Tax Projections and the Budget: Lessons from the 1980s / Alan J. Auerbach.

Format:

Book

Author/Creator:

Auerbach, Alan J.

Contributor:

National Bureau of Economic Research.

Series:

Working Paper Series (National Bureau of Economic Research) no. w5009.

NBER working paper series no. w5009

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Other Title:

Tax Projections and the Budget

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 1995.

Summary:

Some economists have argued that the disincentive effects of marginal tax rate increases in the 1980s caused revenue to rise by less than had been anticipated. To evaluate the hypothesis, this paper considers OMB revenue forecasts and forecast errors for the period 1982-93. If the revenue gains from tax increases, and the revenue losses from tax cuts, were overstated because of inadequate allowance for behavioral responses, then the forecast errors should be negatively related to the initial revenue estimates of the impact of policy changes. For excise taxes and corporate income taxes, the results suggest that the systematic overprediction of revenues during the period can be explained in part by an underestimate of behavioral responses to taxation.

Notes:

Print version record

February 1995.