Yesterday I noticed a FiveBooks Interview with Jonathan Gruber, public economist and one of the advisors of the Massachusetts health care overall and the Affordable Care Act. Remember that video I posted awhile back about the ACA? That was him. Anyway, I was pleasantly surprised that one of the books he recommended was sitting on my shelf (my emphasis added):
Please introduce us to your second selection, Taxing Ourselves: A Citizen’s Guide to the Debate Over Taxes.
“Joel Slemrod and Jon Bakija do an excellent job of taking what we know about how taxes affect behaviour and translating it into basic lessons. There are three different kinds of reactions people can have to taxes. There are timing reactions like, “Should I realise my capital gains today or tomorrow?” There are financing reactions like, “Should I get paid in stock options or wages?” And then there are behaviour adjustments like, “How hard should I work?”
This book teaches that taxes have a large effect on timing, a moderate effect on financing and little-to-no effect on behaviour, such as how hard people work. When people talk about taxes and economic growth, they’re really talking about that third factor but that’s not really what taxes affect. Taxes don’t have much effect on how hard people work – they have more effect on things like the composition of portfolios and when they realise their capital gains. This book brought the literature together to make that point very clearly.”
I read through this book because I was frustrated with the politicized tax narratives of both parities and wanted to know what the general, starting consensus was on national tax policy. Essentially, I needed “A Citizen’s Guide to the Debate over Taxes.” So now when I hear some pundits, politicians, and ‘experts’ talk about tax policy that has no basis in the academic consensus, I understand them to be talking largely from fantasy, not reality. I encourage anyone who is at least partially curious about our tax system, and the arguments surrounding them, to pick it up.
Also check out the rest of Gruber’s interview.