“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
“Unintended Consequences is far smarter and more thought-provoking than most economics written for the general public” - Greg Mankiw, Harvard University, Former Chairman of the Council of Economic Advisors
“Unintended Consequences represents the most cogent and persuasive analysis of the Financial Crisis to date.” - Andrei Shleifer, 1999 John Bates Clark Medal Winner
“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
“…serious thinking for serious thinkers. …a thought-provoking blueprint for growing middle- and working-class incomes.” - Mitt Romney, former Governor of Massachusetts
“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
“…challenges misconceptions that distort our economic debates.” - Arthur Brooks, President of the American Enterprise Institute
“…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 must-read for serious students of economic policy.” - Glenn Hubbard, Dean, Columbia Business School, and former Chairman of the Council of Economic Advisers
“…challenges misconceptions that distort our economic debates.” - Arthur Brooks, President of the American Enterprise Institute
“A full-throated defense of economic dynamism.” - The Wall Street Journal
“…serious thinking for serious thinkers. …a thought-provoking blueprint for growing middle- and working-class incomes.” - Mitt Romney, former Governor of Massachusetts

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CBO’s New Projections Show $1 Trillion Less in Tariff Savings

Marc Goldwein Committee for a Responsible Federal Budget

Date Posted:: November 26, 2025
Is Database:: Database

The CBO has reduced its forecast of tariff revenue through FY 2035 by 25% to $3T. 2/3 of the downward revision is due to methodological refinements such as an increased estimate of the share of imports from Canada and Mexico covered by the USMCA.

Updated projections from the CBO show that tariffs enacted this year will reduce debt (including interest) by $3.0 trillion through Fiscal Year (FY) 2035, down from the $4.0 trillion projected in August. Excluding dynamic effects, CBO now projects $2.5 trillion of revenue as opposed to $3.3 trillion – with 1/3 of the difference driven by announced policy changes and the other 2/3 due to an increased estimate of the share of imports that can access lower or zero duty rates under the United States-Mexico-Canada Agreement (USMCA), reduced estimates of the value of steel and aluminum in goods subject to tariffs on derivative products, and [a rise] in the projected share of tariff costs absorbed by foreign exporters from 0% to 5% of the increase in the tariff rate. If the Supreme Court upholds the ruling that tariffs enacted under the International Emergency Economic Powers Act (IEEPA) are illegal, then the primary deficit impact would likely drop to around $0.7 trillion, or roughly $0.9 trillion after interest. In light of CBO’s updated tariff estimates and the incorporation of actual 2025 budget data from Treasury, we now project debt to rise to 122% of GDP by 2035, roughly 2% of GDP higher than the CRFB Adjusted August Baseline and 4% of GDP higher than CBO’s January 2025 baseline. If the Supreme Court rules IEEPA tariffs illegal, debt would rise further to 127% of GDP.

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

California’s billionaire tax drives $3.53bn–$4.49bn in annual ongoing revenue losses, exceeding one-time collections and resulting in net fiscal harm.
Billionaire out-migration reduces individual income tax collections by multiples of direct wealth tax revenue, leading to structural state budget deficits.

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.

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.

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.

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.

California’s Billionaire Tax Plan Will Backfire

Michael Moritz Financial Times

Date Posted:: January 13, 2026
Is Database:: Database

In 1950, sales taxes accounted for ~60% of California’s revenue, and personal income taxes accounted for 11%. In recent years, the personal income tax share has risen to ~60%, with the top 1% of California taxpayers responsible for ~40% of the revenue.

In 1957, Fairchild Semiconductor, the company that spawned Silicon Valley, was formed by eight men — only one of whom was born in California. At the start of that decade the state’s population was about 10.5mn and only about 11% of its revenue of $1.1bn came from personal income taxes. The sales and use tax (levied on products not services) accounted for almost 60%. Today, California’s population is about 39.5mn while its budget is about $320bn (not including the $174bn the state receives from Washington for social welfare programmes). Since 1990, the budget has grown at an average rate of 6% a year. Compared to the 1950s, the source of the state’s revenue has entirely flipped. In recent years personal income taxes have contributed more than 60% of the total. This revenue rests on a foundation of jelly. In 2022, the top 1% of California taxpayers — just 170,000 payers — coughed up about 40% of all the state’s personal income tax revenues. Worse still, these payments are highly contingent on unpredictable capital gains.

The CBO has reduced its forecast of tariff revenue through FY 2035 by 25% to $3T. 2/3 of the downward revision is due to methodological refinements such as an increased estimate of the share of imports from Canada and Mexico covered by the USMCA.

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.

Will California's Billionaire Tax Act lead to long-term revenue losses?

Takeaways by Macro Roundup® AI

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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.

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.

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.

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%.

Related Articles:

In 1950, sales taxes accounted for ~60% of California’s revenue, and personal income taxes accounted for 11%. In recent years, the personal income tax share has risen to ~60%, with the top 1% of California taxpayers responsible for ~40% of the revenue.

Related Articles:

Takeaways by Macro Roundup^® AI