Biological aging imposes significant socio-economic costs, increasing health expenses, reducing productivity, stalling population growth and straining social systems, culminating in reduced economic activity. We draw insights from interviews with 102 scientists working on aging biology and develop four macroeconomic simulations: slowing brain aging, slowing reproductive aging, and an overall delay in biological aging (including the novel concept of replacing aging). Our model is calibrated to represent how slowing biological aging manifests in the US economy and population through the channels of mortality, fertility, and productivity rates by age. We simulate the economic and demographic impacts of near-future advancements in aging science. We find that a one-year delay in brain aging alone could add $201 billion annually to US GDP. A one-year delay in overall biological aging could boost GDP by $408 billion annually, yielding $27.1 trillion in net present value in the long run. ### Competing Interest Statement The authors have declared no competing interest.

This study uses administrative tax return and audit data to examine the effects of three Internal Revenue Service (IRS) enforcement policies focused on large corporations. The IRS Large Business and International Division’s monitoring threshold increased from $5 million in 2000 and 2001 to $10 million in assets starting in 2002. Starting in tax year 2004, the IRS requires C corporations with at least $10 million in assets to file Schedule M-3, which reconciles book and taxable incomes. In the same year, audit rates jumped discretely at the $10 million asset threshold. We find that C corporations strategically bunch below this threshold in most years from 2004 to 2010. Using variation in audit rates around the $10 million asset threshold over time and the staggered Schedule M-3 implementation dates for C corporations and S corporations, our evidence collectively suggests C corporations bunch below the threshold primarily to avoid higher audit rates. A triple difference estimator shows that the enforcement notch at $10 million in assets has persistent effects on corporation size.

This paper summarizes the significant changes to the taxation of business income in the United States over the last 25 years and how the resulting policy variation has helped inform research on business taxation. The survey of research on the topic covers investment incentives, international taxation, corporate financial policy, issues with pass-through businesses, compliance, enforcement, and other related topics.

Legal services, such as tax preparation, claim to help clients better comply with the law while maximizing their benefits. We test this claim using data from about 135,000 random audits conducted by the US Internal Revenue Service between 2006 and 2014. Supplementing this nationally representative cross section of data on tax compliance with an instrumental-variable approach, we find that tax preparers actually reduce compliance, increasing taxpayers' underreporting of income by roughly $3,900 per tax return. However, we find that volunteer tax preparers assisting low-income taxpayers have compliance rates similar to self-prepared returns, suggesting that differences in clientele or pecuniary incentives can affect the relationship between tax-preparation services and tax compliance.

We aim to understand fundamental preferences over fairness and cooperation embedded in artificial intelligence (AI). We do this by having a large language model (LLM), GPT-3.5, play two classic games: the dictator game and the prisoner’s dilemma. We compare the decisions of the LLM to those of humans in laboratory experiments. We find that the LLM replicates human tendencies towards fairness and cooperation. It does not choose the optimal strategy in most cases. Rather, it shows a tendency towards fairness in the dictator game, even more so than human participants. In the prisoner’s dilemma, the LLM displays rates of cooperation much higher than human participants (about 65% versus 37% for humans). These findings aid our understanding of the ethics and rationality embedded in AI

We employ a large panel of US income tax returns for the period 1987–2018 to extensively characterize and quantify business income risk. Our findings show business income to be much riskier than labor income. Business income is less persistent and is characterized by higher tail risk. Furthermore, when compared to labor income, heterogeneity across households is less important in explaining the cross-sectional variation in business income, and within-household income variation is more important. Our results underscore the income risks business owners face and provide stylized facts and parameter estimates useful for quantitative macroeconomic models and policy analysis. (JEL D31, G51, H24, J23, J31, K34, L26)

A culture of despair represents a negative feedback loop, where perceptions of high economic inequality result in declines in expectations of future success and, in turn, lower probabilities of favorable outcomes. We focus on the first link in that proposed causal chain, the relationship between economic inequality and expectations. Using a panel of youths and geographic variation in inequality, we find a link between inequality and expectations regarding educational outcomes. Our findings show that youth of low socioeconomic status (SES) are negatively affected by inequality. In short, we find support for the theory of a culture of despair.

This paper provides a technical description of the overlapping generations model used by the Joint Research Centre to analyse tax policy reforms, including in particular pension and demographic issues. The main feature of the EDGE-M3 model lies in its high level of disaggregation and the close connection between microeconomic and macroeconomic mechanisms which makes it a very suitable model to analyse the redistributive impact of policies. EDGE-M3 features eighty generations and seven earnings-ability types of individuals. To facilitate a realistic dynamic population structure EDGE-M3 includes Eurostat’s demographic projections. In terms of calibration, the EDGE-M3 family of overlapping generations models is heavily calibrated on microeconomic data. This al-lows the introduction of the underlying individuals’ characteristics in a macro model to the greatest extent possible. In particular, it includes the richness of the tax code by means of income tax and social insurance contribution rate functions estimated using data from the EUROMOD microsimulation model. This feature allows in particular a close connection between the macro and the micro model. In addition, the earnings profiles of the seven heterogeneous agent types are estimated using survey data. Finally, the labour supply, bequests and consumption tax calibration are all done using detailed microeconomic data, making the model highly suitable for the analysis of intra- and intergenerational analysis of tax policy.

Professional tax preparation services claim to help clients better comply with the law while paying lower tax. We test this claim using data from random audits conducted under the IRS National Research Program to compare tax compliance between filers who self-prepared returns and those who used a preparation service. Since the taxpayers’ decision to use tax preparation services is endogenous, we use an instrumental variables approach and instrument for the choice of preparer with measures of the diffusion of tax preparation services within a ZIP code. We find that professional tax preparers reduce rates of tax compliance. On average, returns that were filed with a professional preparer have audit adjustments that are roughly $3,100 larger than similar self-prepared returns. As a test of whether incentives in the professional tax preparation industry might drive increases in non-compliance, we also consider returns filed using preparers in the Volunteer Income Tax Assistance (VITA) programs. Compliance rates amongst VITA-prepared returns are no different than among self-prepared returns, suggesting that different motivations among professional tax preparers may be the cause of the differential compliance rates.

The Italian population is shrinking and ageing. The old-age dependency ratio is projected to rise considerably over the coming decades from 33.7% in 2015 to 61.2% in 2060. The Monti’s government of 2011-13 has introduced some measures to address these issues debt sustainability projections from the European Commission point to significant pressure on Italy’s public finances in the medium-term. In this paper, we evaluate the macroeconomic and intergenerational impact of realistic demographic trends in Italy with a new overlapping generations model named OG-ITA, which is heavily inspired by the open-source model for the United States, OG-USA. Key features of the model include an overlapping generations structure that considers individuals of ages 21 to 100, who are split into seven income-earning ability types. By integrating microeconomic data and simulations from the EUROMOD microsimulation model into the overlapping generations macro model, we can address the dynamic effects of fiscal policies that would counteract the fiscal challenges of ageing populations. The demographic change effects are obtained by first running a standard version of the model with demographic projections and comparing them with a model version with fixed (as of 2015) rates of population growth. We furthermore simulate pension reforms, including raising the age at which one receives a public pension. The results confirm the desirability of combining tax and pension reforms to address the challenges of ageing societies, particularly in the case of Italy. The simulations demonstrate the balance between supporting growth and prosperity over the short run and avoiding excessive burdens for the future.

This article proposes a method for integrating individual effective tax rates and marginal tax rates computed from a microsimulation (partial equilibrium) model of tax policy with a dynamic general equilibrium model of tax policy that can provide macroeconomic analysis or dynamic scores of tax reforms. Our approach captures the rich heterogeneity, realistic demographics, and tax-code detail of the microsimulation model and allows this detail to inform a general equilibrium model with a relatively high degree of heterogeneity. In addition, we propose a functional form in which tax rates depend jointly on the levels of both capital income and labor income.

We examine the impact of enforcement on subsequent compliance behavior by taxpayers. Exploiting waves of randomized audits by the Internal Revenue Service from 2006 to 2009, we find three long-run responses by taxpayers. First, audits increase tax payments substantially in following years, but this effect is short-lived when third-party reporting is not available. Second, taxpayers with high income volatility revert to their preaudit behavior quickly. Third, sophisticated taxpayers are affected less by enforcement. These responses reveal how taxpayers perceive the enforcement risk and change their noncompliance according to the dynamics of the information barrier between them and the enforcement agency.

We consider the question of how pass-through businesses respond to differentials in tax treatment across sources of income. In particular, we use federal tax return data from partnerships and S corporations and a synthetic control methodology (SCM) to analyze the 2012 income tax reforms in Kansas to see how pass-through businesses respond to preferential rates on pass-through business income. We find no effect on economic activity proxies such as gross receipts, capital investment, or employment. We do find that partnerships, but not S corporations, reduced the amount of guaranteed payments to partners when the preferential rate on such payments was repealed.

The Internal Revenue Service (IRS) devotes substantial resources to audit tax returns of earned income tax credit (EITC) claimants, but little is known about the deterrence effect of these audits. Our paper examines the impact of this tax enforcement on subsequent individual taxpaying among those who claimed an EITC. Using evidence from randomized IRS audits during the 2006–2009 period, we find that EITC participants who are audited show much larger increases in reported income in subsequent years, both compared to a control group of EITC filers and compared to audited filers who were not EITC claimants. We find behavioral impacts on the extensive margin as well, with the probability of a filer claiming an EITC dropping by over 6 percentage points within four years following the audit, as well as changes in filing status and the reported number of dependents.

A cash flow tax, such as that proposed by the House Republicans, eliminates the tax-induced bias between debt and equity financing and also places zero tax burden on marginal investments. I simulate the effects on such a cash flow tax on the investment activity and financial policy of U.S. corporations using a structural model of corporate finance. The findings point to significant increases in investment and movement towards equity financing by these firms. The effects of the cash flow tax in partial equilibrium are compared to those obtained in a general equilibrium model, and its found that while the qualitative results hold, price changes significantly dampen the responses of corporations to the reform. keywords: Corporate finance, Firm dynamics JEL classification: D21, E22, G11, H25 ∗Darla Moore School of Business, University of South Carolina, Department of Economics, DMSB 427B, Columbia, SC 29208, (803) 777-1649, jason.debacker@moore.sc.edu

Using a long panel of youths, we establish a causal link between parental expectations regarding education and educational attainment. In particular, we use an instrumental variables approach to find that the child's chances of obtaining a high school or college degree are increasing in the parent's expectations of the likelihood of these events. We then use differences between the objective likelihood of a. child's educational attainment and the parents' subjective probabilities to consider the hypothesis that lower educational outcomes among certain groups are driven by a "culture of despair," where children are low-achieving because they are expected to underachieve. While we do find that children from households with lower levels of income, wealth, and parental education are less likely to attain high school and college degrees, we reject the hypothesis that this is driven by low subjective expectations of educational success. Rather, we find that parents from disadvantaged groups have expectations for the educational outcomes of their children that differ more from the statistical likelihood of these outcomes than do parents of children from advantaged households. That is, we find that parents in more disadvantaged households are more optimistic about the educational outcomes of their children than those from more advantaged households. (C) 2017 Elsevier B.V. All rights reserved.

In 2012, Kansas undertook a large-scale tax reform that excluded pass-through business income from individual taxation. In theory, these changes enhance the incentives to undertake more real economic activity, such as new business formation or expansion of existing businesses. The reform also increased the incentive to avoid taxation by recharacterizing income sources. This paper provides evidence of these effects using federal administrative income tax data spanning 2010–2014. Several findings suggest that, on both the extensive and intensive margins, the pass-through exclusion led to increased tax avoidance in the form of income recharacterization and shifting of effort from activities compensated through wages to those compensated with business income. We do not find much evidence, however, that the Kansas reform led to increases in real economic activity.

Using a long panel of roll call voting data, I find that “flip‐flopping” senators face significant electoral costs when changing positions. In models of electoral competition, as the costs to candidates changing position approach zero, the equilibrium prediction is the convergence of platforms. Such convergence is at odds with empirical observation. Using a dynamic, structural model of candidate positioning, I identify the nature of the costs associated with changing position that may result in such non‐convergence. (JEL D72, C61, H11)

We study how cultural norms and enforcement policies influence illicit corporate activities. Using confidential Internal Revenue Service (IRS) audit data, we show that corporations with owners from countries with higher corruption norms evade more tax in the U.S. This effect is strong for small corporations and decreases as the size of the corporation increases. In the mid-2000s, the United States implemented several enforcement measures to increase tax compliance. We find that these enforcement efforts were less effective in reducing tax evasion by corporations whose owners are from corrupt countries. This suggests that cultural norms can be a challenge to legal enforcement.