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Books

 

      • Taxing Corporate Income in the 21st Century
      • Behavioral Public Finance      
      • The Crisis in Tax Administration
      • Rethinking Estate and Gift Taxation
      • Does Atlas Shrug?
      • Tax Progressivity and Income Inequality 
      • Why People Pay Taxes: Tax Compliance and Enforcement
      • Do Taxes Matter? The Impact of the Tax Reform Act of 1986


Click here for more books by OTPR personnel.


OTPR has established a solid track record in organizing influential and high-quality research projects, the results of which are generally published in conference volumes.

Taxing Corporate Income in the 21st Century
Edited by Alan J. Auerbach, James R. Hines Jr., and Joel Slemrod
Cambridge University Press, 2007

The Office of Tax Policy Research, partnering with The Burch Center for Tax Policy and Public Finance at the University of California -- Berkeley, commissioned nine papers on various aspects relating to the topic of the corporate income tax. The papers were presented at a conference held at the Stephen M. Ross School of Business at the University of Michigan in Ann Arbor on May 5-6, 2005 and published in a volume by
Cambridge University Press. The publication also includes remarks delivered at the conference by two formal commentators.

Most countries levy taxes on corporations, but the impact – and therefore the wisdom – of such taxes is highly controversial among economists. Does the burden of these taxes fall on wealthy shareowners, or is it passed along to those who work for, or buy the products of corporations? Can a country with high corporate taxes remain competitive in the global economy? This volume features state-of-the-art research by leading economists and accountants that sheds light on these and related questions, including how taxes affect corporate dividend policy, stock market value, avoidance, and evasion. The studies promise to inform both future tax policy and regulatory policy, especially in the light of the Sarbanes-Oxley Act and other actions by the Securities and Exchange Commission that are having profound effects on the market for tax planning and auditing in the wake of the well-publicized accounting scandals in Enron and WorldCom.

 

The Effects of Taxes on Market Responses to Dividend Announcements and Payments:  What Can We Learn from the 2003 Dividend Tax Cut?

 

 

Raj Chetty, Joseph Rosenberg, and Emmanuel Saez

Dissecting Dividend Decisions: Some Clues about the Effects of Dividend Taxation from Recent UK Reforms

 

 

 Stephen R. Bond, Michael P. Devereux, and Alexander Klemm

 

The 2003 Dividend Tax Cuts and the Value of the Firm:  An Event Study

 

 

Alan J. Auerbach and Kevin A. Hassett

 How Elastic Is the Corporate Income Tax Base?

 

 

 Jonathan Gruber and Joshua Rauh

An Empirical Examination of Corporate Tax Noncompliance

 

Michelle Hanlon, Lillian Mills, and Joel Slemrod

 

On the Extent, Growth, and Efficiency Consequences of State Business Tax Planning

 

Donald Bruce, John Deskins, and William F. Fox

Corporate Taxation and International Competition

 

 James R. Hines Jr.

 

 

The Changing Role of Auditors in Corporate Tax Planning

 

 

Edward L. Maydew and Douglas A. Shackelford

Taxation and the Evolution of Aggregate Corporate Ownership Concentration

 

 

Mihir A. Desai, Dhammika Dharmapala, and Winnie Fung

 

Behavioral Public Finance
Edited by Edward J. McCaffery and Joel Slemrod
Russell Sage Foundation, 2006

 

   

Behavioral economics questions the basic underpinnings of economic theory, showing that people often do not act consistently in their own self-interest when making economic decisions.  Although these findings have important theoretical implications, they also provide a new lens for examining public policies, such as taxation, public spending, and the provision of adequate pensions.  How can people be encouraged to save adequately for retirement when evidence shows that they tend to spend their money as soon as they can?  Would closer monitoring of income tax returns lead to more honest taxpayers or a more distrustful uncooperative citizenry?

To study these issues, the Office of Tax Policy Research, in collaboration with the University of Southern California Law School, commissioned twelve academic papers on “behavioral public finance.”  Leading scholars in economics, law, and psychology, conducted research projects that ranged in approach from theoretical investigations to field experiments to laboratory experiments to econometric analyses.  Their findings were presented at a conference held on April 23-24, 2004 in Ann Arbor, to which were invited foremost academics.

The project was designed to building on the intellectual momentum created by the conference entitled “Behavioral Public Finance: New Directions for Theory and Analysis” that was held in February, 2003 at the University of Southern California and to begin to sculpt an agenda for this nascent field.

Eleven of the twelve papers presented at the conference, as well as two other papers that have added depth to the publication, were published by the Russell Sage Foundation.

 

Toward an Agenda for Behavioral Public Finance

 

Edward J. McCaffery and Joel Slemrod

 

Statistical, Identifiable, and Iconic Victims

 

 

George Loewenstein, Deborah A. Small, and Jeff Strnad

 

Distinguishing Between Cognitive Biases

 

 

Hanming Fang and Dan Silverman

Masking Redistribution (or Its Absence)

 

Jonathan Baron and Edward J. McCaffery

 

Mispredicting Utility and the Political Process

 

Bruno S. Frey and Alois Stutzer

 

Hyperopia in Public Finance

 

Lee Anne Fennell

 

Value Added Tax Compliance

 

Paul Webley, Caroline Adams, and Henk Elffers

 

Trust and Taxation

 

Terrence Chorvat

 

Tax Evasion: Artful or Artless Dodging?

 

John Cullis, Philip Jones, and Alan Lewis

 

Accounting for Social Security Benefits

 

Howell E. Jackson

 

Saving for Retirement on the Path of Least Resistance

 

James J. Choi, David Laibson, Brigitte C. Madrian, and Andrew Metrick

 

Second-Order Rationality

 

Richard A. Epstein

 



 

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The Crisis in Tax Administration
edited by Henry Aaron and Joel Slemrod
Brookings Institution Press, 2004

Most people voluntarily pay personal income tax. They do so for two reasons, despite the cost and complexity of complying with the tax law. On the positive side, most people recognize, even if grudgingly, that payment of tax is a duty of citizenship. On the negative side, they know that the law requires payment, that evasion is a crime, and that willful failure to pay taxes is punishable by fines or imprisonment. The practical questions for tax administration are how to strengthen each of these motives to comply with the law. How much should be spent on enforcement and how should enforcement be organized to promote these objectives and to get the best results per dollar spent? These issues have moved center stage in public discussions as a result of alleged abuses by the Internal Revenue Service and resulting legislation.

To study these issues, the Office of Tax Policy Research and the Brookings Institution, commissioned ten original studies on tax administration which were presented at a two-day conference, entitled The Crisis in Tax Administration, on November 7-8, 2002 at Brookings in Washington, DC. The results of these studies were published by Brookings Institution Press and publicized through press briefings and op-eds for leading newspapers.

The studies examined theories of tax administration; actual practice of tax administration, including recent modifications initiated in response to legislation; proposed modifications in that practice; design of tax laws to facilitate compliance and enforcement; and practices in other nations from which the United States might learn. The conference was sponsored in collaboration with the American Tax Policy Institute and with the support of the ABA Section of Taxation and the Internal Revenue Service.



 

Sticks and Carrots

 

Frank Cowell

An Historical Look at the Mission of the Internal Revenue Service:  What Is the Balance Between Revenue and Service?

 

Alan Plumley
C. Eugene Steuerle

 

 

Experience and Innovation in Other Countries 

 

Jeffrey Owens
Stuart Hamilton

Administrative Issues with Low-Income Filers  

Janet Holtzblatt
Janet McCubbin

 

An Academic’s View of the Tax Shelter Battle

 

Joseph Bankman

 

Does the Tax System Penalize, or Favor, Small Business?

 

Joel Slemrod

 

Practitioners and Tax Administration

 

Marsha Blumenthal
Charles Christian 

An Overview of International Issues Affecting U.S. Tax Administration

 

David Tillinghast

 

The TurboTax Revolution? Evaluating the Ability of Technology to Solve the Tax Complexity Dilemma

 

Austan Goolsbee

 

Effects of Tax Simplification Options on Equity, Efficiency, and Simplicity: A Quantitative Analysis

 

William Gale
Jeffrey Rohaly

 

 

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Rethinking Estate and Gift Taxation
Edited by William G. Gale, James R. Hines Jr., and Joel Slemrod
Brookings Institution Press, 2001

Controversy over the estate tax arises due in part to the population it affects-the wealthy. Advocates of the estate tax argue that, because it selectively burdens the affluent, the estate tax helps achieve the desired degree of progressivity in the tax system. Opponents argue that the economic costs of the estate tax are high precisely because it discourages economically important behavior -saving and investment, hard work, and innovation - that creates wealth. Important parts of the economy, including the nonprofit sector, have keen interests in estate tax reform, since charitable contributions are affected by estate tax rates and structure.

Political interest in the estate tax has intensified in recent years. The 1997 tax act phased in an increase in the exemption amount and introduced a new small business preference. These changes will not, however, end the controversy, as evidenced recently by prominent American politicians who have called for the complete abolition of the estate tax. The debate is likely to intensify for two important reasons. First, the projected federal budget surpluses have reoriented political attention away from deficit reduction and toward tax cuts. Second, the enormous wealth creation of the 1990s raises the estate tax stakes, as the newly created wealth begins to pass through estates and raises speculation about the ends to which it will be put.

The Office of Tax Policy Research, in partnership with the Brookings Institution, sponsored a conference entitled Rethinking Estate and Gift Taxation which was held in Washington, D.C. on May 4 and 5, 2000.

Ten original studies of the estate and gift tax were commissioned focusing on empirical analyses of the effect of estate and gift taxation on saving and investment, portfolio choice, business organization, avoidance activities, and charitable contributions. In order to put the findings of the empirical studies in perspective, the project also included foundational papers on the estate tax, covering basic facts, experience in other countries, the tax law environment, and the underlying economic theory of how it affects the behavior of potential donors and recipients. These papers were issued as OTPR Working Papers  and published in 2001 by Brookings Institution Press.

 

A Framework for Assessing Estate and Gift Taxation   Louis Kaplow

 

Avoiding Federal Wealth Transfer Taxes

 

  Richard Schmalbeck

 

Simulating the Effects on Inequality and Wealth Accumulation of Eliminating the Federal Gift and Estate Tax

 

  John Laitner

 

The Distributional Burden of Taxing Estates and Unrealized Capital Gains at the Time of Death

 

 

James Poterba

Scott Weisbenner

 

 

The Impact of the Estate Tax on the Wealth Accumulation and Avoidance Behavior of Donors

 

   

David Joulfaian

 

Charitable Giving in Life and Death

 

  David Joulfaian

The Magnitude and Determinants of Federal Estate Tax Noncompliance

 

 

Martha Britton Eller

Brian Erard

Chih-Chin Ho

 

Do Estate Taxes Reduce Saving?

 

 

William Gale

Maria Perozek

 

Elderly Asset Management and Health: An Empirical Analysis

 

 

Jonathan Feinstein

Chih-Chin Ho

 

     

 

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Does Atlas Shrug? The Economic Consequences of Taxing the Rich
Edited by Joel Slemrod
Russell Sage Foundation and Harvard University Press, 2000

On October 24-25, 1997, over 130 policymakers, accountants, lawyers, and economists gathered in Ann Arbor for a conference entitled "Does Atlas Shrug? The Economic Consequences of Taxing the Rich."

Fifteen original papers by some of the leading scholars in public finance were featured. Among the important and controversial new findings are evidence that the 1986 tax cuts did not induce more labor supply from high-income Americans, and that the 1993 tax increase affected primarily the timing of executive compensation, triggering a huge amount of stock option realizations in 1992.

The project also generated new findings on the tax sensitivity of charitable contributions, capital gains realizations, and a wide range of other aspects of economic behavior such as entrepreneurial activity. These new findings shed light on the likely revenue consequences, distributional impact, and economic growth effects of both fundamental tax reform -- such as a flat tax or a retail sales tax -- and more incremental tax changes such as a tightening of capital gains loopholes and estate tax easing.

These research papers were issued as OTPR Working Papers in the spring of 1998, summarized in the OTPR Newsletter, and published in 2000 by Harvard University Press.

The Economics of Taxing the Rich

 

Joel Slemrod

Historical Perspective on U.S. Tax Policy Toward the Rich

 

W. Elliot Brownlee

Progressive Taxation and the Incentive Problem

 

Robert H. Frank

The Tax Environment Facing the Wealthy

 

Douglas A. Shackleford

Who Are the Rich? A Demographic Profile of High-Income and High-Wealth Americans

 

Edward N. Wolff

It's Not About the Money: Why Natural Experiments Don't Work on the Rich

 

Austan Goolsbee

Taxation and the Labor Supply Decisions of the Affluent

 

Robert Moffitt and Mark Wilhelm

Are "Real" Responses to Taxes Simply Income Shifting Between Corporate and Personal Tax Bases?

 

Roger H. Gordon and Joel Slemrod

Portfolio Responses to Taxation: Evidence from the End of the Rainbow

 

Andrew Samwick

The Estate Tax and After-Tax Investment Returns

 

James Poterba

Why Do the Rich Save So Much?

 

Christopher D. Carroll

Capital Gains Taxation and Tax Avoidance: New Evidence from Panel Data

 

Alan J. Auerbach, Leonard E. Burman and Jonathan M. Siegel

Are the Rich Different?

 

James Alm and Sally Wallace

Taxes and Philanthropy Among the Wealthy

 

Gerald E. Auten, Charles T. Clotfelter, and Richard L. Schmalbeck

Entrepreneurs, Income Taxes, and Investment

 

Robert Carroll, Douglas Holtz-Eakin, Mark Rider, and Harvey S. Rosen

 

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Tax Progressivity and Income Inequality
Edited by Joel Slemrod
Cambridge University Press, 1994

This volume assembles nine research papers written by leading public-finance economists on the subject of tax progressivity and its relationship to income inequality. The papers document changes during the 1980s in progressivity at the federal, state, and local levels in the United States. Conceptual issues about how to measure progressivity are investigated, as well as the extent to which declining progressivity contributed to the well-documented increase in income inequality over the past two decades.

Several papers investigate the economic impact and cost of progressive tax systems. Special attention is given to behavioral responses--including portfolio composition--to the taxation of high-income individuals. The concluding papers address the contentious issue of what constitutes a "fair" tax system. They contrast public attitudes concerning alternative tax systems to economists' notions of fairness, and examine the trade-off between fairness and economic growth. Each paper is followed by the formal commentary of a conference participant plus a summary of the

Introduction

 

Joel Slemrod

Trends in Federal Tax Progressivity, 1980-93

 

Richard Kasten, Frank Sammartino, and Eric Toder

The Lifetime Incidence of State and Local Taxes: Measuring Changes During the 1980s

 

Gilbert E. Metcalf

Trends in Income Inequality: The Impact of, and Implications for, Tax Policy

 

Lynn A. Karoly

The Efficiency Cost of Increased Progressivity

 

Robert K. Triest

On the High-Income Laffer Curve

 

Joel Slemrod

Tax Progressivity and Household Portfolios: Descriptive Evidence from the Survey of Consumer Finances

 

John Karl Scholz

Progressivity of Capital Gains Taxation with Optimal Portfolio Selection

 

Michael Haliassos and Andrew B. Lyon

Perceptions of Fairness in the Crucible of Tax Policy

 

Steven M. Sheffrin

Progressive Taxation, Equity, and Tax Design

 

Richard A. Musgrave

 

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Why People Pay Taxes: Tax Compliance and Enforcement
Edited by Joel Slemrod
University of Michigan Press, 1992

Nothing is certain except death and taxes. But while death remains unavoidable, tax evasion has become a pervasive problem in all societies, contributing to fiscal deficits and undermining the fairness and efficiency of the tax system. This book delves into the determinants of tax compliance and discusses strategies to curtail tax evasion.

This volume assembles twelve articles by international experts from accounting, economics, law, psychology, and sociology. The articles draw on diary studies of taxpayer behavior, statistical analysis of data from audited tax returns, survey responses, tax amnesties, and laboratory simulation experiments to analyze taxpaying behavior.

Included are a pioneering study of noncompliance among small and medium-sized corporations, an examination of the effect of audits on taxpayer's subsequent compliance behavior, and a study of the effect on compliance of taxpayer's attitudes toward the tax system and their perceptions of other taxpayer's behavior.
The articles stress the need to abandon the stick of punishing tax evasion and to offer the carrot of encouragement for compliance. The multidisciplinary approach to this pressing issue has much to offer accountants, economists, lawyers, and sociologists.

Introduction

 

Joel Slemrod

Taxpayer Adaptation to the 1986 Tax Reform Act: Do New Tax Laws Affect the Way Taxpayers Think about Taxes?

 

Marco R. Steenbergen, Kathleen M. McGraw, and John T. Scholz

How Taxpayers Think about Their Taxes: Frames and Values

 

John S. Carroll

The Effect of Audits and Socioeconomic Variables on Compliance

 

Kurt J. Beron, Helen V. Tauchen, and Ann Dryden Witte

The Influence of Tax Audits on Reporting Behavior

 

Brian Erard

The Corporate Tax Gap: Evidence on Tax Compliance by Small Corporations

 

Eric M. Rice

Analyzing Income Tax Evasion Using Amnesty Data with Self-Selection Correction: The Case of the Michigan Tax Amnesty Program

 

Steven E. Crane and Farrokh Nourzad

Can Brute Deterrence Backfire? Perceptions and Attitudes in Taxpayer Compliance

 

Steven M. Sheffrin and Robert K. Triest

Reciprocity and Fairness: Positive Incentives for Tax Compliance

 

Kent W. Smith

Deterrence and Alienation Effects of IRS Enforcement: An Analysis of Survey Data

 

Karyl A. Kinsey

Does Deterrence Deter? Measuring the Effect of Deterrence on Tax Compliance in Field Studies and Experimental Studies

 

Dick J. Hessing, Henk Elffers, Henry S. J. Robben, and Paul Webley

Deterrence and Beyond: Toward a Kinder, Gentler IRS

 

James Alm, Betty Jackson, and Michael McKee

The Construction of Compliance and the Challenge for Control: The Limits of Noncompliance Research

 

Doreen McBarnet

 

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Do Taxes Matter? The Impact of the Tax Reform Act of 1986
Edited by Joel Slemrod
The MIT Press, 1992

This book is the first systematic examination of the effects of the Tax Reform Act of 1986, the most important U.S. income tax reform of the last four decades. It presents basic information on and an analysis of different aspects of economic behavior in order to discover whether the observed changes coincide with the predictions of standard public finance models. Prior to implementation of the new law, supporters and opponents made numerous forecasts about its effects on savings, corporate investment, and other major determinants of the country's economic health. The general finding of these original contributions is that the effects of tax reform turned out to be smaller than had been anticipated.

Commissioned by the Office of Tax Policy Research of the University of Michigan, eight of the studies focus on different sectors of the economy, reviewing the predictions and carefully analyzing the evidence to determine actual effects. The ninth study draws together the results to find lessons for future changes in tax policy.

The Economic Impact of the Tax Reform Act of 1986

 

Joel Slemrod

Investment, Tax Policy, and the Tax Reform Act of 1986

 

Alan J. Auerbach and Kevin Hassett

The Impact of the 1986 Tax Reform on Personal Saving

 

Jonathan Skinner and Daniel Feenberg

Effects of the Tax Reform Act of 1986 on Corporate Financial Policy and Organizational Form

 

Roger H. Gordon and Jeffrey K. MacKie-Mason

Taxation and Housing Markets: Preliminary Evidence on the Effects of Recent Tax Reforms

 

James M. Poterba

The Impact of the Tax Reform Act of 1986 on Foreign Direct Investment to and from the United States

 

Joel Slemrod

The Impact of Tax Reform on Charitable Giving: A 1989 Perspective

 

Charles T. Clotfelter

The Impact of the Tax Reform Act of 1986 on State and Local Fiscal Behavior

 

Paul N. Courant and Edward M. Gramlich

Foreign Responses to U.S. Tax Reform

 

John Whalley

 

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