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Taxpayer Behavior and the Distribution of the 1982 Tax Cut

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  • Lawrence B. Lindsey

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.

Suggested Citation

  • Lawrence B. Lindsey, 1985. "Taxpayer Behavior and the Distribution of the 1982 Tax Cut," NBER Working Papers 1760, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:1760
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    References listed on IDEAS

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    1. Lawrence B. Lindsey, 1981. "Is the Maximum Tax on Earned Income Effective?," NBER Working Papers 0613, National Bureau of Economic Research, Inc.
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    Cited by:

    1. Reckers, Philip M.J. & Sanders, Debra L. & Roark, Stephen J., 1994. "The Influence of Ethical Attitudes on Taxpayer Compliance," National Tax Journal, National Tax Association;National Tax Journal, vol. 47(4), pages 825-836, December.
    2. Boskin, Michael J., 1987. "Perspectives on the Tax Reform Act of 1986," CEPR Publications 244434, Stanford University, Center for Economic Policy Research.
    3. Reckers, Philip M.J. & Sanders, Debra L. & Roark, Stephen J., 1994. "The Influence of Ethical Attitudes on Taxpayer Compliance," National Tax Journal, National Tax Association, vol. 47(4), pages 825-36, December.

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