A Response to Seth H. Giertz

Authors

Daniel Feenberg, National Bureau of Economic ResearchFollow

Document Type

Article

Date of this Version

2009

Comments

Published in TAX POLICY LESSONS FROM THE 2000s, ed. Alan D. Viard (Washington, DC: AEI Press, 2009).

Abstract

There are two aspects of Seth Giertz's excellent chapter that I want to talk about. One is slightly technical; I want to try to provide some explanation for why estimating elasticity of taxable income (ETI) is so difficult. I think this difficulty is unappreciated by nonspecialists, who are quick to latch onto a favorite estimate without understanding the weaknesses in the estimation. The other aspect is a bit more philosophical and addresses the different functions of the partial equilibrium analysis done here and the general equilibrium work done a few years back in the macro group at the Congressional Budget Office (CBO). Perhaps surprisingly, I strongly endorse the partial equilibrium approach taken here for the comparison of tax reforms.