Office: Phone: Class Time: Class Place:

112 Economics 492-8291

JAMES ALM ECONOMICS 8211

PUBLIC ECONOMICS: TAXATION FALL 1996

email: Office Hours:

MW 1:00pm-2:15 pm Economics 5

COURSE OBJECTIVES

Alm@Colorado.EDU MWF 11:00am-12:00 pm or by appointment

Economics 8211 applies economic theory to issues of taxation and tax policy. The course first discusses basic principles of taxation. ft then describes the U.S. tax structure, and analyzes the impact of the existing and alternative tax systems on the allocation of resources and the level and distribution of economic welfare.

COURSE REQUIREMENTS There will be two examinations: a midterm examination worth 1/3 of the final grade, and a comprehensive final examination also worth 1/3 of the final grade. The midterm exam will be given after completion of Basic Principles of Taxation, (tentatively) scheduled for Monday, October 21; the final exam is scheduled for Thursday, December 19, from 7:30 pm to 10:30 pm. Also required is an original research paper on a public economics topic of your choice; the research paper is worth 1/3 of the final grade. The final version will be due on the fast day of class. Details of the paper will be discussed in class.

There will also be periodic assignments. Although they will not be collected or graded, questions from them may appear on the exams. Students are encouraged to work together on the assignments.

TEXTBOOKS There is one required textbook:

Joel Sfemrod, ed., Do Taxes Matter? The Impact of the Tax Reform Act of 1986 (Cambridge, MA: The MIT Press, 1992), denoted "Slemrod."

Also recommended (but not required) are:

Harvey S. Rosen, Public Finance, 4th Edition (Chicago, IL: Richard D. Irwin, Inc., 1995), · denoted "Rosen."

Joseph A. Pechman, Federal Tax Policy, Fifth Edition, (Washington, D.C.: The Brookings Institution, 1987), denoted "Pech man."

Alan J. Auerbach and Martin Feldstein, Handbook of Public Economics. Volumes I and fl (New York, NY: Elsevier Science Publishing Company, Inc .. 1985 and 1987).

A reading packet of articles is also required.

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COURSE OUTLINE

0 . Welfare Economics

I. Basic Principles of Taxation: What is a "good" tax system? A. Taxation and Incentives 8. Taxation and Fairness C. Taxation and Incidence D. Taxation and Excess Burden E. Taxation and Revenues F. Tax Administration and Compliance Costs G. Taxation and Politics H. Optimal Taxation

II. Taxes on Individual Income A. The Structure of the Individual Income Tax B. The Impacts of Income Taxation

1. Labor Supply 2. Saving 3. Portfolio Choice 4. Tax Preferences 5. Capital Gains 6. Tax Avoidance and Evasion 7. Tax Treatment of the Family 8. Inflation 9. Tax Policy Uncertainty 10. Income Reporting

Ill. Social Security: Taxation and Benefits A. The Structure of Social Security 8. The Impacts of Social Security

1. Labor Supply 2. Savings 3. Distribution of Income

IV. Taxes on Business Income A. The Structure of Corporate Income Taxation 8. The Impacts of the Corporation Income Tax

1. Investments and Mergers 2. Financial Structure of the Firm 3. Deductible Activities 4. Incidence

V. Deficit Finance

VI. Taxes on Consumption

VII. Taxes on Wealth

VIII. The Theory of Tax Design and Tax Reform

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READING LIST All starred (*) readings are required.

I.A. Taxation and Incentives *Slemrod, Joel (1992), "The Economic Impact of the Tax Reform Act of 1986," in Slemrod. *Slemrod, Joel (1994). "A General Model of the Behavioral Response to Taxation," University of

Michigan Working Paper. *Moffit, Robert (1992), "Incentive Effects of the U.S. Welfare System," The Journal of Economic

Literature, 30 (1 ), 1-61 . Slemrod, Joel (1992), "Do Taxes Matter? Lessons from the 1980s," The American Economic Review

Papers and Proceedings, 82, 250-256.

1.8. Taxation and Fairness Rosen, Chapter 8. *Young, Peyton (1990). "Progressive Taxation and Equal Sacrifice," The American Economic Review,

80 (1 ), 253-266. Musgrave, R. A (1959), The Theory of Public Finance, Chapters 4 and 5 (New York, NY: McGraw-Hill

Book Company). Blum, W. J. and H. Kalven (1963), The Uneasy Case for Progressive Taxation (Chicago, IL: The

University of Chicago Press). Okun, Arthur M. (1975), Equality and Efficiency: The Big Tradeoff (Washington. D.C.: The Brookings

Institution).

I.C. Taxation and Incidence Rosen, Chapter 13. *Mclure, Charles E. (1975), "General Equilibrium Incidence Analysis," Journal of Public Economics, 4,

125-161. *Kotlikoff, Laurence J. and Lawrence H. Summers (1987), "Tax Incidence," Chapter 16 in Handbook of

Public Economics Volume II, Alan J. Auerbach and Martin S. Feldstein. eds. (New York, NY: North-Holland).

*Shaven, John 8. and John Whalley (1984), "Applied General Equilibrium Models of Taxation and International Trade," The Journal of Economic Literature, 22 (3), 1007-1051.

Alm, James and Steven Thorpe (1995), "Taxation, Imperfect Competition, and Discontinuities," International Tax and Public Finance .

. Auerbach, Alan J., Jagadeesh Gokhale, and Laurence J. Kotlikoff (1991), "Generational Accounts: A Meaningful Alternative to Deficit Accounting," in Tax Policy and the Economy, David Bradford, ed. (New York, NY: National Bureau of Economic Research and the MIT Press).

Auerbach, Alan J. and Laurence J. Kotlikoff (1987), Dynamic Fiscal Policy (Cambridge, MA: Cambridge University Press).

Baxter, Marianne and Robert G. King (1993), "Fiscal Policy in General Equilibrium," The American Economic Review, 83 (3), 315-335.

Davidson. Carl and Lawrence Martin (1993), "General Equilibrium Incidence under Imperfect Competition: A Quantity-Setting Supergame Analysis," Journal of Political Economy, 93, 1212-1223.

Fullerton, Don and Diane Lim Rogers (1993), WhO Bears the Lifetime Tax Burden? (Washington, D.C.: The Brookings Institution).

Harberger, Arnold C. (1962), "The Incidence of the Corporation Income Tax," Journal of Political Economy, 70, 215-240.

Katz. Michael and Harvey S. Rosen (1985), "Tax Analysis in an Oligopoly Model," Public Finance Quarterly , 13 (1 ), 3-20.

Kotlikoff, Laurence J. (1992) , Generational Accounting (New York, NY: The Free Press). Menchik, Paul and Martin David (1982), "The Incidence of a Lifetime Consumption Tax," National Tax

Journal , 35 (2), 189-203. Mieszkowski, Peter M. (1967) , "On the Theory of Tax Incidence," Journal of Political Economy, 75,

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250-262. Musgrave. Richard A., The Theory of Public Finance, Chapter 10 (New York, NY: McGraw-Hill Book

Company). Pechman, Joseph A. (1986), Who Paid the Taxes. 1966-1985? (Washington, D.C.: The Brookings

Institution). Whalley, John (1988), "Lessons from General Equilibrium Models," Chapter 2 in Uneasy Compromise:

Problems of a Hybrid Income-Consumption Tax, Henry J. Aaron, Harvey Galper, and Jo.seph A. Pechman, eds. (Washington, D.C. : The Brookings Institution).

I.D. Taxation and Excess Burden Rosen, Chapter 14. *Auerbach, Alan J. (1985), "The Theory of Excess Burden and Optimal Taxation." Chapter 2 in

Handbook of Public Economics Volume I, Alan J. Auerbach and Martin S. Feldstein, eds. (New York, NY: North-Holland).

*Browning, Edgar (1976), "The Marginal Cost of Public Funds," Journal of Political Economy, 84 (2), 283-298.

*Ballard, Charles L., John B. Shoven, and John Whalley (1985), "The Total Welfare Cost of the United States Tax System: A General Equilibrium Approach," National Tax Journal , 38, 125-140.

Stuart, Charles (1984), "Welfare Costs per Dollar of Additional Tax Revenue in the U. S.," The American Economic Review, 7 4, 352-362.

Alm, James (1985), "The Welfare Cost ·of the Underground Economy," Economic Inquiry, 24 (2), 243-263.

Ballard. Charles L. , John B. Shaven, and John Whalley (1985), "General Equilibrium Computations of the Marginal Welfare Costs of Taxes in the United States," The American Economic Review, 75, 128-138.

Browning, Edgar K. (1987), "On the Marginal Welfare Cost of Taxation," The American Economic Review, 77, 11-23.

Feldstein, Martin, S. (1978),· "The Welfare Cost of Capital Income Taxation," Journal of Political Economy, 86, S29-S52.

Fullerton, Don (1991), "Reconciling Recent Estimates of the Marginal Welfare Cost of Taxation," The American Economic Review, 81 (1), 302-308.

Harberger, Arnold C. (1979), "Taxation, Resource Allocation, and Welfare," in Taxation and Welfare, Little, Brown and Company.

Harberger, Arnold C. (1979), "The Measurement of Waste, " in Taxation and Welfare (Boston. MA: Little, Brown and Company).

Hausman, Jerry A. (1981), "Exact Consumer's Surplus and Deadweight Loss," The American Economic Review, 71, 662-676.

Mayshar, Joran (1990), "On Measures of Excess Burden and their Application ," Journal of Public Economics, 43, 263-289.

McKenzie, G. W. and I. F. Pearce (1982), "Welfare Measurement--A Synthesis," The American Economic Review, 72, 669-682.

Richter, Donald K. (1977), "Games Pythagoreans Play," Public Finance Quarterly, 5, 495-515. Silberberg, Eugene (1972), "Duality and the Many Consumer's Surpluses," The American Economic

Review, 62, 942-952. Willig, Robert D. (1976), "Consumer's Surplus Without Apology," The American Economic Review, 66,

589-597.

I.E. Taxation and Revenues *Fullerton, Don (1982), "On the Possibility of an Inverse Relationship Between Tax Rates and Tax

Revenues," Journal of Public Economics, 19, 3-22. Giovannini, Alberto and Martha de Melo (1993), "Government Revenue from Financial Repression ,"

The American Economic Review, 83 (4), 953-963. Pechman, Joseph A. (1973) , "Responsiveness of the Federal Individual Income Tax to Changes in

Income," Brookings Papers on Economic Activity, No. 2, 385-413.

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I.F. Tax Administration and Compliance Costs *Slemrod, Joel and Nikki Sorum (1984), "The Compliance Cost of the U. S. Individual Income Tax

System." National Tax Journal, 37 (4), 461-474. *Blumenthal, Marsha and Joel Slemrod (1996), "The Compliance Costs of Big Business," Public

Finance Quarterly. Goode, Richard (1981), "Some Economic Aspects of Tax Administration," International Monetary-Fund

Staff Papers, 28, 249-27 4. Bird, Richard M. (1989), "The Administrative Dimension of Tax Reform in Developing Countries," in

Tax Reform in Developing Countries, Malcolm . Gillis, ed. (Durham, NC: Duke University Press, 315-346).

Mayshar, Joram (1991 ), "Taxation with Costly Administration," Scandinavian Journal of Economics, 93 (1), 75-88.

Pitt, Mark M. and Joel Slemrod (1989), "The Compliance Cost of Itemizing Deductions: Evidence from Individual Tax Returns," The American Economic Review,· 79 (5), 1224-1232.

Slemrod, Joel (1989), "The Return from Tax Simplification: An Econometric Analysis," Public Finance Quarterly, 17 (1), 3-27.

Slemrod, Joel (1992), "Did the Tax Reform Act of 1986 Simplify Tax Matters?" Journal of Economic Perspectives, 6 (1 ), 45-57.

Slemrod, Joel and Shlomo Yitzhaki (1987), "The Optimal Size of a Tax Collection Agency," The Scandinavian Journal of Economics, 89 (2), 183-192.

Wilson, John Douglas (1989), "On the Optimal Tax Base for Commodity Taxation," The American Economic Review, 79 (5), 1196-1206.

Yitzhaki·, Shlomo (1979), "A Note on Optimum Taxation and Administrative Costs," The American Economic Review, 69 (3), 475-480.

I.G. Taxation and Politics Rosen, Chapter 7. *Hettich, Walter and Stanley L. Winer (1988), "Economic and Political Foundations of Tax Structure,"

The American Economic Review, 78, 701-712. Alm, James and Nancy J. McCallin (1996), "The Determinants of State Tax Structures," University of

Colorado Working Paper.

I.H. Optimal Taxation Rosen, Chapter 15. *Auerbach (1985) in I.D. *Alm, James (1996), "What is an 'Optimal' Tax System?" National Tax Journal, 49 (1), 117-133. Atkinson, Anthony B. and Joseph E. Stiglitz (1976), "The Design of Tax Structure: Direct Versus

Indirect Taxation," Journal of Public Economics, 6, 55-76. Diamond, Peter A. ( 1975), "A Many-person Ramsey Tax Rule," Journal of Public Economics, 1975,

335-342. Diamond, Peter A. and James A. Mirrlees (1971), "Optimal Taxation and Public Production, Part I and

II," The American Economic Review, 61, 8-27 and 261-278. Kaplow, Louis (1989), "Optimal Taxation with Costly Enforcement and Compliance," Journal of Public

Economics. Mirrlees, James A. (1976), "Optimal Tax Theory: A Synthesis," Journal of Public Economics, 6, 327-

358. Slemrod, Joel (1990), "Optimal Taxation and Optimal Tax Systems," The Journal of Economic

Perspectives, 4 (1), 157-178. Stern, Nicholas (1976), "On the Specification of Models of Optimum Income Taxation," Journal of

Public Economics, 6, 123-162. Stern, Nicholas (1987), "The Theory of Optimal Commodity and Income Taxation: An Introduction,"

Chapter 2 in The Theory of Taxation for Developing Countries, David Newbery and Nicholas Stern, eds. (New York, NY: Oxford University Press).

Stiglitz, Joseph E. (1987) , "Pareto Efficient and Optimal Taxation and the New New Welfare

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Economics," Chapter 15 in Handbook of Public Economics Volume II, A lan J. Auerbach and Martin S. Feldstein, eds. (New York, NY: North-Holland).

II.A. The Structure of the Individual Income Tax Rosen. Chapter 16. Pechman. Chapters 4 and 7. Due. John F. (1977), "Personal Deductions," in Comprehensive Income Taxation, Joseph A. Pechman,

ed. (Washington. D.C.: The Brookings Institution). Goode, Richard (1976), The Individual Income Tax, Chapters 2, 5, 6, 7, 9 (Washington, D.C.: The

Brookings Institution). Goode, Richard (1977), "The Economic Definition of Income," in Comprehensive Income Taxation

Joseph A. Pechman, ed. (Washington, D.C.: The Brookings Institution).

11.8.1. Labor Supply Rosen. Chapters 9 and 17. *Macurdy, Thomas, David Green, and Harry Paarsch (1989), "Assessing Empirical Approaches for

Analyzing Taxes and Labor Supply," Journal of Human Resources, 25 (3), 415-490. *Eissa. Nada (1995), "Labor Supply and the Economic Recovery Tax Act of 1981 ," in Empirical

Foundations of Household Taxation, Martin Feldstein and James M. Poterba, eds. (Chicago, IL: National Bureau of Economic Research and The University of Chicago Press, 5-38).

Bosworth, Barry and Gary Burtless (1992), "Effects of Tax Reform on Labor Supply, Investment, and Saving," Journal of Economic Perspectives, 6 (1), 3-25. .

Hausman, Jerry A. (1985), "Taxes and Labor Supply," Chapter 4 in Handbook of Public Economics Volume I. , Alan J. Auerbach and Martin S. Feldstein, eds. (New York, NY: North Holland).

Macurdy, Thomas (1992), "Work Disincentive Effects of Taxes: A Reexamination of Some Evidence," The American Economic Review Papers and Proceedings, 82, 243-249.

Triest, Robert K. (1990), "The Effect of Income Taxation on Labor Supply in the United States, " Journal of Human Resources, 25, 490-516.

11.8.2. Saving Rosen, Chapter 17. *Sandmo, Agnar (1985), "The Effects of Taxation on Savings and Risk Taking," Chapter 5 in Handbook

of Public Economics Volume I, Alan J. Auerbach and Martin S. Feldstein, eds. (New York, NY: North-Holland).

*Gale, William G. and John Karl Scholz (1994), "IRAs and Household Saving," The American Economic Review, 84 (5), 1233-1260.

*Poterba, James M .. Steven F. Venti, and David A. Wise (1995), "Do 401(k) Contributions Crowd Out Other Personal Saving?" Journal of Public Economics, 58, 1-32.

*Skinner, Jonathan and Daniel Feenberg (1992), "The Impact of the 1986 Tax Reform Act on Personal Saving," in Slemrod.

Altonji, Joseph G., Furnia Hayashi, and Laurence J. Kotlikoff (1992), "Is the Extended Family Altruistically Linked? Direct Tests Using Micro Data,N The American Economic Review, 82 (5), 1177-1198.

Bernheim, B. Douglas, Andrei Shleifer, and Lawrence H. Summers (1985) , "The Strategic Bequest Motive," Journal of Political Economy, 93, 1045-1076.

Baskin, Michael J. (1978), "Taxation, Saving, and the Rate of Interest," Journal of Political Economy, 86, S3-S27.

Burman. Leonard. Joseph Cordes, and Larry Ozanne (1990), "IRAs and National Savings," National Tax Journal, 43 (3), 259-283.

Engen, Eric, William G. Gale, and John Karl Scholz (1994) , "Do Savings Incentives Work?" Brookings Papers on Economic Activity, 1 , 85-151 .

Hubbard, R. Glenn, Jonathan Skinner, and Stephen P. Zeldes (1995), "Precautionary Saving and Social Insurance," Journal of Political Economy, 103 (2), 360-399.

Kotlikoff, Laurence J. (1984), ''Taxation and Savings: A Neoclassical Perspective," The Journal of

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Economic Literature, 22, 1576-1629. Modigliani , Franco, et al. (1988), "Symposium, Explaining Savings," The Journal of Economic

Perspectives, 2(2), 15-58. Poterba, James M., Steven F. Venti, and David A. Wise (1996) , "Personal Retirement Saving

Programs and Asset Accumulation: Reconciling the Evidence," NBER Working Paper 5599. Samuelson, Paul A. (1959), "An Exact Consumption-loan Model of Interest with or without the Social

Contrivance of Money," Journal of Political Economy, 66, 467-482. Summers, Lawrence H. (1981), "Capital Taxation and Accumulation in a Life Cycle Growth Model,"

The American Economic Review, 71., 533-544. Venti, S. and David Wise (1987), "IRAs and Saving," in The Effects of Taxation on Capital

Accumulation, Martin S. Feldstein , ed. (Chicago, IL: The University of Chicago Press).

11.B.3. Portfolio Choice Rosen, Chapter 17 (Portfolio Composition). *Sandmo, in 11.B.2. Bulow, Jeremy and Lawrence H. Summers (1984), "The Taxation of Risky Assets," Journal of Political

Economy, 92, 20-39. Feldstein, Martin S. (1976), "Personal Taxation and Portfolio Composition: An Econometric Analysis,"

Econometrica, 44, 631-650. Hubbard, R. Glenn (1985), "Personal Taxation, Pension Wealth. and Portfolio Composition," The

Review of Economics and Statistics, 57. Stiglitz, Joseph E. (1969), "The Effects of Income, Wealth , and Capital Gains Taxation on Risk­

Taking," Quarterly Journal of Economics, 83, 263-283.

11.B.4. Tax Preferences Rosen, Chapter 17. *Clotfelter, Charles T. (1992), "The Impact of Tax Reform on Charitable Giving: A 1989 Perspective," in

Siem rod. *Poterba, James M. (1992), "Taxation and Housing Markets: Preliminary Evidence on the· Effects of

Recent Tax Reforms," in Slemrod. *Feenberg, Daniel (1987), "Are Tax Price Models Really Identified?" National Tax Journal, 60 (4), 629-

633. Aaron. Henry J. (1970), "Income Taxes and Housing," The American Economic Review, 60, 789-806. Browning, Jacqueline M. (1979), "Estimating the Welfare Cost of Tax Preferences," Public Finance

Quarterly, 7, 199-219. Clotfelter, Charles T. and C. Eugene Steuerle (1981), "Charitable Contributions," in Henry J. Aaron and

Joseph A. Pechman, How Taxes Affect Economic Behavior? (Washington, D.C.: The Brookings Institution).

de Leeuw, Frank and Larry Ozanne (1981), "Housing," in Henry J. Aaron and Joseph A. Pechman, How Taxes Affect EconomicBehavior? (Washington, D.C.: The Brookings Institution).

Feldstein, Martin S. (1980), "A Contribution to the Theory of Tax Expenditures," in The Economics of Taxation, Henry J. Aaron and Michael J. Baskin, eds. (Washington, D.C.: The Brookings Institution).

Follain, James R. , Jr. (1982), "Does Inflation Affect Real Behavior: The Case of Housing," Southern Economic Journal, 48, 570-582.

Hendershott. Patric (1980), "Real User Costs and the Demand for Single-Family Housing," Brookings Papers on Economic Activity, No. 2 , 401-444.

Long, James E. and Frank A. Scott (1984), "The Impact of the 1981 Tax Act on Fringe Benefits and Federal Tax Revenues," National Tax Journal, 37, 185-194.

Poterba, James M. (1984), "Tax Subsidies to Owner-occupied Housing: An Asset Market Approach," Quarterly Journal of Economics, 99; 729-752.

Woodbury, S. A. (1983), "Substitution Between Wage and Nonwage Benefits," The American Economic Review, 73 (1), 166-182.

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11.B.5. Capital Gains *Gillingham. Robert and John S. Greenlees (1992), "The _Effect of Marginal Tax Rates on Capital Gains

Revenue: Another Look at the Evidence," National Tax Journal, 45 (2), 167-177. *Burman, Leonard E., Kimberly Clausing, and John F. O'Hare (1994), "Tax Reform and Realizations of

Capital Gains," National Tax Journal, 47 (1), 1-18. *Burman, Leonard E. and William Randolph (1994), "Measuring Permanent Responses to Capital

Gains Tax Changes in Panel Data," The American Economic Review, 84, 794-809. Auerbach, Alan (1988), "Capital Gains Taxation in the United States: Realizations, Revenue, and

Rhetoric," Brookings Papers on Economic Activity, No. 2, 595-631 . Auten, Gerald and Charles T. Glatfelter (1982), "Permanent Versus Transitory Tax Effects and the

Realization of Capital Gains," Quarterly Journal of Economics, 97, 613-632. Congressional Budget Office (1988), How Capital Gains Tax Rates Affect Revenues (Washington,

D.C.: Government Printing Office). Cook, Eric W. and John F. O'Hare (1992), "Capital Gains Redux: Why Holding. Periods Matter,"

National Tax Journal, 45 (1), 53-76. Feldstein, Martin S., Joel Slemrod, and Shlomo Yitzhaki (1980), "The Effects of Taxation on the Selling

and Switching of Common Stock," Quarterly Journal of Economics, 94, 777-791. Lindsay, Lawrence (1987), "Capital Gains Taxes Under the Tax Reform Act of 1986: Revenue

Estimates Under Various Assumptions," National Tax Journal, 40 (3), 489-504. Minarik. Joseph J. (1981 ), "Capital Gains," in How Taxes Affect Economic Behavior?, Henry J. Aaron

and Joseph A. Pechman, eds. (Washington. D.C.: The Brookings Institution).

11.B.6. Tax Avoidance and Evasion *Alm, James (1987), "Compliance Costs and the Tax Avoidance-Tax Compliance Decision," Public

Finance Quarterly, 16(1.), 323-338. *Alm, James, Roy Bahl, and Matthew N. Murray (1990), "Tax Structure and Tax Compliance," The

Review of Economics and Statistics, 72 (4), 603-613. *Alm, James, Gary H. McClelland, and William D. Schulze (1992), "Why Do People Pay Taxes?"

Journal of Public Economics, 48, 21-.38. *Erard, Brian (1993), "Taxati.on with Representation: An Analysis of the Role of Tax Practitioners in

Tax Compliance," Journal of Public Economics, 52, 163-197. • Alm, James, Michael McKee, and William Beck (1990), "Amazing Grace: Tax Amnesties and

Compliance," National Tax Journal, 43 (1), 23-37. Alm, James, Roy Bahl, and Matthew N. Murray (1993), "Audit Selection and Income Tax

Underreporting in the Tax Compliance Game," Journal of Development Economics, 41 (1), 1-. 33.

Allingham, Michael G. and Agnar Sandmo (1972), "Income Tax Evasion: A Theoretical Analysis," Journal of Public Economics, 1, 323-338.

Clotfelter, Charles T. (1983), "Tax Evasion and Tax Rates: An Analysis of Individual Tax Returns," The Review of Economics and Statistics, 65, 363-373.

Cowell, Frank A. (1990), Cheating the Government: The Economics of Evasion (Cambridge, MA: The MIT Press).

Dubin, Jeffrey A. , Michael J. Graetz, and Louis L. Wilde (1990), "The Effect of Audit Rates on the Federal Individual Income Tax, 1977-1986," National Tax Journal, 43 (4), 395-409.

Erard. Brian and Jonathan Feinstein (1994), "Honesty and Evasion in the Tax Compliance Game," RAND Journal of Economics, 25 (1), 1-19.

Feinstein, Jonathan (1991) , "An Econometric Analysis of Income Tax Evasion and its Detection," RAND Journal of Economics, 22 (1), 14-35.

Reinganum, Jennifer F. and Louis L. Wilde (1985), "Income Tax Compliance in a Principal-Agent Framework," Journal of Public Economics, 26, 1-18.

Reinganum, Jennifer F. and Louis L. Wilde (1986), "Equilibrium Verification and Reporting Policies in a Model of Tax Evasion," International Economic Review, 27, 739-760.

11.B.7. Tax Treatment of the Family

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*Feenberg, Daniel R. and Harvey S. Rosen (1995), "Recent Developments in the Marriage Tax," National Tax Journal, 48 (1 }, 91-101 . ·

*Apps, Patricia F. and Ray Rees (1988), "Taxation and the Household," Journal of Public Economics, 35, 355-369.

*Alm. James and Leslie A Whittington (1996}, "Income Taxes and the Timing of Marital Decisions." Journal of Public Economics.

Alm, James and Leslie A Whittington (1995), "Income Taxes and the Marriage Decision," Applied Economics, 27 (1), 25-31 .

Alm, James and Leslie A Whittington (1996), "For Love or Money: Economic Incentives and the Marriage Decision," University of Colorado Working Paper.

Alm, James and Leslie A Whittington (1996), "The Rise and Fall and Rise ... of the Marriage Tax," ·National Tax Journal.

Brazer, Harvey E. (1980), "Income Tax Treatment of the Family," in The Economics of Taxation, Henry J. Aaron and Michael J. Baskin, eds. (Washington, D.C.: The Brookings Institution, 223-246).

Whittington. Leslie A and James Alm (1996), '"Till Death or Taxes Do Us Part: Income Taxes and the Divorce Decision," Journal of Human Resources.

Whittington, Leslie A , James Alm, and H. Elizabeth Peters (1990), "Fertility and the Personal Exemption: Implicit Pronatalist Policy in the United States," The American Economic Review, 80, 545-556.

11.8.8. Inflation Aaron, Henry J., ed. (1976), Inflation and the Income Tax (Washington, D.C.: The Brookings

Institution). Alm, James and Reuben A Zubrow (1987}, "Who Benefits from Indexation?" Public Finance Quarterly

15 (1), 27-44. Congressional Budget Office (1980), Indexing the Individual Income Tax for Inflation (Washington,

· D.C.: Government Printing Office).

11.8.9. Tax Policy Uncertainty *Alm, James ('1988), "Uncertain Tax Policies, Individual Behavior, and Welfare," The American

Economic Review, 78, 237-245. *Skinner, Jonathan (1988), "The Welfare Cost of Uncertain Tax Policy," Journal of Public Economics,

37, 129-145. *Alm, James. Betty R. Jackson. and Michael McKee (1992), "Institutional Uncertainty and Taxpayer

Compliance," The American Economic Review, 82 (4), 1018-1026.

11.8.10. Income Reporting *Feldstein, Martin S. (1996), "The Effect of Marginal Tax Rates on Taxable Income: A Panel Study of

the 1986 Tax Reform Act," Journal of Political Economy, 103 (3), 551-572. *Alm, James and Sally Wallace (1996), "Taxpayer Responses to the Tax Reform Act of 1986,"

University of Colorado Working Paper. Alm, James and Sally Wallace (1996), "Tax Rates and Taxpayer Reporting Decisions: Quantile.

Quintile, and Ordinary Least Squares Estimation Results," University of Colorado Working Paper.

Feenberg, Daniel R. and James M. Poterba (1993). "Income Inequality and the Incomes of Very High­income Taxpayers: Evidence from Tax Returns," in Tax Policy and the Economy, James M. Poterba, ed. (Cambridge, MA: The MIT Press, 145-177).

Samwick, Andrew (1996) , "Tax Shelters and Passive Losses after the Tax Reform Act of 1986," in Empirical Foundations of Household Taxation, Martin Feldstein and James M. Poterba, eds. (Chicago, IL: National Bureau of Economic Research and The University of Chicago Press. 193-234).

Slemrod, Joel (1996), "High-income Families and the Tax Changes ofthe 1980s: The Anatomy of Behavioral Response," in Empirical Foundations of Household Taxation, Martin Feldstein and James M. Poterba, eds. (Chicago, IL: National Bureau of Economic Research and The

University of Chicago Press, 169-192).

111.B. The Impact of Social Security Rosen, Chapters 10 and 11.

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*Feldstein, Martin (1996), "Social Security and Saving: New Time Series Evidence," National Tax Journal, 49 (2), 151-164.

*Leimer D. R. and S. D. Lesnoy (1982), "Social Security and Private Savings: New Time Series Evidence," Journal of Political Economy, 90, 606-629.

*Burkhauser, Richard V. and John A. Turner (1985). "Is the Social Security Payroll Tax a Tax?" Public Finance Quarterly, 13 (3), 253-268.

*Vistnes, Jessica Primoff (1994), "An Empirical Analysis of Married Women's Retirement Decisions," National Tax Journal, 47 (1), 135-153.

Baskin, Michael J., et al (1987), "Social Security: A Financial Appraisal Across and Within Generations," National Tax Journal, 40 (1), 19-34.

Feldstein, Martin S. (1974), "Social Security, Induced Retirement, and Aggregate Capital Accumulation," Journal of Political Economy, 82, 905-926.

Hansson, Ingemar and Charles Stuart (1989), "Social Security as Trade Among Living Generations," The American Economic Review, 79 (5), 1182-1195.

Pechman, Joseph A. (1983), The Economic Effects of Social Security (Washington, D.C.: The Brookings Institution).

IV.A. The Structure of Corporate Income Taxation Rosen, Chapter 18. Pechman, Chapter 5. *Boadway, Robin (1987), "The Theory and Measurement of Effective Tax Rates," in The Impact of

Taxation on Economic Decisions, Jack Mintz and D. Purvis, eds. (J. Deutsch). Congressional Budget Office (1985), Revising the Corporate Income Tax (Washington, D.C.:

Government Printing Office). Fullerton. Don (1984), "Which Effective Tax Rate?" National Tax Journal, 37 (1), 23-41. Stiglitz. Joseph E. (1973), "Taxation, Corporate Financial Policy, and the Cost of Capital," Journal of

Public Economics, 2. 1-34. Stiglitz, Joseph E. (1976), "The Corporation Income Tax," Journal of Public Economics, 5, 301-312.

IV.8.1. Investments and Mergers *Chirinko, Robert (1986), "Business Investment and Tax Policy," National Tax Journal, 39 (2), 137-155 .. *Auerbach, Alan J. and Kevin Hassett (1992), "Investment. Tax Policy, and the Tax Reform Act of

1986," in Slemrod. *Slemrod, Joel (1992), "The Impact of the Tax Reform Act of 1986 on Foreign Direct Investment to and

from the United States," in Slemrod. *Nadeau, Serge and Robert P. Strauss (1991), "Tax Policies and the Real and Financial Decisions of

the Firm: The Effects of the Tax Reform Act of 1986," Public Finance Quarterly , 19 (3), 251-292.

Auerbach, Alan J. , and D. Reishus (1988), "The Effects of Taxation on the Merger Decision," in Alan J. Auerbach , ed., Corporate Takeovers: Causes and Consequences (Chicago, IL: The University of Chicago Press).

Feldstein, Martin S. and Lawrence H. Summers (1979), "Inflation and the Taxation of Income in the Corporate Sector," National Tax Journal, 32, 445-470.

Hendershott, Patric H. and Sheng-Cheng Hu (1981), "Investment in Producers' Equipment," in Henry J. Aaron and Joseph A. Pechman. How Taxes Affect Economic Behavior? (Washington, D.C.: The Brookings Institution).

IV.8.2. Financial Structure *Zodrow, George R. (1991) . "On the 'Traditional' and 'New' Views of Dividend Taxation," National Tax

Journal, 44 (4), 497-509.

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*Gordon, Roger H. and Jeffrey K. MacKie-Mason (1992), "Effects of the Tax Reform Act of 1986 on Corporate Financial Policy and Organization Form," in Slemrod.

*Plesko, George (1994) , "Corporate Taxation and the Financial Characteristics of Firms," Public Finance Quarterly, 22 (3), 311-334.

Auerbach, Alan J. (1983), "Taxation, Corporate Financial Policy, and the Cost of Capital," The Journal of Economic Literature, 21 , 905-940.

Bagwell, Lyle and John Shaven (1989), "Cash Distributions to Shareholders," Journal of Economic Perspectives, 3, 129-140.

Bolster, Paul J. and Vahan Janjigian (1991), "Dividend Policy and Valuation Effects of the Tax Reform Act of 1986," National Tax Journal, 44 (4), 511-518.

Brinner, Roger E. and Stephen H. Brooks (1981), "Stock Prices," in Henry J. Aaron and Joseph A. Pechman, How Taxes Affect Economic Behavior? (Washington, D.C. : The Brookings Institution).

Carroll, Robert and David Joulfaian (1993), "Do Taxes Affect Corporate Financial Decisions? The Choice of Organization Form," unpublished manuscript.

Gordon, Roger H. and Burton G. Malkiel (1981), "Corporation Finance," in Henry J. Aaron and Joseph A. Pechman, How Taxes Affect Economic Behavior? (Washington, D.C.: The Brookings Institution).

Miller. Merton and Myron Scholes (1982), "Dividends and Taxes: Some Empirical Evidence," Journal of Political Economy, 90, 1118-1141 .

Poterba. James M. and Lawrence H. Summers (1983). "Dividend Taxes. Corporate Investment. and 'Q'," Journal of Public Economics, 22, 135-167.

IV.B.3. Tax Deductible Activities *Trezevant, Robert (1994), "How Did Firms Adjust Their Tax-Deductible Activities in Response ta the

Economic Recovery Tax Act of 1981?" National Tax Journal, 47 (2), 253-271 .

IV .B.4. Incidence *Gordon, Robert J. (1967), "The Incidence of the Corporation Income Tax in U.S. Manufacturing," The

American Economic Review, 57, 731-758. Harberger, Arnold C. (1962), "The Incidence of the Corporation Income Tax," Journal of Political

Economy, 70, 215-240. Krzyzaniak, Marian and Richard A. Musgrave (1964), The Shifting of the Corporation Income Tax

(Baltimore, MD: The Johns Hopkins University Press).

V. Deficit Finance Rosen. Chapter 19. *Barro. Robert J. (1979), "On the Determination of the Public Debt," Journal of Political Economy, 87,

940-971 . *Seater, John J. (1993), "Ricardian Equivalence," The Journal of Economic Literature, 31 (1), 142-190. Barro. Robert J. (1974), "Are Government Bonds Net Wealth?" Journal of Political Economy, 82, 1095-

1117. Blejer, Mario I. and Adrienne Cheasty (1991 ), "The Measurement of Fiscal Deficits: Analytical and

Methodological Issues," The Journal of Economic Literature, 29 (4), 1644-1678. Conway, Karen Smith (1994), "Reconsidering the Effects of Fiscal Policy on Private Sector Activity: A

Unifying View of Neutrality," Public Finance Quarterly, 22 (4), 195-221. Hansson, Ingemar and Charles Stuart (1987), "The Welfare Costs of Deficit Finance," Economic

!.!J..ru!i.!Y, 25 (3), 479-496. Leiderman, Leonardo and Mario I. Blejer (1988), "Modeling and Testing Ricardlan Equivalence,"

International Monetary Fund Staff Papers, 35 (1). 1-35. Slate, Steven. Michael McKee, William Beck. and James Alm (1995), "Testing Ricardian Equivalence

under Uncertainty," Public Choice, 85 (1-2), 11-29. Yellen, Janet L., et al. (1989), "Symposium, Budget Deficit," The Journal of Economic Perspectives,

3(2). 17-93.

VI. Taxes on Consumption Rosen, Chapter 20. Pechman, Chapter 6.

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Bradford, David (1980), "The Case for a Personal Consumption Tax," in What Should Be Taxed: Income or Expenditure? Joseph A. Pechman, ed. (Washington. D.C. : The Brookings Institution).

VII. Taxes on Wealth Rosen, Chapters 20 and 21. Pechman, Chapters 8 and 9. *Mieszkowski, Peter M. (1972), "The Property Tax: An Excise Tax or a Profits Tax?", Journal of Public

Economics, 1, 73-96. Mieszkowski, Peter and George R. Zodrow (1989), "Taxation and the Tiebout Model," The Journal of

Economic Literature, 27 (3), 1098-1146. Joulifian, David (1991), "Charitable Bequests and Estate Taxes," National Tax Journal, 44 (2), 169-

180. Mclure, Charles E. (1977), "The New View of the Property Tax: A Caveat," National Tax Journal, 30,

69-76.

VIII. The Theory of Tax Design and Tax Reform *Aaron, 'Henry J. (1992), "Lessons for Tax Reform," in Slemrod. ·*Feldstein, Martin S. (1976), "On the Theory of Tax Reform," Journal of Public Economics, 6, 77-104. *Zodrow, George (1981), "Implementing Tax Reform," National Tax Journal, 34(4), 401-418. Boadway, Robin and Neil Bruce (1985), "Theoretical Issues in Tax Reform," in David Laidler (ed.) ,

Approaches to Economic Well-Being (Toronto, Canada: University of Toronto Press). Aaron, Henry J., et al. (1987), "Symposium, Jax Reform," Journal of Economic Perspectives, 1 (1), 7-

119. Aaron, Henry J. and Harvey Galper (1985), Assessing Tax Reform (Washington, D.C.: The Brookings

Institution). Bradford. David (1986), Chapter 5 in Untangling the Income Tax (Boston, MA: Harvard University

Press). Goode, Richard (1980), "The Superiority of the Income Tax," in What Should Be Taxed: Income or

Consumption?, Joseph A. Pechman, ed. (Washington, D.C. : The Brookings Institution). Musgrave, Richard A. (1976), "ET, OT, and SBT," Journal of Public Economics, 6, 3-16. World Bank (1988), "Reforming Tax Systems," Chapter 4 in World Development Report (New York,

NY: Oxford University Press, 79-104). · Auerbach, Alan J., Laurence J. Kotlikoff, and Jonathan Skinner (1983), "The Efficiency Gains from

Dynamic Tax Reform," International Economic Review, 81-100.