We use a 1985-2005 panel of state data to investigate the relative tax base elasticities of two major US state taxes—corporate income taxes and sales taxes—with respect to changes in their tax rates. We focus on these two taxes because they are essentially flat-rate taxes at the state level, making it relatively straightforward to construct estimates of their bases using aggregate collections a...

This paper argues that in assessing the effects of tax rates on aggregate hours of market work, it is essential to explicitly consider how the government spends tax revenues. Different choices regarding government spending lead to different elasticities of hours of work with regard to tax rates. I illustrate the empirical importance of this point by addressing the issue of hours worked and tax ...

Executive Summary This Report presents a detailed description of Treasury's dynamic analysis of the President's proposal to permanently extend the tax relief provisions enacted in 2001 and 2003 that are currently set to expire at the end of 2010. These enacted provisions include: • Lower tax rates on ordinary income; • Lower tax rates on dividends and capital gains; • A ten-percent individual i...

Over the past seventy years Congress has enacted dozens of tax and transfer programs, giving little if any attention to the marriage subsidies and penalties that they inadvertently impose. Although the programs affect both rich and poor Americans, the penalties fall most heavily on low- or moderate-income households with children. In this article, Adam Carasso and Eugene Steuerle review importa...

If optimal tax theory is to be the basis for calculating tax rates, a close understanding is required of the relationship between the structure of preferences and the configuration of optimal tax rates. Otherwise hypotheses chosen by the econometrician for practical convenience may completely determine the results, independently of measurement. This paper explores the relationship between vario...

Executive Summary This Report presents a detailed description of Treasury's dynamic analysis of the President's proposal to permanently extend the tax relief provisions enacted in 2001 and 2003 that are currently set to expire at the end of 2010. These enacted provisions include: • Lower tax rates on ordinary income; • Lower tax rates on dividends and capital gains; • A ten-percent individual i...

This paper uses U.S. Statistics of Income (SOI) Corporate Income Tax Returns balance sheet data on all corporations, to estimate the effects of changes in corporate tax rates on the debt policies of firms of different sizes. Small firms face very different tax rates than larger firms, and relative tax rates have also changed frequently over time, providing substantial information to identify ta...

The tax burden on equity securities has varied substantially since US federal income taxes were introduced in 1913. Taxes on equity securities vary over time due to changes in dividend and capital gains tax rates and due to changes in corporate payout policies. Equity taxes also vary across firms due to persistent differences in propensities to pay dividends. Despite the continuing policy debat...