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Taxpayer Behavior and the Distribution of the 1982 Tax Cut

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  • Lawrence B. Lindsey
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    Abstract

    The Economic Recovery Tax Act of 1981 mandated the most substantial reduction in personal income tax rates since the tax cuts of 1964. The rate reductions stimulated debates about the responsiveness of taxpayers to tax rates and incentives, the magnitude of the foregone revenue, and the distribution of the tax burden. This paper provides estimates of these three parameters. A baseline income distribution was created which took the macroeconomic environment of 1982 as given. This distribution is contrasted with the actual income reported in 1982 to measure the added reporting of income as a result of the rate cuts. The National Bureau of Economic Research TAXSIM model was used to estimate the effects of taxpayer behavior on tax liabilities as well.

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    File URL: http://www.nber.org/papers/w1760.pdf
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    Bibliographic Info

    Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 1760.

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    Date of creation: Oct 1985
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    Handle: RePEc:nbr:nberwo:1760

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    Postal: National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.
    Phone: 617-868-3900
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    23. Browning, Edgar K & Johnson, William R, 1984. "The Trade-Off between Equality and Efficiency," Journal of Political Economy, University of Chicago Press, vol. 92(2), pages 175-203, April.
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