Before yesterday, I didn’t really think so. However, Emmanuel Saez changed my outlook a bit. I attended a seminar he gave on a paper that he’s working on concerning optimal US tax and transfer policy. I liked the general thrust of his presentation; he was concerned with both the effects that income elasticities for taxation have on revenue collection and the implications of some behavioral insights for administering a tax system.
Explicit in all of this is the idea that redistribution is a good thing. In other words, if we can soak the rich to maximize revenue that can be transferred to the poor, without the rich “going Galt” or the poor deciding not to work, then we should. The question of taxation then becomes the issue of finding the marginal tax rate where the “rich,” however we choose to define them (Saez likes top 1%, but also drills down intop 0.1% and 0.01%), pay as much revenue to the government as possible.
The questions he received throughout did not challenge his prior that redistribution is good (I think he got one about this topic really being welfare economics, but there was a murmuring consensus in the room that this wasn’t true). Instead, they focused on details such as, “how do you make the tax base neutral,” or “where does the estate tax play into this?” In other words, their analysis and critique of his arguments seemed to be positive, but the entire premise for his argument was normative. And they want along with it (“they” being a group of neoclassical economists from Brookings and Urban). What other priors ostensibly derived from “welfare economics” would neoclassical economists accept/reject?