Maxwell Tabarrok provides an excellent review of an important article.
Taxation and innovation in the 20th century is a 2018 article by Ufuk Akcigit, John Grigsby, Tom Nicholas, and Stefanie Stantcheva that provides some answers. They collect and clean new data sets on patents, business and individual income, and state-level tax rates dating back to the early 20th century. Major result: taxes constitute a huge obstacle to innovation. A 1 percent increase in the marginal tax rate for 90th percentile earners decreases the number of patents and inventors by 2 percent. The corporate tax rate is even bigger, with a 1 percent increase leading to a 2.8 percent decrease in patents and a 2.3 percent decrease in the number of inventors.
The calculation of the Max envelope is particularly useful, placing this result in the context of other methods aimed at increasing innovation.
Read it the totality.
For something completely different, Connor Tabarrok offers an update on Charlotte the Stingray:
A “miracle pregnancy” featured on national news generated huge business for a small-town aquarium, but months after the famous stingray was born, there are still no babies. Are we being fooled by a fish?
I particularly liked this line:
Taking all of this into account, my position is that even if they figured it out, it’s unlikely that this shark would have to pay child support to Charlotte’s puppies.
Read it the totality.
Are MR readers more interested in tax policy or virgin birth lines? We will see.
