"This past week, wrangling over the Bush-era tax cuts has riveted Washington. The spectacle is only the latest round in an endless debate, one that has launched innumerable op-eds, cacophonous talk-show segments, and dinner-table quarrels. As conservatives see it, higher tax rates hurt job creation as well as undercut the incentive for entrepreneurship and hard work. Many liberals cast these downsides as modest, while stressing the value of tax revenue. Will tax cuts bring a bloom of free enterprise — or exploding deficits? Economists have studied the issue ad nauseam, but firm conclusions are elusive. It is difficult to tease out cause and effect, because at any given time, economic conditions other than taxation also shape behavior.
If only there were a scientific way to determine the real impact of taxation on industriousness, labor supply, and innovation.
According to some scholars, there is. Randomly assign a representative sample of the population — say, 10,000 taxpayers — a lower tax rate, and see what happens. Did these Americans, on average, behave any differently than their counterparts? Did they work longer hours or more jobs, start more businesses, hire more employees?
In other words, test government policies using the same technique — randomized controlled trials — used to test new drugs. A growing chorus of legal scholars, economists, and political scientists believes that such trials should be conducted to evaluate a wide range of laws: gun control, safety and environmental regulations, election reforms, securities rules, and many others. And some believe that we are ethically obligated to do this, because laws affect our lives so pervasively. Understanding the true costs and benefits of legislation, they say, is essential to making good policy — and we may know much less about our own laws than we think."
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