(8/11) The proposals in the Hamilton paper would raise about 1 pp of GDP in new revenue, and still leave US corporate tax revenues below that of peer nations as a share of GDP. It would close about half that gap.

(7/11) What about competitiveness? US corporations pay very little tax. We are more than 40 percent of the profits of the world’s biggest 2000 public corporations, a much larger share than US GDP in the world, yet we raise much less corporate revenue than peer countries.

(4/11) The corporate tax reaches all of US equity income, including that held by foreigners, tax exempts, or tax preferred accounts.

(1/11) 🧵In my piece in today’s FT, I argue that the corporate tax is an excellent tool for taxing the same wealth that proponents of billionaires’ taxes (or the CA wealth tax) are reaching for. Link at end of thread.

(8/8) Even if half of these measures were adopted, it will improve the US fiscal trajectory a lot, nearly stabilizing debt relative to GDP and lowering interest costs for both the government and households.

Paper link : economicstrategygroup.org/publication/15…

(7/8) We hope our framework shows how much revenue is on the table in terms of sensible, time-tested, reforms. Such reforms would also collect more from winners in today’s economy (to help fund a strong safety net for others).

(6/8) We also suggest a menu of “sin” taxes and some other revenue buckets (returning some tax policy parameters to earlier levels, incremental individual capital tax measures). Altogether, the menu raises $15t, but we are under no illusion Congress will do all of this.

(4/8) The corporate tax is a better way to tax capital than many, since it doesn’t exempt foreigners, endowments, or retirement earnings. It can reach billionaires, respond to offshoring, and handle the challenge of taxing AI profits, regardless of how that turns out.

(2/8) Spending can also play a role, but we focus on tax. Absent the tax cuts of recent years, there would be a far smaller fiscal problem. And the United States is a low tax country with a high debt burden, compared to our peers.

(1/8) New Paper 🧵! Out today, my piece with @NatashaRSarin out of @AspenEcon on the importance of raising revenue in the time ahead. (As today’s interest rates remind us!) We argue that tried-and-true tax policy choices can meet our extraordinary fiscal moment.

(1/2) Maybe now that the bond market cares, US policymakers will follow?

U.S. Debt Hits $40 Trillion as America’s Borrowing Binge Continues

(1/2) I've always found the politics of this tax mystifying. Why object to fixing loopholes and lowering exemptions for the transfer of intergenerational wealth when only the richest 4 in 1000 pay?

Who Would Be Affected By A Decrease In The Estate Tax Exemption?

This US ambassador to the EU is deeply confused.

The EU cbam applies EU carbon policy evenly to domestic and foreign goods alike. In contrast, US tariffs are just that.

(2/2) Even beyond the distortions, regressivity, dysfunction, and harm to foreign relations, tariffs are also failing as a revenue instrument.

To give some perspective, total federal revenues are about 20x tariff revenues for 2025, and in 2026 tariff revenues will be lower.

[8/] I also suggest levying the tax increase only on the largest (by profit) 2% of firms, with a surtax applying to the largest <0.5% of firms. This has both political and economic benefits, providing a nudge toward more competitive firms & no tax increase pain for 98% of payers.

[4/12] The second big motive is that international efforts are still needed to combat profit shifting and tax competition, forces that are alive and well, thanks in part to recent weakening of Pillar 2 global min tax. Still, Pillar 2 efforts are a good starting point.

[3/] While this is a lot of (2030s) revenue, it is only 0.86 percent of GDP, so would close ~ half of the gap between US corporate revenue/GDP ratios and those of peer nations, which are ~ 1.5-2 percentage points higher. US public companies are the most successful in the world.

(2/12) With a huge thanks to @BudgetModel for scoring, the plan would raise a lot of revenue. And that is a key motivation for the proposal. We need revenue, capital income can bear higher taxes, and the entity level of tax is best way to holistically tax capital.

🧵(1/12) On Tuesday, @hamiltonproj released my proposal on reforming US international tax. I suggest raising corporate rates for the biggest profit taxpayers, and strengthening US international tax rules to better align with the large potential of international efforts.

(1/2) Looking forward to talking tax @hamiltonproj in one week, on June 16!

At the event on business tax reform (link next page), the conversation will focus on 3 new business tax proposals, including my own, one by @elenaspatel et al., and one by @dashching et al.

(6/6) At present, the world needs collective action around the problem of collective action. Coalitions of the willing can show the way forward, but it will require both pragmatism and a lot of work, as pointed out recently by Canadian PM Carney.

nytimes.com/interactive/20…

(5/6) Such mechanisms have the potential to fuel cooperative solutions to global collective action problems, and they can also strengthen coalitions in the face of disruptive “spoilers”, a policy problem that may be particularly salient today.

(3/6) Solutions require several ingredients; most essential are incentive mechanisms that spur jurisdictions to adopt policy change instead of standing aside. In this regard, the CBAM and the Pillar 2 UTPR rule are hugely important - and often misunderstood -policy innovations.

(1/6) 🧵 My new working paper is out today @PIIE, comparing three global collective action problems that occupy my recent scholarly work: international tax, climate, and world trade.

I look at both the nature of these problems, and lessons for progress in times ahead.

Terrific piece from Maury Obstfeld, examining the claim that dollar centrality lies at the heart of US current account deficits.

"That this proposition is wrong has not prevented its confident assertion."

(My favorite line. Applies to so much these days.)

Link follows.

Yet another way in which US policy endears us to the rest of the world...

Out today w/ Shane Ball, our piece in NYT.

I used to think the Trump tariffs were about not understanding economics.

Then I thought they were about disguising a shift in tax burdens.

Those may both be true; yet the dominant aim may well be power/corruption.

Link to follow.

New piece out @Bruegel_org with Ignacio García Bercero, Marilyn Pereboom, and Catherine Wolfram.

In which we describe why exempting fertilizer from the EU's CBAM will do little to nothing for farmers, while weakening an important climate policy tool. Link follows.

(5/6) And Trump has plenty of cards to play with trading partners.

(4/6) But there is also bad news.

Tariffs will continue, alongside distortion, business uncertainty, consumer costs, and rampant opportunities for corruption and rent-seeking.

(3/6) These tariffs also expire in five months, unless there is an Act of Congress. Calling the question with Congress will not be successful, especially given the fact that this is a midterm election year, affordability is front of mind, and tariffs are deeply unpopular.

(2/6) Another good and important development: the President’s tariff cudgel is weaker. An even across-the-board tariff makes it hard to play foreign governments off each other.

(1/6) In my recent piece with Maurice Obstfeld @PIIE, we describe features of today’s US tariff environment. There is good news and bad news, but it is clear that Section 122 doesn’t apply.

Most Important Good News:
The Court defended separation of powers.

Tariffs not authorized under IEEPA. 6-3 decision.

supremecourt.gov/opinions/25pdf…

Mine today..,

We need more conversations across the divide, and I can think of no better person to further these conversations than Secretary Buttigieg.

Pete Returns to Fox News youtu.be/c000vQXggH4?si… via @YouTube

The economic consequences of President Trump have puzzled many, myself included. But many Trump policies make our economy weaker in the long run, even as they create short run disruption. An excellent read from @bencasselman in today's NYT (link follows).

@FT editorial board's advice on Greenland. Link follows.

At least these small businesses are standing up for the integrity of the constitution (and demonstrating the harmful economic effects of tariffs).

nytimes.com/live/2025/11/0…

Excellent piece from @D_A_Irwin, including this Reagan quote: “We should beware of the demagogues who are ready to declare a trade war against our friends — weakening our economy, our national security and the entire free world — all while cynically waving the American flag.”

(1/2) My new column with Maurice Obstfeld in VoxEU argues that the broad tariffs of the Trump administration are not well suited to tax policy, macroeconomic, or other aims.

(7/7) For more on a comparison of relevant climate policy actions for the United States, see this recent work:
papers.ssrn.com/sol3/papers.cf…

ceepr.mit.edu/wp-content/upl…

(5/7) Further, climate policy *inaction* is regressive, harming poorer counties & households disproportionately. Poorer counties are more exposed to risks like wildfire particulates; the higher costs of home insurance & cooling are a larger share of income for poorer households.

(4/7) In the U.S., natural disasters are far more consequential than heat, for both costs and mortality risks. Increased particulate matter from smoke causes more deaths than heat (cold deaths fall); home insurance price increases are more important than higher cooling costs.

(3/7) When it comes to climate change, “blue” counties and “red” counties suffer similarly, with slightly higher costs for Trump-voting counties in comparison to Harris-voting counties.

(2/7) Guided by the literature, we examine several key vectors through which climate inaction affects households. Overall, household damages total nearly $600 by one estimate, and damages reach about $900 for ten percent of households.

Paper: brookings.edu/articles/who-b…

🧵 (1/7) With Chris Knittel and Catherine Wolfram, happy to announce our new paper on “Who Bears the Burden of Climate Inaction?”, posted today for the BPEA conference @BrookingsInst.

We find large climate cost impacts that vary by both geography and income.

(7/8) Together with the OBBBA, this fiscal switch of lower income tax revenues, higher tariff revenues, and spending cuts targeting poorer Americans will leave most Americans with lower after-tax incomes.

(6/8) In terms of progressivity, tariffs are far less progressive than the income tax; they harm poor and middle-class Americans more than rich Americans for the simple reason that they fall on consumption, not savings, and savings rates increase with income.

(5/8) In terms of efficiency, tariffs perform poorly relative to other tax instruments, for reasons discussed at length in the paper. At current levels, efficiency losses approach one third of revenue raised.

(4/8) Once accounting for mechanical offsets, our revenue findings are compatible with recent 10-year estimates of tariff revenues, but readers should note these studies are not strictly comparable, and exemptions and evasion might reduce revenues further.

(3/8) In terms of revenue, we calculate tariff “Laffer curves” under multiple modeling assumptions, finding that tariff revenues peak at a level far short of what it would take to replace (or even dramatically reduce) income tax revenues.

(2/8) While tariffs have long been employed for various narrow aims, their use in today’s US economy is far more significant. Tariffs are a tax. In our paper, we evaluate the use of tariffs by broad tax policy criteria: revenue, efficiency, progressivity, and tax administration.

🧵 (1/8) My new working paper with Maurice Obstfeld, “Tariffs as Fiscal Policy”, was just posted today @PIIE. Within, we evaluate the new role that tariffs are playing in the US economy.

(5/6) Price impacts on key materials would be modest, with minimal consumer effects.

Also, a graduated price approach would allow low- and middle-income countries to join fairly, backed by technology transfer, finance, and capacity-building.

(4/6) Using 2 models, the report's analysis shows that: a climate coalition could cut emissions 7x more than current policies — equal to Canada’s annual emissions.

It could also raise nearly $200 billion per year in revenues, mostly from domestic carbon pricing.

(3/ ) Over 80% of emissions in the steel, cement, aluminum and fertilizers industries are *already* covered by existing or planned carbon pricing systems. These industries account for over 20% of global carbon emissions.

🧵 (1/6) Huge congrats to Catherine Wolfram and team the release of the Flagship Report of the Global Climate Policy Project at Harvard and MIT Working Group on Climate Coalitions on "Building a Climate Coalition: Aligning Carbon Pricing, Trade, and Development."

Because the world needs more abusive tax shelters...

Trump Administration Halts I.R.S. Crackdown on Major Tax Shelters nytimes.com/2025/09/09/bus…

Something to bear in mind when spending time on this site. Social media and polarization are... related. Nice graphic from @FinancialTimes.

Voters are connecting the dots between ruinous tariff/deportation policies and their own cost of living concerns. Congress would be wise to listen. As would the President. Link follows.

US Appeals Court rejects Trump Administration's IEEPA tariffs.

The IEEPA tariffs are about 70 percent of them, by revenue.

Excellent commentary on the short and medium run risks surrounding Fed independence, from @jasonfurman.

So OBBB is soon law. My thoughts in yesterday's blog.

piie.com/blogs/realtime…

Just out @PIIE, my discussion of the three fundamental failures of the OBBB.

(There are more, but I focus on the big ones.)

See next post for details.

(3/3) The goal is to help policy makers envision a climate coalition centered on carbon pricing.

Stay tuned for the final report in September. This interim report was released in conjunction with the 4th International Conference on Financing for Development.

(1/3) While we are waiting on the R bill that will further set back US action on climate, happy to announce the release of the Interim Report on "Building a Climate Coalition: Aligning Carbon Pricing, Trade, and Development." (Link below.)

With borrowing costs, this bill with add $4 trillion in deficits. If new temporary provisions are made permanent, it will cost even more.

It will cut the safety net, and the benefits are skewed toward the top. Alongside tariffs, the bottom 80% of population will be worse off.

The National Debt Is Already Causing Bigger Problems Than People Realize

Yep, and $4 trillion in new deficits won't help.

(link follows next post)

To reveal the underlying values, just look at the bill. Both Senate and House bill have large, expensive tax breaks for the foreign income of US MNCs, even as the Administration supposedly rails against offshoring, as @SenWhitehouse points out in a new oped. Link follows.

(1/4) New @BudgetHawks analysis of Senate bill shows that it is even more fiscally profligate than the House version. What are the risks of such high deficits and debt?

Curious about the economic consequences of Trump's second term?

Download this free @cepr_org book with many short essays (including my own piece on tariffs) across fields of economics.
(Link in next post.)

@B_Eichengreen on the lessons of history and the risks associated with unfettered stablecoin proliferation. Link in next post.

(1/5) 🧵 Trump’s fiscal switch is highly evident in the today’s @The_Budget_Lab analysis which shows clearly how the combination of OBBB and tariffs under Trump harm the bottom 8 deciles, leave the 9th decile indifferent, and benefit only the top decile.