Taxing More, Taking Less: How Broadening the Federal Tax Base Can Reduce Income Tax Rates

Many economists see the narrowness of the tax base - or what gets taxed - as the most significant problem with the existing individual income tax system.  This paper examines this issue and shows how taxing just some income leads to high tax rates and lower economic growth.  It also examines how tax reform can mitigate these ill effects.

Fixing the Alternative Minimum Tax

The federal alternative minimum tax is often derided as a redundant and unfair part of the federal individual income tax system.  Enacted in the later-1960s as a way of taxing several hundred high-income filers who legally avoided taxation under the ordinary individual income tax system the tax has grown to affect millions.  This report shows how the keys to reforming the AMT lie in fixing the regular individual income tax system.  Properly done this could eliminate the need for an AMT altogether. 

Health Care Reform: How Much Does It Redistribute Income?

Unless policymakers strictly adhere to the benefit principle where individuals who benefit from government programs also pay their cost any public policy will transfer income between groups in society.  This paper uses a sophisticated economic model to allocate both the benefits and costs of the Patient Protection and Affordable Care Act and explores its distributional effects.

Federal Tax Burden by State

The federal government levies a range of taxes on everything from salaries and wages to alcohol, tobacco and firearms.  Differences in income levels, consumption patterns and other factors result in these taxes having a widely disparate impact by state.  This analysis used a sophisticated economic model to allocate the economic burden of these taxes to the states and then explored their impact.     

An Analysis of the Disincentive Effects of the Estate Tax on Entrepreneurship

Federal estate and gift taxes are frequently criticized for depressing entrepreneurial activity.  Because they are levied at the end of one’s life, however, it’s difficult to judge the magnitude of this effect.   A model of wealth accumulation is developed in this paper and then used to estimate the discouraging effects of the current transfer tax regime under various scenarios.

Tax Pyramiding: The Economic Consequences of Gross Receipts Taxes

Gross receipts taxes tax all business sales with few or no deductions.  Such a broad tax base allows the statutory rate to be kept very low.  In many cases, however, these low rates are illusionary.  This paper shows how ‘tax-pyramiding’ results in businesses and industries facing widely disparate tax burdens, distorting economic choices and harming state and local economies.

How Excise Tax Differentials Affect Interstate Smuggling and Cross-border Sales of Cigarettes in the United States

Over the last several decades state and localities across the country have hiked cigarette taxes to raise revenue and discourage smoking.  These efforts have often been less than successful as smokers altered their shopping habits in response to the hikes.  Some have responded by purchasing their cigarettes in neighboring jurisdictions with lower taxes.  Others have begun buying their cigarettes on federal facilities and Native American tribal lands where sales are exempt from state and local taxes.  Still others have turned to the black market to secure their nicotine fix.  This paper uses an econometric model to estimate how the demand for cigarettes is filled in each of the states.

Cigarette Taxes, Black Markets and Crime: Lessons from New York’s 50 Year Losing Battle

The state and city of New York have long levied some of the highest cigarette taxes in the nation.  These levies have spawned a massive black market that has diverted billions of dollars from legitimate businesses and governments to criminals.  This illicit market has proven itself to be been very resistant to law enforcement efforts to control it and exposed many average New Yorkers to violence.  This paper traces the history of cigarette taxes in New York back to their inception in 1938.  Its author also published an editorial summarizing its findings in the Wall Street Journal [add link].  

Impact of Virginia's Gubernatorial Personal Property Tax Relief Plans Vary Widely by Locality

During the 1997 campaign for Virginia governor Republican James Gilmore and Democrat Don Beyer offered competing plans for eliminating the much reviled personal property tax on privately owned vehicles.  This analysis modeled the impact of the plans for owners of four popular vehicles living in various regions of the state over time.

Federal Aid or Fiscal Burden?  Estimating the Impact of Federal Intergovernmental Grants on the State of North Dakota

In recent decades federal grants-in-aid to the states have grown rapidly.  This paper examines the link between federal aid and state tax and spending policies.  It also explores the effects of federal aid on state regulatory policy.

Keep the Greenback: Why Carrying a Pocket Full of Dollar Coins Won’t Save the Country a Cent

In 2011 the United States Government Accountability Office released a report claiming that replacing the one dollar bill with a coin would be financially benefit the federal government.  This paper critiques that report by arguing that such a move would impose costs exceeding those savings on public at large and that the proper role for government is minimize society-wide costs.