Tax Policy and the Economy

Tax policy debates, generated by one of the most sweeping reforms of the Federal income tax system since its inception, are certain to continue for years to come, providing a fertile field for economic research. This book is the first in a series of annual publications on tax policy and the economy initiated by the National Bureau of Economic Research and designed to convey research results in a way that is accessible to a wide body of lawyers, policymakers, and businesspeople involved in formulating tax policy. Volume 1 of Tax Policy and the Economy presents six studies of diverse tax policy issues, each bringing new data to bear on an important policy issue. Alan Auerbach and James Poterba examine the striking decline in corporate tax revenues as a share of GNP John Shoven describes new developments in corporate finance and tax avoidance, concluding that these devices have helped and will continue to help corporate shareholders escape the double taxation of dividends. Herman Leonard and Richard Zeckhauser review the experience of several states with tax amnesty programs and consider the likely effects of a Federal tax amnesty program. Jeffrey Harris explores the economic effects of tobacco taxation, particularly the effect the recent hike in the Federal excise tax on cigarettes had on prices and on the number of smokers. Douglas Bernheim suggests that the Federal estate tax could conceivably reduce Federal tax revenues. And in a concluding chapter, Michael Boskin and Douglas Puffert show that the redistributions between married workers and single workers in the Social Security system far outweigh the much discussed "marriage tax" effects of the individual income tax.