Brown & Streza Blog
By Matt Brown on 2/25/2011 9:21 AM

The gap between the richest and poorest Americans is at historic highs, with estimates suggesting that the top 1 percent of Americans hold nearly 50 percent of the wealth, topping even the distance before the Great Depression in the 1920s. A recent survey concluded that Americans desire a more equal distribution of wealth, and dramatically underestimate the current gap. Perhaps surprisingly, this was true for Americans at all wealth levels and among those who voted for George W. Bush over John Kerry. More

By Matt Brown on 2/18/2011 8:34 AM

The Sum of its Parts: Reforming Charitable Donations of Partial Interests

Sarah B. Lawsky (UC-Irvine)

Abstract:

This essay analyzes the tax rule that permits a deduction for donating property to a charity, but denies a deduction for donating a partial interest in that same property. For example, someone who donates a building to a charity may be permitted to take a deduction for the fair market value of the building. But if instead of donating the entire building, that person permits the charity to use the building rent-free for a year, he cannot take any deduction at all. Drawing on insights from modern finance, the essay shows that the only reason Congress gave for enacting the partial interest provision does not actually provide a way to distinguish between partial interests and whole interests, and that other possible justifications for the provision are also unconvincing. The partial interest ban is at best unnecessary and at worst inconsistent with other areas of tax law, and it should therefore be repealed.

By Matt Brown on 2/18/2011 8:15 AM

From the NYU Colloquium on Tax Policy and Public Finance

Link to Materials: Envy and Altruism in Hard Times

Kenneth Scheve (Yale University, Department of Political Science)

Abstract:

The politics of economic crises bring distributive economic conflict to the fore of national political debates. How economic activity is to be regulated and how policy should be used to transfer resources between citizens become central political questions and the answers chosen often influence the trajectory of policy for a generation or at least until the next crisis. This paper investigates how social preferences, specifically envy and altruism, influence individual policy opinions in these debates. I argue that social preferences have a powerful influence on support for policy alternatives which in turn shape the incentives faced by politicians in setting policy. I conduct original survey experiments in France and the United States and provide strong evidence that individuals care both about how economic policy alternatives affect their own interests and how they influence the welfare of others. Their concern about the welfare of others is consistent with inequality aversion -- both envy and altruism. The analysis focuses on key policy areas in the response to the current international economic crisis: trade policy, financial sector regulation, and tax policy. This preliminary draft presents the results from the United States only as the French survey is in the field.