• Tax Policy Lessons from the 2000s
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Tax Policy Lessons from the 2000s

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This volume is an invaluable guide for policymakers facing important decisions about environmental taxation, marginal tax rates, dividend taxation, and the taxation of business investment.
  • February 16, 2009
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The American tax system stands at a crossroads. In addition to longstanding arguments over the tax code and budget deficits, there are new concerns raised by Washington’s expensive plan to repair the troubled economy, proposals to address global warming, and the scheduled expiration of the 2001 and 2003 tax cuts at the end of 2010. As they make pivotal decisions on these issues, what lessons can the Obama administration and the new Congress draw from analysis of past experience? Tax Policy Lessons from the 2000s brings together the most up-to-date research available on tax policy with trenchant analysis by America’s leading economists. The authors explore the role taxes should play in setting environmental policy; the effect of tax rate increases on labor supply and reported taxable income; the economic impact of deficit-financed tax reductions; and the effect of the tax system on businesses’ financial and investment decisions. During the 2000s, economists gained many valuable insights about how taxes affect economic behavior. Drawing on a decade’s worth of theoretical models, statistical studies, and observations, the authors provide a map of the progress that has been made and the work that is yet to be done. This volume is an invaluable guide for policymakers facing important decisions about environmental taxation, marginal tax rates, dividend taxation, and the taxation of business investment.
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Price: $19.99
Pages: 310
Publisher: AEI Press
Imprint: AEI Press
Publication Date: February 16, 2009
Trim Size: 9.00 X 6.00 in
ISBN: 9780844742786
Format: Paperback
BISACs: BUSINESS & ECONOMICS / Taxation / General, Public finance & taxation, BUSINESS & ECONOMICS / General, BUSINESS & ECONOMICS / Taxation / Corporate, Corporate and business tax laws, Taxation procedure
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LIST OF ILLUSTRATIONS

INTRODUCTION, Alan D. Viard

1. ENVIRONMENTAL TAXATION: WHAT HAVE WE LEARNED IN THIS DECADE? Gilbert E. Metcalf

The U.S. Experience with Environmental Taxes

Advances in the Theory

Efficiency Considerations of Environmental Taxation

Distributional Considerations with Environmental Taxation

The New Frontier: Carbon Pricing

Conclusion

Notes

References

2. A RESPONSE TO GILBERT E. METCALF, Roberton C. Williams III

Environmental Taxes in the United States

Lessons for Carbon Policy

A Brief Proposal for a U.S. Carbon Policy

Notes

References

3. EVIDENCE ON LABOR SUPPLY AND TAXES, AND IMPLICATIONS FOR TAX POLICY, Nada Eissa

Tax Policy Changes in the 2000s and Their Impact on Labor Supply Incentives

Impact on Labor Supply Incentives

A Simple Framework for Evaluating the Impact of Tax Cuts in the 2000s?

Taxes and Labor Supply

The Budget Set

Identification of Labor Supply and Tax Effects

What Do We Know about Taxes and Labor Supply?

Male Labor Supply

Female Labor Supply

Intertemporal Responses

Implications for Welfare Evaluation of Tax Reform

Conclusions

Notes

References

4. A RESPONSE TO NADA EISSA, Steven J. Davis

Micro and Macro Studies of Labor Supply Responses to Taxes

Longer-Run and Equilibrium Responses to Taxes

Labor Supply Responses on Other Margins

Summary

Notes

References

5. THE ELASTICITY OF TAXABLE INCOME: INFLUENCES ON ECONOMIC EFFICIENCY AND TAX REVENUES, AND IMPLICATIONS FOR TAX POLICY, Seth H. Giertz

Developments in Assessing the Efficiency Implications of Taxation

Developments in ETI Research since 2000

Issues That Complicate Estimation

Recent ETI Estimates

Applying the ETI for Tax Policy

Data and Institutional Background

Revenue and Efficiency Implications of Expiring Tax Legislation

Marginal Deadweight Loss

Laffer Curves

Conclusion

Notes

References

6. A RESPONSE TO SETH H. GIERTZ, Daniel Feenberg

Mean Reversion

Inequality

Partial versus General

References

7. WELFARE AND MACROECONOMIC EFFECTS OF DEFICITFINANCED TAX CUTS: LESSONS FROM CGE MODELS, John W. Diamond and Alan D. Viard

Background

Basic Theory in OLG Models

Rationale for CGE Modeling

Auerbach-Kotlikoff Results

Lessons Learned in the 2000s

Model Structure and Calibration

Production

Individual Behavior

Calibration

Simulation Results

Immediate Spending Offset

Government Transfer Offset after Ten Years

Across-the-Board Tax Increase after Ten Years

Summary of Macroeconomic Effects

Intergenerational Welfare Effects

How Are Deficit-Financed Tax Cuts Typically Paid For?

Models of Infinite-Lived Agents

Conclusion and Extensions

Appendix

The Nonresidential Production Sector

The Owner-Occupied and Rental Housing Production Sectors

Individual Behavior

Notes

References

8. A RESPONSE TO JOHN W. DIAMOND AND ALAN D. VIARD, Laurence J. Kotlikoff

References

9. THE IMPACT OF TAXES ON DIVIDENDS AND CORPORATE FINANCIAL POLICY: LESSONS FROM THE 2000S, Dhammika Dharmapala

Lessons about Dividends, Payout Policy, and Firm Value

A Simple Equilibrium Condition

The Effects of JGTRRA on Dividends

The Effects of JGTRRA on Firm Value

Interpreting the Evidence

Lessons about Corporate Financial Policy and Portfolio Choices

International Financial Equilibrium

The Effect of JGTRRA on U.S. Investors’ Equity Holdings

Lessons about Corporate Tax Integration

The Efficiency Costs of Corporate Financial Distortions

Corporate Tax Integration and International Financial Integration

Future Directions for Dividend Tax Policy

Firm-Level Approaches to Corporate Tax Integration

Conclusion

Notes

References

10. A RESPONSE TO DHAMMIKA DHARMAPALA, Douglas A. Shackelford

Why JGTRRA Might Have Had No Effect on Dividend Policy

Shareholders Not Benefiting from JGTRRA Influence Dividend Policy

Repurchases Remained More Tax-Efficient than Dividends

Dividends Were Unpopular

Rate Reductions Were Temporary

Adjustments Distort Dividend Signaling

Increased Dividends Have Adverse Implications for Stock Options

Alternative Minimum Tax Dulls Benefit

Summary

Nontax Explanations for the Increase in Dividends

What We Have Learned from the Extant Studies

Great Paper, circa 2013

The Forgotten Capital Gains Tax Cut

Conclusion

Notes

References

11. TAXES AND BUSINESS INVESTMENT: LESSONS FROM THE PAST DECADE, Alan J. Auerbach and Kevin A. Hassett

Partial Expensing

Dividend Taxes

The Investment Effect of Dividend Tax Changes

Dividend Payout Changes

Conclusion

Notes

References

12. A RESPONSE TO ALAN J. AUERBACH AND KEVIN A. HASSETT, Matthew D. Shapiro

Note

References

INDEX

ABOUT THE AUTHORS