VERSION OF AUGUST 25, 2009

Econ 9460Advanced Public Economics II (Taxation)David L. SjoquistFall 2009

Office: 433 AYSPS

Phone: 404.413.0246 email: sjoquist@gsu.eduOffice Hours: By appointmentClass Time: MW 12:00-1:15 pmClass Place: 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 doctoral-level 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 7 th

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.

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A number of book chapters and articles may be hard to find. I will post various chapters and articles on 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. Overview of the course (topics, assignments, tests, etc) B. Issues of interest (who bears the burden and equity of taxes; efficiency – excess burden

and optimal tax; incentives)C. Brief overview of U.S. taxesD. General tax principals

II. Review of welfare theory

A. Pareto OptimalityB. Social Welfare FunctionC. Theory of excess burden

III. Equity/Fairness

A. Measuring income and income distributionB. Horizontal equityC. Vertical equity

IV. Incidence – general theory

A. Partial equilibriumB. General equilibrium (Harberger model and its many extensions)C. Dynamic incidence (growth and overlapping generation model

V. Incidence and efficiency – empirical and tax-specific theory

A. Studies of all taxes B. Personal income and payroll taxC. Commodity taxesD. Corporate income taxE. Property taxF. Estate tax

VI. Optimal taxation

A. Commodity taxes (indirect taxes)B. Income tax (direct taxes)C. Tax on capitalD. Direct vs. indirect

VII. Tax Structure and Incentive Effects

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VIII. Personal Income Tax: Structure and Incentive effects.

A. StructureB. Labor supply (hours, effort, fringe benefits, low income supports, retirement, etc) C. Saving D. Risk taking, portfolio E. Capital gainsF. Family formation (marriage and fertility) G. Other incentives, including housing and charitable giving

IX. Taxes on business income

A. StructureB. InvestmentC. Corp capital structure, dividend policyD. Business structureE. Location of physical investment

X. Consumption, Sales and Excise taxes

XI. Taxes on wealth

A. Property taxB. 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. Context for ReformB. What to do about the Underground EconomyC. Flat Tax MovementD. 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 securitya. Labor supplyb. Savingc. 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.pdfhttp://www.oecdobserver.org/news/fullstory.php/aid/651/The_truth_about_tax_burdens.htmlhttp://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

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(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, 128-138.

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

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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, 589-597.

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, 1212-1223.

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.

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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): 667-699.

*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, 1987-1999”. 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): 85-97.

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, 335-342.

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.

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Mirrlees, James A. (1976), "Optimal Tax Theory: A Synthesis," Journal of Public Economics, 6, 327-358.

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, 1-12.

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

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*Rogers, Diane Lim (1999), “Federal Income Tax Policy: Issues of Distribution and Equity”, Chapter 24 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.

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Jha, Chapter 8, “Taxation and Labor Supply”.

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.

17

Hubbard, R. Glenn, Jonathan Skinner, and Stephen P. Zeldes (1995), "Precautionary Saving and Social 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.

19

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).

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.

20

Rosen, Harvey and Kenneth Rosen (1980). “Federal Taxes and Home Ownership: Evidence from Times 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.

22

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/tax-policy/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.” 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.

23

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 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).

24

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.

*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

25

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, 315-346).

Burman, Leonard E. and David Weiner (2005), “Suppose They Took the AM out of AMT?” Urban-Brookings 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.

26

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 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.

27

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): 193-218.

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.

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.

28

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 Coherent Preferences," American Economic Review 94(4): 1014-33.

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.

Bernheim, B.D., and D. Garrett (2003), “The Effects of Financial Education in the Workplace: Evidence 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). “Optimal Defaults and Active Decisions,” Quarterly Journal of Economics.

Duflo, Esther, and Emmanuel Saez (2003). “The Role of Information and Social Interaction in Retirement 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).

Gruber, Jonathan, and Botond Koszegi (2001). “Is Addition ‘Rational’? Theory and Evidence,” Quarterly Journal of Economics 116(4): 1261-1305.

Laibson, David, Andrea Repetto, and Jeremy Tobacman (1998). “Self-Control and Saving for Retirement,” Brookings Papers on Economic Activity, 1: 91-172.

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Madrian, B., and D. Shea (2001). “The Power of Suggestion: Inertia in 401(k) Participation and Saving Behavior,” Quarterly Journal of Economics 116: 1149-1187.

McCaffery, Edward and Joel Slemrod (eds) (2006). Behavioral Public Finance. New York, NY: Russell Sage Foundation.

XV. Tax Reform

*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 Saving”, Chapter 21 of Handbook.

*Feldstein, Martin S. (1976), "On the Theory of Tax Reform," Journal of Public Economics, 6, 77-104.

*Martinez-Vazquez, Jorge and Robert M. McNab (2000), "The Tax Reform Experiment in Transitional Countries," National Tax Journal, 53 (2), 273-298.

*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.

Aaron, Henry J., et al. (1987), "Symposium, Tax 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).

Auerbach, Alan J., Laurence J. Kotlikoff, and Jonathan Skinner (1983), "The Efficiency Gains from Dynamic Tax Reform," International Economic Review, 81-100.

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).

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