Do taxes matter? Lessons from the 1980's

Article Abstract:

Policymakers of the 1990s are cautious about the use of fiscal policy in stabilizing economic activity. Supply-side economics, which became popular in 1982, was based on the theory that fiscal policy would promote positive economic results. Supply-side economics relied on the reduction of marginal tax rates to increase investment, savings and the labor supply. An analysis of the fiscal policies of the 1980s reveals a hierarchy of behavioral responses to taxation, which include the timing of economic transactions, financial and accounting responses and the real decisions of individuals and firms.

Economic aspects, Fiscal policy, Taxation, Supply-side economics

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Deconstructing the income tax

Article Abstract:

The existing US tax system is altered into the Hall-Rabushka flat tax, a consumption-base value-added tax, and back into an income-base tax. The exercise reveals that an impersonal tax system, or a system that does not involve individuals but only the company in tax-remittance, is the key factor in tax simplification. Another factor is the elimination of extraneous elements from the tax system. In flat tax or value-added tax simplification, flat-rate taxing of factor payments is handled by the firm.

Tax Law, Public Finance Activities, Income tax, Value-added tax, Flat tax

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Income creation or income shifting? Behavioral responses to the Tax Reform Act of 1986

Article Abstract:

Tax reform in the 1980s has generated a body of knowledge that challenged traditional views on the relationship between taxation and behavioral response, particularly after the Tax Reform Act of 1986. The negligible behavioral response to taxation and the minimal and slow response of variables such as labor, savings and investment to taxation were contradicted by evidence from the 1980s. Thus, economists have called for a reconstruction of normative and positive taxation study.

Evaluation, Tax administration and procedure, Tax administration, Tax reform, Tax research

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