DO WE NOW COLLECT ANY REVENUE FROM TAXING CAPITAL INCOME
➤ Gửi thông báo lỗi ⚠️ Báo cáo tài liệu vi phạmNội dung chi tiết: DO WE NOW COLLECT ANY REVENUE FROM TAXING CAPITAL INCOME
DO WE NOW COLLECT ANY REVENUE FROM TAXING CAPITAL INCOME
DO WE NOW COLLECT ANY REVENUE FROM TAXING CAPITAL INCOME?Roger Gordon1 University of California. San DiegoLaura Kalambokidis-University of Minnesota. DO WE NOW COLLECT ANY REVENUE FROM TAXING CAPITAL INCOME Twin CitiesJoel Slemrod3 University of Michigan. Ann ArborNovember 4,2002Presented at the International Seminar in Public Economics conference held at the University of California at Berkeley on December 7 and 8.2001. We are grateful to Heidi Shierholz and Steffanie Guess-Murphy for outstanding res DO WE NOW COLLECT ANY REVENUE FROM TAXING CAPITAL INCOMEearch assistance.Abstract: The U.S. income tax system has long been recognized as a hybrid of an income and consumption tax, with elements that do notDO WE NOW COLLECT ANY REVENUE FROM TAXING CAPITAL INCOME
fit naturally into either pure system.What it actually is has important policy implications for, among other things, understanding the impact of moviDO WE NOW COLLECT ANY REVENUE FROM TAXING CAPITAL INCOME?Roger Gordon1 University of California. San DiegoLaura Kalambokidis-University of Minnesota. DO WE NOW COLLECT ANY REVENUE FROM TAXING CAPITAL INCOMEtional implications of switching from the current system to one form of consumption tax, a modified cash flow tax.’ Department of Economics - 0508. University of California. San Diego. 9500 Gilman Drive. La Jolla. CA 92093-0508; Tel: (858)-534-4828; Fax: (858)-534-7040; Email: rogordon@ucsd.edu.■Dep DO WE NOW COLLECT ANY REVENUE FROM TAXING CAPITAL INCOMEartment of Applied Economics, University of Minnesota, 231 classroom office Building, 1994 Buford Ave., St. Paul, MN 55108-6040; Tel: (651) 625-1995;DO WE NOW COLLECT ANY REVENUE FROM TAXING CAPITAL INCOME
Fax: (651) 625-6245; Email: lkalambo@apec.umn.edu.■University of Michigan Business School. 701 Tappan Sheet. Ann Arbor. Ml 48109-1234; Tel: (734) 936-DO WE NOW COLLECT ANY REVENUE FROM TAXING CAPITAL INCOME?Roger Gordon1 University of California. San DiegoLaura Kalambokidis-University of Minnesota. DO WE NOW COLLECT ANY REVENUE FROM TAXING CAPITAL INCOMESlemrod1. IntroductionThe tax treatment of capital income is one of the most contentious aspects of existing tax systems, both in theory' and in practice. Most existing income taxes strongly reflect the structure recommended by Haig (1921) and Simons (1938), who advocated that individuals be taxed o DO WE NOW COLLECT ANY REVENUE FROM TAXING CAPITAL INCOMEn their combined wage and capital income, subject to a perhaps progressive rate structure.4 The Haig-Simons structure came to be known as a ComprehensDO WE NOW COLLECT ANY REVENUE FROM TAXING CAPITAL INCOME
ive Income Tax. Yet in most countries, an increasing fraction of revenue over time has been collected through value-added taxes and payroll taxes, botDO WE NOW COLLECT ANY REVENUE FROM TAXING CAPITAL INCOME?Roger Gordon1 University of California. San DiegoLaura Kalambokidis-University of Minnesota. DO WE NOW COLLECT ANY REVENUE FROM TAXING CAPITAL INCOMEal income by maintaining a progressive tax on wage income but imposing a flat tax at a relatively low rate on a particular definition of capital income. Even under tax systems that maintain the structure of a Comprehensive Income Tax, a growing fraction of savings has been in pension plans, IRA’s, a DO WE NOW COLLECT ANY REVENUE FROM TAXING CAPITAL INCOMEnd equivalents, that in theory' do not distort savings incentives. Most countries also exempt income in kind from owner-occupied housing and consumerDO WE NOW COLLECT ANY REVENUE FROM TAXING CAPITAL INCOME
durables. Together, owner-occupied housing and pensions comprise a large fraction of household savings.While existing income taxes still maintain manyDO WE NOW COLLECT ANY REVENUE FROM TAXING CAPITAL INCOME?Roger Gordon1 University of California. San DiegoLaura Kalambokidis-University of Minnesota. DO WE NOW COLLECT ANY REVENUE FROM TAXING CAPITAL INCOMEommittee Report (1978), Bradford (1984), Hall and Rabushka (1995), McLure and Zodrow (1996), presidential candidate Steve Forbes’ flat tax proposal, and Bond, et. al. (1996).The theoretical literature in this area has largely focused on measuring the many types of efficiency costs that arise from th DO WE NOW COLLECT ANY REVENUE FROM TAXING CAPITAL INCOMEe current tax treatment of capital income. Existing taxes, for example, distort overall investment incentives, the allocation of capital across sectorDO WE NOW COLLECT ANY REVENUE FROM TAXING CAPITAL INCOME
s and countries, corporate debt-equity ratios, overall savings incentives, 1 *1 The tax reform recommendations of the U.S. Treasury (1984). a modifiedDO WE NOW COLLECT ANY REVENUE FROM TAXING CAPITAL INCOME?Roger Gordon1 University of California. San DiegoLaura Kalambokidis-University of Minnesota. DO WE NOW COLLECT ANY REVENUE FROM TAXING CAPITAL INCOME realization patterns lor capital gains, etc. Each of these types of distortions appears to create nontrivial efficiency losses. In combination, the efficiency losses would appear to be a major consideration in the design of the lax structure.Of course, efficiency costs arc only one consideration wh DO WE NOW COLLECT ANY REVENUE FROM TAXING CAPITAL INCOMEen choosing tax rates. In spite of these high efficiency costs, taxes on capital income could still perhaps be justified if they generate sufficient oDO WE NOW COLLECT ANY REVENUE FROM TAXING CAPITAL INCOME
ffsetting distributional gains per dollar- of tax revenue raised. At the optimal policy, the efficiency costs net of distributional gains from taxes oDO WE NOW COLLECT ANY REVENUE FROM TAXING CAPITAL INCOME?Roger Gordon1 University of California. San DiegoLaura Kalambokidis-University of Minnesota. DO WE NOW COLLECT ANY REVENUE FROM TAXING CAPITAL INCOMEd Slemrod (1988)), we looked at these issues more closely. To begin with, using U.S. tax return data from 1983, we estimated how much tax revenue would change if the tax system were modified to exempt income from capital in present value, while leaving tax rates and tax incentives otherwise unchange DO WE NOW COLLECT ANY REVENUE FROM TAXING CAPITAL INCOMEd. Surprisingly, we found that the existing tax system in that year collected effectively nothing in revenue from taxes on capital income, of course,DO WE NOW COLLECT ANY REVENUE FROM TAXING CAPITAL INCOME
distributional gains might still be sufficient to justify such taxes, even if they do not collect revenue on net. This paper then looked at the distriDO WE NOW COLLECT ANY REVENUE FROM TAXING CAPITAL INCOME?Roger Gordon1 University of California. San DiegoLaura Kalambokidis-University of Minnesota. DO WE NOW COLLECT ANY REVENUE FROM TAXING CAPITAL INCOMEly in taxable bonds, had lower after-tax income under the existing tax structure. In contrast, higher income taxpayers gained. In particular, personal and corporate interest deductions saved higher income taxpayers enough in taxes to offset any other taxes due on their capital income.Ihis past study DO WE NOW COLLECT ANY REVENUE FROM TAXING CAPITAL INCOME has several key weaknesses, though, as a guide for current policy discussions. For one, it examines data from before the 2001, 1993, and particularlyDO WE NOW COLLECT ANY REVENUE FROM TAXING CAPITAL INCOME
the 1986, lax reforms which included major changes in the lax treatment of capital? In addition, the data far the previous study c ame from 1983, whiDO WE NOW COLLECT ANY REVENUE FROM TAXING CAPITAL INCOME?Roger Gordon1 University of California. San DiegoLaura Kalambokidis-University of Minnesota. DO WE NOW COLLECT ANY REVENUE FROM TAXING CAPITAL INCOMEmade it hairier to make use of interest deductions, by allowing only home mortgage interest deductions on Schedule A and by preventing real estate losses from being deductible on Schedule E. Depreciation schedules were also lengthened, while capital gains were taxed more heavily.6Note, though, that DO WE NOW COLLECT ANY REVENUE FROM TAXING CAPITAL INCOMEsimilar results were repotted in Shoven (1900), using 1986 data. Kalambnkidis (1992) looked at rhe implications for coipnrare tax payments by industryDO WE NOW COLLECT ANY REVENUE FROM TAXING CAPITAL INCOME
for each year from 1975 to 1987. When the results of the Kalambokidis study arc made consistent with the methodology in Gordon and slcmrod3Third, theDO WE NOW COLLECT ANY REVENUE FROM TAXING CAPITAL INCOME?Roger Gordon1 University of California. San DiegoLaura Kalambokidis-University of Minnesota. DO WE NOW COLLECT ANY REVENUE FROM TAXING CAPITAL INCOMErepeal of existing taxes on capital income.The objective of this study is to address each of these weaknesses. To begin with, we replicate our previous approach using data from 1995, so after the 1986 and 1993 tax reforms, though before the 2001 tax changes.' Of course, 1995 data are also affected b DO WE NOW COLLECT ANY REVENUE FROM TAXING CAPITAL INCOMEy business cycle effects: 1995 was in the middle of a period of dramatic growth in the U.S. Our second objective is to examine the sensitivity of ourDO WE NOW COLLECT ANY REVENUE FROM TAXING CAPITAL INCOME
estimates to such business cycle effects. Finally, we develop an approach for making use of panel data that include retired individuals to provide morDO WE NOW COLLECT ANY REVENUE FROM TAXING CAPITAL INCOME?Roger Gordon1 University of California. San DiegoLaura Kalambokidis-University of Minnesota. DO WE NOW COLLECT ANY REVENUE FROM TAXING CAPITAL INCOMEon 2, we discuss the motivation and justification for the approach we take for estimating the revenue effects of existing taxes on capital income. Section 3 then reexamines the revenue effects of exempting capital income in present value, based on the 1995 data. Section 4 examines the sensitivity of DO WE NOW COLLECT ANY REVENUE FROM TAXING CAPITAL INCOME these estimates to business cycle effects, while section 5 looks closely at the distributional effects of these existing taxes on capital income. SecDO WE NOW COLLECT ANY REVENUE FROM TAXING CAPITAL INCOME
tion 6 provides a brief summary.2. Approach used to assess revenue effectsHow much revenue is raised by existing taxes on capital income? That is, howDO WE NOW COLLECT ANY REVENUE FROM TAXING CAPITAL INCOME?Roger Gordon1 University of California. San DiegoLaura Kalambokidis-University of Minnesota. DO WE NOW COLLECT ANY REVENUE FROM TAXING CAPITAL INCOME our estimate of how much revenue is collected from current taxes on the return to capital.The immediate question is: Relative to which alternative tax system? There are a wide variety of tax structures that imply no distortions at the margin to savings and (1983), the finding is that a cash flow ta DO WE NOW COLLECT ANY REVENUE FROM TAXING CAPITAL INCOMEx collects less revenue in aggregate than existing corporate taxes in each year from 1975 to 1981, more revenue in 1982 and 1983, less revenue in 1984DO WE NOW COLLECT ANY REVENUE FROM TAXING CAPITAL INCOME
and 1985, and more revenue in 1986 and 1987.The Economic Growth and Tax Relief Act of 2001 changed tax rates considerably, but involved no direct chaGọi ngay
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