Acceptable reforms for this paper range from specific versions of the “fundamental tax reforms” discussed by Slemrod and Bakija to smaller reforms concerning a particular tax. The The proposals should come from economists, law professors, tax accountants, or legislators. Proposals by candidates for public office may also be acceptable if they contain enough details. accountants, or legislators. Proposals by candidates for public office may also be acceptable if
they contain enough details. Do not pick a past reform proposal that has become law. The point of the exercise is how to change the current tax system. Also, I will not approve tax reform proposals taken only from textbooks, because they are not specific enough. (For example, do not say you will analyze the
Hall-Rabushka tax described in Slemrod and Bakija. Instead, find a specific version of this tax, including relevant tax rates.) Avoid reforms for which the main goal is to reduce the size of government by significantly
reducing tax revenue. If your reform does reduce revenue, then you need to analyze a revision of it in which tax rates are raised to make it revenue neutral.
Questions to answer in your paper.
• Does the tax reform create a more “equitable tax system” in the sense that the reform is effectively redistributing income to lower-income households, for which the social value
of another 100 dollars is relatively high? (How high exactly can be debated.)
• What are the efficiency effects of the tax reform, that is, does it reduce or increase deadweight losses?
o Does your reform increase or reduce the effective taxation of labor income or savings income, and do these changes create important changes in the excess
burden of taxation. Slemrod and Bakija contain excellent discussions of the
empirical evidence, which you can use. (Put the relevant data on the data sheet described below and refer to it in your essay.)
o Are there other sources of deadweight loss? (Example: Taxing only realized
capital gains and not taxing unrealized capital gains at death causes individuals to hold on to stocks that they should have sold.)
Hall-Rabushka tax described in Slemrod and Bakija. Instead, find a specific version of this tax, including relevant tax rates.) Avoid reforms for which the main goal is to reduce the size of government by significantly
reducing tax revenue. If your reform does reduce revenue, then you need to analyze a revision of it in which tax rates are raised to make it revenue neutral.
Questions to answer in your paper.
• Does the tax reform create a more “equitable tax system” in the sense that the reform is effectively redistributing income to lower-income households, for which the social value
of another 100 dollars is relatively high? (How high exactly can be debated.)
• What are the efficiency effects of the tax reform, that is, does it reduce or increase deadweight losses?
o Does your reform increase or reduce the effective taxation of labor income or savings income, and do these changes create important changes in the excess
burden of taxation. Slemrod and Bakija contain excellent discussions of the
empirical evidence, which you can use. (Put the relevant data on the data sheet described below and refer to it in your essay.)
o Are there other sources of deadweight loss? (Example: Taxing only realized
capital gains and not taxing unrealized capital gains at death causes individuals to hold on to stocks that they should have sold.)
Some useful websites and articles
1. Congressional Research Service
https://crsreports.congress.gov/
Search over “tax” or “tax reform,” or narrow the search for a particular reform or type of reform.
For a general discussion of consumption taxes, which we’re discussing in class, search for
“consumption taxes: an overview”.
2. Peter G. Peterson Foundation
https://www.pgpf.org/finding-solutions/tax-reform
3. Brookings Institute
https://www.brookings.edu/blog/up-front/2021/04/28/tax-reforms-to-raise-revenue-efficiently-
and-equitably/
https://www.brookings.edu/articles/the-coming-fiscal-cliff-a-blueprint-for-tax-reform-in-2025/
1. Congressional Research Service
https://crsreports.congress.gov/
Search over “tax” or “tax reform,” or narrow the search for a particular reform or type of reform.
For a general discussion of consumption taxes, which we’re discussing in class, search for
“consumption taxes: an overview”.
2. Peter G. Peterson Foundation
https://www.pgpf.org/finding-solutions/tax-reform
3. Brookings Institute
https://www.brookings.edu/blog/up-front/2021/04/28/tax-reforms-to-raise-revenue-efficiently-
and-equitably/
https://www.brookings.edu/articles/the-coming-fiscal-cliff-a-blueprint-for-tax-reform-in-2025/
4. Tax Policy Center
https://www.taxpolicycenter.org/search?filter=tax+reforms&sort_by=search_api_relevance&item
s_per_page=25
(At this address, you can also click on individual years with tax reform information, starting with
2024.)
5. Google Scholar
A search engine mainly devoted to academic research. Contains research on tax reforms by both
economists and law professors. Law journal articles about tax reforms are sometimes quite
helpful.
Note: Access to journal articles can usually be obtained using your MSU affiliation, either while
you are searching on Google Scholar, or by accessing the articles in the MSU library’s “electronic
resources.”
6. Articles discussing several ways to reform the tax system.
The following articles discuss many ways to reform the tax system. If you might want to write
about one of these reforms, then you should find another source that discusses it in more detail.
Clausing, Kimberly, 2020, “Fixing Five Flaws of the Tax Cuts and Jobs Act,” Columbia Journal
of Tax Law 11.
Clausing, Kimberly, and Natasha Sarin, 2023, “The Coming Fiscal Cliff: A Blueprint for Tax
Reform in 2025,” The Hamilton Project, Brookings.
https://www.taxpolicycenter.org/search?filter=tax+reforms&sort_by=search_api_relevance&item
s_per_page=25
(At this address, you can also click on individual years with tax reform information, starting with
2024.)
5. Google Scholar
A search engine mainly devoted to academic research. Contains research on tax reforms by both
economists and law professors. Law journal articles about tax reforms are sometimes quite
helpful.
Note: Access to journal articles can usually be obtained using your MSU affiliation, either while
you are searching on Google Scholar, or by accessing the articles in the MSU library’s “electronic
resources.”
6. Articles discussing several ways to reform the tax system.
The following articles discuss many ways to reform the tax system. If you might want to write
about one of these reforms, then you should find another source that discusses it in more detail.
Clausing, Kimberly, 2020, “Fixing Five Flaws of the Tax Cuts and Jobs Act,” Columbia Journal
of Tax Law 11.
Clausing, Kimberly, and Natasha Sarin, 2023, “The Coming Fiscal Cliff: A Blueprint for Tax
Reform in 2025,” The Hamilton Project, Brookings.