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Full-Text Articles in Social and Behavioral Sciences
New York Is Not Arkansas, Seth H. Giertz
New York Is Not Arkansas, Seth H. Giertz
Seth H Giertz
When she declared her candidacy for the U. S. Senate from New York, First Lady Hillary Rodham Clinton, as expected, promised to fight for an ever larger federal government—in part by expanding programs targeting children and the poor and opposing Republican tax cuts. But, Mrs. Clinton also drew attention to another issue when she declared: “It is just wrong that today New York sends $15 billion more in taxes each year to Washington than New York gets back.” Mrs. Clinton must believe that the net return of federal tax dollars to New Yorkers is unrelated to the size of the …
Recent Literature On Taxable-Income Elasticities, Seth Giertz
Recent Literature On Taxable-Income Elasticities, Seth Giertz
Seth H Giertz
This paper reviews the literature on taxable-income elasticities, focusing primarily on empirical studies examining the U.S. tax changes of 1981, 1986, 1990, and 1993 and the bracket creep of the late 1970s and early 1980s. The paper first provides background on the importance of the elasticity of taxable income both for forecasting income tax revenue and for assessing the efficiency implications of tax rate changes. It then discusses the major methodological issues and obstacles before delving into the literature. The paper emphasizes the different methodologies employed and the sensitivity of estimates to an array of factors, including sample selection, the …
The Elasticity Of Taxable Income: Influences On Economic Efficiency And Tax Revenues, And Implications For Tax Policy, Seth H. Giertz
The Elasticity Of Taxable Income: Influences On Economic Efficiency And Tax Revenues, And Implications For Tax Policy, Seth H. Giertz
Seth H Giertz
While research into the elasticity of taxable income (ETr), which measures the responsiveness of reported taxable income to changes in tax rates, dates back to at least Lindsey (1987), recognition of its importance as a central parameter for tax policy design did not begin to take hold until the second half of the 1990s. In fact, a 1998 survey to determine public and labor economists' views on key policy parameters (Fuchs, Krueger, and Poterba 1998) included no questions on the ETI. I suspect that a 2008 survey would include such questions, just as I suspect that a 1998 conference entitled …
Tax Reform And Charitable Giving, Seth H. Giertz
Tax Reform And Charitable Giving, Seth H. Giertz
Seth H Giertz
Of the $240.7 billion donated to U.S. charities in 2003, 75 percent was from individuals. Of that total, $145.7 billion was taken as itemized deductions on federal income tax returns. In addition, non-itemizers and non-filers contributed $33.0 billion – contributions that received no special tax treatment. Under current law, only taxpayers who itemize may deduct from Adjusted Gross Income (AGI) their charitable donations in determining taxable income. In recent years, a number of different proposals have been put forth that would alter the tax treatment of giving by individuals. Some plans would extend a variant of the charitable deduction to …
The 2002 Downturn In State Revenues: A Comparative Review And Analysis, J. Fred Giertz, Seth H. Giertz
The 2002 Downturn In State Revenues: A Comparative Review And Analysis, J. Fred Giertz, Seth H. Giertz
Seth H Giertz
We analyze the behavior of state revenues since the early 1950s to determine the severity of the revenue declines experienced by states after the 2001 recession. Both total state revenues for the nation and state–level data for each state are studied. We conclude that the states were indeed hit with an unprecedented downturn in revenues—unlike anything that had been experienced in the preceding half–century. Further and contrary to general perceptions, revenue increases in the years preceding the downturn were not particularly strong compared to revenue increases in the years leading up to previous recessions. We further conclude that most proposed …
Private And Public Contributions To Financing College Education, Nabeel Alsalam, Seth H. Giertz, Dennis Zimmerman
Private And Public Contributions To Financing College Education, Nabeel Alsalam, Seth H. Giertz, Dennis Zimmerman
Seth H Giertz
Introduction and Summary The cost of four years of undergraduate education, including living expenses, now averages nearly $80,000 at public colleges and over $100,000 at many private institutions. Tuition and fees have risen steadily since 1980, fueling concern that college is becoming prohibitively expensive for many families. In two decades, tuition and fees at public universities more than doubled, from $1,883 (in 2001 dollars) in 1980 to $4,281 in 2001.
,br> A major component of higher education represents an investment, with the returns accruing in the form of greater productivity (and income) for future workers. As such, education is a …
Accelerated Depreciation And State Revenues, Seth H. Giertz
Accelerated Depreciation And State Revenues, Seth H. Giertz
Seth H Giertz
For state governments across the country, these are austere times. States are facing some of the worst budget shortfalls in decades, leaving legislators scrambling to bring revenues and expenditures into balance, while not upsetting their constituencies. In addition to changing economic conditions, a recent federal change granting accelerated depreciation to business threatened to eat up additional state revenue. A popular response from many states has been to decouple from the federal definition of income: i.e., not allow bonus depreciation for state taxes by moving away from the federal definition of income.
A Sensitivity Analysis Of The Elasticity Of Taxable Income, Seth H. Giertz
A Sensitivity Analysis Of The Elasticity Of Taxable Income, Seth H. Giertz
Seth H Giertz
This paper applies the methods of Gruber and Saez (2002) to a panel of tax returns spanning years 1979 through 2001 in order to examine the sensitivity of the elasticities of taxable and broad income to an array of factors. The paper finds that Gruber and Saez’s approach yields an estimated elasticity of taxable income (ETI) for the 1990s that is about half the size of my corresponding estimate for the 1980s. The paper finds that weighting regression results by income not only has a substantial impact on the estimates, but also results in overall estimates that are influenced by …
Taxable Income Responses To 1990s Tax Acts: Further Explorations, Seth H. Giertz
Taxable Income Responses To 1990s Tax Acts: Further Explorations, Seth H. Giertz
Seth H Giertz
This paper presents applications of variants of a differencing methodology to Internal Revenue Service tax records in order to estimate taxable income elasticities for the 1990s. Estimates are systematically examined by applying a number of sensitivity tests. Estimates are produced after altering the: (1) time interval over which observational-level behavior is measured; (2) income restrictions on the sample; (3) choice of control variables; and (4) weighting scheme used in the regressions. In general, estimates are quite sensitive to a number of different factors. In contrast to some of the literature, estimates are larger when behavior is measured over 3-year intervals …
Trends In High Incomes And Behavioral Responses To Taxation: Evidence From Executive Compensation And Statistics Of Income Data, Nada O. Eissa, Seth H. Giertz
Trends In High Incomes And Behavioral Responses To Taxation: Evidence From Executive Compensation And Statistics Of Income Data, Nada O. Eissa, Seth H. Giertz
Seth H Giertz
This paper examines income trends from 1992 to 2004 and the responsiveness of different income measures to tax changes for corporate executives and for the very highest income U.S. taxpayers. We detail the growth in executive compensation and break down the components of that growth by sources, such as the value of options and stock grants, as well as bonus income. We then examine income trends at various points in the income distribution for executives and for all taxpayers. An empirical strategy similar to that employed by Goolsbee (2000) is then used to examine the responsiveness to tax rates of …
Panel Data Techniques And The Elasticity Of Taxable Income, Seth H. Giertz
Panel Data Techniques And The Elasticity Of Taxable Income, Seth H. Giertz
Seth H Giertz
This paper examines the elasticity of taxable income with a focus on income controls designed to control for divergence in the income distribution and mean reversion. Additional emphasis is placed on the difference between short-run and longer-run responses to tax rate changes. Several panel techniques are applied to tax return data for years 1991 to 1997, followed by a cross-section analysis covering the same period. For each panel regression, an innovative inverted panel regression framework is employed to test the efficacy of the controls for mean reversion apart from controls for divergence in the income distribution. Finally, cross-section (and repeated …
The Elasticity Of Taxable Income During The 1990s: A Sensitivity Analysis, Seth H. Giertz
The Elasticity Of Taxable Income During The 1990s: A Sensitivity Analysis, Seth H. Giertz
Seth H Giertz
This paper examines alternative methodologies for measuring responses to the 1990 and 1993 federal tax increases. The methodologies build on those employed by Gruber and Saez (2002), Carroll (1998), and Auten and Carroll (1999). Internal Revenue Service tax return data for the project are from the Statistics of Income, which heavily oversamples high-income filers. Special attention is paid to the importance of sample income restrictions and methodology. Estimates are broken down by income group to measure how responses to tax changes vary by income. In general, estimates are quite sensitive to a number of different factors. Using an approach similar …
The Elasticity Of Taxable Income With Respect To Marginal Tax Rates: A Critical Review, Emmanuel Saez, Joel B. Slemrod, Seth H. Giertz
The Elasticity Of Taxable Income With Respect To Marginal Tax Rates: A Critical Review, Emmanuel Saez, Joel B. Slemrod, Seth H. Giertz
Seth H Giertz
This paper critically surveys the large and growing literature estimating the elasticity of taxable income with respect to marginal tax rates (ETI) using tax return data. First, we provide a theoretical framework showing under what assumptions this elasticity can be used as a sufficient statistic for efficiency and optimal tax analysis. We discuss what other parameters should be estimated when the elasticity is not a sufficient statistic. Second, we discuss conceptually the key issues that arise in the empirical estimation of the elasticity of taxable income using the example of the 1993 top individual income tax rate increase in the …
The Elasticity Of Taxable Income Over The 1980s And 1990s, Seth H. Giertz
The Elasticity Of Taxable Income Over The 1980s And 1990s, Seth H. Giertz
Seth H Giertz
Taxable (and broad) income elasticities are estimated using tax return data from 1979 to 2001. Data from the Continuous Work History Survey (CWHS) yield an estimated taxable income elasticity for the 1990s that is about half the corresponding 1980s estimate. Estimates from the full Statistics of Income, which heavily over-samples high–income filers, generally confirm the CWHS results. More sophisticated income control brings the estimates for the two decades closer together—to 0.40 for the 1980s and 0.26 for the 1990s. Work by Kopczuk (2005) implies that the narrowing of the tax base since 1986 could account for 14 to 29 percent …