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This paper provides a distributional analysis of the Tax Cuts and Jobs Act (TCJA), with implications for American households from changes to the individual income and corporate income taxes. We mod...

This paper considers methods for taxing the income of the affluent. Much of this income is unrealized capital gains that escapes tax. Conventional individual income tax changes cannot capture this ...

The state of Illinois temporarily increased its flat individual income tax rate from 2011 to 2014. This paper evaluates taxpayer responses following the rate increase and subsequent decrease using ...

We asked a random sample of the Michigan population to identify their average tax rate in the federal individual income tax. We find that 84.9 percent of respondents overstate their actual average ...

Integration of the corporate and individual income taxes can be achieved by providing shareholders a credit for corporate taxes paid with respect to corporate earnings distributed as dividends. Whe...

This paper examines 2001 National Research Program data to assess the role of information reporting in explaining individual income tax compliance in the United States. Taxpayers are largely compli...

Social Security benefits are taxed under a complex regime that raises marginal effective tax rates by up to 85 percent, which could discourage the labor supply of older workers and affect the decision to claim benefits. Using a nonparametric graphical methodology, this paper investigates whether older taxpayers reduce income to avoid the tax. While previous research found that the labor supply of older workers is significantly affected by the Social Security earnings test, we find little evidence of a response to benefit taxation in a large panel of data compiled from individual income tax and information returns. Similarly, while taxation of benefits provides an incentive for many to delay claiming, we find no evidence of such an effect. Overall, the findings suggest that older taxpayers have little understanding of the rules governing Social Security benefit taxation.

This paper consists of three parts. First, I review the legislative history related to the enactment of two major tax cut proposals during George W. Bush’s presidency, the first in 2001 and the second in 2003. Second, I present results from a simple tax calculator that calculates the expected change in tax liabilities from 2010 to 2011 under current law for taxpayers of different filing status and at different income levels. The paper concludes by exploring some alternative approaches to address the looming tax increase and describes possible lessons from the legislative tax history of 2001–2006.

Between fiscal year 2000 and fiscal year 2003, federal revenues fell by $243 billion, putting them at their lowest level relative to GDP in over 40 years. The decline in revenues came after a period of rapidly rising revenues between 1994 and 2000. This paper looks at the sources of the decline in revenues in the last three fiscal years and contrasts them with the sources that contributed to the rise in revenues in the previous six years. Individual income tax receipts explain much of the rise and fall in the last nine years. Differences in aggregate economic growth explain some of the difference in revenue growth between the two periods. The differences in aggregate economic growth were reinforced by the fact that receipts grew more quickly than the aggregate economy in the first period and declined more quickly in the latter period. Rapid growth in tax return incomes and an increase in the share of income taxed at higher marginal tax rates explain much of the rise in personal income tax receipts relative to the economy in the first period. A reversal of these trends along with tax cuts enacted after 2000 explain much of the decline in the latter period.

This paper provides a description of issues that are important in determining the macroeconomic effects of tax policy changes. We discuss the role of assumptions about general macroeconomic modeling issues like market behavioral parameters, and the actions of fiscal and monetary authorities. Estimating the revenue feedback effects of tax policy also requires several applied measurement issues that do not typically arise in macroeconomic modeling. Each of these issues introduces significant sources of uncertainty into the macroeconomic analysis of tax policy. We use simulations of a hypothetical 10 percent cut in individual income tax rates to illustrate issues and challenges.

This paper focuses on the design, development, and use of the Individual Taxpayer Burden Model (ITBM)— a microsimulation model developed jointly by IBM and the 1RS to estimate the amount of time an...

Policymakers have directed much effort towards reducing or eliminating the so-called "marriage penalty" present in the U.S. individual income tax. However, because the marriage penalty is frequently misunderstood, many suggested remedies do little to reduce the penalty, and in some cases even exacerbate it. In this paper we use the recent income tax reduction proposal of the Bush Administration to highlight some of the challenges involved in reducing the marriage penalty. Using representative couples with varying distributions of income and family structure, we contrast the marriage penalties under current tax law (as of May 2001) with those under the tax structure in the Administration's proposal. Our calculations indicate that it is certainly feasible to reduce the marriage penalty. However, our calculations also indicate that achieving this goal can be a difficult task, with tax reductions and other tax changes sometimes having unintended and unanticipated effects. In particular, the Bush tax plan does not eliminate the marriage tax, and in some cases actually makes the marriage penalty even larger than it is at present. In short, reducing marriage penalties is not as simple as reducing income taxes.

Provides estimates of individual income tax elasticity in the U.S. by augmenting the nice cross-section model suggested by Tanzi (1969, 1976) through the addition of income-inequality and quadratic income terms. Results for the 1980's, based on income inequality data for 1979, show the same broad patterns as those for earlier periods, but the elasticity estimates are somewhat lower and seem to indicate a slight declining tendency.

Analyzes empirically the effect of audit rates and certain other factors on the filing of federal individual income tax returns and the self-reporting of taxes due. Estimates that self-reported taxes in 1986 would have been greater by approximately fifteen billion dollars had the federal audit rate remained constant at its 1977 level during the intervening period.

Changes in the economy interact with the actions of taxpayers and the Congress to produce an individual income tax structure that is itself changing. This paper examines the net effect of these var...

We develop and estimate an economic model of tax compliance which specifically incorporates important aspects of the U.S. Federal income tax laws (e. g., a progressive tax structure and multiple pe...

This paper considers four proposals to limit the deductibility of state and local (S-L) taxes against the federal individual income tax base: eliminate sales tax deductibility, impose a floor on al...

By analyzing a national sample of federal individual income tax returns, we are able to identify important determinants of whether a taxpayer uses an accountant or other professional tax return pre...

able to gather on amnesties in other states. Do tax amnesties generate revenue that In our view, information about the types would not otherwise be collected? Will tax of taxpayers (or nontaxpayers) who paramnesties provide continuing future reve- ticipate in amnesties and the circumnue gains? And is an amnesty appropriate stances that lead them to participate can in the transition to a new tax enforcement be of considerable use in evaluating the regime? Based on economic analysis of the effects of amnesties and for predicting the choice to participate in an amnesty and e-x- prospects for a federal tax amnesty from amination of the characteristics of partic the state results. ipants in Michigan and other states, it ap- Under a tax amnesty, taxpayers are ofpears that amnesties are not particularly fered an opportunity to come forward during a specified period of time and pay preeffective in identifying tax evaders, so that I