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Download Behavioral Simulation Methods in Tax Policy Analysis by Martin Feldstein PDF

By Martin Feldstein

Those 13 papers and accompanying commentaries are the 1st culmination of an ongoing learn undertaking that has targeting constructing simulation types that comprise the behavioral responses of people and companies to substitute tax principles and premiums and on increasing computational normal equilibrium versions that learn the long-run results of alterations at the economic system as a whole.The critical concentration of the venture has been at the microsimulation of person habit. hence, this quantity comprises experiences of person responses to an over relief in tax premiums and to adjustments within the optimum tax charges; a research of other tax remedies of the family members; and experiences of such particular features of loved ones habit as tax therapy of domestic possession, charitable contributions, and person saving habit. Microsimulation suggestions also are used to estimate the consequences of different guidelines at the long-run monetary prestige of the social safety application and to ascertain the results of other tax ideas on company funding and of foreign-source source of revenue on in another country investment.The papers dedicated to the advance of common equilibrium simulation versions to incorporate an exam of the consequences of foreign alternate and capital flows, a examine of the consequences of capital taxation that makes use of a closed economic climate equilibrium version, and an exam of the influence of switching to an inflation-indexed tax process. within the volume's ultimate paper, a life-cycle version within which contributors maximize lifetime software topic to an entire life price range constraint is used to simulate the results of tax ideas on own discount rates.

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This procedure ignores possible price effects of itemization on expenditure. This is permissible because we require only an estimate of deductible expenses at the prices associated with itemization rather than an estimate of actual deductible expenditures by nonitemizers. The probability of a joint return showing itemized deductions depends strongly on income, ranging from less than 1% at incomes less than $5,000 to more than 99% at incomes over $1million, but it does not seem to relate to any other available variables.

If the distribution is nonsymmetric, it may be important; if not, simply using the estimated variance (from a regression package, for example) would probably do quite well. Then the authors suppose that H j results from optimizing a utility function of the form set forth in step 5. A weak link in the authors’ procedure I believe is the method they use to assign values to the parameters in the utility function. They choose estimated wage and income elasticities (qw and q A ) from the literature and then used the relations in step 6 to determine the utility function (and labor supply function) parameters for the family.

7. 8 of the text. Both sets of tables look at the same tax regimes as they affect the subsample of married couples. The only difference is in the assumed value of the wage elasticity. 4. Because these regimes do not induce major changes in marginal tax rates, the particular value of the wage elasticity of supply is not of major importance. 2 The Status Quo, 1979 (marrieds and singles) AGI Class ( x $1,100) Returns <5 5-10 10-15 15-20 2G30 30-50 50-100 > 100 6,323,365 13,520,001 17,197,557 11,502,705 17,500,605 9,899,335 1,800,712 510,856 Means Totals ...

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