TAX REFORM FOR GROWN-UPS
On March 24 the Obama administration announced the formation of a high-level task force to review the U.S. tax system and make policy recommendations by December 4, 2009. Former Federal Reserve Chairman Paul Volcker will head the panel, and senior economic adviser Austan Goolsbee will serve as staff director.
Is it déjà vu all over again? Just four years ago President Bush formed a tax review panel, The President's Advisory Panel on Federal Tax Reform, whose report was delivered on November 1, 2005. To see what that panel recommended, what became of their recommendations, and what lessons the episode provides for Obama's task force, read the article by OTPR Director Joel Slemrod and Katherine Blauvelt, "Tax Reform for Grown-Ups" that was published in the March 2006 issue of the Milken Institute Review.
TAXING THE RICH
How much and how the rich should be taxed often plays a critical role in tax policy debates. It comes up with regard to incremental tax proposals, which are always scrutinized for how
much benefit goes to high-income individuals. It also figures
prominently in the debate about fundamental tax reform --
whether to abandon the income tax in favor of a value-added tax,
retail sales tax, or flat tax; while it is generally agreed upon
that any of these alternatives would reduce the tax burden on
the rich, there is much less agreement about whether the
economic benefits would be significant, and on how critical the
reduction of tax progressivity is to the economic benefits these
reforms promise. In his introductory chapter of Does Atlas Shrug: The Economic
Consequences of Taxing the Rich, OTPR Director Joel
Slemrod discusses the issue of income tax rates on affluent
Candace Johnson Award
The Office of Tax Policy Research is proud to announce that our own Mary Ceccanese received the 2010 Candace Johnson Staff Award for Excellence, a University-wide award given by the Office of the Provost to an exemplary staff member.
We know Mary as OTPR’s Coordinator, which she has done with exceptional competence, energy, creativity and good cheer for 22 years. It is not at all an understatement to say that OTPR would not be OTPR without her. What you might not know is that, over this time, Mary has expanded her job to become a change agent and educator, in the university and beyond, about the importance of creating and sustaining connnections between the staff and faculty, managers and staff, and various other employee groups. She actively participates in Voices of the Staff, a volunteer-based program offering U-M staff members an opportunity to share ideas and define the campus community issues that matter most to them. She also is involved in the design and delivery of training workshops, mentoring relationships with staff in a variety of units, and the development of original tools for creating positive workplaces. Four years ago, Mary initiated a task force at the Ross School called FAST Connections, which promotes high-quality relationships between faculty and staff.
We all congratulate Mary on this award and are delighted to see her receive this recognition.
ASSOCIATION ANNUAL MEETING
The Office of Tax Policy Research was well represented at this year's annual meeting of the National Tax Association. Along with OTPR Director, Joel Slemrod; Research Director, James R. Hines Jr.; Research Associates David Albouy and Dan Silverman; nine of our graduate students attended. Our annual dinner for people with an OTPR connection was great fun, attended by 17 of us even though it met at the same time as the NTA Executive Board, which kept several OTPR alumni from joining us.
of Tax Policy Research, The Concord Coalition, and Concerned Youth for
America are sponsoring a showing of I.O.U.S.A. – The Movie.
December 4, 6:30 – 9:00 p.m.
Palmer Commons Forum Hall
Per the Concord Coalition,
a nonpartisan grassroots organization advocating generationally responsible
fiscal policy, the critically-acclaimed "I.O.U.S.A." documentary,
directed by Patrick Creadon ("Wordplay"), follows The Concord
Coalition's "Fiscal Wake-Up Tour" and tells the story of America's
four key deficits - budget, savings, balance of payments and leadership
- and their implications for the nation and U.S. citizens.
The movie, an official
selection of the 2008 Sundance Film Festival, features Concord Coalition
Executive Director Robert Bixby and Fiscal Wake-Up Tour keynote speaker,
former Comptroller General of the U.S., David Walker. It contains interviews
with Concord Coalition President Peter G. Peterson and Concord Board
members Robert Rubin and Paul Volcker. There is also rare footage of
The Concord Coalition's first media event, a press conference below
the National Debt Clock in Times Square, with founders Paul Tsongas,
Warren Rudman and Pete Peterson. Using candid interviews, archival footage
and economic data, "I.O.U.S.A." presents a vivid, alarming
profile of America's current financial status.
Following the movie,
a panel discussion was held by OTPR’s director, Joel Slemrod,
U-M alum Diane Lim Rogers, chief economist at the Concord Coalition,
and Yoni Gruskin, national executive director of Concerned Youth of
America. Reception followed.
ECONOMIC ISSUES IN THE CAMPAIGN
HEALTH CARE, TAXES, TRADE, AND
THE FINANCIAL CRISIS
October 14, 2008
Commons, Great Lakes South Central Room, 4th
4:15 – 6:00 p.m.
Faculty, staff, and students attended a recent presentation sponsored by the Office of Tax Policy Research on the hottest economic issues facing voters this year– health care, taxes, trade, and, of course, the housing/financial crisis. Members of the University faculty who critiqued the candidates’ proposals and offered their own views on the issues included:
Thomas Buchmueller, Waldo O. Hildebrand Professor of
Risk Management and
Insurance; Professor of Business Economics and
James Levinsohn, J. Ira and Nicki Harris Family
Professor of Public Policy,
Professor of Public Policy, Professor of Economics
Joel Slemrod, Paul W. McCracken Collegiate Professor
of Business Economics
and Public Policy, Professor of Economics, Director,
Office of Tax Policy
Robert Van Order, Adjunct Professor of Finance,
Former Chief International
Economist, Freddie Mac.
NEW RESEARCH -- INCOME TAX
NONCOMPLIANCE BY INCOME GROUP
New research by
OTPR Director Joel Slemrod and IRS employee Andrew
Johns looks at income tax noncompliance by income
group. It makes use of newly available data for tax
year 2001 from the IRS’s most recent comprehensive
study of individual income tax noncompliance, the
National Research Program. The study finds that,
when taxpayers are arrayed by their “true” income,
defined as reported income adjusted for the
underreporting estimated by the IRS tax gap
methodology, the ratio of aggregate misreported
income to true income generally increases with
income, although it peaks among taxpayers with
adjusted gross income between $500,000 to
$1,000,000, and is lower than the peak ratio for
individuals with income above $1,000,000. In sharp
contrast, though, the ratio of underreported tax to
true tax is highest for lower-income taxpayers.
This contrast in results reflects the fact that
under a graduated tax schedule a given percentage
reduction in taxable income corresponds to a higher
percentage reduction in tax liability the lower is a
taxpayer’s income. Much, but not all, of the
distributional pattern of noncompliance is related
to the fact that on average high-income taxpayers
receive their income in forms that have higher
noncompliance rates. To view this paper, please
In November of each year, the National Tax Association holds
its annual conference; this year celebrating its 100th
anniversary. One of the highlights (for OTPR attendees) is the
annual dinner, where current and former OTPR-affiliated students
and faculty gather to meet and reminisce.