Tax Projections and the Budget: Lessons from the 1980's
AbstractSome economists have argued that the disincentive effects of marginal tax rate increases in the 1980s caused revenue to rise by less than had been anticipated. To evaluate the hypothesis, this paper considers OMB revenue forecasts and forecast errors for the period 1982-93. If the revenue gains from tax increases, and the revenue losses from tax cuts, were overstated because of inadequate allowance for behavioral responses, then the forecast errors should be negatively related to the initial revenue estimates of the impact of policy changes. For excise taxes and corporate income taxes, the results suggest that the systematic overprediction of revenues during the period can be explained in part by an underestimate of behavioral responses to taxation.
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Bibliographic InfoArticle provided by American Economic Association in its journal American Economic Review.
Volume (Year): 85 (1995)
Issue (Month): 2 (May)
Other versions of this item:
- Alan J. Auerbach, 1995. "Tax Projections and the Budget: Lessons from the 1980s," NBER Working Papers 5009, National Bureau of Economic Research, Inc.
- H30 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - General
- H61 - Public Economics - - National Budget, Deficit, and Debt - - - Budget; Budget Systems
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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NBER Working Papers
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- Feenberg, D.R. & Poterba, J.M., 1992. "Income Inequality and the Incomes of Very High Income Taxpayers: Evidence from Tax Returns," Working papers 92-16, Massachusetts Institute of Technology (MIT), Department of Economics.
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