VP Federal Tax @TaxFoundation. @StLawrenceU Alum. Arkansan. North Country NY Native. Aspiring aviation nerd. Married to @VictoriaBell. All views my own.
Farmington, Arkansas
Joined September 2011
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Garrett Watson retweeted
You can debate the magnitude of people who move for tax reasons. But if you debate the existence you lose all credibility with me. I could easily name more than a dozen people I know who have moved from high-tax jurisdictions to low-tax jurisdictions to reduce their taxes.
Garrett Watson retweeted
Good summary here, and plenty for tax watchers to engage on in 2027:
- premium tax credit expansion
- removing tariffs
- LIHTC
- CTC and EITC
- AI/data center policy
- Tax hikes to pay for new spending
nytimes.com/2026/10/23/us/po…
Garrett Watson retweeted
The key reason is this:
People who did not fall off the turnip truck yesterday know the truth about "one time" taxes. Especially this one that spends the money on recurring programs instead of one time expenses.
My source for CA prop 40 leading to a permanent tax? Prof. Zucman:
The key problem is this:
Why would billionaires permanently leave California in response to a one-time tax owed if they lived there on January 1, 2026?
It would only make sense for them to leave if the tax becomes annual.
But if the tax becomes annual, it would also generate revenue annually — by virtue of, well, being annual.
Garrett Watson retweeted
This is important work especially because the corporate tax exemption for nonprofit hospitals does not show up on the annual tax expenditure lists and estimates provided by JCT and Treasury.
.@GS_Watson and I explored policy options to reform the tax treatment of nonprofit hospitals.
We estimate that subjecting large hospital systems to the 21% corporate tax would raise nearly $150B over 10 years.
(1/5)
Garrett Watson retweeted
New @TaxFoundation analysis estimates that taxing large hospitals systems at the 21 percent corporate income tax rate would raise nearly $150 BILLION in new federal revenue over 10 years.
Incredibly valuable work from @andrew_lautz and @GS_Watson:
taxfoundation.org/blog/optio…
Garrett Watson retweeted
.@GS_Watson and I explored policy options to reform the tax treatment of nonprofit hospitals.
We estimate that subjecting large hospital systems to the 21% corporate tax would raise nearly $150B over 10 years.
(1/5)
New from @andrew_lautz and me: Nearly half of US hospitals are exempt from federal corporate income tax among other tax breaks. As hospitals consolidate into larger systems, these worth more each year. What would reform look like?
taxfoundation.org/blog/optio… @TaxFoundation
New from @andrew_lautz and me: Nearly half of US hospitals are exempt from federal corporate income tax among other tax breaks. As hospitals consolidate into larger systems, these worth more each year. What would reform look like?
taxfoundation.org/blog/optio… @TaxFoundation
Other options: an endowment-style tax on net investment income ($22.8B-$119.6B), recapturing tax benefits above charity care ($64.2B), denying deductions for gifts ($32.0B), or ending tax-exempt bond financing ($5.9B).
Design matters. Reforms should limit harm to capital investment, and some systems may spin off hospitals to avoid the tax. But focusing on the largest systems would improve neutrality while sparing smaller hospitals.
taxfoundation.org/blog/optio…
Garrett Watson retweeted
Tax rules don't always treat similar businesses or families the same. Non-profit hospitals benefit from many exclusions that for-profit hospitals face. @GS_Watson and @andrew_lautz explore several policies that Congress might consider: taxfoundation.org/blog/optio…
Garrett Watson retweeted
Gabriel Zucman declares it methodologically fraudulent to assume any billionaires would leave California in response to a "one-time" retroactive 5% tax of their wealth. He cannot conceive that they may assume the tax would be repeated later. <facepalm>
xitter.cf/gabriel_zucman/status/…
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Garrett Watson retweeted
This is the standard way to score tax policy. You score the law as written (in this case a one-time wealth tax) and the behavioral consequences from that law (people worried it will last moving).
There are arguments against that approach. But is not “highly inappropriate” or “dishonest” to do what JCT or any other neutral body would do.
Let’s be clear: this is a highly inappropriate way to model the effect of Prop 40 on taxpayer behavior.
For one, it’s a basic violation of rational expectations, a cornerstone of modern economics.
In Jaros and @joshrauh world, the billionaires act irrationally: they respond to a policy that does not exist and will never exist.
Economics students around the world are taught this is not an appropriate way to model behavior — but apparently in this context (fighting Prop 40) it’s OK.
Garrett Watson retweeted
The first incident has ZERO to do with AI — the cert authority used 4 bit entropy instead of 384 🫠.
In the second, AI is heavily on the defense side of a long-existing problem finally being fixed.
AI creates issues but important to understand them right.
Patch your software.
Two classes extremely bad cyber vulnerabilities disclosed in the last 24 hours. The first potentially impacts everyone online. The second impacts nearly everyone running a server.
tl;dr: Everyone should upgrade their OS and Browser as soon as possible. If you run a server you should upgrade PHP (or ensure it’s removed if you’re not using it) as soon as possible.
The first class of vulnerabilities is a set of root TLS certificates that were discovered to have a trivial private key. Literally the number 4. These roots were controlled by #eMudhra. The problem is that with that an attacker could create a certificate and, if they could get in the traffic flow, intercept traffic to any site or service. The solution is to stop trusting certificates issued by these vulnerable roots. Upgrading your browser and OS is the fastest way for most Internet users to do this.
The second class of vulnerabilities doesn’t apply to most consumers directly, but does apply to most anyone running a server. These vulnerabilities have been dubbed #php2shell. PHP is one of the most widely used web programming languages. It’s estimated 70% of websites run on PHP. These vulnerabilities allow an attacker to send a crafted set of queries to a server running PHP and potentially take over the server. From there they could potentially read, modify, delete, or repurpose anything on the server. The solution is to upgrade PHP to the latest version ASAP. Even if you’re not using PHP for your web development, it’s often included by default. So make sure it is either upgraded or fully removed.
@Cloudflare received advanced warning of both of these classes of vulnerabilities. We’ve ensured that where we act as a proxy we are no longer trusting the vulnerable roots. We are also reviewing certificate transparency (CT) logs for any sign the vulnerability was exploited before its disclosure. We have not found any evidence but CT logs are not perfect and a sophisticated attacker who knew about the weakness could have exploited it without a new certificate being logged.
For the PHP vulnerabilities, we have deployed mitigations available for all customers for free. Because of the complexity of the vulnerabilities and number of ways it can be exploited, we also released new WAF capabilities that are unique in the industry to catch the exploit based on the response. These too are available for every Cloudflare customer for free.
Even if you are taking advantage of Cloudflare’s protection, it is important to upgrade your OS, browsers, and PHP installations as soon as possible. We can provide a strong bandaid, but the best protection is to fix the underlying problem.
If you’re interested in learning more, you can read our blogs:
Vulnerable roots: blog.cloudflare.com/emudhra-…
PHP vulnerabilities: blog.cloudflare.com/php-vuln…
Garrett Watson retweeted
Imagine drafting a billionaire tax proposal so sloppy & awful that the California Teachers Association recommends voting no & begins offering technical assistance to help activists become less incoherent & dangerous
Economics argument that the proposed California billionaire tax would be net negative for revenue.
As a political economy complement, note that the CA teachers union has decided to recommend voting "no" on the initiative.
nber.org/papers/w35899#fromr…
Garrett Watson retweeted
Tyler Cowen's take that Holmes shouldn't go to prison because she's a mother with a newborn is bad on many levels, but especially because she *obviously* had the baby for the purpose of trying to get a lighter sentence.
Think about incentives and second order effects people!
Garrett Watson retweeted
New tariff polling from @EchelonInsights continues to be brutal for Republicans. Look at the cross tabs, here:
- 68 percent of suburban households say reducing or eliminating tariffs would improve the cost of living a lot/some.
- 64 percent of parents.
echeloninsights.com/insights…
Garrett Watson retweeted
What do Larry Kudlow, Janet Yellen, Steve Mnuchin, @econJaredB & me have in common? We all believe the permitting reform bill is essential for America to build, grow, tackle climate change and maintain our technological lead.
Probably the broadest letter I've ever signed.
