Features

New to This Edition

The dynamic public policy environment of the past few years required a thorough updating of most aspects of the book. All statistics, data-related tables and figures, and applications have been updated completely to reflect the most recent available data.In addition, a number of major changes were made throughout, including new examples, updating of existing chapter introductions, revisions to the Application and Empirical Evidence boxed features, and a number of new and thoroughly updated text discussions.

The signal event since the last edition of this textbook was the COVID-19 crisis and government reactions to it.  This edition has been extensively revised to reflect this new reality, as well as to incorporate a number of other updates to both public policy and our understanding of the economic and human consequences of such policies.  Revisions include:

Chapter 1 has a new introduction tied to COVID-19, highlighting the array of decisions that the government had to make and the controversies they engendered.  Section 1.3 was also edited to highlight how the policy issues arising from COVID-19 are front and center to public finance debates

Chapter 4 discusses the role of debt in the wake of COVID-19 and includes a richer discussion of the “secular stagnation” view of public debt burdens

Chapter 5 introduces a new example of positive production externalities, research and development with a corresponding new empirical application, as well as a new application on vaccine development under Operation Warp Speed

Chapter 9 includes a new introduction on political expediencies and politician positioning on energy policy, as well as a significantly updated discussion of political polarization

Chapter 10 starts with a new introduction focused on the fiscal stress placed on states and localities by COVID-19

Chapter 14 begins with a new introduction about the role of Unemployment Insurance during the COVID-19 crisis, and includes a new application on modernizing the UI system in the wake of COVID-19

Chapter 16 features a number of updates to the discussion of the ACA and the future of the U.S. health care system

Chapter 17 features an updated discussion of Universal Basic Income (UBI) in the context of the robust discussion that took place during the 2020 election

Chapter 19 includes a new introduction about corporate tax incidence in the context of the 2017 corporate tax cuts

Chapter 21 starts with a new introduction that focuses on the impact of recent tax reforms on labor supply

Chapter 22 begins with a revised introduction focused on candidate Biden’s plan to limit the tax benefits associated with retirement accounts

Chapter 23 has a new introduction focused on early evidence on the opportunity zones introduced by the 2017 tax reform, as well as a revised discussion of efforts to tax wealth

Chapter 25 incorporates an updated discussion of IRS efforts to combat tax evasion.