The tax system profoundly affects countless aspects of private behavior. It is a powerful policy influence on the distribution of income and it is the one aspect of government that almost every citizen cannot avoid. With tax reform high on the political agenda, this book brings together studies of leading tax economists and lawyers to assess the various reform proposals and examine the effects of tax reform in several distinct areas. Together, these studies and comments on them present a balanced evaluation of professional opinion on the issues that will be critical in the tax reform debate. The book addresses annual and lifetime distributional effects, saving, investment, transitional problems, simplification, home ownership and housing prices, charitable groups, international taxation, financial intermediaries and insurance, labor supply, and health insurance. In addition to Henry Aaron and William Gale, the contributors include Alan Auerbach, University of California, Berkeley; David Bradford, Princeton University; Charles Clotfelter, Duke University; Eric Engen, Federal Reserve; Don Fullerton, University of Texas; Jon Gruber, Massachusetts Institute of Technology; Patric Hendershott, Ohio State; David Ling, University of Florida; Ronald Perlman, Covington & Burling; Diane Lim Rogers, Congressional Budget Office; John Karl Scholz, University of Wisconsin; Joel Slemrod, University of Michigan; and Robert Triest, University of California, Davis.
I. Introduction -- II. Recent tax reform proposals -- III. Effects on the macroeconomy -- IV. Effects on the allocation of resources -- V. Effects on economic efficiency -- Appendix A. What will a consumption-based tax do to the price level and the value of existing assets? -- Appendix B. Simulation models and the saving response -- Appendix C. Fullerton-Rogers General-equilibrium model.
In its Annual Report 2003/2004, the German Council of Economic Experts launched a dual income tax as an option for a fundamental tax reform in Germany. In February 2005, the German government appointed the Council to prepare a detailed report on economic effects of a business tax reform, with special emphasis on a dual income tax. With regard to the latter, conceptual problems of tax law and of tax administration were to be addressed as well as possible transitional problems when implementing a dual income tax. This book presents an English version of the original report completed in April 2006.
Tax reform debates in the United States have focused on the question of whether the existing corporate and individual income tax system should be replaced with some form of a national consumption tax. This book contains essays written by internationally recognized tax experts who describe the current state in economic thinking on the issue of whether fundamental tax reform is preferable to continued incremental reform of the existing income tax. The papers were originally commissioned by the James A. Baker III Institute for Public Policy at Rice University, Houston. The collection covers a range of tax policy issues related to consumption tax reforms, including their economic effects, distributional consequences, effects on administrative and compliance costs, transitional issues and the political aspects of fundamental tax reform, and international comparisons. The book will serve as a comprehensive guide to the ongoing tax reform debate to tax policy makers and the general electorate.
Proposals for fundamental tax reform would replace the current Fed. income tax system with a comprehensive consumption- based tax. Objectives of tax reform include stimulating economic activity and promoting a more efficient allocation of resources. Some common features of recent proposals are a broader tax base, more uniform rates, and a tax on consumption. This study analyzes the major economic effects of several tax reform plans, focusing on the effects on saving and investment, output, and the allocation of resources within the economy, and the ultimate impacts of those changes on social well-being. Charts and tables.
A number of recent proposals for fundamental tax reform would replace the current federal income tax system with a comprehensive consumption-based tax. Objectives of tax reform include stimulating economic activity and promoting a more efficient allocation of resources. Many common features of recent proposals could achieve those results-for example, a broader tax base, more uniform rates, and a tax on consumption rather than income. This Congressional Budget Office (CBO) study analyzes the major economic effects of several tax reform plans and finds that much uncertainty surrounds the likelihood and magnitude of the economic gains from tax reform. The study focuses on the effects on saving and investment, output, and the allocation of resources within the economy, as well as the ultimate impacts of those changes on social well-being. The study was prepared at the request of Senators Pete Domenici, Robert Bennett, Joseph Biden, and Robert Kerrey and former Senator Sam Nunn.
Who should pay taxes, how should they be collected, and how do they affect the economy? Should the income tax be tinkered with, replaced with a flat tax, or left alone? Cutting through the academic jargon and self-serving Washington-speak, Joel Slemrod and Jon Bakija bring together all of the data, analytical insight, and related material bearing on tax reform to explore the fundamental questions and choices inherent in tax policymaking. They review the key elements of fundamental tax reform proposals, including a single rate, a clean base, and a consumption base. Then they take a detailed look at the major alternatives for tax reform, providing concise guidelines that will make clear the choices involved in tax policy.
Tax experts across the political spectrum agree that the current rate structure is not rational and that potential gains from reform could be remarkable. Accordingly, tax reform is widely viewed as desirable. However, there is not a clear consensus on what reforms are most desirable or feasible. In Toward Fundamental Tax Reform, eleven leading tax scholars, including a Nobel Prize winner, outline their ideas about tax reform. The original essays provide readers with concise but varying perspectives on the possibilities of tax reform. They also focus attention on key questions in the scholarly debate: Would a different tax code dramatically alter the functioning of the economy? How much damage does the current law do? Can relatively small changes to the tax code deliver most of the benefits of more dramatic reforms like the flat tax? Are political forces that oppose efficient tax systems simply too powerful to overcome? Will tax reform inevitably harm the poor? Can a tax reform, if enacted, be sustained?
This book studies topics relating to fundamental tax reform. The topics include, among others, the effects of taxation on household saving, the effects of reducing taxes on individuals' work effort, issues in the taxation of financial services, and international issues in consumption taxation.
David F. Bradford discusses key concepts in consumption and income taxes and identifies the problems of a transition to a consumption-based system. He addresses how such a transition would affect interest rates and shows how price changes would alter the distribution of gains and losses.