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• Case | HBS Case Collection | July 2018 (Revised September 2018)

  Donald Trump and the Tax Cuts and Jobs Act

  Matthew Weinzierl and Robert Scherf

  In January 2018, President Donald Trump was full of optimism. He had just signed the most substantial legislation of his young presidency, the Tax Cuts and Jobs Act (TCJA), making major changes to the tax code. Echoing his campaign slogan—Make America Great Again—Trump emphasized the power of tax cuts to drive economic growth. TCJA divided the U.S. Congress. The Republican Speaker of the House Paul Ryan (R-WI) celebrated it as "something I have been working on for my entire adult life,” and Senate Majority Leader Mitch McConnell (R-KY) cheered: “2017 was the best year for conservatives in the 30 years that I’ve been here. The best year on all fronts.” But Democrats attacked the bill from several angles. House Minority Leader (and former Speaker) Nancy Pelosi (D-CA) said: "This GOP tax scam is simply theft, monumental, brazen theft from the American middle class and from every person who aspires to reach it… The GOP tax scam is not a vote for an investment in growth or jobs. It is a vote to install a permanent plutocracy in our nation.… And it betrays the future and betrays the aspirations of our children." As in Congress, U.S. public opinion at the time of the bill’s passage was mixed but sharply split along party lines. Which appraisal of TCJA would prove to be right? Would TCJA's changes last, or would the American public end up rejecting them and vote in a government to reverse them? Were Trump and the Republicans charting a course toward prosperity, or had they taken a wrong turn?

  Keywords: Taxation; Jobs and Positions; Government and Politics; Public Opinion; United States;

  Citation:

  Weinzierl, Matthew, and Robert Scherf. "Donald Trump and the Tax Cuts and Jobs Act." Harvard Business School Case 719-002, July 2018. (Revised September 2018.)  View Details

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• Article | Economic Journal (Royal Economic Society) | July 2018

  Revisiting the Classical View of Benefit-Based Taxation

  Matthew Weinzierl

  This article incorporates into modern optimal tax theory the classical logic of benefit‐based taxation in which an individual's benefit from the activities of the state is tied to his or her income‐earning ability. First‐best optimal policy is characterized analytically as depending on a few potentially estimable statistics. Constrained optimal policy, with a Pareto‐efficient objective that trades off this principle and conventional utilitarianism, is simulated using conventional constraints and methods. A wide range of optimal policy outcomes can result, including those that match well several features of existing policies. This analysis thereby contributes to the theory of positive optimal taxation.

  Keywords: Taxation; Theory; Policy;

  Citation:

  Weinzierl, Matthew. "Revisiting the Classical View of Benefit-Based Taxation." Economic Journal (Royal Economic Society) 128, no. 612 (July 2018).  View Details

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• Article | Journal of Economic Perspectives

  Space, the Final Economic Frontier

  Matthew C. Weinzierl

  After decades of centralized control of economic activity in space, NASA and U.S. policymakers have begun to cede the direction of human activities in space to commercial companies. NASA garnered more than 0.7% of GDP in the mid-1960s but is only around 0.1% of GDP today. Meanwhile, space has become big business, with $300 billion in annual revenue. The shift from public to private priorities in space is especially significant because a widely shared goal among commercial space's leaders is the achievement of a large-scale, mainly self-sufficient, developed space economy. Jeff Bezos has stated that the mission of his firm Blue Origin is "millions of people living and working in space." Elon Musk, founder of SpaceX, has laid out plans to build a city of a million people on Mars within the next century. Both Neil deGrasse Tyson and Peter Diamandis have been given credit for stating that Earth's first trillionaire will be an asteroid miner. Such visions are clearly not going to become reality in the near future. But detailed roadmaps to them are being produced, and recent progress in the required technologies has been dramatic. If such space-economy visions are even partially realized, the implications for society will be enormous. Though economists should treat the prospect of a developed space economy with healthy skepticism, it would be irresponsible to treat it as science fiction. In this article, I provide an analytical framework—based on classic economic analysis of the role of government in market economies—for understanding and managing the development of the space economy.

  Keywords: Emerging Markets; Economics; Private Sector; Aerospace Industry;

  Citation:

  Weinzierl, Matthew C. "Space, the Final Economic Frontier." Journal of Economic Perspectives 32, no. 2 (Spring 2018): 173–192.  View Details

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