VERSION OF AUGUST 25, 2009
Econ 9460
Advanced Public Economics II (Taxation)
David L. Sjoquist
Fall 2009
Office:
Phone:
email:
Office Hours:
Class Time:
Class Place:
433 AYSPS
404.413.0246
sjoquist@gsu.edu
By appointment
MW 12:00-1:15 pm
501 GCB
COURSE OBJECTIVES
Public Economics examines government tax and spending policies: what does government do, what are
the effects of these actions, and are these effects “good” or “bad”. Economics 9460 is part of a doctorallevel sequence in public economics, and focuses upon issues in taxation. Using theoretical, empirical,
and experimental tools, the course describes the major taxes used around the world; it analyzes the
impacts of taxation on the allocation of resources, the distribution of economic welfare, and the level of
tax revenues; and it evaluates these impacts.
COURSE REQUIREMENTS
The prerequisite for this course is Econ 8100.
There will be two exams (a mid term and final), one paper, and periodic homework assignments.
 Midterm examination worth 30 percent of the final grade will be given on October 12th.
 A comprehensive final exam worth 30 percent of the final grade will be given on December 7th at
12:30 pm.
 An original research paper on a public economics topic of your choice; the research paper is worth 30
percent of the final grade. Details of the paper will be discussed in class.
o Paper topics with a one paragraph abstract are due September 9th.
o Annotated outlines (3-5 pages) are due on October 12th.
o Paper is due no later than December 7th at 12:30 pm.
 The remaining 10 percent of the final grade is based upon periodic graded assignments. You will be
told which assignments are to be handed in for grades.
Make up exams and late papers and homework will be allowed only if permission is given prior to the
scheduled exam.
ULearn will be used for the course; students are required to check ULearn for calendar updates,
modifications of the syllabus, informational postings, assignments and some readings. ULearn will also
be used to provide presentation materials for class. Please check ULearn each morning before class for
updates.
A number of book chapters and articles may be hard to find. I will post various chapters and articles on
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the ULearn website.
Please remember that all university regulations, deadlines, and policies must be observed. In particular,
students are expected to follow the GSU APolicy on Academic Honesty@ (Section 409 of the Georgia
State University Faculty Handbook). Also, on some date after the mid-point of the course (a date set by
the Provost), students on the grade rolls but no longer taking the class will be given a grade of WF, and
the last day of class that the student attended or turned in an assignment will be reported to the GSU
administration.
COURSE LEARNING OUTCOMES
1. The student should be able to define and understand the effects of taxes on the distribution of income
(e.g., the theory of “tax incidence”), and be able to measure the incidence of direct and indirect taxes
using both partial and general equilibrium models of tax incidence.
2. The student should be able to define and understand concepts of “tax equity”, be able to evaluate the
equity of a tax and of tax systems.
3. The student should be able to define and understand the effects of taxes on the efficiency of resource
allocation (e.g., the theory of “excess burden”), and be able to analyze the excess burden of direct and
indirect taxes using both partial and general equilibrium models of excess burden.
4. The student should be able to define and understand the effects of taxes on revenues, and be able to
derive the revenue maximizing tax rate for a particular type of tax.
5. The student should be able to derive the conditions for optimal commodity and income taxation,
including being able to analyze the trade-offs among equity, efficiency, and revenues in any tax
system.
6. The student should be able to define and understand positive models of taxation, and be able to
analyze their implications for tax structure.
7. The student should be able to analyze savings, labor, retirement, consumption, and investment
decisions under alternative tax regimes.
8. The student should be able to construct and evaluate a model of tax compliance, and be able to
analyze the impacts of alternative tax rate and tax administration policies on tax compliance.
9. The student should be able to describe and understand the major revenue sources (e.g., personal
income tax, corporate income tax, deficit finance, taxes on consumption, and taxes on wealth).
10. The student should be able to define, understand, and evaluate the principles of public finance in a
federal system.
Your constructive assessment of this course plays an indispensable role in shaping education at Georgia
State. Upon completing the course, please take time to fill out the online course evaluation.
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COURSE OUTLINE
The course syllabus provides a general plan for the course; deviations may be necessary.
I.
Introduction
A.
B.
C.
D.
II.
Review of welfare theory
A.
B.
C.
III.
Studies of all taxes
Personal income and payroll tax
Commodity taxes
Corporate income tax
Property tax
Estate tax
Optimal taxation
A.
B.
C.
D.
VII.
Partial equilibrium
General equilibrium (Harberger model and its many extensions)
Dynamic incidence (growth and overlapping generation model
Incidence and efficiency – empirical and tax-specific theory
A.
B.
C.
D.
E.
F.
VI.
Measuring income and income distribution
Horizontal equity
Vertical equity
Incidence – general theory
A.
B.
C.
V.
Pareto Optimality
Social Welfare Function
Theory of excess burden
Equity/Fairness
A.
B.
C.
IV.
Overview of the course (topics, assignments, tests, etc)
Issues of interest (who bears the burden and equity of taxes; efficiency – excess burden
and optimal tax; incentives)
Brief overview of U.S. taxes
General tax principals
Commodity taxes (indirect taxes)
Income tax (direct taxes)
Tax on capital
Direct vs. indirect
Tax Structure and Incentive Effects
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VIII.
Personal Income Tax: Structure and Incentive effects.
A.
B.
C.
D.
E.
F.
G.
IX.
Structure
Labor supply (hours, effort, fringe benefits, low income supports, retirement, etc)
Saving
Risk taking, portfolio
Capital gains
Family formation (marriage and fertility)
Other incentives, including housing and charitable giving
Taxes on business income
A.
B.
C.
D.
E.
Structure
Investment
Corp capital structure, dividend policy
Business structure
Location of physical investment
X.
Consumption, Sales and Excise taxes
XI.
Taxes on wealth
A.
B.
Property tax
Estate, gift and inheritance taxes
XII.
Tax rate and tax revenue
XIII.
Tax administration, tax compliance, tax avoidance/tax evasion
XIV.
Behavioral public economics
XV.
Tax reform
A.
B.
C.
D.
Context for Reform
What to do about the Underground Economy
Flat Tax Movement
Excise Taxes in Developing Economies
Other potential topics, but not covered in this course, include:
1. Inflation and indexing
2. International tax issues
3. Taxation and politics
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4. Deficit finance
5. Corrective taxes
6. Optimal sin taxes
7. Social security
a. Labor supply
b. Saving
c. Intergenerational income distribution
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TEXTBOOKS
There are no required textbooks. However, I recommend that you read the relevant chapters of an
intermediate-level public finance textbook. In the course outline I have noted relevant chapters from
Rosen, but any such book will do. Here are four such books:
Harvey S. Rosen and Ted Gayer, Public Finance, 8th Edition (Chicago, IL: Richard D. Irwin,
Inc., 2008), denoted "Rosen”. (Note that the order, and hence numbering, of the chapters
are not the same as in previous editions.)
Neil Bruce, Public Finance and the American Economy, Second Edition (Reading, MA:
Addison-Wesley Educational Publishers, Inc., 2001).
Jonathan Gruber, Public Finance and Public Policy, 2nd edition (New York, NY: Worth
Publishers, 2007).
Joseph E. Stiglitz, Economics of the Public Sector, 3rd edition (New York, N.Y.: Norton &
Company, 2000).
The following are graduate level public economics textbooks. Some chapters from some of these books
have been assigned.
Richard W. Tresch, Public Finance: a Normative Theory, 2nd edition, 2002, denoted “Tresch”
Robin Boadway and David Wildasin, Public Sector Economics, 2nd edition, 1984, denoted
“B&W”
Atkinson and Stiglitz, Lectures in Public Finance, 1980, denoted “A&S.”
Myles, Gareth D., Public Economics, 1995, denoted “Myles”
Salanie, Bernard, The Economics of Taxation, 2003, denoted “Salanie.”
Alan J. Auerbach and Martin Feldstein, Handbook of Public Economics, there are 4 volumes,
1985, 1987, 2002, 2002, denoted “Handbook of PE: I - IV”
Jha, Raghbendra, Modern Public Economics, 1998; 2nd edition due out in fall 2009, denoted
“Jha.”
Richard Musgrave, The Theory of Public Finance, 1959, denoted “Musgrave.”
There are assigned or recommended readings from the following books:
W. Bartley Hildreth and James A. Richardson, eds., Handbook on Taxation (New York, NY:
Marcel Dekker, Inc., 1999), denoted "Handbook."
Joel Slemrod, ed., Do Taxes Matter? The Impact of the Tax Reform Act of 1986 (Cambridge,
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MA: The MIT Press, 1992), denoted "Slemrod."
Joseph A. Pechman, Federal Tax Policy, Fifth Edition, (Washington, D.C.: The Brookings
Institution, 1987), denoted "Pechman."
OTHER READING
The following provide useful advice to economists (read on your own):
McCloskey, Donald, "Economical Writing," Economic Inquiry, April, 1985, 187-222.
Hamermesh, Daniel S., "The Young Economist's Guide to Professional Etiquette," Journal of
Economic Perspectives, Winter, 1992, 169-179.
Thomson, William, A Guide for the Young Economist, MIT Press, 2001
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READING LIST
All starred (*) readings are required.
Changes to the required readings are likely to be made during the semester. However, the readings
through section VIII are very firm.
I. Introduction
*Gelles, Ann J. (1999), “Legal and Constitutional Foundations of Taxation”, Chapter 2 of Handbook.
*Musgrave, Chapter 1, “A Brief History of Fiscal Doctrine,” Handbook of PE: I
*Rosen, Chapter 1, “Introduction” and Chapter 2, “Tools of Positive Analysis”
Richardson, James A. and W. Bartley Hildreth (1999), AEconomic Principles of Taxation@, Chapter 3 of
Handbook.
Slemrod, Joel and Jon Bakija (1999), AAn Overview of the U.S. Tax System@, Chapter 19 of Handbook.
Or, Slemrod and Bakija, Taxing Ourselves: A Citizen’s Guide to the Debate Over Taxes, 4th
edition, 2008
Tridimas, George and Stanley Winer (2005), “The Political Economy of Government Size,” European
Journal of Political Economy, vol. 21: 643-666.
Some info on taxes around the globe:
http://unpan1.un.org/intradoc/groups/public/documents/UN/UNPAN005543.pdf
http://www.oecdobserver.org/news/fullstory.php/aid/651/The_truth_about_tax_burdens.html
http://epp.eurostat.ec.europa.eu/cache/ITY_OFFPUB/KS-SF-07-031/EN/KS-SF-07-031-EN.PDF
II. Review of Welfare Economics
*Auerbach, Alan J. (1985), "The Theory of Excess Burden and Optimal Taxation," Chapter 2 in
Handbook of PE: I.: 61-86.
*B&W, Appendix to Chapter 9, “Normative Analysis of Taxation: Efficiency Aspects”, pp 248-255.
*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.
*Browning, Edgar (1976), "The Marginal Cost of Public Funds," Journal of Political Economy, 84 (2),
283-298.
*Harberger, Arnold C. (1979), "Taxation, Resource Allocation, and Welfare," Chapter 2 in Taxation and
Welfare, Little, Brown and Company.
*Hines, James R. (1999), “Three Sides of Harberger Triangles,” Journal of Economic Perspectives, 13
8
(2), 167-188.
*Rosen, Chapter 3, “Tools of Normative Analysis” and Chapter 15, “Taxation and Efficiency”.
Auerbach, Alan and James Hines (2002), Chapter 21 “Taxation and Economic Efficiency”, Handbook in
PE: III: pp 1348-1361.
Ballard, Charles L., John B. Shoven, and John Whalley (1985), "General Equilibrium Computations of
the Marginal Welfare Costs of Taxes in the United States," American Economic Review, 75, 128138.
Browning, Edgar K. (1987), "On the Marginal Welfare Cost of Taxation," American Economic Review,
77, 11-23.
Clemens, Jason, Niels Veldhuis, and Milagros Palacios (2007), “Tax Efficiency: Not all Taxes are
Created Equal,” Studies in Economic Prosperity, Fraser Institute (Vancouver, BC).
Creedy, John (2003), “The Excess Burden of Taxation and Why it (Approximately) Quadruples When the
Tax Rate Doubles,” New Zealand Treasury, Working Paper 03/29.
Diamond, Peter and Daniel McFadden (1974). "Some Uses of the Expenditure Function in Public
Finance." Journal of Public Economics 3: 3-21.
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."
American Economic Review, 81 (1), 302-308.
Goulder, Lawrence H. and Roberton C. Williams III (2002), “The Substantial Bias from Ignoring General
Equilibrium Effects in Estimating Excess Burden, and a Practical Solution,” Journal of Political
Economy, 111(4), 898-927.
Gravelle, Jane and Laurence Kotlikoff (1988), “Does the Harberger Model Greatly Understate the Excess
Burden of the Corporate Tax?—Another Model Says Yes,” NBER Working Paper No. 2742,
October, 1988.
Harberger, Arnold C. (1979), "The Measurement of Waste," in Taxation and Welfare (Boston, MA:
Little, Brown and Company), also AER 1964
Hausman, Jerry A. (1981), "Exact Consumer's Surplus and Deadweight Loss," American Economic
Review, 71, 662-676.
Jha, Part 1 (Chapters 1-3), “Welfare Economics”
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," American Economic
9
Review, 72, 669-682.
Myles, Chapter 2, “General Equilibrium and Welfare.”.
Richter, Donald K. (1977), "Games Pythagoreans Play," Public Finance Quarterly, 5, 495-515.
Silberberg, Eugene (1972), "Duality and the Many Consumer's Surpluses," American Economic Review,
62, 942-952.
Stuart, Charles (1984), "Welfare Costs per Dollar of Additional Tax Revenue in the U. S.," American
Economic Review, 74, 352-362.
Tresch, Chapter 1 “Introduction to Normative Public Sector Theory” and Chapter 2 “A General
Equilibrium Model for Public Sector Analysis.” (If you have not read chapters 1-4 of Tresch, you
should read them.)
Willig, Robert D. (1976), "Consumer's Surplus without Apology," American Economic Review, 66, 589597.
III. Equity/Fairness
*Rosen, Chapter 12, “Income Redistribution: Conceptual Issues”.
*Tresch, Chapter 11, “Applying First-Best Principles of Taxation—What to Tax and How” (pp 331-361
only).
*Young, Peyton (1990). “Progressive Taxation and Equal Sacrifice”, American Economic Review, 80
(1), 253-266.
Blum, W. J. and H. Kalven (1953). The Uneasy Case for Progressive Taxation (Chicago, IL: The
University of Chicago Press).
Myles, chapter 3, “Topics in Measurement.”
IV. Incidence—general theory
*A&S Chapter 6, “Tax Incidence—Simple Competitive Equilibrium” and Chapter 7, “Tax Incidence—
Departures from the Standard Model” (pp 200-208 only).
*B&W Chapter 12, “Tax Incidence” (pp 348-382 plus appendices only).
*Harberger, Arnold C. (1962), "The Incidence of the Corporation Income Tax," Journal of Political
Economy, 70, 215-240.
*McLure, Charles E. (1975), “General Equilibrium Incidence Analysis”, Journal of Public Economics, 4,
125-161.
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*Rosen, Chapters 14, “Taxation and Income Distribution”.
*Shoven, John B. and John Whalley (1984), “Applied General Equilibrium Models of Taxation and
International Trade”, Journal of Economic Literature, 22 (3), 1007-1051.
Auerbach, Alan J. and Laurence J. Kotlikoff (1987), Dynamic Fiscal Policy (Cambridge, MA: Cambridge
University Press).
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).
Baxter, Marianne and Robert G. King (1993), "Fiscal Policy in General Equilibrium," 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, 12121223.
Fullerton, Don and Gilbert E. Metcalf (2002), “Tax Incidence,” Chapter 26 in Handbook of PE: VI.
Gravelle, Jane G. and Laurence J. Kotlikoff (1989), "The Incidence and Efficiency Effects of Corporate
Taxation when Corporate and Noncorporate Firms Produce the Same Good," Journal of Political
Economy, 97, 749-780.
Jha, Chapter 11, “The Theory of Tax Incidence” and Chapter 12, “Tax Incidence in Dynamic Models”.
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).
Kotlikoff, Laurence J. and Lawrence H. Summers (1987), “Tax Incidence”, Chapter 16 in Handbook of
PE: II.
Mieszkowski, Peter M. (1967), "On the Theory of Tax Incidence," Journal of Political Economy, 75,
250-262.
Musgrave, Chapters 4, 5, and 10.
Okun, Arthur M. (1975), Equality and Efficiency: The Big Tradeoff (Washington, D.C.: The Brookings
Institution).
Salanie, Chapter 1, “Tax Incidence”.
Summers, Lawrence H. (1983), "The Asset Price Approach to the Analysis of Capital Income Taxation,"
National Tax Association-Tax Institute of America, Proceedings of the Seventy-sixth Annual
Conference on Taxation, 112-120.
11
Tresch, Chapter 16, “The Theory and Measurement of Tax Incidence”.
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 Joseph A.
Pechman, eds. (Washington, D.C.: The Brookings Institution).
V. Incidence and Efficiency—empirical and tax-specific theory
*Bento, Antonio, Lawrence Goulder, Mark Jacobsen, and Roger von Haefen (2009), “Distributional and
Efficiency Impacts of Increased U.S. Gasoline Prices” American Economic Review, 99 (3): 667699.
*Fullerton, Don and Diane Lim Rogers (1991), “Lifetime Versus Annual Perspective on Tax Incidence”
National Tax Journal 44(3):277-287.
*Gordon, Robert J. (1967), "The Incidence of the Corporation Income Tax in U.S. Manufacturing,"
American Economic Review, 57, 731-758.
*Pechman, Joseph A. (1986), Who Paid the Taxes, 1966-1985? (Washington, D.C.: The Brookings
Institution).
*Shoven, John (1976). “The Incidence and Efficiency Effects of Taxes on Income from Capital.” Journal
of Political Economy 84 (6): 1261-83.
*Summers, Lawrence H. (1987), "The Asset Price Approach to the Analysis of Capital Income Taxation,"
NBER Working Paper 1356.
Adda, J. and F. Cornaglia (2006). “Taxes, Cigarette Consumption and Smoking Intensity,” American
Economic Review 96(4): 1013—1028.
Alm, James, Edward Sennoga, and Mark Skidmore (2009), “Perfect Competition, Urbanization, and Tax
Incidence in the Retail Gasoline Market,” Economic Inquiry 47(1): 118-34.
Ballard, Charles, Don Fullerton, John Shoven, and John Whalley (1985). A General Equilibrium Model
for Tax Policy Evaluation Chicago: University of Chicago Press. Chapters 2, 3.
Ballard, Charles, John Shoven, and John Whalley (1985). “The Total Welfare Cost of the United States
Tax System: A General Equilibrium Approach.” National Tax Journal 38 (2): 125-40.
Besley, Timothy and Harvey Rosen (1999). “Sales Taxes and Prices: An Empirical Analysis.” National
Tax Journal 157-178.
Carbonnier, Clement (2007). “Who Pays Sales Taxes? Evidence from French VAT Reforms, 19871999”. Journal of Public Economics 91(5-6): 1219-29.
Chernick, Howard and Andrew Reschovsky (1997), "Who Pays the Gasoline Tax?" National Tax
Journal, 50 (2), 233-259.
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Davies, James, France St-Hilaire, and John Whalley (1984). “Some Calculations of Lifetime Tax
Incidence.” American Economic Review 74 (4): 633-49.
Doyle, J. and K. Samphantharak (2008). “$2.00 Gas! Studying the Effects of a Gas Tax Moratorium.”
Journal of Public Economics
Fullerton, Don and Diane Lim Rogers (1993), Who Bears the Lifetime Tax Burden? (Washington, D.C.:
The Brookings Institution).
Gruber, Jonathan and B. Koszegi, “Tax Incidence when Individuals are Time-Inconsistent: The Case of
Cigarette Excise Taxes,” Journal of Public Economics (2004), 88(9-10), 1959-1987.
Gruber, Jonathan (1997). "The Incidence of Payroll Taxation: Evidence from Chile." Journal of Labor
Economics 15 (3, part 2): S72-S101.
Hausman, Jerry (2000). “Efficiency Effects on the U.S. Economy from Wireless Taxation,” National Tax
Journal 53: 733-742.
Krzyzaniak, Marian and Richard A. Musgrave (1964), The Shifting of the Corporation Income Tax
(Baltimore, MD: The Johns Hopkins University Press).
Kubik, Jeffrey (2004). “The Incidence of Personal Income Taxation: Evidence from the Tax Reform Act
of 1986”. Journal of Public Economics 88: 1567-1588.
Menchik, Paul and Martin David (1982), "The Incidence of a Lifetime Consumption Tax," National Tax
Journal, 35 (2), 189-203.
Plesko, George A. (1999), AThe Corporate Income Tax: Impact and Incidence@, Chapter 26 of
Handbook.
Poterba, James (1984). Tax Subsidies to Owner-Occupied Housing: An Asset Market Approach”.
Quarterly Journal of Economics 79(2): 325-30.
Poterba, James (1989). "Lifetime Incidence and the Distributional Burden of Excise Taxes." American
Economic Review, Papers and Proceedings 79(2): 325-330.
Rothstein, Jesse (2008). “The Unintended Consequences of Encouraging Work: Tax Incidence and the
EITC.” Princeton Univ. Working Paper.
Smart, Michael and Richard Bird (2009). “The Economic Incidence of Replacing a Retail Sales Tax with
a Value-Added Tax: Evidence from Canadian Experience.” Canadian Public Policy 35(1): 8597.
Tresch, Chapter 17, “Expenditure Incidence and Economy-Wide Incidence Studies”.
Young, D. and A. Bielinska-Kwapisz (2002). "Alcohol Taxes and Beverage Prices." National Tax
Journal 55.1: 57-73.
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VI. Optimal Taxation
*Alm, James (1996), "What is an 'Optimal' Tax System?" National Tax Journal, 49 (1), 117-133.
*Auerbach, Alan J. (1985), "The Theory of Excess Burden and Optimal Taxation," Chapter 2 in
Handbook of PE: I.: 86-110.
*B&W, Chapter 9, “Normative Analysis of Taxation: Efficiency Aspects”.
*Diamond, Peter A. and James A. Mirrlees (1971), "Optimal Taxation and Public Production, Part I and
II," American Economic Review, 61, 8-27 and 261-278.
*Rosen, Chapter 16, “Efficiency and Equitable Taxation”.
*Samuelson, Paul (1986). “Theory of Optimal Taxation.” Journal of Public Economics 30:137-43.
*Sandmo, Agnar (1976), “Optimal Taxation: An Introduction to the Literature,” Journal of Public
Economics, July/August 1976, p. 37-54.
A&S chapter 12, “The Structure of Indirect Taxation”.
Atkinson, Anthony B. and Joseph E. Stiglitz (1976), "The Design of Tax Structure: Direct Versus Indirect
Taxation," Journal of Public Economics, 6, 55-76.
Auerbach, Alan and James Hines (2002), Chapter 21 “Taxation and Economic Efficiency”, Handbook in
PE: III: pp 1361-1379.
Corlett, W., and D. Hague (1953). “Complementarity and the Excess Burden of Taxation.” Review of
Economic Studies 21:21-30.
Diamond, Peter A. (1975), "A Many-person Ramsey Tax Rule," Journal of Public Economics, 1975, 335342.
Diamond, Peter A. (2009). “Taxes and Pensions.” Southern Economic Journal 76 (1): 1-15.
Jha, Chapter 13, “Some Results in Commodity Taxation” and Chapter 14, “Aspects of Income Taxation”.
Kaplow, Louis (1989), "Optimal Taxation with Costly Enforcement and Compliance," Journal of Public
Economics.
Mankiw, Gregory N., Matthew Weinzierl, and Danny Yagan (2009). “Optimal Taxation in Theory and
Practice.” NBER Working Paper 15071.
Mirrlees, James A. (1971). “An Exploration in the Theory of Optimal Income Tax.” Review of Economic
Studies 38: 175-208.
Mirrlees, James A. (1976), "Optimal Tax Theory: A Synthesis," Journal of Public Economics, 6, 327-
14
358.
Myles, Chapter 4, “Commodity Taxation” and Chapter 5, “Income Taxation”.
Ramsey, Frank (1927). “A Contribution to the Theory of Taxation.” Economic Journal 37: 47-61.
Salanie, Section II (Chapters 3-7), “Optimal Taxation”.
Slemrod, Joel (1990), "Optimal Taxation and Optimal Tax Systems," 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 Welfare Economics,"
Chapter 15 in Handbook of PE: II,
Tresch, Chapter 13, “The Second-Best Theory of Taxation in One-Consumer Economies with Linear
Production”, Chapter 14, ““The Second-Best Theory of Taxation with General Production
Technologies and Many Consumers”, and Chapter 15, “Taxation Under Asymmetric
Information”.
VII. Tax Structure and Incentive Effects
*Slemrod, Joel (2001). “A General Model of the Behavioral Response to Taxation”, International Tax
and Public Finance, 8 (2): 119-128.
Auerbach, Alan J. and Joel Slemrod (1997), “The Economic Effects of the Tax Reform Act of 1986”,
Journal of Economic Literature, 35 (2): 589-632.
Gravelle, Jane G. (1999), “Federal Tax Policy: Tax Provisions as Incentives”, Chapter 22 of Handbook.
Slemrod, Joel (1992), Chapter 1,“The Economic Impact of the Tax Reform Act of 1986”, in Slemrod, 112.
Moffitt, Robert (1992), “Incentive Effects of the U.S. Welfare System”, Journal of Economic Literature,
30 (1), 1-61.
VIII. The Personal Income Tax
VIII.A. The Structure of the Personal Income Tax
*Rogers, Diane Lim (1999), “Federal Income Tax Policy: Issues of Distribution and Equity”, Chapter 24
15
of Handbook.
*Rosen, Chapter 17, “The Personal Income Tax”
*Wallace, Sally and Barbara M. Edwards (1999), “Personal Income Tax,” Chapter 8 of Handbook.
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).
Messere, Ken, Flip de Kim, and Christopher Heady (2003), chapter 6, “The Personal Income Tax,” in Tax
Policy: Theory and Practice in OECD Countries, (Oxford: Oxford University Press).
Pechman, Chapter 4, “The Individual Income Tax”.
Tresch, Chapter 11, “Applying First-Best Principles of Taxation—What to Tax and How”.
VIII.B. Labor Supply
*B&W, Chapter 11, “The Incentive Effects of Taxation” pp 287-301.
*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).
*Hausman, Jerry A. (1985), "Taxes and Labor Supply," Chapter 4 in Handbook of PE: I
*Rosen, Chapter 13, “Expenditure Programs for the Poor” and Chapter 18, “Personal Taxation and
Behavior”.
Bosworth, Barry and Gary Burtless (1992), "Effects of Tax Reform on Labor Supply, Investment, and
Saving," Journal of Economic Perspectives, 6 (1), 3-25.
Eissa, Nada (1995). “Taxation and Labor Supply of Married Women: The Tax Reform Act of 1986 as a
Natural Experiment.” NBER Working Paper 5023.
Hausman, Jerry (1980), “Labour Supply”, in Henry Aaron and Joseph A. Pechman (eds), How Taxes
Affect Economic Behavior, Washington D.C.: The Brookings Institute, 27-83
Hausman, Jerry A. and James Poterba (1987), “Household Behavior and the Tax Reform Act of 1986,”
Journal of Economic Perspectives, Summer 1987, pp. 73-86.
Jha, Chapter 8, “Taxation and Labor Supply”.
16
MaCurdy Thomas (1989), “Assessing Empirical Approaches for Analyzing Taxes and Labor Supply”,
Journal of Human Resources, 25 (3), 415-90.
MaCurdy, Thomas (1992), "Work Disincentive Effects of Taxes: A Reexamination of Some Evidence,"
American Economic Review, Papers and Proceedings, 82(2): 243-249.
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.
Moffit, Robert (1990), “The Economics of Kinked Budget Constraints,” Journal of Economic
Perspectives, Vol. 4, No. 2, 119-139.
Triest, Robert K. (1990), "The Effect of Income Taxation on Labor Supply in the United States," Journal
of Human Resources, 25, 490-516.
VIII.C. Saving
*B&W, Chapter 11, “The Incentive Effects of Taxation” pp 301-314.
*Atkinson and Stiglitz, Chapter 3, “Taxation, Saving, and Decisions Over Time.”
*Hubbard, R. Glenn and Jonathan Skinner (1996), "Assessing the Effectiveness of Saving Incentives,"
Journal of Economic Perspectives, 10 (4), 73-90.
*Sandmo, Agnar (1985), "The Effects of Taxation on Savings and Risk Taking," Chapter 5 in Handbook
of PE: I.
Altonji, Joseph G., Fumio Hayashi, and Laurence J. Kotlikoff (1992), "Is the Extended Family
Altruistically Linked? Direct Tests Using Micro Data," 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.
Boskin, 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.
Gale, William G. and John Karl Scholz (1994), "IRAs and Household Saving," American Economic
Review, 84 (5), 1233-1260.
Hubbard, R. Glenn, Jonathan Skinner, and Stephen P. Zeldes (1995), "Precautionary Saving and Social
17
Insurance," Journal of Political Economy, 103 (2), 360-399.
Jha, Chapter 7, “The Effects of Taxes on Savings”.
Kotlikoff, Laurence J. (1984), "Taxation and Savings: A Neoclassical Perspective," Journal of Economic
Literature, 22, 1576-1629.
Modigliani, Franco, et al. (1988), "Symposium, Explaining Savings," Journal of Economic Perspectives,
2(2), 15-58.
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.
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. Published in
Frontiers in the Economics of Aging, University of Chicago Press: 85-105 (1998)
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.
Skinner, Jonathan and Daniel Feenberg (1992), Chapter 3, "The Impact of the 1986 Tax Reform Act on
Personal Saving," in Slemrod, 50-79.
Summers, Lawrence H. (1981), "Capital Taxation and Accumulation in a Life Cycle Growth Model,"
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).
VIII.D. Portfolio Choice and Risk
*B&W, Chapter 11, “The Incentive Effects of Taxation” pp 314-321.
*Samwick, Andrew (1998), "Portfolio Responses to Taxation," in Does Atlas Shrug? The Economic
Consequences of Taxing the Rich, Joel Slemrod, ed. (New York, NY: Cambridge University
Press).
*Sandmo, Chapter 5, “The Effects of Taxation on Savings and Risk Taking”, in Handbook of PE: I
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.
Hendershott, Patric (1980), "Real User Costs and the Demand for Single-Family Housing," Brookings
Papers on Economic Activity, No. 2, 401-444.
18
Hubbard, R. Glenn (1985), "Personal Taxation, Pension Wealth, and Portfolio Composition," Review of
Economics and Statistics, 57.
Poterba, James M. (1984), "Tax Subsidies to Owner-occupied Housing: An Asset Market Approach,"
Quarterly Journal of Economics, 99, 729-752.
Poterba, James M. and Andrew A. Samwick (2003), “Taxation and Household Portfolio Composition:
U.S. Evidence from the 1980s and 1990s”, Journal of Public Economics 87 (1): 5-38.
Stiglitz, Joseph E. (1969), "The Effects of Income, Wealth, and Capital Gains Taxation on Risk-Taking,"
Quarterly Journal of Economics, 83, 263-283.
VIII.E Capital Gains
*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," American Economic Review, 84, 794-809.
*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.
Auerbach, Alan (1988), "Capital Gains Taxation in the United States: Realizations, Revenue, and
Rhetoric," Brookings Papers on Economic Activity, No. 2, 595-631.
Auerbach, Alan and Jonathan Siegel (2000). “Capital Gains Realizations of the Rich and Sophisticated,”
American Economic Review, May: 276-82.
Auerbach, Alan (1991). “Retrospective Capital Gains Taxation,” American Economic Review, March:
167-78.
Auten, Gerald and Charles T. Clotfelter (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
19
and Joseph A. Pechman, eds. (Washington, D.C.: The Brookings Institution).
Poterba, James (2002). “Taxation, Risk-Taking, and Household Portfolio Behavior.” Chapter 17,
Handbook of PF: III.
VIII.F. Tax Treatment of the Family
*Alm, James and Leslie A. Whittington (1996), "Income Taxes and the Timing of Marital Decisions,"
Journal of Public Economics, 64 (2), 219-240.
*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), "The Rise and Fall and Rise...of the Marriage Tax,"
National Tax Journal, 49 (4), 571-589.
Brazer, Harvey E. (1980), "Income Tax Treatment of the Family," in The Economics of Taxation, Henry
J. Aaron and Michael J. Boskin, eds. (Washington, D.C.: The Brookings Institution, 223-246).
Feenberg, Daniel R. and Harvey S. Rosen (1995), "Recent Developments in the Marriage Tax," National
Tax Journal, 48 (1), 91-101.
Whittington, Leslie A. and James Alm (1996), "'Till Death or Taxes Do Us Part: Income Taxes and the
Divorce Decision," Journal of Human Resources, 32 (2), 388-412.
Whittington, Leslie A., James Alm, and H. Elizabeth Peters (1990), "Fertility and the Personal
Exemption: Implicit Pronatalist Policy in the United States," American Economic Review, 80,
545-556.
VIII.G Other Effects of Personal Income Tax
*Bakija, Jon, William Gale and Joel Slemrod (2003). “Charitable Bequests and Taxes on Inheritances and
Estates: Aggregate Evidence from Across States and Time.” American Economic Review 93(2):
366-370.
*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 Economic Behavior? (Washington, D.C.: The Brookings Institution).
Randolph, William (1995). “Dynamic Income, Progressive Taxes, and the Timing of Charitable
Contributions.” Journal of Political Economy 103(4): 709-738.
Rosen, Harvey and Kenneth Rosen (1980). “Federal Taxes and Home Ownership: Evidence from Times
20
Series.” Journal of Political Economy 88(1): 59-75.
IX. The Corporate Income Tax
IX. A. The Structure of Corporate Income Taxes
* Oslund, Patricia C. (1999), ACorporate Income and Franchise Taxes@, Chapter 10 of Handbook.
*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).
*Feldstein, Martin (1988), “Imputing Corporate Tax Liabilities to Individual Taxpayers,” National Tax
Journal, pp. 37-60.
*Pogue, Thomas F. (1999), APrinciples of Business Taxation: How and Why Should Businesses Be
Taxed?@ Chapter 9 of Handbook.
*Rosen, Chapter 19, “The Corporation Tax”.
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.
Pechman, Chapter 5, “The Corporation Income Tax”.
Stiglitz, Joseph E. (1976), "The Corporation Income Tax," Journal of Public Economics, 5, 301-312.
IX. B. Financing and Debt
*B&W, Chapter 11, “The Incentive Effects of Taxation” pp..321-337
*Gordon, Roger H. and Jeffrey K. MacKie-Mason (1992), Chapter 4, "Effects of the Tax Reform Act of
1986 on Corporate Financial Policy and Organization Form," in Slemrod, 91-138.
*Plesko, George (1994), "Corporate Taxation and the Financial Characteristics of Firms," Public Finance
Quarterly, 22 (3), 311-334.
*Grubert, Harry and John Mutti (2000), "Do Taxes Influence Where U .S. Corporations Invest?@
National Tax Journal, 53 (4, Part 1), 825-839.
*Zodrow, George R. (1991), "On the 'Traditional' and 'New' Views of Dividend Taxation," National Tax
Journal, 44 (4), 497-509.
Auerbach, Alan J. (1983), "Taxation, Corporate Financial Policy, and the Cost of Capital," Journal of
Economic Literature, 21, 905-940.
21
Bagwell, Lyle and John Shoven (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).
Gale, William G. and Peter Orszag (2005), “Deficits, Interest Rates, and the User Cost of Capital: A
Reconsideration of the Effects of Tax Policy on Investment,” Urban-Brookings Tax Policy Center
Discussion Paper No. 27.
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.
Stiglitz, Joseph E. (1973), "Taxation, Corporate Financial Policy, and the Cost of Capital," Journal of
Public Economics, 2, 1-34.
IX.C. Integration
*U.S. Treasury (1992), “Integration of the Individual and Corporate Tax Systems: Taxing Business
Income Once,” January 1992, available via: http://www.ustreas.gov/offices/taxpolicy/library/integration-paper/
X. Taxes on Consumption
*Bowman, John H. (1999), “Excise Taxation”, Chapter 27 of Handbook.
*Mikesell, John L. (1999), “Sales Taxes”, Chapter 5 of Handbook.
*Rosen, Chapter 21, “Fundamental Tax Reform” (pp. 478-490).
“The Taxation of Electronic Commerce” (2000), National Tax Journal, 53 (4, Part 3).
Alm, James and Michael Melnik. 2005. “Sales Taxes and the Decision to Purchase Online.” Public
Finance Review 33(2): 184-212.
Ballard, Charles and Jaimin Lee (2007). “Internet Purchases, Cross-Border Shopping, and Sales Taxes.”
22
National Tax Journal 60(4): 711-25.
Baum, Donald (1998). “Economic Effects of Eliminating the Sales Tax Exemption for Food: An Applied
General Equilibrium Analysis.” Journal of Economics 24(1): 125-48.
Crossen, Sijbren (2005). Theory and Practice of Excise Taxation: Smoking, Drinking, Gambling,
Polluting, and Driving. Oxford University Press.
Cutler, Harvey and Irina Strelnikova (2004). “The Impact of the US Sales Tax Rate on City Size and
Economic Activity: A CGE Approach.” Urban Studies 41(4): 875-85.
Evans, Williams, J. Ringel, and D. Stech, (1999). “Tobacco Taxes and Public Policy to Discourage
Smoking”, in Tax Policy and the Economy, vol. 13, ed. J. Poterba, MIT Press: Cambridge.
Fisher, Ronald C. 1980. “Local Sales Taxes: Tax Rate Differentials, Sales Loss, and Revenue
Estimation.” Public Finance Quarterly 8: 171-88.
Fox, William F. 1986. “Tax Structure and the Location of Economic Activity Along State Borders.”
National Tax Journal 39: 387-401.
Goolsbee, Austan. 2000. “In a World without Borders: The Impact of Taxes on Internet Commerce”
Quarterly Journal of Economics 115 (2): 561-76.
Iorwerth, Aled Ab, and John Whalley. 2002. "Efficiency Considerations and the Exemption of Food from
Sales and Value Added Taxes." Canadian Journal of Economics 35(1): 166-82.
Merriman, David F., Mark Skidmore. 2000. “Did Distortionary Sales Taxation Contribute to the Growth
of the Service Sector?” National Tax Journal, 53 (1): 125-42.
Mikesell, John L. 1970. “Central Cities and Sales Tax Rate Differentials: The Border City Problem.”
National Tax Journal 23: 206-14.
Mikesell, John L. (1997), "The American Retail Sales Tax," National Tax Journal, 50 (1), 149-165.
Mikesell, John L. 1971. “Sales Taxation and the Border County Problem.” Quarterly Review of
Economics and Business 11: 23-9.
Mikesell, John.L. and C. Kurt Zorn. 1986. “Impact of the Sales Tax Rate On Its Base: Evidence from a
Small Town.” Public Finance Quarterly 14(3): 329-38.
Murray, Matthew N. (1997), "The Sales Tax and Electronic Commerce," National Tax Journal, 50 (3),
573-592.
Pechman, Chapter 6 “Consumption Taxes.”
Poterba, James M. (1996), “Retail Price Reactions to Changes in State and Local Sales Taxes,” National
Tax Journal, 49 (2), 165-176.
Tosun, Mehmet S. and Mark L. Skidmore. 2007. “Cross-Border Shopping and the Sales Tax: An
23
Examination of Food Purchases in West Virginia” The B.E. Journal of Economic Analysis &
Policy, 7 (1), Art 63. Available at http://www.bepress.com/bejeap/vol7/iss1/art63
Walsh, Michael J. and Jonathan D. Jones. 1988. “More Evidence on the ‘Burden Tax’ Effect: The Case
of West Virginia, 1979-84.” National Tax Journal 61(2): 261-65.
XI. Taxes on Wealth
*“Forum on the Estate Tax” (2000), National Tax Journal, 52 (4, Part 1), 889-957.
*Cornia, Gary C. and Gloria E. Wheeler (1999), “The Personal Property Tax”, Chapter 7 of Handbook.
*Fisher, Glenn W. (1999), “The Real Property Tax”, Chapter 6 of Handbook.
*Henderson, Charlene B., D. Larry Crumbley, and Edward E. Milam (1999), “Taxation of Estates and
Gifts”, Chapter 29 of Handbook.
*Mieszkowski, Peter M. (1972), "The Property Tax: An Excise Tax or a Profits Tax?", Journal of Public
Economics, 1, 73-96.
*Poterba, James M. (1998), "The Estate Tax and After-tax Rates of Return," in The Economic
Consequences of Taxing the Rich, Joel Slemrod, ed., (New York, NY: Cambridge University
Press).
*Rosen, Chapter 21, “Fundamental Tax Reform”, (pp.495-502) and Chapter 22, “Public Finance in a
Federal System” (pp 521-529).
Johnson, Erik and Randall Walsh (2009). “The Effect of Property Taxes on Location Decisions: Evidence
from the Market for Vacation Homes.” NBER Working Paper 14793.
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.
Mieszkowski, Peter and George R. Zodrow (1989), "Taxation and the Tiebout Model," The Journal of
Economic Literature, 27 (3), 1098-1146.
Pechman, Chapter 8, “Estate and Gift Taxes”.
Poterba, James M. (2001), “The Estate and Gift Tax and Inter Vivos Giving in the United States”, Journal
of Public Economics, 79 (1), 237-64
XII. Tax Rate and Tax Revenue
*Bird, Richard and Sally Wallace (2005), “Revenue Maximizing Tax Rates,” in Encyclopedia of Taxation,
Urban Institute, 2005.
24
*Fullerton, Don (1982), "On the Possibility of an Inverse Relationship Between Tax Rates and Tax
Revenues," Journal of Public Economics, 19, 3-22.
*Haughton, Jonathan (1998), “Calculating the Revenue Maximizing Excise Tax Rate,” Eager Project
Discussion Paper #13: http://www.eagerproject.com/
*Saez, Emmanuel, Joel B. Slemrod, and Seth H. Giertz (2009). “The Elasticity of Taxable Income with
Respect to Marginal Tax Rates: A Critical Review.” NBER Working Paper 15012.
Giovannini, Alberto and Martha de Melo (1993), "Government Revenue from Financial Repression,"
American Economic Review, 83 (4), 953-963.
Marks, Marilyn Rubin, J. L. Peters, and Nancy Mantell (1999), ARevenue Forecasting and Estimation@,
Chapter 31 of Handbook.
Mauskopf, Eileen and David Reifschneider (1997), "Dynamic Scoring, Fiscal Policy, and the Short-run
Behavior of the Macroeconomy," National Tax Journal, 50 (3), 631-655.
Pechman, Joseph A. (1973), "Responsiveness of the Federal Individual Income Tax to Changes in
Income," Brookings Papers on Economic Activity, No. 2, 385-413.
XIII. Tax Administration and Compliance
*Allingham, Michael G. and Agnar Sandmo (1972), "Income Tax Evasion: A Theoretical Analysis,"
Journal of Public Economics, 1, 323-338.
*Alm, James (1987), "Compliance Costs and the Tax Avoidance-Tax Compliance Decision," Public
Finance Quarterly, 16(1), 323-338.
*Alm, James (1999), "Tax Compliance and Administration," Chapter 30 of Handbook.
*Blumenthal, Marsha and Joel Slemrod (1996), "The Compliance Costs of Big Business," Public Finance
Quarterly.
*Slemrod, Joel and Nikki Sorum (1984), "The Compliance Cost of the U. S. Individual Income Tax
System," National Tax Journal, 37 (4), 461-474.
Alm, James, Gary H. McClelland, and William D. Schulze (1992), "Why Do People Pay Taxes?" Journal
of Public Economics, 48, 21-38.
Alm, James, Roy Bahl, and Matthew N. Murray (1990), "Tax Structure and Tax Compliance," Review of
Economics and Statistics, 72 (4), 603-613.
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, 315346).
25
Burman, Leonard E. and David Weiner (2005), “Suppose They Took the AM out of AMT?” UrbanBrookings Tax Policy Center Discussion Paper No. 25.
Clotfelter, Charles T. (1983), "Tax Evasion and Tax Rates: An Analysis of Individual Tax Returns,"
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 (1993), "Taxation with Representation: An Analysis of the Role of Tax Practitioners in Tax
Compliance," Journal of Public Economics, 52, 163-197.
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.
Goode, Richard (1981), "Some Economic Aspects of Tax Administration," International Monetary Fund
Staff Papers, 28, 249-274.
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," American Economic Review, 79 (5), 1224-1232.
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.
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," Scandinavian
Journal of Economics, 89 (2), 183-192.
Wilson, John Douglas (1989), "On the Optimal Tax Base for Commodity Taxation," American Economic
Review, 79 (5), 1196-1206.
Yitzhaki, Shlomo (1979), "A Note on Optimum Taxation and Administrative Costs," American Economic
26
Review, 69 (3), 475-480.
XIV. Behavioral Public Economics
XIV.A. Principles of Normative Analysis
*Kahneman, Daniel and Amos Tversky (1979). “Prospect Theory: An Analysis of Decisions under Risk.”
Econometrica 47(2): 263-91.
*McCaffery, Edward and Joel Slemrod (2006). “Toward an Agenda for Behavioral Public Finance.” In
McCaffery, Edward and Joel Slemrod (eds). Behavioral Public Finance. New York, NY: Russell
Sage Foundation.
Alm, James and Sarah Jacobson (2007). “Using Laboratory Experiments in Public Economics.” National
Tax Journal 60(1): 129-52.
Asheim, Geir (2008). “Procrastination, Partial Naivete, and Behavioral Welfare Analysis,” mimeo,
University of Oslo.
Beshears, John, James J. Choi, David Laibson, Brigitte C. Madrian (2008). “How are Preferences
Revealed?” Journal of Public Economics 92; 1787-1794.
Bernheim, B. Douglas (forthcoming 2009). “Behavioral Welfare Economics,” Journal of the European
Economics Association.
Bernheim, B. Douglas and Antonio Rangel (2009). “Beyond Revealed Preference: Choice-Theoretic
Foundations for Behavioral Welfare Economics,” Quarterly Journal of Economics.
Carmichael, H. Lorne, and W. Bentley MacLeod (2006), “Welfare Economics with Intransitive Revealed
Preferences: A Theory of the Endowment Effect,” Journal of Public Economic Theory 8 (2): 193218.
Dalton, Patricio, and Sayantan Ghosal (2008). “Behavioral Decisions and Welfare,” mimeo, University of
Warwick.
Easterlin, Richard A. (1974). “Does Economic Growth Improve the Human Lot?: Some Empirical
Evidence,” in P. A. David and W. R. Levin eds., Nations and Household in Economic Growth,
Stanford University Press, pp. 98-125.
Frey, Bruno S., and Alois Stutzer (2002). “What Can Economists Learn from Happiness Research?”
Journal of Economic Literature 40: 402-435.
Frey, Bruno S., and Alois Stutzer (2004). “Economic Consequences of Mispredicting Utility,” Institute for
Empirical Research in Economics Working Paper #218, University of Zurich.
Green, Jerry, and Daniel Hojman (2007) “Choice, Rationality, and Welfare Measurement,” mimeo,
Harvard University.
27
Gruber, Jonathan, and Sendhil Mullainathan (2005) “Do Cigarette Taxes Make Smokers Happier?”
Advances in Economics Analysis & Policy, Berkeley Electronic Press,
http://www.bepress.com/bejeap.
Gul, Faruk and Wolfgang Pesendorfer (2007). “Welfare without Happiness,” American Economic Review
94(2): 471-76.
Kahneman, Daniel (1999). “Objective Happiness,” Chapter 1 in Daniel Kahneman, Ed Diener and Norbert
Schwarz, eds., Well-Being: The Foundations of Hedonic Psychology, Russell Sage Foundation,
New York.
Kahneman, Daniel (2004). Alan B. Krueger, David Schkade, Norbert Schwarz, and Arthur A. Stone,
“Toward National Well-Being Accounts,” American Economic Review 94: 429-434.
Kahneman, D., P. Wakker, and R. Sarin (1997). “Back to Bentham? Explorations of Experienced Utility,”
Quarterly Journal of Economics 112: 375-406.
Kahneman, Daniel and Robert Sugden (2005). “Experienced Utility as a Standard of Policy Analysis,”
Environmental and Resource Economics 32(1): 161-81.
Kimball, Miles and Robert Willis (2006). “Utility and Happiness,” mimeo, University of Michigan,
October.
Kimball, Miles, Helen Levy, Fumio Ohtake and Yoshiro Tsutsui (2006). “Unhappiness after Hurricane
Katrina,” NBER Working Paper #12062.
Koszegi, Botond and Matthew Rabin (2007). “Mistakes in Choice-Based Welfare Analysis,” American
Economic Review 94(2): 477-81.
Koszegi, Botond, and Matthew Rabin (2008). “Choices, Situations, and Happiness,” Journal of Public
Economics 92: 1821-1832.
Koszegi Botond,and Matthew Rabin (2008). “Revealed Mistakes and Revealed Preferences,” in Andrew
Caplin and Andrew Schotter (eds.), The Foundations of Positive and Normative Economics: A
Handbook, Oxford: Oxford University Press, 193-209.
Layard, Richard (2005) Happiness, London, UK: Penguin Press.
Manzini, Paola, and Marco Mariotti (2008). “Categorize Then Choose: Boundedly Rational Choice and
Welfare,” mimeo, University of London.
Noor, Jawwad (2008). “Subjective Welfare,” mimeo, Boston University.
Noor, Jawwad (2008). “Temptation, Welfare, and Revealed Preference,” mimeo, Boston University.
Sugden, Robert (2004). “The Opportunity Criterion: Consumer Sovereignty Without the Assumption of
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Thaler, Richard, and Cass R. Sunstein (2003). “Libertarian Paternalism,” American Economic Review
Papers and Proceedings 93(2): 175-179.
XIV.B. Some applications
*Chetty, Raj, Adam Looney, and Kory Kroft (2007). “Salience and Taxation: Theory and Evidence,”
NBER Working Paper 13330. (forthcoming American Economic Review).
Bernheim, B. Doulgas, and Antonio Rangel (2004). “Addiction and Cue-Triggered Decision Processes,”
American Economic Review 94(5): 1558-90.
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from a Survey of Households,” Journal of Public Economics, 1487-1519.
Carroll, Gabriel D., James Choi, David Laibson, Brigitte C. Madrian, and Andrew Metrick (forthcoming).
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Plan Decisions: Evidence from a Randomized Experiment,” Quarterly Journal of Economics 118:
815-42.
Finkelstein, Amy (2007) “EZ-Tax: Tax Salience and Tax Rates,” NBER Working Paper 12924.
(forthcoming Quarterly Journal of Economics).
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Behavior,” Quarterly Journal of Economics 116: 1149-1187.
McCaffery, Edward and Joel Slemrod (eds) (2006). Behavioral Public Finance. New York, NY: Russell
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*Aaron, Henry J. (1992), Chapter 10, "Lessons for Tax Reform," in Slemrod, 321-331.
*Bosworth, Barry and Gary Burless (1999), “Effects of Tax Reform on Labor Supply, Investment, and
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*Martinez-Vazquez, Jorge and Robert M. McNab (2000), "The Tax Reform Experiment in Transitional
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*Rosen, Chapter 21, ““Fundamental Tax Reform” (pp 490-495).
*U.S. CBO (1999), “The Economic Effects of Comprehensive Tax Reform”, Chapter 20 of Handbook.
*Zodrow, George (1981), "Implementing Tax Reform," National Tax Journal, 34(4), 401-418.
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