James Alm Office: 11 2 Economics Phone: 492-8291

ECONOMICS 8211 PUBLIC ECONOMICS: TAXATION

FALL 1993

Office Hours: MW 3:30-5:00 p.m. or by appointment

Class: MW 2:00-3: 1 5 p.m., 5 Economics

COURSE OBJECTIVES

Economics 8211 applies economic theory to issues of taxation and tax policy. The course first discusses basic principles of taxation . It then describes the U.S. tax structure, and analyzes the impact of the existing and alternative tax systems on the allocation of resources and the level and distribution of economic welfare.

COURSE REQUIREMENTS

There will be two examinations: a midterm examination worth 20 percent of the final grade, and a comprehensive final examination worth 40 percent. The midterm exam will be given after completion of Basic Principles of Taxation; the final exam is tentatively scheduled for Wednesday, December 15, from 7:30 to 10:30 p.m. Also required is an original research paper on a public economics topic of your choice; the research paper is worth 40 percent of the final grade, and it will be due on the last day of class. Details of the paper will be discussed in class.

There will also be periodic assignments. Although they will not be collected or graded, questions from them may appear on the exams. Students are encouraged to work together on the assignments.

TEXTBOOKS

There are two required textbooks:

Joseph A. Pechman, Federal Tax Policy, Fifth Edition, (Washington, D.C.: The Brookings Institution, 1987), denoted "Pechman ."

Henry J. Aaron and Joseph A. Pechman, eds., How Taxes Affect Economic Behavior (Washington, D.C.: The Brookings Institution, 1981), denoted "Aaron and Pechman."

Also recommended are:

Joseph E. Stiglitz, Economics of the Public Sector, Third Edition (New York, NY: W.W. Norton and Co., 1991 ), denoted "Stiglitz ."

Alan J. Auerbach and Martin Feldstein, Handbook of Public Economics, Volumes I and II (New York, NY: Elsevier Science Publishing Company, Inc., 1985 and 1987) .

A reading packet of articles is also required.

COURSE OUTLINE

I. Basic Principles of Taxation A. Taxation and Fairness 8. Taxation and Incentives

1 . Household Decisions 2. Production Decisions

C. Taxation and Excess Burden D. Taxation and Incidence E. Taxation and Revenues F. Optimal Taxation

1. Commodity Taxation 2 . Income Taxation 3. Tax Structure

G. The Timing of Taxation 1. The Impact of Government Debt 2. Intergenerational Incidence 3. Tax Amnesties

H. Tax Administration and Compliance Costs I . Taxation and Politics

II. Taxes on Individual Income A. The Structure of the Individual Income Tax 8. The Impact of Income Taxation

1 . Labor Supply 2. Savings 3. Portfolio Choice 4. Tax Preferences 5. Capital Gains 6. Tax Avoidance and Evasion 7 . Tax Treatment of the Family 8. Inflation 9. Tax Policy Uncertainty 10. Distribution of Income

Ill. Social Security: Taxation and Benefits A. The Structure of Social Security 8. The Impact of Social Security

1 . Labor Supply 2. Savings 3. Distribution of Income

IV. Taxes on Business Income A . The Structure of Corporate Income Taxation B. The Impact of the Corporation Income Tax

1 . Investments and Mergers 2. Financial Structure of the Firm 3. Incidence of the Corporation Income Tax

V. Taxes on Consumption

VI. Taxes on Wealth

VII. The Theory of Tax Design and Reform

READING LIST

All starred (*) readings are required.

I.A. Taxation and Fairness Stiglitz, Chapter 16. Musgrave, R. A. (1959), The Theory of Public Finance, Chapters 4 and 5, McGraw-Hill Book

Company. Blum, W . J . and H. Kalven (1963), The Uneasy Case for Progressive Taxation, The University of

Chicago Press. Okun, Arthur M . (1975), Equality and Efficiency: The Big Tradeoff, The Brookings Institution.

I.B. Taxation and Incentives * Siem rod, Joel ( 1 992), "Do Taxes Matter? Lessons from the 1 980s," The American Economic

Review Papers and Proceedings, 82, 250-256. *Moffit, Robert (1992) , "Incentive Effects of the U.S. Welfare System," Journal of Economic

Literature, 30 ( 1), 1-61 . Slemrod, Joel, ed. (1990), Do Taxes Matter? The Impact of the Tax Reform Act of 1986, The MIT

Press.

I.C. Taxation and Excess Burden Stiglitz. Chapter 18. * Auerbach, Alan J . ( 1985), "The Theory of Excess Burden and Optimal Taxation," Chapter 2 in

Handbook of Public Economics Volume I, Alan J. Auerbach and Martin S. Feldstein, eds. , North-Holland.

*Stuart, Charles (1984), "Welfare Costs per Dollar of Additional Tax Revenue in the U. S.," The American Economic Review, 74, 352-362.

*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.

Alm, James (1985), "The Welfare Cost of the Underground Economy," Economic Inquiry, 24 (2), 243-263.

Ballard, Charles L., John B. Shoven, and John Whalley (1985), "General Equilibrium Computations of the Marginal Welfare Costs of Taxes in the United States, " The American Economic Review, 75, 128-138.

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," in Taxation and Welfare, Little, Brown and Company.

Harberger, Arnold C. ( 1 979), "The Measurement of Waste," in Taxation and Welfare, Little, Brown and Company.

Hausman, Jerry A. ( 1 981), "Exact Consumer's Surplus and Deadweight Loss, " The American Economic Review, 71, 662-676.

McKenzie, G. W. and I. F. Pearce (1982), "Welfare Measurement--A Synthesis, " The American Economic Review, 72, 669-682.

Richter, Donald K. (1977), "Games Pythagoreans Play," Public Finance Quarterly, 5, 495-515. Silberberg, Eugene (1972), "Duality and the Many Consumer's Surpluses," The American Economic

Review, 62, 942-952. Willig, Robert D. (1976), "Consumer's Surplus Without Apology," The American Economic Review,

66, 589-597.

I.D. Taxation and Incidence Stiglitz, Chapter 17. *Mclure, Charles E. ( 1975), "General Equilibrium Incidence Analysis, " Journal of Public Economics,

4, 125-161 . *Shaven, John B. and John Whalley (1984), "Applied General Equilibrium Models of Taxation and

International Trade," Journal of Economic Literature, 22 (3), 1007-1051. *Kotfikoff, Laurence J. and Lawrence H. Summers (1987) , "Tax Incidence." Chapter 16 in

Handbook of Public Economics Volume II, Alan J. Auerbach and Martin S. Feldstein, eds. , North-Holland.

Alm, James and Steven Thorpe ( 1992). "Taxation with Endogenous Market Structure, " University of Colorado at Boulder Working Paper.

Baxter, Marianne and Robert G. King ( 1993), "Fiscal Policy in General Equilibrium, " The American Economic Review, 83 (3), 315-335.

Harberger, Arnold C. ( 1 962), "The Incidence of the Corporation Income Tax," Journai of Political Economy, 70, 215-240.

Mieszkowski, Peter M. (1967), "On the Theory of Tax Incidence," Journal of Political Economy, 75 , 250-262.

Musgrave, Richard A., The Theory of Public Finance, Chapter 10, McGraw-Hill Book Company. 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. , The Brookings Institution.

I.E. Taxation and Revenues *Fullerton, Don (1982), "On the Possibility of an Inverse Relationship Between Tax Rates and Tax

Revenues," Journal of Public Economics, 19, 3-22. Pechman, Joseph A. (1973), "Responsiveness of the Federal Individual Income Tax to Changes in

Income," Brookings Papers on Economic Activity, No. 2, 385-413.

I.F. Optimal Taxation Stigfitz, Chapter 20. *Auerbach (1985) in I.C. *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., Oxford University Press.

*Stiglitz, Joseph E. (1987), "Pareto Efficient and Optimal Taxation and the New New Welfare Economics," Chapter 15 in Handbook of Public Economics Volume II, Afan J. Auerbach and Martin S. Feldstein, eds., North-Holland.

Atkinson, Anthony B. and Joseph E. Stigfitz (1976), "The Design of Tax Structure: Direct Versus Indirect Taxation," Journal of Public Economics, 6, 55-76.

Diamond, Peter A . and James A . Mirrlees (1971), "Optimal Taxation and Public Production," The American Economic Review, 61, 8-27 and 261-278.

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

Slemrod, Joel (1990), "Optimal Taxation and Optimal Tax Systems," The Journal of Economic Perspectives, 4(1). 157-178.

I.G. The Timing of Taxation Stigfitz, Chapter 28. * Barro, Robert J. ( 1 979), "On the Determination of the Public Debt ," Journal of Political Economy,

87, 940-971. *Seater, John J. (1993), "Ricardian Equivalence," Journal of Economic Literature, 31 (1). 142-190 * Alm, James, Michael McKee, and William Beck ( 1 990), "Amazing Grace: Tax Amnesties and

Compliance," National Tax Journal. Auerbach, Afan J ., Jagadeesh Gokhafe, and Laurence J. Kotlikoff (1991 ), "Generational Accounts:

A Meaningful Alternative to Deficit Accounting," in David Bradford, ed., Tax Policy and the Economy (New York, NY: National Bureau of Economic Research and the MIT Press) .

Auerbach, Alan J. , Laurence J. Kotfikoff, and Jonathan Skinner (1983), "The Efficiency Gains from

Dynamic Tax Reform," International Economic Review, 81-100. Barro, Robert J . (1974), "Are Government Bonds Net Wealth?" Journal of Political Economy, 82,

1095-1117. Blejer, Mario I. and Adrienne Cheasty ( 1991), "The Measurement of Fiscal Deficits: Analytical and

Methodological Issues," Journal of Economic Literature, 29 (4), 1644-1678. Hansson, I. and C. Stuart ( 1987), "The Welfare Costs of Deficit Finance," Economic Inquiry, 25

(3), 479-496. Kotlikoff, Laurence J. (1992) , Generational Accounting (New York, NY: The Free Press) . Leiderman, Leonardo and Mario I. Blejer (1988) , "Modeling and Testing Ricardian Equivalence,"

International Monetary Fund Staff Papers, 35 (1 ), 1-35. Yellen , Janet L., et al (1989), "Symposium, Budget Deficit," The Journal of Economic Perspectives,

3(2), 17-93.

I.H. Tax Administration and Compliance Costs *Slemrod, Joel and Nikki Sorum (1984), "The Compliance Cost of the U. S. Individual Income Tax

System," National Tax Journal, 37(4) , 461-474. *Goode, Richard (1981), "Some Economic Aspects of Tax Administration," International Monetary

Fund Staff Papers, 28, 249-274. Bird, Richard M . (1989), "The Administrative Dimension of Tax Reform in Developing Countries, " in

Malcolm Gillis, ed. , Tax Reform in Developing Countries, Duke University Press, 315-346. Mayshar, Joram (1991), "Taxation with Costly Administration," Scandinavian Journal of

Economics, 93 ( 1), 75-88. 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," The

Scandinavian Journal of Economics, 89 (2), 183-192. Wilson, John Douglas (1989), "On the Optimal Tax Base for Commodity Taxation," The American

Economic Review, 89, 1196-1206. Yitzhaki, Shlomo ( 1979), "A Note on Optimum Taxation and Administrative Costs," The American

Economic Review, 69 (3), 475-480.

I.I. Taxation and Politics *Hettich, Walter and Stanley L. Winer (1988), "Economic and Political Foundations of Tax

Structure," The American Economic Review, 78, 701-712.

II.A. The Structure of the Individual Income Tax Stiglitz, Chapter 21 . * Pechman, Chapters 4 and 7. Due, John F. (1977), "Personal Deductions," in Joseph A . Pechman, ed., Comprehensive Income

Taxation, The Brookings Institution. Goode, Richard (1976), The Individual Income Tax, Chapters 2, 5, 6, 7, 9, The Brookings

Institution. Goode, Richard (1977), "The Economic Definition of Income," in Joseph A . Pechman, ed.,

Comprehensivse Income Taxation, The Brookings Institution.

11.B.1. Labor Supply Stiglitz, Chapter 1 9. *Hausman, Jerry A. (1981), "Labor Supply," in Aaron and Pechman. *Hausman, Jerry A. (1985), "Taxes and Labor Supply," Chapter 4 in Handbook of Public

Economics Volume I., Alan J. Auerbach and Martin S. Feldstein (eds.), North Holland. Bosworth, Barry and Gary Burtless ( 1992), "Effects of Tax Reform on Labor Supply, Investment,

and Saving," Journal of Economic Perspectives, 6 ( 1), 3-25. Macurdy, Thomas (1992), "Work Disincentive Effects of Taxes: A Reexamination of Some

Evidence," The American Economic Review Papers and Proceedings, 82, 243-249.

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11.B.2. Savings Stiglitz, Chapters 13 and 22. *van Furstenberg, George M. (1981), "Saving, " in Aaron and Pechman. *Sandmo, Agnar (1985), "The Effects of Taxation on Savings and Risk Taking," Chapter 5 in

Handbook of Public Economics Volume i, Alan J . Auerbach and Martin S. Feldstein, eds. , North-Holland.

*Bernheim, 8. Douglas, Andrei Shleifer, and Lawrence H. Summers (1985), "The Strategic Bequest Motive," Journal of Political Economy, 93, 1 045-1 076.

Altonji, Joseph G., Furnia Hayashi, and Laurence J. Kotlikoff (1992), "Is the Extended Family Altruistically Linked? Direct Tests Using Micro Data," The American Economic Review, 82 (5), 1177-1198.

Baskin, Michael J. ( 1978), "Taxation, Saving, and the Rate of Interest," Journal of Political Economy, 86, S3-S27.

Feldstein, Martin, S. (1978) , "The Welfare Cost of Capital Income Taxation," Journal of Political Economy, 86, S29-S52.

Kotlikoff, Laurence J. ( 1 984), "Taxation and Savings: A Neoclassical Perspective," Journal of Economic Literature, 22, 1576-1629.

Modigliani, Franco, et al (1988), "Symposium. Explain ing Savings," The Journal of Economic Perspectives, 2(2), 15-58.

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 .

Summers, Lawrence H. (1981), "Capital Taxation and Accumulation in a Life Cycle Growth Model," The American Economic Review, 71, 533-544.

Venti, S. and David Wise (1987), "IRAs and Saving, " in Martin S. Feldstein, ed., The Effects of Taxation on Capital Accumulation, The University of Chicago Press.

11.B.3. Portfolio Choice *Sandmo, in 11.8.2. *Bulow, Jeremy and Lawrence H. Summers (1984), "The Taxation of Risky Assets," Journal of

Political Economy, 92, 20-39. Stiglitz, Joseph E. (1969), "The Effects of Income, Wealth, and Capital Gains Taxation on Risk­

Taking," Quarterly Journal of Economics, 83, 263-283.

11.B.4. Tax Preferences * Clotfelter, Charles T. and C. Eugene Steuerle (1981), "Charitable Contributions," in Aaron and

Pech man. *de Leeuw, Frank and Larry Ozanne (1981), "Housing," in Aaron and Pechman. Aaron, Henry J. (1970), "Income Taxes and Housing," The American Economic Review, 60, 789-

806. Browning, Jacqueline M. (1979), "Estimating the Welfare Cost of Tax Preferences," Public Finance

Quarterly, 7, 199-219. Feldstein, Martin S. (1980), "A Contribution to the Theory of Tax Expenditures," in Henry J . Aaron

and Michael J . Baskin, eds., The Economics of Taxation, The Brookings Institution. Foflain, James R., Jr. (1982), "Does Inflation Affect Real Behavior: The Case of Housing," Southern

Economic Journal, 48, 570-582. Hendershott, Patric (1980), "Real User Costs and the Demand for Single-Family Housing,"

Brookings Papers on Economic Activity, No. 2, 401-444. Long, James E. and Frank A. Scott (1984), "The Impact of the 1981 Tax Act on Fringe Benefits

and Federal Tax Revenues," National Tax Journal, 37, 185-194. Woodbury, S. A. ( 1983), "Substitution Between Wage and Nonwage Benefits," The American

Economic Review, 73, 166-182.

11.B.5 . Capital Gains

* Gillingham, Robert and John S. Greenlees (1992) , "The Effect of Marginal Tax Rates on Capital

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Gains Revenue: Another Look at the Evidence," National Tax Journal, 45 (2), 167-177. * Minarik, Joseph J. (1981), "Capital Gains," in Aaron and Pechman. Auerbach, Alan (1988), "Capital Gains Taxation in the United States: Realizations., Revenue, and

Rhetoric," Brookings Papers on Economic Activity, No. 2. 595-631 . 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, 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.

11.B.6. Tax Avoidance and Evasion Stiglitz, Chapter 24. *Alm, James (1987), "Compliance Costs and the Tax Avoidance-Tax Compliance Decision, " Public

Finance Quarterly, 1 6( 1), 323-338 . ... Alm, James, Roy Bahl, and Matthew N. Murray (1991), "Tax Structure and Tax Compliance," The

Review of Economics and Statistics. *Alm, James, Gary H. McClelland, and William D. Schulze (1992), "Why Do People Pay Taxes?"

Journal of Public Economics, 48, 21-38. Allingham, Michael G. and Agnar Sandmo (1972), " Income Tax Evasion: A Theoretical Analysis, "

Journal of Public Economics, 1, 323-338. Clotfelter, Charles T. (1983), "Tax Evasion and Tax Rates: An Analysis of Individual Tax Returns,"

The Review of Economics and Statistics, 65, 363-373. Cowell, Frank A. (1990), Cheating the Government: The Economics of Evasion, 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. 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.

11.B. 7. Tax Treatment of the Family *Brazer, Harvey E. (1980), "Income Tax Treatment of the Family," in Henry J. Aaron and Michael

J. Baskin, eds., The Economics of Taxation, The Brookings Institution, 223-246. Whittington, Leslie A .• James Alm, and H. Elizabeth Peters (1990), "Fertility and the Personal

Exemption: Implicit Pronatalist Policy in the United States," The American Economic Review, 80, 545-556. .

11.B.8. Inflation Aaron, Henry J., ed . (1976), Inflation and the Income Tax, The Brookings Institution. Alm, James and Reuben A. Zubrow (1987), "Who Benefits from Indexation?" Public Finance

Quarterly 15 (1 ). 27-44. Congressional Budget Office ( 1980), Indexing the Individual Income Tax for inflation, Government

Printing Office.

11.B.9. Tax Policy Uncertainty *Alm, James (1988), "Uncertain Tax Policies, Individual Behavior, and Welfare," The American

Economic Review, 78, 237-245. *Skinner, Jonathan ( 1 988), "The Welfare Cost of Uncertain Tax Policy," Journal of Public

Economics, 37, 129-145.

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* Alm, James, Betty R. Jackson, and Michael McKee (1992), "Institutional Uncertainty and Taxpayer Compliance," The American Economic Review, 82 (4), 1018-1026.

11 .8.10. Distribution of Income Pechman, Joseph A . (1985), Who Paid the Taxes, 1966-1985, The Brookings Institution.

111 .B.2. The Impact of Social Security *Leimer D. R. and S. D. Lesnoy (1982), "Social Security and Private Savings: New Time Series

Evidence," Journal of Political Economy, 90, 606-629. *Burkhauser, Richard V. and John A. Turner (1985), "Is the Social Security Payroll Tax a Tax?"

Public Finance Quarterly, 13 (3), 253-268. Baskin, Michael J. , et al (1987), "Social Security: A Financial Appraisal Across and Within

Generations," National Tax Journal, 40 (1 ), 19-34. Feldstein, Martin S. (1974), "Social Security, Induced Retirement, and Aggregate Capital

Accumulation," Journal of Political Economy, 82, 905-926. Hansson, Ingemar and Charles Stuart (1989), "Social Security as Trade Among Living

Generations," The American Economic Review, 79 (5), 1182-1195. Pechman, Joseph A. (1983), The Economic Effects of Social Security, The Brookings Institution.

IV .A. The Structure of Corporate Income Taxation Stiglitz, Chapter 23. *Pechman, Chapter 5 . *Boadway, Robin (1987), "The Theory of Effective Tax Rates," in The Impact of Taxation on

Economic Decisions, J . Mintz and D. Purvis, eds., J. Deutsch. Congressional Budget Office (1985), Revising the Corporate Income Tax, Government Printing

Office. Fullerton, Don ( 1984), "Which Effective Tax Rate?" National Tax Journal, 3_7 ( 1), 23-41 . Stiglitz, Joseph E. ( 1973), "Taxation, Corporate Financial Policy, and the Cost of Capital ," Journal

of Public Economics, 2, 1-34. Stiglitz, Joseph E. ( 1976), "The Corporation Income Tax," Journal of Public Economics, 5, 301-

312.

IV .B.1. Investments and Mergers *Hendershott, Patric H. and Sheng-Cheng Hu (1981), "Investment in Producers' Equipment, " in

Aaron and Pechman . .. Chirinko, Robert S. ( 1986), "Business Investment and Tax Policy," National Tax Journal, 39(2),

137-155. *Nadeau, Serge and Robert P. Strauss (1991), "Tax Policies and the Real and Financial Decisions

of the Firm: The Effects of the Tax Reform Act of 1 986," Public Finance Quarterly, 19 (3), 251-292 .

Auerbach, Alan J., and D. Reishus (1988), "The Effects of Taxation on the Merger Decision," in Alan J. Auerbach , ed., Corporate Takeovers: Causes and Consequences, The University of Chicago Press.

Feldstein, Martin S. and Lawrence H. Summers (1979), "Inflation and the Taxation of Income in the Corporate Sector," National Tax Journal, 32, 445-4 70.

IV .B.2. Financial Structure *Gordon, Roger H. and Burton G. Malkiel (1981), "Corporation Finance," in Aaron and Pechman. * Brinner, Roger E. and Stephen H. Brooks ( 1981), "Stock Prices," in Aaron and Pech man. *Zodrow, George R. (1991), "On the 'Traditional' and ' New' Views of Dividence Taxation,"

National Tax Journal, 44 (4), 497-509. Auerbach , Alan J. (1983), "Taxation, Corporate Financiai Policy, and the Cost of Capital," Journal

of Economic Literature, 21, 905-940. Bagwell, Lyle and John Shaven ( 1989), "Cash Distributions to Shareholders," Journal of Economic

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Perspectives, 3, 129-140. Bolster, Paul J. and Vahan Janjigian (1991), "Dividend Policy and Valuation Effects of the Tax

Reform Act of 1 986," National Tax Journal, 44 (4), 511-518. Carroll, Robert and David Joulfaian (1993), " Do Taxes Affect Corporate Financial Decisions? The

Choice of Organization Form," unpublished manuscript. Miller, Merton and Myron Scholes (1982), "Dividends and Taxes: Some Empirical Evidence, "

Journal of Political Economy, 90, 111 8-1141 .

IV.B.3. Incidence of the Corporation Income Tax +Gordon, Robert J . ( 1967), "The Incidence of the Corporation Income Tax in U.S. Manufacturing,"

The American Economic Review, 57, 731-758. Harberger, Arnold C. (1962), "The Incidence of the Corporation Income Tax," Journal of Political

Economy, 70, 215-240. Krzyzaniak, Marian and Richard A. Musgrave (1964), The Shifting of the Corporation Income Tax,

Johns Hopkins Press.

V. Taxes on Consumption +Pechman, Chapter 6. Bradford, David (1980), "The Case for a Personal Consumption Tax," in Joseph A. Pechman, ed.,

What Should Be Taxes: Income or Exp.enditure? The Brookings Institution.

VI. Taxes on Wealth +Pechman, Chapters 8 and 9. +Mieszkowski, Peter M. (1972), "The Property Tax: An Excise Tax or a Profits Tax?", Journal of

Public Economics, 1, 73-96. Joulifian, David (1991), "Charitable Bequests and Estate Taxes," National Tax Journal, 44 (2), 169-

180. Mclure, Charles E. ( 1 977), "The New View of the Property Tax: A Caveat," National Tax Journal,

30, 69-76.

VII. The Theory of Tax Design and Reform +Feldstein, Martin S. (1976), "On the Theory of Tax Reform," Journal of Public Economics, 6, 77-

104. +zodrow, George (1981 ), "Implementing Tax Reform," National Tax Journal, 34(4), 401-418. *Boadway, Robin and Neil Bruce (1985), "Theoretical Issues in Tax Reform," in David Laidler (ed.),

Approaches to Economic Well-Being, University of Toronto Press. 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, The Brookings Institution. Bradford, David (1986), Chapter 5 in Untangling the Income Tax, Harvard University Press. Goode, Richard (1980), "The Superiority of the Income Tax," in What Should Be Taxed: Income or

Consumption?, Joseph A . Pech man, ed., The Brookings Institution. Musgrave, Richard A . ( 1976), "ET, OT, and SBT," Journal of Public Economics, 6, 3-16. World Bank (1988), "Reforming Tax Systems," Chapter 4 in World Development Report, Oxford

University Press, 79-104.