In the News: Leonard Burman

Len Burman, Paul Volcker Chair in Behavioral Economics, suggests eliminating a provision of current law in which assets that increase in value can go essentially untaxed across generations as a way to reduce inequality.

"If President Trump really wants to cut taxes on capital gains, he should go to Congress with a plan to do so directly, and not through a poorly designed back-door regulatory scheme," writes Leonard Burman, professor emeritus of public administration and international affairs.

Len Burman, Paul Volcker Chair in Behavioral Economics, says there are potential legal issues with characterizing taxes one owes to the state as a gift to charity.

"We won’t really know the effect of the tax plan for several years when we have data that we can try to measure the effect of the tax plan separate from other factors going on in the economy at the same time," says Len Burman, Paul Volcker Chair in Behavioral Economics.

"If widely adopted and successful, the plans could significantly reduce federal revenue and most of the benefits would go to taxpayers with high incomes," says Len Burman, Paul Volcker Chair in Behavioral Economics.

"Radical simplification would be possible, but this bill is not radical simplification, regardless of how may props they use," says Len Burman, Paul Volcker Chair in Behavioral Economics, about the GOP tax bill.

"This is not a burden increase. People who qualify for premium tax credits and drop insurance are better off doing it (their cost of insurance doesn't change). Worse off are those who have incomes too high to qualify for credits and would face much higher premiums," says Len Burman, Paul Volcker Chair in Behavioral Economics.

If Gary Cohn, the White House chief economic adviser, "were trying to make a parody of the rich people’s argument for the estate tax, he couldn’t have done a better job,” says Leonard Burman, professor of public administration and international affairs and Paul Volcker Chair in Behavioral Economics.

A paper co-authored by Leonard Burman, professor of public administration and international affairs, found that the taxable share of U.S. corporate stock had fallen from 80 percent in 1965 to a mere 24 percent in 2015. The explanation for the sharp decline lies in the proportion of shares held by tax-exempt retirement accounts or by foreigners, who generally escape U.S. tax on dividends.

"Social Security is wildly popular," says Leonard Burman, professor of public administration and international affairs. "People support the regressive payroll tax because they like what it pays for and because it’s automatically withdrawn from their paychecks, unlike the reviled income tax that requires an obvious and painful annual reckoning."

According to Leonard Burman, professor of public administration and international affairs, "enlightened policy should aim to make work pay and help workers adapt. Better education and training will help. But a permanent solution would create a mechanism to automatically translate economic growth into higher wages."

According to Leonard Burman, professor of public administration and international affairs, "Trump’s 'tax reform plan' isn’t tax reform and it isn’t a plan. To borrow an analogy from the president’s favorite sport, he should take a mulligan and swing again at tax reform after he’s brought on a tax policy team and they’ve had a chance to do their homework."

“I think at the end of the day, you’re not going to see either the Trump or the House GOP tax plan. It will look a little more like George W. Bush’s 2001 tax bill—mostly just rate cuts,” says Leonard Burman, Paul Volcker Chair in Behavioral Economics.

"An Analysis of the House GOP Tax Plan," co-authored by Len Burman, Paul Volcker Chair in Behavioral Economics, examines the House GOP tax reform blueprint, which would significantly reduce marginal tax rates, increase standard deduction amounts, repeal personal exemptions and most itemized deductions, and convert business taxation into a destination-based cash flow consumption tax.

Leonard Burman, professor of public administration and international affairs, opines that President Reagan "got people excited about the idea of fixing our broken tax system. It’s hard to imagine President Trump doing that.”