21 July 2011  The Tax Code and Systemic Risk  Simon Johnson at
the New York Times discusses whether tax reform could make the
financial system safer, for example, by reducing tax incentives
to favor debt over equity which increases leverage in the
economy and makes firms more vulnerable to economic downturns as
a result. The topic is near and dear to my heart as I presented
on May 29, 2009 at the Law and Society Conference in Denver
entitled "This Financial Crisis Was Brought To You By The
Internal Revenue Code" on essentially the same subject.  Some
key points of my paper were these:  1. Aggregate tax rates don't
have much influence on economic growth, but incentives to engage
in one kind of economic activity rather than another good
economic substitute for that kind of activity are extremely
influential. For example, historically very specific provisions
of the law regarding which kinds of charitable giving are
entitled to tax deductions have profound influences on the
porportion of taxable gifting made by