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Alternative Tax Treatments of the Family: Simulation Methodology and Results

In: Behavioral Simulation Methods in Tax Policy Analysis

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  • Daniel R. Feenberg
  • Harvey S. Rosen

Abstract

A number of suggestions have been made to reform the tax treatment of the family. None of these proposals has been accompanied by careful estimates of their effects on the income distribution, revenue collections, and labor supply. The purpose of this paper is to provide such information. Our analysis is based upon a series of simulations using the TAXSIM file of the National 3ureau of Economic Research, which contains information from a sample of tax returns filed in 1974. Substantial attention is devoted to the problem of imputing data that are absent from TAXSIM. The simulations assume that wives' labor supply behavior depends upon the tax system. The tax reforms simulated include various exemptions and credits for secondary workers, as well as changes in the rules governing filing status. In a number of cases we find that allowing for even a modest behavioral response leads to substantial changes in the revenue implications of the proposals.
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Suggested Citation

  • Daniel R. Feenberg & Harvey S. Rosen, 1983. "Alternative Tax Treatments of the Family: Simulation Methodology and Results," NBER Chapters, in: Behavioral Simulation Methods in Tax Policy Analysis, pages 7-46, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberch:7704
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    References listed on IDEAS

    as
    1. Boskin, Michael J. & Sheshinski, Eytan, 1983. "Optimal tax treatment of the family: Married couples," Journal of Public Economics, Elsevier, vol. 20(3), pages 281-297, April.
    2. Rosen, Harvey S, 1980. "What Is Labor Supply and Do Taxes Affect It?," American Economic Review, American Economic Association, vol. 70(2), pages 171-176, May.
    3. Feldstein, Martin S & Taylor, Amy, 1976. "The Income Tax and Charitable Contributions," Econometrica, Econometric Society, vol. 44(6), pages 1201-1222, November.
    4. Rosen, Harvey S, 1976. "Taxes in a Labor Supply Model with Joint Wage-Hours Determination," Econometrica, Econometric Society, vol. 44(3), pages 485-507, May.
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    Cited by:

    1. Gamal Atallah, 1998. "Les impôts sur le revenu et l’offre de travail des femmes mariées : une revue de la littérature," L'Actualité Economique, Société Canadienne de Science Economique, vol. 74(1), pages 95-128.
    2. Lawrence B. Lindsey, 1981. "Alternatives to the Current Maximum Tax on Earned Income," NBER Working Papers 0822, National Bureau of Economic Research, Inc.
    3. Lawrence B. Lindsey, 1985. "Estimating the Revenue Maximizing Top Personal Tax Rate," NBER Working Papers 1761, National Bureau of Economic Research, Inc.
    4. Mervyn A. King, 1986. "The Empirical Analysis of Tax Reforms," NBER Working Papers 1996, National Bureau of Economic Research, Inc.
    5. Hausman, Jerry A & Poterba, James M, 1987. "Household Behavior and the Tax Reform Act of 1986," Journal of Economic Perspectives, American Economic Association, vol. 1(1), pages 101-119, Summer.
    6. Lawrence B. Lindsey, 1985. "Taxpayer Behavior and the Distribution of the 1982 Tax Cut," NBER Working Papers 1760, National Bureau of Economic Research, Inc.
    7. Daniel R. Feenberg, 1982. "The Tax Treatment of Married Couples and the 1981 Tax Law," NBER Working Papers 0872, National Bureau of Economic Research, Inc.
    8. Mervyn A. King & Jonathan I. Leape, 1984. "Wealth and Portfolio Composition: Theory and Evidence," NBER Working Papers 1468, National Bureau of Economic Research, Inc.
    9. King, Mervyn A. & Leape, Jonathan I., 1998. "Wealth and portfolio composition: Theory and evidence," Journal of Public Economics, Elsevier, vol. 69(2), pages 155-193, June.
    10. Lawrence B. Lindsey, 1986. "Individual Taxpayer Response to Tax Cuts 1982-1984 with Implications forthe Revenue Maximizing Tax Rate," NBER Working Papers 2069, National Bureau of Economic Research, Inc.
    11. Daniel R. Feenberg & Harvey S. Rosen, 1986. "State Personal Income and Sales Taxes, 1977–1983," NBER Chapters, in: Studies in State and Local Public Finance, pages 135-186, National Bureau of Economic Research, Inc.
    12. Don Fullerton & Marios Karayannis, 1987. "The Taxation of Income from Capital in the United States, 1980-86," NBER Working Papers 2478, National Bureau of Economic Research, Inc.

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