Monday, March 28, 2011  March 24 NYU Tax Policy Colloquium (with
Kirk Stark)  Last Thursday at the colloquium, Kirk Stark
presented his paper, Bribing the States to Tax Food, along with
an earlier (and recently published) companion paper, The Federal
Role in State Tax Reform.  The earlier piece discusses state
revenue volatility, arguably a contributing factor to the
horrendous fiscal problems that a number of states and
localities currently face. In fat times they tend to ramp up
spending, but in lean times they may find it hard (or
undesirable) to shoot back down again. An appealing normative
approach might be "smoothing" (e.g., have the same teacher to
child ratio in a fat year as a lean one), along with updating as
one's long-term revenue expectations change but without
following the business cycle as such. (And with countercyclical
macro policy left to the federal level, leaving aside the
political problems we've recently seen with trying to execute it
there.) This is what one would expect to observe wit