Wharton PPI publishes Issue Briefs tackling concerns that are varied but share one common thread: they are central to the economic health of the nation and the American people. These are nonpartisan, knowledge-driven documents written by Wharton and Penn faculty in their specific areas of expertise.
PublicationThe Policy Trajectories of Autonomous Vehicles(2018-05-30) MacDuffie, John PaulAutonomous Vehicle (AV) technology promises to dramatically reduce deaths and economic losses from crashes caused by human error, increase mobility for those with disabilities, and revolutionize the auto industry. Yet legislation to facilitate oversight of the development and deployment of AVs is stalling in Congress. Professor John Paul MacDuffie offers a primer on AV technology policy, and discusses strategies for addressing safety and other public concerns while still facilitating AV innovation in the private sector. PublicationOptions Facing Congress in Renewing the Terrorism Risk Insurance Act(2014-07-01) Kunreuther, Howard; Michel-Kerjan, Erwann; Kunreuther, Howard; Michel-Kerjan, ErwannThe Terrorism Risk Insurance Act (TRIA) is set to expire at the end of 2014 and is currently under debate in Congress. Renewing TRIA may limit the amount of disaster relief the federal government would contribute after a terrorist attack, but the different options under which TRIA might be renewed carry implications for how losses from any attack would be spread between commercial policyholders, insurers, and taxpayers. PublicationThe Tax Cuts and Jobs Act’s Incorporation “Incentive”(2019-10-28) Knoll, Michael S.; Knoll, Michael S.Many observers have asserted that the reduced corporate tax rate instituted by the 2017 Tax Cuts and Jobs Act (TCJA) has transformed entity choice for business owners, incentivizing owners of businesses structured as sole proprietorships or passthrough entities to incorporate their businesses and to use these new corporations as pocketbook investment vehicles to invest in and hold portfolio investments, substantially reducing wealthy individuals’ tax obligations and Treasury’s tax collections. This brief offers a different view, and discusses why predictions of widespread conversions to the corporate form at a substantial cost to the fiscal position of the U.S. are overstated. The brief explores the various purported tax advantages to incorporating, both when business owners are looking to invest substantial profits in portfolio assets, as well as when retained earnings are reinvested in the business and produce ordinary income. PublicationAfter Debt: A Path Forward for Puerto Rico(2016-04-01) Skeel, David A; Skeel, David AThis Issue Brief summarizes events surrounding the current debt crisis in Puerto Rico and presents a two-step plan for restructuring Puerto Rico’s debt and encouraging more effective governance. This plan draws extensively on the previous experiences of debt crises in municipalities on the U.S. mainland. Step one entails the creation of a financial control board (FCB) for Puerto Rico, monitored by the U.S. federal government but involving significant Puerto Rican representation. Step two would be for Congress either to craft a restructuring framework applicable to all of America’s territories, or to extend the existing bankruptcy laws in Chapter 9 of the Bankruptcy Code (with modifications) to Puerto Rico and its municipalities. PublicationNot the Only Game in Town: The Complementary Roles of Public & Private Environmental Governance(2015-10-01) Light, Sarah E; Light, Sarah EThis Brief focuses on ways in which private firms are adopting tools that mirror public law instruments—such as internal carbon fees (similar to a public carbon tax) and private cap-and-trade schemes (like public emissions trading schemes)—to reduce greenhouse gas emissions and address climate change. These private case studies suggest that significant progress in reducing emissions can come from embedding emissions reduction programs into core business strategy. Moreover, these case studies indicate that climate change, as a global issue, requires public regulators to recognize the potential contributions of global multinational firms. PublicationThe Issue at the Heart of America’s Great Unbanking(2017-05-01) Servon, LisaConsumer protection regulation targets services like payday lenders under the presumption that these services can be predatory and associated with high costs. Yet an increasing number of Americans are utilizing such alternative financial services and joining the ranks of the “unbanked” and “underbanked.” Altering this status quo and promoting greater middle-class stability will require that policymakers foster innovation in the development of high-quality, transparent, and consumer-oriented financial services within the mainstream banking system. PublicationThe Danger of Crowding Out the Crowd in Equity Crowdfunding(2014-08-01) Mollick, Ethan; Mollick, EthanWith regard to equity crowdfunding, too many policymakers and regulators are focusing their attention on the “funding” piece of crowdfunding, overlooking the fact that the true revolutionary power of crowdfunding lies instead in the crowd. PublicationIs There a Future for Employer- Sponsored Health Insurance?(2015-03-01) Pauly, Mark V; Pauly, Mark VOver the next five years, the effects of the ACA on employer-sponsored insurance will be modest. In the longer run, there is greater potential for disruption, depending on how firms respond to the subsidies available on the exchanges for low-wage workers. In all, only about 15% of the workforce likely will be affected. The impacts of the ACA on firms will vary widely based on three main factors: 1) the size of the firm, 2) the average compensation within the firm, and 3) the degree to which wages within the firm are homogenous or heterogeneous. Keeping in mind that employees pay for all their health insurance, group insurance is not intrinsically superior to private exchanges, and cost trumps choice for consumers, firms will choose the option that maximizes benefits to their workers, takes advantage of the best available subsidies while avoiding tax penalties, and results in the lowest administrative costs. Making all low-wage workers eligible for the same subsidies, whether they acquire coverage on the exchanges or in group plans, would be reasonable and involve less distortions. PublicationOptimizing Outcomes on the Health Insurance Exchanges(2013-11-01) Baker, Tom; Baker, Tom; Volpp, Kevin G; Starc, Amanda; Volpp, Kevin GThe success of the new health insurance exchanges will depend greatly on the quality of the enrollment decisions that consumers make. Choosing the wrong insurance product can translate into billions of dollars in wasteful spending at the national level. Faculty at the University of Pennsylvania have contributed to several studies outlining important ways that the exchanges can be made to work better for consumers—and for the larger economy. PublicationAddressing Personal-Income-Tax Manipulation with Tools from Psychology(2017-10-01) Rees-jones, Alex; Rees-jones, AlexIn order to better understand the tax manipulation decision-making process—both legal uses of tax deductions and illegal tax evasion—this brief looks at the impact of gain/loss framing. Analysis of tax data confirms that tax decisions are influenced by “loss aversion.” For instance, taxpayers are more likely to pursue tax reduction activities when they make a loss smaller, as compared to when they make a gain larger. The brief looks at tools that policymakers have at their disposal for both deterring tax evasion and making exiting tax incentives maximally effective. The brief discusses instances when such gain/loss framing interventions might be deployed, and provides estimates around the size of the revenue responses they may generate. The author estimates that if tax filers who face losses experienced the lower motivation to manipulate shown by those facing gains, annual tax revenue would increase by $1.4 billion. Even attempts at marginal interventions, though smaller in predicted effects, might be financially worthwhile.