Working Paper: NBER ID: w2132
Authors: Lawrence H. Summers
Abstract: While frequently invoked, the level playing field ideal and its practical embodiment in tax legislation has received relatively little analysis. This paper examines the economic arguments surrounding the level playing field doctrine. I conclude that leveling the playing field is an issue of little economic importance and that efforts to level the playing field like those recently enacted are likely to create more important nonneutralities than those they eliminate. They may however contribute to the perceived fairness of the tax system.
Keywords: Tax Reform; Level Playing Field; Economic Efficiency
JEL Codes: H21; H25
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| tax reforms (H29) | economic efficiency (D61) |
| tax reforms (H29) | economic equity (D63) |
| effective tax rate calculations (H29) | actual investment decisions (G11) |
| tax policy (H20) | investment inefficiency (D61) |
| recent tax policies (H29) | nonneutralities between forms of capital (D29) |
| nonneutralities between forms of capital (D29) | economic efficiency (D61) |
| nonneutralities between forms of capital (D29) | economic equity (D63) |
| 1986 tax act (H20) | tax burdens on new investments (H25) |
| tax burdens on new investments (H25) | favoring existing investments (G31) |
| efforts to achieve tax neutrality (H29) | substantial efficiency gains (D61) |