The Would-Be Chef Who Found Tax And Economics

by Tax Notes State Commentary Editor Doug Sheppard

Growing up in a rural area of eastern Jamaica in the 1980s, the culinarily inclined Denvil Duncan dreamed of becoming an executive chef on a cruise ship.

Inspired by a cousin who worked in that capacity on the luxurious barges that pulled into Jamaican ports, Duncan saw a future in the planning, preparation, and presentation of delicacies while sailing the high seas.

Until he got a reality check.

“That did not work out in part because studying in high school in Jamaica, this would come under home economics, and my family did not have the means to support me taking this particular subject in high school,” Duncan recalled. “Because it was both theory and practical, and for the practical part, you would need to be buying all these ingredients, taking them to school, making dishes, and so on.”

Little did Duncan know that the death of this dream would lead him to study economics and take him from a modest upbringing in Guy’s Hill — a small rural town in the parish of Saint Catherine — to a prestigious academic career in the United States with stints at Georgia State University and, ultimately, Indiana University.

Economic Roots

When culinary reality set in, Duncan began studying economics in earnest at St. Jago High School in Spanish Town, the capital of Saint Catherine — earning two additional years of study by performing well on the CXC exams.

He went on to earn a Bachelor of Science in economics and accounting from the University of the West Indies in Kingston in 2001 and a master’s degree in economics from the same institution two years later. Upon attaining the latter, he started teaching at the university as an assistant lecturer in the economics department.

Around that time, one of the pivotal events that would shape Duncan’s career happened when in late 2004 he met Sally Wallace and Roy Bahl of Georgia State University’s Andrew Young School of Policy Studies, who were consulting with the Jamaican government on a tax reform package.

“Toward the end of that project, both Roy and Sally gave a presentation at the University of the West Indies — this was right around the time that I was applying for graduate school, and the plan was always to do a PhD in economics,” Duncan said. “So I was fortunate enough to meet both of them during that seminar. Both of them encouraged me to apply to Georgia State University, which I did, and my application was successful — and I joined the PhD program in the economics department of the Andrew Young School.”

Academically, Duncan was well prepared for the transition when he made the move in 2005. Otherwise, the move from Jamaica to Atlanta was a significant adjustment for someone whose only previous trip to the United States was a two-day conference in San Antonio.

Not only is Kingston (population 1.2 million) only about a fifth of the size of metro Atlanta (population 5.8 million), but the tropical climate is a far cry from the weather in Georgia. Customs, food, and of course the locals’ Southern accents also took some getting used to.

“I’m a native speaker of English, but the accent in the South was quite interesting,” Duncan said. “It was the first time I was experiencing this, and I can remember vividly the first couple of weeks — there would be a time delay between when the train operator indicated the name of the next stop and when it registered in my brain that, ‘OK, that’s what he just said.’ There would be a gap between when that was announced and when I could understand exactly what was going on. So it took a couple of weeks for me to adjust to the accent.”

Much like his collegiate experience saw his initial interest in corporate finance and developmental economics shift to public finance, it was in graduate school that Duncan developed an interest in taxes, thanks in part to meeting public finance economist James Alm and labor economist Klara Sabirianova Peter — who both inspired his studies in public and labor economics.

“I’ve just continued with the taxation side of things and understanding how tax policy influences the decisions that economic agents make — however you define economic agents,” Duncan said.

“Whether you’re looking at individuals, corporations, policymakers, sellers, or buyers, it’s all very interesting when you think about how implementing a tax policy can have such important implications for revenue generation and expenditure policies. What can you fund and how will those policies end up influencing the lives of common people?”

By 2010, Duncan had completed his PhD studies — including a dissertation on public finance — and was ready for the job market. Describing himself as “fully committed to public finance and taxation,” he received offers from both Deloitte (working on tax policy issues) and Indiana University’s School of Public and Environmental Affairs (now known as the O’Neill School) — ultimately choosing the latter.

“I ended up taking the [Indiana] job because I just felt like I’d have more opportunities to work on the things that interest me,” Duncan said. “And I suppose after spending three to four years working on a research project, working on research for your dissertation, it kind of becomes part of you in a sense — at least it was for me. It became part of who I am, who I was at the time, so it just seemed more natural — like a better fit — for me to go to academia than to go to industry.”

The job may have been a good fit, but Duncan once again found that he would have to get used to the change of scenery — namely, the colder, cloudier climate and the considerably smaller locale. Insufficient sunlight was particularly an issue for the Jamaican native, who found himself dealing with mild bouts of seasonal affective disorder.

“For some reason, that really messed me up in my first semester — to the point that I’m pretty sure my neighbors thought I was a crazy guy,” Duncan said.

“Because I would go to the back door of my apartment, a glass door that backs up to the other apartment, and on the few days when we had sun, I would be standing there in my boxers alone — trying to absorb as much of that sunlight as I could.”

Traffic was also an adjustment. “After spending five years in Atlanta driving two hours to cover 6 miles, I moved to a city where I could get to pretty much anywhere I wanted to be in 10 minutes — and find myself eventually becoming frustrated if I had to stop behind a car at a stoplight,” Duncan said with a chuckle. “That was quite a big difference — a favorable one, of course.”

The most significant change, however, was settling into an academic career as an assistant professor who teaches, does research, and serves on committees.

“It’s quite an adjustment,” Duncan said. “Thankfully, here in the O’Neill School, I was surrounded by fabulous people who provided important guidance to help with that adjustment. And I’m forever grateful to all of those people for making the transition smoother than it otherwise probably could have been.”

Tax Evasion Studies

While many economics questions interest him, tax research that started in grad school and later at O’Neill continue to occupy a significant portion of Duncan’s studies — particularly tax evasion and motor fuel taxes.

Duncan cited Peter’s exploration of Russia’s 2001 tax reform — involving a switch from a graduated tax schedule to a linear tax schedule — as a primary catalyst for his interest in taxes.

“There was some work that had shown that this change in the tax rate schedule had important implications — or at least important impacts on tax evasion,” Duncan said.

“So there was some suggestion that by lowering the taxes and using this linear schedule, tax compliance increased. So that got me thinking: When we try to measure income inequality, we are using observable data; we’re measuring the income that we observe. The taxes that we apply, regardless of how progressive they are or how graduated the tax schedules are, only apply to observed income.

“And so the question at the time was: ‘Well, suppose a lot of the income is not being taxed. Does that then reduce the effectiveness of the tax system at reducing income inequality?’ Because the tax on total income — sum of hidden and observed — would be less progressive than the tax on observed income. So my dissertation focused on this.”

A paper on the labor effects of the flat tax reform and a dissertation on the income inequality effects of the tax reform followed — with the latter sparking his interest in tax evasion and, as a result, more papers on the subject.

“One was the effect on progressivity, then another study looked at the effect of access to tax evasion on labor supply responses, so here the idea was: If the only way I can respond to tax policy is through reducing my labor supply, then my labor supply response will most likely be different than if I’m also able to respond by hiding more of my income,” Duncan said. “We looked at that one in a lab experiment study.”

Motor Fuel Taxes

Duncan’s hiring at Indiana University opened a new phase of his tax studies, and one that he’s perhaps most renowned for: motor fuel taxes.

As Duncan recounted, it all started over lunch with the dean in 2010, during which he learned that both he and his new employer were interested in looking at mileage user fees: “That started another branch of research in which here the question was more about how the fuel economy of motor vehicles has been increasing over time — mostly in response to regulation. And as vehicles become more fuel efficient, it means that there’s less gasoline being consumed, which means that less revenue is collected from the fuel tax — which means that there’s less revenue available to finance roads, bridges, and so on. So we were starting to think about the implication of these policies on the ability to maintain and build new roads — and then what might some alternative policies be?”

This branch of research, according to Duncan, has been the most rewarding because it’s allowed him to participate in actual policy discussions — as opposed to just publishing papers.

In 2015, for example, he and John Graham, then dean of the O’Neill School, “were invited to join a consortium of firms that were hired by the Indiana government — where the objective was to analyze the revenue implications for the fuel tax, and also to discuss or propose options that will allow the state to address this concern.”

“One of the things that they wanted us to do, explicitly, was to look at the mileage user fee,” Duncan said. “So that was a very fulfilling opportunity because I was able to work with policymakers and put together this document and present it to the Department of Transportation. That’s an opportunity to feel like your work actually has some impact — as opposed to just writing a paper and publishing it, and it sits in a journal somewhere. This is a case in which that work was actually being used in the policymaking process.”

That served as a good prequel to one of Duncan’s subsequent excursions, in which he was approached in 2018 by the International Fuel Tax Agreement (IFTA), which wanted to implement a strategic plan to explore the same questions that Duncan had previously explored — “the idea that the fuel tax is potentially under threat because of increased fuel economy, automation of vehicles, and all of these changes that are happening.”

“They wanted to do a careful analysis of strengths, weaknesses, opportunities, challenges — and identify some goals and strategies for achieving those goals,” Duncan recalled. “And so they reached out to me, and I partnered with one of my colleagues, Dr. Sean Nicholson-Crotty, and both of us worked with them over a period of six to seven months, maybe even longer, working on developing that strategic plan and delivering that plan to the board of IFTA.”

The research concluded in 2019 — leaving both academics with a feeling of satisfaction, according to Duncan: “That was another fulfilling experience, because again, it’s not publishing the paper in let’s say The National Tax Journal, Public Budgeting & Finance, or Public Administration Review — which are some of the places we’ve published our work on mileage user fees, but this was working directly with the policymakers to see, ‘Well, how should we move forward in this space?’”

“If you publish the paper,” Duncan added, “your colleagues may read them, and that brings joy — if people are reading and recognizing your work, that’s also fulfilling. But speaking personally, it’s more fulfilling to translate that work for the policymakers who are actually going to implement it and effect change in the way things are done.”

Given all the misconceptions and apprehensions about replacing fuel taxes with mileage user fees, the work of Duncan and other proponents is far from done.

The fee — which would most likely require an electronic device in vehicles to be effective — has raised concerns regarding privacy abuses by the government and hackers, the cost of implementation, and equity, which is particularly relevant to the perennial issue of the costs for rural versus urban drivers.

“People have raised this as a concern, but we’ve argued — over the range of papers that we’ve written — that these are not insurmountable challenges,” Duncan said.

“If you take even the equity argument, for example: Yes, if you live in a rural area, you’re driving longer distances, and you would therefore have a higher mileage tax bill on average. But it is also the case now that if you live in a rural area driving longer distances, you’re consuming more fuel — and therefore, on average, have a higher gasoline tax bill.”

Duncan has responses to the other concerns as well that go beyond the scope of this article, but mainly, he’s certain of one thing: Mileage user fees are a viable replacement for fuel taxes.

“In my opinion, it seems so clear cut,” he said. “Like if you look at just the landscape of the fuel tax: To the extent you want to finance roads and bridges with a benefit-based type of financial instrument, the fuel tax doesn’t seem like it’s going to survive long term. Surely, the average age of a vehicle is anywhere from maybe 15 to 16 years, so it’s not like it’s going to disappear tomorrow. But the trajectory is not a good one, so you really have to think about options to replace it — and the mileage tax seems like an obvious one.”

If indeed his stance on the fuel tax puts him at odds with much of the public for the time being, it wouldn’t be the first time Duncan has had to overcome long odds: Coming from Jamaica to academia isn’t a common story, and brings diversity to a field (taxes) that’s not necessarily known for it.

“That concern is not unique to the tax side of the profession,” Duncan said. “I can only speak for the economics profession, personally; I’m not speaking on behalf of the profession — just my observations of the profession. I would say that the general concern is: Is the representation in the profession consistent with representation of the general population? And of course, it’s not, and everyone is trying to figure out how can we improve representation across various dimensions — whether race, ethnicity, gender, and so on. So I would say there is still work to be done, and I know there are lots of individuals and organizations that are taking this seriously and trying to implement policies that would move us in the direction of a greater level of representation.”