“…a very valuable contribution.” - Larry Summers, former Secretary of the Treasury and director of the National Economic Council, president emeritus, Harvard University
“Unintended Consequences is full of substance, it is one of the must-read books of the year, and once I finish it I will be giving it a second read through right away.” - Tyler Cowen, Professor, George Mason University
“Unintended Consequences represents the most cogent and persuasive analysis of the Financial Crisis to date.” - Andrei Shleifer, 1999 John Bates Clark Medal Winner
“There are an amazing number of good ideas and interesting points made in Unintended Consequences. The thinking underlying it, and the obvious depth of understanding of the author, are very impressive.” - Steven Levitt, coauthor of Freakonomics; 2004 John Bates Clark Medal
“…serious thinking for serious thinkers. …a thought-provoking blueprint for growing middle- and working-class incomes.” - Mitt Romney, former Governor of Massachusetts
“…reminds us that inequality sends a signal of what society lacks most, in America’s case, entrepreneurship and risk taking.” - Lawrence Lindsey, CEO, The Lindsey Group, former Director of the National Economic Council
“…a must-read for serious students of economic policy.” - Glenn Hubbard, Dean, Columbia Business School, and former Chairman of the Council of Economic Advisers
“…a fresh argument for the productive value of inequality.” - David Autor, Professor of Economics, Massachusetts Institute of Technology
“Unintended Consequences provides a provocative interpretation of the causes of the global financial crisis and the policies needed to return to rapid growth. Whether you agree or not, this analysis is well worth reading.” - Nouriel Roubini, New York University; Chairman, Roubini Global Economics
“…reminds us that inequality sends a signal of what society lacks most, in America’s case, entrepreneurship and risk taking.” - Lawrence Lindsey, CEO, The Lindsey Group, former Director of the National Economic Council
“…challenges misconceptions that distort our economic debates.” - Arthur Brooks, President of the American Enterprise Institute
“Unintended Consequences offers deep and well-argued analyses on almost every issue.” - The New York Times

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Taxing Billionaires: Estate Taxes and the Geographical Location of the Ultra-Wealthy

Enrico Moretti and Daniel J. Wilson American Economic Journal

Date Posted:: May 4, 2023
Is Database:: Database

Enrico Moretti and @wilson_daniel_j find 35% of billionaires leave states that have an estate tax. However, for the average state the additional revenues from an estate tax exceed the loss of revenues from forgone income taxes by 31 percent.

We find that billionaires responded strongly to geographical differences in estate taxes by increasingly moving to states without estate taxes, especially as they grew older. Our estimated elasticity implies that $80.7 billion of 2001 Forbes 400 wealth escaped estate taxation in the subsequent years due to billionaires moving away from estate tax states. Yet despite the high elasticity of geographical location with respect to the estate tax, we find that for most states the benefit of additional revenue from the estate tax exceeds the cost of forgone income tax revenue by a significant margin. Adoption of an estate tax implies a one-time tax revenue gain for the state when a resident billionaire dies, but it also reduces its billionaire population and thus their flow of income tax revenue over remaining lifetimes. For the average state the benefit of additional revenue from the estate tax exceeds the cost of forgone income tax revenue by 31 percent. While the cost-benefit ratio varies substantially across states, most states that currently do not have estate taxes would experience revenue gains if they adopted estate taxes. California, which has the highest personal income top tax rate, is the main exception In California, the cost-benefit ratio is 1.45, indicating that if California adopted the estate tax on billionaires, the state would lose revenues by a significant margin. (Currently, California does not have an estate tax.) An earlier version of this research was cited in my chapter The Economics of Inequality in High-Wage Economies in Oxford University Press's United States Income, Wealth, Consumption, and Inequality

Takeaways by Macro Roundup^® AI

The authors estimate that $80.7 billion of 2001 Forbes 400 wealth escaped estate taxation in subsequent years as billionaires moved away from estate tax states, with the response stronger as billionaires grew older.
For the average state, the authors find that added estate tax revenue exceeds the cost of forgone income tax revenue by 31 percent, implying most states without estate taxes would gain revenue by adopting them.
California, which has the highest personal income top tax rate and no estate tax, is the main exception, with a cost-benefit ratio of 1.45 indicating it would lose revenues by adopting an estate tax on billionaires.

The Impact of Tariffs on the Cost of Capital in the US

Kyle Pomerleau, Thomas Brosy, Robert McClelland and John Wong American Enterprise Institute

Date Posted:: October 7, 2026
Is Database:: Database

The IEEPA tariffs through January 2026 raised equipment’s user cost of capital 9%, from 17.7% to 19.3%. With depreciation unchanged, the required pre-tax net return rose 1.6pp, 4.3% to 5.9%, a tax at purchase that expensing cannot eliminate.

The standard Hall-Jorgenson user cost of capital framework defines the minimum gross required return on an additional unit of capital. The service price of capital (SS) is the minimum pretax gross return required on a new investment; the minimum pretax net return (ρrho) equals SS minus economic depreciation. Consider imported equipment requiring a 25% gross return: 20% to cover depreciation and 5% shareholders’ demanded return. A 10% tariff raises the cost of capital to 27.5%. [Thus the minimum pretax net return—the hurdle rate—rises from 5% to 7.5%]. For equipment, tariffs raise the cost of capital 9%, from 17.7% to 19.3%: 86% of the burden is direct, 14% indirect. 100% bonus depreciation reduced the equipment METR from 19.1% to 4.1%; tariffs raised it to 30.3%, more than offsetting the tax cut.

Takeaways by Macro Roundup^® AI

Tariffs in force before the February 20, 2026 Supreme Court ruling in Learning Resources v. Trump raised the economy-wide marginal effective tax rate on new US investment by 4.2 points, from 12.8 percent to 17.0 percent, and the cost of capital by 2.7 percent, the AEI authors estimate.
Equipment bore the largest estimated burden, with its marginal effective tax rate rising 26.1 points from 4.1 percent to 30.3 percent and its cost of capital up 9.0 percent, while mainframes and PCs saw a 26.6 percent cost-of-capital increase.
The estimated 4.2 point tariff-driven increase in the marginal effective tax rate offset the One Big Beautiful Bill Act’s 3.5 point reduction, leaving a net 0.8 point rise economy-wide and an 11.1 point net increase for equipment.

Ongoing State Tax Revenue Implications of the 2026 California Billionaire Tax Act

Jared Walczak California Tax Foundation

Date Posted:: April 28, 2026
Is Database:: Database

Walczak estimates the 2026 California Billionaire Tax Act would reduce annual state tax revenues by ~$3.53B to $4.49B due to billionaire departures and associated spillovers. The NPV of these ongoing losses would be several times the wealth tax revenue.

This paper estimates ongoing annual reductions in state tax revenue under scenarios based on announced and anticipated billionaire departures. The analysis considers direct impacts on individual income and, to a much lesser extent, sales tax collections, along with spillover effects. We identify 212 California billionaires using the Forbes billionaire list and classify each based on whether their wealth is primarily held in publicly traded equity, a privately held operating business, financial fund management, or a diversified mix of sources. We use classification-specific assumptions of income loss subject to a given billionaire’s departure, assuming that only 5% of public founders’ income will remain California source after a departure, compared to 55 percent for private operating business owners, 35% for financial management, and 15% for diversified wealth. Under our primary scenarios, the wealth tax yields ongoing reductions of $3.53 billion to $4.49 billion per year in income, sales, and other tax collections. Calculations based exclusively on the nine publicly identified billionaire emigres yield $2.77 billion in recurring revenue loss and can be regarded as a lower bound. Actual out-migration almost certainly already exceeds that which has been publicly reported, and continued departures should be expected should the initiative advance.

Takeaways by Macro Roundup^® AI

The authors estimate the 2026 California Billionaire Tax Act would cut state income, sales, and other tax collections by $3.53 billion to $4.49 billion per year under their primary billionaire-departure scenarios.
Limiting the calculation to the nine publicly identified billionaire emigres yields $2.77 billion in recurring revenue loss, which the authors regard as a lower bound.
The analysis classifies 212 California billionaires from the Forbes billionaire list and assumes post-departure California-source income of 5% for public founders, 55% for private operating business owners, 35% for financial management, and 15% for diversified wealth.

Massachusetts Loses Billions in Income After Millionaire Tax

Greg Ryan Bloomberg

Date Posted:: March 20, 2026
Is Database:: Database
Is Important:: Important

Net outflows of adjusted gross income from Massachusetts increased 8% y/y in 2023 to $4.2B, after a 4% surtax on income over $1mm took effect. Top earners leaving the state were responsible for 70% of the outflow.

Residents exiting Massachusetts took a net of $4.2 billion in adjusted gross income with them in 2023, one of the largest totals in the country, after a tax on millionaires took effect. The amount was an 8% year-over-year increase, according to Internal Revenue Service data, even as the total number of taxpayers leaving the state slowed. This was the first year that residents were subject to a 4% surtax on incomes over $1 million after voters approved the levy in 2022 to fund schools and transportation. Despite the tax’s implementation, the number of residents moving out of Massachusetts who reported income of $200,000 or more — the top bracket tracked in the IRS data — fell year-over-year. Net outflows from Massachusetts long predate the millionaires tax, especially to Florida and New Hampshire, its northern neighbor, which has no tax on wages or capital gains. Total lost income was also higher in 2021 than 2023. The state’s millionaires-tax collections have increased every year since 2023 and so far in fiscal 2026 have jumped 19% year-over-year to $1.3 billion.

Takeaways by Macro Roundup^® AI

Residents leaving Massachusetts took a net $4.2 billion in adjusted gross income with them in 2023, an 8% year-over-year increase and one of the largest totals in the country, according to Internal Revenue Service data.
The number of Massachusetts out-migrants reporting income of $200,000 or more, the top bracket tracked in IRS data, fell year-over-year in 2023, the first year of the voter-approved 4% surtax on incomes above $1 million.
Massachusetts millionaires-tax collections have risen every year since 2023 and are up 19% year-over-year to $1.3 billion so far in fiscal 2026, while net outflows to Florida and New Hampshire predate the surtax.

Who Is Paying for the 2025 U.S. Tariffs?

Mary Amiti, Chris Flanagan, Sebastian Heise, and David Weinstein Federal Reserve Bank of New York

Date Posted:: February 13, 2026
Is Database:: Database
Is Important:: Important

A FRBNY analysis finds that ~90% of tariffs’ economic burden was borne by American firms and consumers in the first 8 months of 2025. Between January and November, however, that incidence declined 8pp as firms reorganised supply chains.

94% of the tariff incidence was borne by the U.S. in the first eight months of 2025. This result means that a 10% tariff caused only a 0.6 percentage point decline in foreign export prices. The tariff pass-through into import prices has declined in the latter part of the year. That is, a larger share of the tariff incidence was borne by foreign exporters by the end of the year. In November, a 10% tariff was associated with a 1.4 percent decline in foreign export prices, suggesting an 86% pass-through to U.S. import prices. Given that the average tariff in December was 13% our results imply that U.S. import prices for goods subject to the average tariff increased by 11% (13 times 0.86) more than those for goods not subject to tariffs. These higher import prices caused firms to reorganize supply chains.

Takeaways by Macro Roundup^® AI

U.S. buyers bore 94% of the 2025 tariff incidence during the first eight months of the year, with a 10% tariff associated with only a 0.6 percentage point decline in foreign export prices.
Tariff pass-through into U.S. import prices declined later in 2025: in November a 10% tariff was associated with a 1.4% decline in foreign export prices, suggesting 86% pass-through.
With the average tariff at 13% in December, the results imply U.S. import prices for tariffed goods rose 11% more than for untariffed goods, prices that led firms to reorganize supply chains.

Supply and The Mam

Michael Cembalest J.P. Morgan

Date Posted:: February 5, 2026
Is Database:: Database

At ~15%, NYC has the highest combined city-state personal tax rate in the US, and the top marginal corporate income tax rate at 17.4%. The city also has the highest industrial, retail and multifamily property taxes per square foot of 10 major cities.

NYC has the highest combined city-state personal tax rate in the US and the highest all-in corporate income tax rate at 17.4% (state plus city plus MTA surcharge). According to the [Citizens Budget Commission], New York State is the highest tax jurisdiction in the US based on tax collections per capita and #2 on tax collections per $1,000 of personal income. NYC has the highest industrial, retail and multifamily property taxes per square foot of ten major cities.

Takeaways by Macro Roundup^® AI

New York City carries the highest all-in corporate income tax rate in the US at 17.4%, combining state and city taxes plus the MTA surcharge, along with the highest combined city-state personal tax rate.
The Citizens Budget Commission ranks New York State as the highest tax jurisdiction in the US by tax collections per capita and #2 by tax collections per $1,000 of personal income.
New York City has the highest industrial, retail, and multifamily property taxes per square foot among ten major cities.

Laffer Curves Are Flat

Rachel Moore, Brandon Pecoraro and David Splinter Joint Committee on Taxation

Date Posted:: January 28, 2026
Is Database:: Database
Is Important:: Important

JCT calculations suggest that properly constructed individual income tax Laffer curves are flat over wide ranges. Modeling shifting across business types and interactions btw various taxes under 2022 law, they find revenue is ~ constant for top rates btw 37% and 55%.

Laffer curves estimated with more realistic taxes are flatter, suggesting less potential revenue gains from top rate increases and a lower revenue-maximizing top rate. Standard simplifications miss meaningful behavioral margins such as shifting across tax bases and sectors. Interactions between federal individual income taxes and other taxes produce even flatter Laffer curves and smaller revenue gains from higher top rates. Panel A of Figure 2 shows how federal individual income tax revenues change as the top tax rate varies along the x-axis. With a broad base, total income enters the tax function as a single base, applying the top rate to all income even though much of it qualifies for lower preferential tax rates. With a narrow base, only wage income enters the tax function, which fails to apply the top tax rate to any capital income. The true tax base lies between the narrow and the broad base. The Laffer curve estimated using the tax calculator and true base reaches a more modest peak (only 1.3% more tax revenue) at a top tax rate of 47%. Notably, this additional federal income tax revenue is only about 0.1% of GDP. Relative to both the narrow and broad bases, the true base implies smaller potential revenue gains and a lower revenue-maximizing top tax rate.

Takeaways by Macro Roundup^® AI

A Laffer curve estimated with a tax calculator and the true tax base peaks at a top rate of 47%, yielding only 1.3% more federal individual income tax revenue, about 0.1% of GDP.
The true tax base lies between a narrow base covering only wage income and a broad base applying the top rate to all income, and it implies smaller potential revenue gains and a lower revenue-maximizing top rate than either.
Standard simplifications omit behavioral margins such as shifting across tax bases and sectors, and interactions between federal individual income taxes and other taxes produce flatter Laffer curves with smaller revenue gains from higher top rates.

Enrico Moretti and @wilson_daniel_j find 35% of billionaires leave states that have an estate tax. However, for the average state the additional revenues from an estate tax exceed the loss of revenues from forgone income taxes by 31 percent.

Do state estate taxes raise revenue despite billionaires moving away?

Takeaways by Macro Roundup® AI

The IEEPA tariffs through January 2026 raised equipment’s user cost of capital 9%, from 17.7% to 19.3%. With depreciation unchanged, the required pre-tax net return rose 1.6pp, 4.3% to 5.9%, a tax at purchase that expensing cannot eliminate.

Do tariffs raise the effective tax rate on new investment?

Takeaways by Macro Roundup® AI

Related Articles:

Walczak estimates the 2026 California Billionaire Tax Act would reduce annual state tax revenues by ~$3.53B to $4.49B due to billionaire departures and associated spillovers. The NPV of these ongoing losses would be several times the wealth tax revenue.

How much state tax revenue would billionaire departures cost annually?

Takeaways by Macro Roundup® AI

Related Articles:

Net outflows of adjusted gross income from Massachusetts increased 8% y/y in 2023 to $4.2B, after a 4% surtax on income over $1mm took effect. Top earners leaving the state were responsible for 70% of the outflow.

Does a millionaire surtax accelerate income leaving the state?

Takeaways by Macro Roundup® AI

Related Articles:

A FRBNY analysis finds that ~90% of tariffs’ economic burden was borne by American firms and consumers in the first 8 months of 2025. Between January and November, however, that incidence declined 8pp as firms reorganised supply chains.

Are U.S. buyers bearing most of the cost of tariffs?

Takeaways by Macro Roundup® AI

Related Articles:

At ~15%, NYC has the highest combined city-state personal tax rate in the US, and the top marginal corporate income tax rate at 17.4%. The city also has the highest industrial, retail and multifamily property taxes per square foot of 10 major cities.

Does New York City impose the highest taxes among major US cities?

Takeaways by Macro Roundup® AI

Related Articles:

JCT calculations suggest that properly constructed individual income tax Laffer curves are flat over wide ranges. Modeling shifting across business types and interactions btw various taxes under 2022 law, they find revenue is ~ constant for top rates btw 37% and 55%.

How much revenue would raising top tax rates actually generate?

Takeaways by Macro Roundup® AI

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