On April 23, 2025, IMPA and the Department of Economics hosted a timely conversation about the future of U.S. economic policy — and the democratic and institutional values that underpin it.
Featured Participants
University Professor, Columbia University; Nobel laureate in Economics; Founder and Co-President, Initiative for Policy Dialogue; Board Member, IMPA
Theodore A. Wells ’29 Professor of Economics, Princeton University; Co-Director, Griswold Center for Economic Policy Studies & Princeton Program in Public Finance
Senior Fellow, Brookings Institution & Tax Policy Center
Assistant Professor of Economics, American University; Co-director, IMPA
Chief of Policy and Advocacy at the Groundwork Collaborative
Summary
The event opened with remarks by Dr. Gonzalez, co-director at IMPA, who framed the ongoing debate around tax reform as an opportunity — not just for policy adjustment but for a broader societal reckoning on values such as equity, resilience, and power.
Prof. Joseph E. Stiglitz provided a sweeping overview of how the justification and design of the U.S. tax system has evolved over the last half century. He emphasized that while taxes are often viewed as distortionary, they can be corrective when addressing market failures – particularly in today’s context of increasing inequality and climate externalities. He argued that modern economic realities, such as the rise of monopoly rents and under-taxation of capital income (for example, through preferential treatment of dividends and capital gains), have not only strengthened the justification for government intervention through taxes but also demand new methods and frameworks for doing so effectively.
Prof. Stiglitz also critiqued the U.S. corporate tax system, suggesting that it is better understood as a tax on pure profits, especially monopoly rents, and not on productive capital itself. He pointed to empirical evidence showing that higher corporate taxes do not necessarily deter investment. A more progressive and corrective tax system, he argued, is both economically justified and politically urgent – especially given how technological and financial changes have magnified inequities. He further highlighted issues like the under-enforcement of IRS regulations and the political underpinnings of tax design.
Dr. Ilyana Kuziemko built “pre-distribution” – policies that reduce inequality before taxes even enter the picture. Drawing on her research, she emphasized that Americans often prefer policies like job guarantees and public health care systems over simple redistribution through the tax system. However, these “predistributive” strategies are less favored by the highly educated, potentially due to class-based threats to their own status. She highlighted areas like financial regulation, labor unions, and public education funding as critical sites for such interventions.
Dr. Vanessa Williamson, previewed her forthcoming book and its connection to current events. She focused on the intersection of taxation and democracy, describing how IRS underfunding – especially in enforcement targeting high-income earners – has weakened institutional capacity and eroded fairness. She noted disturbing instances of data misuse and a shrinking IRS workforce, which undercuts trust in government.
The discussion concluded with a Q&A that explored the political and social barriers to implementing large-scale public programs like single-payer health care, underscoring the importance of building public trust and demonstrating government effectiveness before proposing ambitious reforms. Together, the panelists conveyed a unified message: tax reform must not only address fiscal needs but also confront deeper structural inequities and institutional failures. Their discussions underscored the growing urgency for a modernized tax framework that supports both economic resilience and democratic legitimacy.