My academic research centers on uncovering and closing gaps between the theory and reality of tax policy. My main contribution has been to identify and address a mismatch between the goals for taxation typically assumed in theory and the goals the public and policymakers endorse in reality. In brief, in the academic literature tax policy is evaluated solely by where we all end up, but in reality people also care about how we get there. To narrow this gap I have developed an approach to tax research I call Positive Optimal Taxation. This approach includes three steps: 1) gathering evidence that the goals for taxation assumed in standard theory fit poorly with real-world views; 2) identifying alternative goals—and the philosophical principles behind them—that better describe those real-world views; 3) incorporating those alternative goals into formal modern tax theory and demonstrating that doing so enables us to better explain, and inform, policy.
Consider, for example, the debate over how much to tax the rich. My research has shown that most people think the rich should pay more in taxes not only (and perhaps not even primarily) because a dollar is worth less in the hands of someone with more, the reason assumed in modern tax theory. Instead, they think the rich should pay more also because that's how the rich pay their fair share of the costs of a functioning society or because the rich have benefited more from that society's functioning, views consistent with the Equal Sacrifice principle of taxation that was endorsed by John Stuart Mill and the Classical Benefit-Based Taxation principle put forth by Adam Smith.
Most people, in fact, see merit in a range of potential views on this question and use a mixture of principles when making their judgments, an approach I call “normative diversity.” That approach strikes most of us as a good description of real-world moral reasoning, especially in a democracy, but it is sharply at odds with the standard approach in tax theory. My research shows not only that this conflict exists but also that it can be overcome. That is, modern tax theory can be adjusted to include normative diversity, and the payoff from doing so—in terms of the theory’s power to help us understand actual policy choices—is real.
In the end, I hope that this research succeeds in making my fellow tax theorists think differently about what they assume are the goals of tax policy, changing how tax theory is done and what impact it can have.
Additional strands of my academic research share the same motivation: to bring the study of tax policy into closer contact with practice. I have shown how taking into account differences in preferences across people—which public debates over taxes have always included but which modern research largely assumes away—brings theoretical policy recommendations more in line with existing policy. And, I have shown how to use complex modern theory to suggest simple reforms and guidelines for taxation and fiscal policy, rather than the intricate and sometimes impractical proposals those models most directly imply.
Like my academic research, my course development work for HBS helps us to understand why societies choose the economic policies they do, and how they might do better. Most of this work is included in my elective course: The Role of Government in Market Economies (RoGME). RoGME follows in the tradition of decades of pedagogy at HBS, providing the nuanced perspective on the role of government that is essential for the future leaders we train to maximize the positive difference they will make in the world. Whether the topic is reform of public education, coordination on climate change, management of the national debt, regulation of immigration, or the design of taxes, we find our way to a discussion of not only what the key tradeoffs are but also how to think about making them. In the end, aided by the unique power of the case method to make abstract questions tangible and fundamental disagreements plain, RoGME students come to see debates over specific policy issues as examples of a deeper, more analytically useful tension between competing views of the proper role of the government.
