PUBLISHED PAPERS
Yogo, Motohiro, Andrew Whitten, and Natalie Cox (2025). Financial Inclusion Across the United States. Journal of Financial Economics.
Goodman, Lucas, Katherine Lim, Bruce Sacerdote, and Andrew Whitten (2025). How Do Business Owners Respond to a Tax Cut? Examining the 199A Deduction for Pass-through Firms. Journal of Public Economics.
*media: tax notes
Goodman, Lucas, Katherine Lim, Bruce Sacerdote, and Andrew Whitten (2023). Automatic Tax Filing: Simulating a Pre-Populated Form 1040. National Tax Journal, 76:4, pp. 805-838.
*media: vox, wall street journal
Mortenson, Jacob A., and Andrew Whitten (2020). Bunching to Maximize Tax Credits: Evidence from Kinks in the U.S. Tax Schedule. American Economic Journal: Economic Policy, 12:3, pp. 402-32.
*replication files and online appendix: here
*code: .ado file to estimate bunching
*media: wall street journal
Mortenson, Jacob A., Heidi R. Schramm, and Andrew Whitten (2019). The Effects of Required Minimum Distribution Rules on Withdrawals from Traditional IRAs. National Tax Journal, 72:3, pp. 507-542.
*online appendix: here
*winner of the 2019 Richard A. Musgrave Prize for best article in the National Tax Journal.
WORKING PAPERS
(2024) Taxing S Corporations as C Corporations
coauthors: Lucas Goodman and Quinton White
We calculate tax rates for S corporations and compare to hypothetical scenarios where they are taxed as C corporations. Using tax records from 2018 to 2021 to analyze S corporations with positive net income, we find that these firms would face a higher tax rate on average as C corporations, although a small share would face a lower tax rate. This result holds across the income distribution of firms and at nearly all firm asset levels. We find that the tax advantage of being an S corporation would shrink, but remain positive, if the Section 199A deduction for qualifying business income were repealed. We examine the sensitivity of our results to assumptions on the share of profits distributed to owners and the degree to which retained earnings are eventually taxed at the shareholder level. Averaging across firms, we find that firms face lower tax rates as S corporations even if undistributed profits fully escape taxation in the C corporation counterfactual. Weighting by net income, we find that firms would pay lower tax as C corporations only if they distribute little of their profits and retained earnings are lightly taxed at the shareholder level.
(2024) IPOs and Foreign Tax Structures
coauthors: Christine Dobridge and Becky Lester
Does going public affect the amount and type of corporate international tax planning? Using a panel of U.S. corporate tax return data from 2004 to 2018, we show that IPO completion is associated with the rapid implementation of multinational foreign tax structures central to the current international tax policy debate. Specifically, within three years after filing for an IPO, firms (i) expand their presence in low-tax jurisdictions, (ii) enter into cross-border agreements that accompany intangible asset transfers to foreign subsidiaries, and (iii) increase their level of foreign related-party payments. The effects are strongest among firms with the greatest capital market pressure to hit post-IPO earnings targets, firms with the highest R&D spending prior to the IPO, and firms that switch to more sophisticated tax advisors in the years preceding the IPO. The paper contributes to the nascent literature studying tax implications of IPOs by documenting the types and timing of specific tax strategies that enable public firms to remain lightly taxed in the post-IPO period. Furthermore, the findings imply that U.S. tax policies targeted at early-stage innovative firms are critical for retaining domestically developed intellectual property —and the income earned on such assets—for the U.S. tax base.
(2023) The Secular Decline in Private Firm Leverage
coauthors: Aymeric Bellon, Christine Dobridge, and Erik Gilje
Using firm-level administrative tax data, we document dramatic reductions in private leverage since the Global Financial Crisis, while leverage among public firms rose during this period. Changing firm characteristics are unable to account for this pattern. Younger and smaller private firms experience large declines in leverage. Reduced leverage among private firms is correlated with lower investment. The decline in private firm leverage and investment is strongly related to plausibly exogenous increases in local area bank capital requirements. Our findings suggest that banks’ credit supply plays a prominent role in explaining the leverage pattern of private firms.
(2016) Estimating the Elasticity of Broad Income for High-Income Taxpayers
coauthors: Laura Kawano and Caroline Weber
This paper precisely estimates the elasticity of broad income (EBI) with respect to the marginal net-of-tax rate for high-income taxpayers. We study the introduction of a new top income tax bracket in 2013 using a large panel of high-income taxpayers drawn from administrative tax records. Our estimation strategy – inverse probability weighting – takes into account the tremendous income volatility experienced by high-income taxpayers. We obtain an intent-to-treat (ITT) EBI of 0.013. After rescaling to account for taxpayers crossing the top income tax bracket threshold, we obtain a treatment-effect-on-the-treated elasticity that is bounded below by the ITT estimate and above by 0.034.
DORMANT PAPERS
(2019) Simulating the 199A Deduction for Pass-through Owners
coauthors: Lucas Goodman, Katie Lim, and Bruce Sacerdote
We analyze the new Section 199A deduction for pass-through income using a representative sample of administrative data from tax year 2016. We identify the taxpayers who would have benefited from the pass-through deduction had it applied in 2016. The analysis uses taxpayers' reported income, abstracting from behavioral responses, and applies key aspects of 2018 tax code. We do not attempt to model any potential economic growth spurred by 199A, nor do we model the economic incidence of the deduction. The estimated tax savings from the deduction, measured in 2018 dollars, is $34.5 billion. The majority of the beneficiaries of the deduction are in the bottom 80 percent of the income distribution. However, 60 percent of pass-through income, and 72 percent of the statutory benefit of the passthrough deduction, accrues to taxpayers in the top five percent of adjusted gross income (above roughly $208,000). Without the 199A guardrails, we estimate that this group would receive 83 percent of the statutory benefit.
(2018) The Absence of Income Effects at the Onset of Child Tax Benefits
coauthors: Jake Mortenson, Heidi Schramm, and Lin Xu
We study the effects of quasi-random variation in unearned income on labor force participation, earnings, business income, capital gains realizations, retirement savings, and unemployment compensation. To identify these income effects, we exploit an age discontinuity in the federal tax system: parents whose children are born in December of year t-1 can claim child-related tax benefits for that year, whereas otherwise-similar parents whose children are born in January of year t cannot. We use a panel of administrative tax data comprised of the universe of married households with a child born in December or January in years 2001 through 2013. Over this period, the average child tax benefit was about $1,800. Using a regression discontinuity research design, we find approximately zero treatment effects on the intensive and extensive margin for all outcome variables studied. Our results are consistent with precise zero income effects and suggest that households do not learn about (and respond to) child tax benefits in the first year they are claimed.
(2016) Optimal Taxation of Internalities: The Role of Market Incentives
This paper analyzes the optimal taxation of goods when consumers fail to maximize their own utility, imposing internalities on themselves. This can happen due to imperfect information, cognitive bias, or lack of willpower, among other causes. I relax two ubiquitous assumptions found in other work on this topic by studying imperfect competition and the incentive firms have to de-bias consumers. Contrary to standard results, I find that (i) internality correction, even if costless, is not always desirable; (ii) optimal tax rates are generally not equal to marginal internalities; and (iii) firm de-biasing incentives attenuate the optimal internality tax or subsidy.