While "'Tis impossible to be sure of any thing but Death and Taxes" Bullock (1716), the structure of taxes and their burden have undergone large and frequent changes over time. We provide a brief history of U.S. federal income tax reforms since the 1960s, calculate effective federal income tax rates for each wave of the Panel Study of Income Dynamics, and discuss how effective taxation changed from 1969 to 2016. We show that most tax regimes are short-lived and that the variation in taxes over time and across groups is large. We also use an estimated dynamic model of couples and singles to show that the various tax regimes that we estimate imply very different labor market and saving behavior. These findings stress the importance of studying and modeling tax changes over time and across groups.

This paper examines the reliability of survey data for research on pass-through businesses activities. Pass-through businesses account for over half of all net income to businesses in the United States and most of the rise in top income shares. We examine all surveys that ask questions about these businesses and compare outcomes across surveys and with aggregated administrative data. We document large inconsistencies in business incomes, receipts, and number of returns. We highlight problems due to non-representative samples and measurement errors. Non-representativeness is reflected in undersampling of businesses, especially in categories of owners with low total incomes. Measurement errors arise because respondents do not refer to relevant documents when answering survey questions and also because some questions are framed in a manner that is confusing to respondents. Finally, we discuss measurement issues for statistics of interest, such as returns and valuations of ongoing private businesses, that are inherently latent and cannot be recovered using either survey or administrative data.

Prior to the mid-1980s, labor productivity growth was a useful barometer of the U.S. economys performance:it was low during economic recessions and high during expansions. Since then, labor productivityhas become significantly less procyclical. In the recent recession of 20082009, labor productivity actuallyrose as GDP plummeted. These facts have motivated the development of new business cycle theoriesbecause the conventional view is that they are inconsistent with existing business cycle theory. In thispaper, we analyze recent events with existing theory and find that the labor productivity puzzle is muchless of a puzzle than previously thought. In light of these findings, we argue that policy agendas arisingfrom new untested theories should be disregarded.

The basic neoclassical growth model accounts well for the postwar cyclical behavior of the U.S. economy prior to the 1990s, provided that variations in population growth, depreciation rates, total factor productivity, and taxes are incorporated. For the 1990s, the model predicts a depressed economy, when in fact the U.S. economy boomed. We extend the base model by introducing intangible investment and non-neutral technology change with respect to producing intangible investment goods and find that the 1990s are not puzzling in light of this new theory. There is compelling micro and macro evidence for our extension, and the predictions of the theory are in conformity with U.S. national products, incomes, and capital gains. We use the theory to compare current accounting measures for labor productivity and investment with the corresponding measures for the model economy with intangible investment. Our findings show that standard accounting measures greatly understate the boom in productivity and investment.

During the 1990s, market hours in the United States rose dramatically. The rise in hours occurred as gross domestic product (GDP) per hour was declining relative to its historical trend, an occurrence that makes this boom unique, at least for the postwar U.S. economy. We find that expensed plus sweat investment was large during this period and critical for understanding the movements in hours and productivity. Expensed investments are expenditures that increase future profits but, by national accounting rules, are treated as operating expenses rather than capital expenditures. Sweat investments are uncompensated hours in a business made with the expectation of realizing capital gains when the business goes public or is sold. Incorporating expensed and sweat equity into an otherwise standard business cycle model, we find that there was rapid technological progress during the 1990s, causing a boom in market hours and actual productivity.

Expensed investments are expenditures financed by the owners of capital that increase future profitsbut, by national accounting rules, are treated as an operating expense rather than as a capitalexpenditure. Sweat investment is financed by worker-owners who allocate time to their businessand receive compensation at less than their market rate. Such investments are made with theexpectation of realizing capital gains when the business goes public or is sold. But these investmentsare not included in GDP. Taking into account hours spent building equity while ignoring the outputintroduces an error in measured productivity and distorts the picture of what is happening inthe economy. In this paper, we incorporate expensed and sweat equity in an otherwise standardbusiness cycle model. We use the model to analyze productivity in the United States during the1990s boom. We find that expensed plus sweat investment was large during this period and criticalfor understanding the dramatic rise in hours and the modest growth in measured productivity.

This article describes changes in the number of average weekly hours of market work per person in the United States since World War II. Overall, this number has been roughly constant; for various groups, however, it has shifted dramatically from males to females, from older people to younger people, and from single- to married-person households. The article provides a detailed look at how the lifetime pattern of work hours has changed since 1950 for different demographic groups. This article also documents several factors that lead to the reallocation of hours worked across groups: increases in relative wages of females to males; technological innovations that shift female labor from the home to the market; increases in Social Security benefits to retired workers; and changes in family structure. The data presented are based on those collected by the U.S. Bureau of the Census during the 19502000 decennial censuses.