Working Paper: NBER ID: w1765
Authors: Joel Slemrod
Abstract: This paper analyzes the Reagan Administratioris tax reform proposal in terms of its three stated objectives --fairness, simplicity, and economic growth -- and considers its likely effecton labor supply, saving and investment, and housing. The paper also attempts to place the tax reform debate in the context of modern public finance theory, in order to provide some rigorous framework for discussion of the important issues.
Keywords: Tax Reform; Households; Economic Growth; Labor Supply; Saving; Investment
JEL Codes: H24; H31
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Reduction in marginal tax rates (H31) | Increase in labor supply (J20) |
| Reduction in marginal tax rates (H31) | Increase in after-tax wage rate (H31) |
| Changes in tax incentives (H25) | Impact on saving and investment behaviors (D14) |
| Expansion of individual retirement accounts (IRAs) (D14) | Enhance saving (E21) |
| Elimination of property tax deductibility (H20) | Increase in overall tax burden on owner-occupied housing (H22) |
| Increase in overall tax burden on owner-occupied housing (H22) | Affect housing demand and investment decisions (R21) |