor supply, as revealed by the end-of-year follow-up survey. The findings suggest that while information can correct misconceptions and shift intentions, entrenched behavioral norms tied to institutional thresholds, together with psychological frictions, may limit the effectiveness of such interventions in changing actual behavior. |
| Date: | 2026–06 |
| URL: | https://d.repec.org/n?u=RePEc:toh:tupdaa:86 |
| By: | James Giesecke; Jason Nassios |
| Abstract: | This paper compares three capital-gains tax designs for personally held CGT assets: (i) the current Australian nominal gains system; (ii) the proposed return to inflation indexation with asymmetric treatment of real gains and losses; and, (iii) a benchmark based on symmetric treatment of real gains and losses. The analysis centres the expected capital-price path on CPI inflation, thereby isolating the tax treatment of inflation-driven capital price changes. Three findings emerge. First, under the current nominal gains system, the long-run CGT liability on an asset that merely preserves its purchasing power approaches 23.5 per cent of the asset's terminal value at top marginal rates. Second, asset-by-asset indexation with asymmetric recognition of losses imposes a tax penalty on cross-sectional dispersion in individual asset returns that, at a 30-year horizon, exceeds the burden of the current system. Third, the effective CGT burden under both the current and proposed systems is shaped by the inflation environment, although through different channels: the current system taxes inflationary nominal gains, while the proposed system widens the band of unrecognised real losses as inflation raises the indexed cost base. A symmetric real-gains tax avoids these distortions. |
| Keywords: | Capital gains tax, Asymmetric loss recognition, Inflation indexation, Nominal versus real gains, Effective tax burden |
| JEL: | E62 H21 H24 G11 |
| Date: | 2026–06 |
| URL: | https://d.repec.org/n?u=RePEc:cop:wpaper:g-370 |
| By: | Garth Heutel |
| Abstract: | Through theory and numerical simulations, I explore how a pollution tax can be designed to accommodate ethical objections. I consider four types of objections that have been raised by ethicists – based on equity concerns, incommensurability, civic responsibility, and commodification. In each case, I theoretically derive a tax designed to respond to the objection, and quantitatively, using a general equilibrium model calibrated to the U.S. economy and carbon dioxide pollution, I show how these accommodations affect the magnitude of the tax and the resulting emissions level. Some accommodations likely have small effects on the carbon tax rate, while others can cause the tax rate to increase fivefold. |
| JEL: | A13 D63 H23 Q58 |
| Date: | 2026–05 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:35278 |
| By: | Han Gao; Michael P. Keane; Kaja Kierulf; Alan Woodland |
| Abstract: | This paper estimates a learning-by-doing human-capital production function in which hours affect both current productivity and future human capital. We show that the standard Ben-Porath specification is weakly identified: its objective function is nearly flat along a ridge in parameter space, undermining conventional inference. We develop a flexible sieve alternative that is well-identified, and estimate a concave hours technology using PSID data. Embedding this technology in a life-cycle model, we find very small prime-age labor-supply responses to temporary wage shocks. Despite these low elasticities, optimal labor-income taxes are flat because they distort both current labor supply and future human-capital accumulation. |
| JEL: | C13 C14 H21 J22 J24 |
| Date: | 2026–05 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:35238 |
| By: | Nicholas-James Clavet; Pierre-Carl Michaud; Julien Navaux |
| Abstract: | We develop a model of optimal long-term care provision and insurance with heterogeneous risk and preferences. Using a novel survey experiment, we estimate preferences (demand) for care settings and service bundles. We then calibrate health transitions and the supply of services using Canadian administrative data for the province of Quebec. The optimal insurance scheme has lower co-insurance in nursing homes and higher co-insurance in home care while leading to a constrained expansion of home care services. Relative to the prevailing system, optimal provision increases home care utilization, raises public expenditure threefold, and delivers a large increase in consumer surplus. |
| JEL: | H51 I18 J14 J26 |
| Date: | 2026–05 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:35284 |
| By: | Manisha Jain; Corina Mommaerts; Jeffrey Weaver |
| Abstract: | Employer-side wage subsidies are widely used to promote employment among disadvantaged workers. We study how such subsidies translate into firm hiring behavior using the federal Work Opportunity Tax Credit, which subsidizes up to 40% of first-year wages and covers over two million hires annually. Using linked administrative data from Wisconsin and multiple quasi-experimental designs, we find consistent and precise null effects on hiring, earnings, retention, and related outcomes across designs and firm types. Original data on firm hiring practices suggest two mechanisms that can limit employer-side subsidy efficacy: perceived legal risks discourage eligibility screening and organizational frictions attenuate decision-makers’ responsiveness. |
| JEL: | H25 J38 M51 |
| Date: | 2026–05 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:35229 |
| By: | C. Palomino, Juan; Sebastian, Raquel |
| Abstract: | We study perceptions of wealth inequality and preferences over the design of a wealth tax through representative online survey experiments in the United Kingdom and Spain (2023). After eliciting prior beliefs about the wealth distribution, we randomly expose respondents to true distributional statistics and measure the effects on support for a wealth tax and on its preferred design: threshold, rate and asset base. Baseline support is high and stable (over 80% in both countries), the modal preferred threshold is £/€1 million or more, a low (0.5%) rate is more acceptable than a high (1.5%) one, and respondents protect primary residences in both countries and pension wealth in the UK. The average treatment effect on support, threshold and rate is close to zero in both countries, reflecting a high-support ceiling and a weak link between perceived inequality and tax preferences. On average, respondents who correct their misperceptions update their view of inequality but not their support, a clear belief-to-preference dissociation. Information campaigns may shift beliefs about inequality but appear unlikely to broaden an already high overall support for wealth taxation. An analysis of subgroups by world-views reveals that information can move preferences about the exemption threshold -where the ceiling does not bind- and only in some Spanish groups: supporters who regard inequality as unfair and trust that taxation is useful and well spent. |
| Keywords: | wealth tax, tax threshold, redistribution preferences, information experiment, misperceptions, United Kingdom, Spain |
| JEL: | H24 D31 D83 C93 |
| Date: | 2026–06 |
| URL: | https://d.repec.org/n?u=RePEc:amz:wpaper:2026-16 |