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Estimating Long-Run Revenue Effects of Tax Law Changes

Author

Listed:
  • Jane G. Gravelle

    (US Congressional Research Service)

Abstract

Constraints aimed at controlling the deficit place a premium on the revenue effects of proposals within the budget horizon, which is typically five years. Yet, many tax provisions have uneven patterns of cost: long-run costs may differ in magnitude, and even direction, from the short-run costs. Examples include tax treatment of intangibles, investment subsidies, prospective indexation of capital gains and "backloaded" vs. "frontloaded" individual retirement accounts. Some provisions, such as tax payment speedups, may be driven solely by budget considerations. This paper proposes one solution-to require a standardized form of revenue estimating, based on present value calculations.

Suggested Citation

  • Jane G. Gravelle, 1993. "Estimating Long-Run Revenue Effects of Tax Law Changes," Eastern Economic Journal, Eastern Economic Association, vol. 19(4), pages 481-494, Fall.
    • Handle: RePEc:eej:eeconj:v:19:y:1993:i:4:p:481-494
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    File URL: http://web.holycross.edu/RePEc/eej/Archive/Volume19/V19N4P481_494.pdf
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    Citations

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    Cited by:

    1. Robert Carroll & Warren Hrung, 2005. "What Does the Taxable Income Elasticity Say About Dynamic Responses to Tax Changes?," American Economic Review, American Economic Association, vol. 95(2), pages 426-431, May.
    2. Alan J. Auerbach, 1994. "The US Fiscal Problem: Where We Are, How We Got Here, and Where We're Going," NBER Chapters, in: NBER Macroeconomics Annual 1994, Volume 9, pages 141-186, National Bureau of Economic Research, Inc.

    More about this item

    Keywords

    Deficit; Law; Tax Law; Tax;
    All these keywords.

    JEL classification:

    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • K34 - Law and Economics - - Other Substantive Areas of Law - - - Tax Law

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