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The Economics of Tax Reform
Published online by Cambridge University Press: 12 May 2020
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The federal income tax is of central importance in both economics and politics. The income tax has been the mainstay of the federal government's revenue since the end of World War II. The income tax on individuals has consistently produced over 40 percent of total revenues for the last three decades. The income tax on corporations, while not as productive of revenue as it once was, still contributes about 10 percent of the total tax take. These large revenue yields make the income tax the main point of contact between the federal government and the broad population of typical American households, and perhaps also the dominant factor in people's attitudes toward the government as a whole.
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- Copyright © American Political Science Association 1986
References
Suggested References and Teaching Materials
These items can enhance teaching about tax reform in American government classes. The alphabetical list, deliberately brief, comprises materials that would be pedagogically useful, rather than expert analyses of revenue policy.Google Scholar
Aaron, Henry J. and Galper, Harvey, Assessing Tax Reform (Washington: Brookings, 1985). An analysis of the flaws of the current tax system and a prescription for an entirely new system based on consumption rather than income, favored by many economists but rejected by policymakers.Google Scholar
Bradley, Bill, The Fair Tax (New York: Pocket Books, 1984). The rationale for tax reform in general and one plan in particular, by the U.S senator whose proposal revitalized interest in the topic in the 1980s.Google Scholar
Hayes, Michael T., “The Semi-Sovereign Pressure Groups,” Journal of Politics. 40 (February, 1978), 134–161. A six-fold classification of public policies, that puts tax reform into the broader context of policy analysis. Hayes’ work is an extension of Theodore Lowi's original formulation, published as “American Business, Public Policy, Case Studies and Political Theory,” World Politics,16 (July, 1964), 677-715.CrossRefGoogle Scholar
Lowery, David and Sigelman, Lee, “Understanding the Tax Revolt: Eight Explanations,” American Political Science Review, 75 (December, 1981), 963–974. A statistical analysis of attitudes on taxation, based on 1978 NES data. While the methodology is sophisticated, it can be stimulating for more advanced students.CrossRefGoogle Scholar
Madison, James, The Federalist, No. 10.The classic explanation of American politics gains new relevance when read in the context of the conflict over tax policy.Google Scholar
Minarik, Joseph J., Making Tax Choices (Washington: The Urban Institute Press, 1985). An exposition of the goals of the tax system, the shortcomings of the current law, and superior and feasible alternatives within the framework of the income tax.Google Scholar
Page, Benjamin I., Who Gets What from Government(Berkeley and Los Angeles: University of California Press, 1983). Applying a consistent criterion of equality, this book is an insightful analysis of overall U.S government policy. Chapter 2, “Who Bears the Tax Burden” is particularly relevant.Google Scholar
Pechman, Joseph A., editor, A Citizen's Guide to the New Tax Reforms (Totowa, New Jersey: Rowman and Allanheld, 1985). Readings on each of the major proposals for tax reform, with an explanatory introduction by the editor.Google Scholar
Pomper, Marlene M., ed., The Election of 1984(Chatham, NJ: Chatham House, 1985). Chapters 3 and 4 of this collection include discussions of the impact of the tax issue on the 1984 presidential election.Google Scholar
Public Agenda Foundation, Taxes: Who Should Pay and Why?(Dayton, Ohio: Domestic Policy Association, 1985). A comprehensible presentation of tax policy, designed for discussion by student and public groups. Materials available include the basic book ($3), discussion guide ($5 for bulk orders of 100), questionnaire ($5 for 100), and a VHS videocassette. Write: 5335 Far Hills Avenue, Dayton, Ohio 45429. (Phone: 513-434-7300).Google Scholar
Public Broadcasting System. Taxes: Behind Closed Doors(1986). A production of “Frontline,” this one-hour televised report is a realistic examination of the current tax fight and, in its own words, “a classic story of how Washington works.” Videocassettes can be rented or bought from: PBS Video, Box 8092, Washington, D.C. 20024. (Phone: 800-424-7963.)Google Scholar
Schlozman, Kay L. and Verba, Sidney, Injury to Insult (Cambridge: Harvard University Press, 1979). Focusing on attitudes of the unemployed, the volume examines public opinion on class-related issues, including taxes. Particularly useful are Chapter 5, “American Social Ideology,” and Chapter 8, “Economic Strain and Political Attitudes.“Google Scholar
U.S. Department of the Treasury, Tax Reform for Fairness, Simplicity, and Economic Growth: The Treasury Department Report to the President,3 volumes (Washington: U.S. Government Printing Office, November 1984); The President's Tax Proposals to the Congress for Fairness, Growth, and Simplicity (Washington: U.S. Government Printing Office, May 1985). The November 1984 response to President Reagan's State of the Union mandate for a comprehensive study of the tax code, covering all major provisions of the law; and the May 1985 Administration proposal, complete with retreats from the original Treasury positions. Basic reference documents in the current battle over tax reform.Google Scholar