At first glance, the elimination of the corporate tax on business seems an obvious method of attracting new firms to the state and promoting the expansion of existing firms. And in fact, states and localities have been offering tax incentives, usually in the form of reduced property taxes or corporate income tax credits, to firms for many years. Under current law, Georgia imposes a 6 percent ta...

We study experimentally how taxpayers choose between two tax regimes to fund a public good. The first-best tax regime imposes a general, distortion-free income tax. However, this tax cannot be enforced. The second-best alternative supplements the income tax by a specific commodity tax. This tax cannot be evaded but distorts optimal consumption choices, instead. The result is that a large majori...

A fundamental property of a progressive income tax is that it provides implicit collective insurance against idiosyncratic shocks to income by dampening the variability of disposable income and consumption. The Economic Recovery Tax Act of 1981 (ERTA) and the Tax Reform Act of 1986 (TRA86) greatly reduced the number of marginal tax brackets and the maximum marginal rate, which limits the abilit...

In this paper company-level panel data are used to explore the role of tax changes on corporate financial policy. A panel model for the years 1993-98 is estimated confirming the explanatory power of the tax variable. The estimation also shows that firms reduced leverage in the last three years (1996-98) as a reaction to important tax changes: the reduction in 1996 was the effect of the temporar...

This paper uses a finite mixture model to uncover heterogeneous income tax rate perceptions, establishing four new results. First, almost half of respondents do not distinguish between marginal and average tax rates. Second, roughly 30 percent of respondents know the statutory marginal tax rates schedule (and answer questions accordingly). Third, among respondents who think all income is taxed ...

Proposals to substantially reduce or eliminate the state income tax and replace the lost revenue through a higher sales tax rate, an expanded sales tax base, or some combination of the two, are being considered in a dozen states, specifically Georgia, Hawaii, Idaho, Kansas, Louisiana, Missouri, Nebraska, New Jersey, Ohio, Oklahoma, Oregon and South Carolina (Hamilton 2012). While no state has f...

The PRC enterprise income tax law was enacted on January 1, 2008, with accordance to which the enterprise income tax law system has been changing. It took a long time to promulgate the law just as it takes and will take certain period to integrate the system from the constitutional law to tax polices. The lack of taxing power under constitutional law, the silence of a basic tax law, and the arb...

Although developing countries face high levels of income inequality, they rely more on consumption taxes, which tend to be linear and are less effective for redistribution than a non-linear income tax. One explanation for this pattern is that the consumption taxes are generally more enforceable in these economies. This paper studies the optimal combination of a linear consumption tax, with a no...

Discussions of the “ideal” form of individual income taxation have largely been based on some variant of the standard suggested by Haig (1921) and Simons (1938). This “Haig-Simons” (H-S) standard argues that an ideal income tax should be imposed on “comprehensive income”, and the H-S standard has been used to justify the frequently heard call for a “Broad-based, Low-rate” tax reform strategy. H...