tax burdens

James Devine jdevine at popmail.lmu.edu
Wed Oct 14 08:44:49 PDT 1998


Our e-mail facility was down for a day or so, so I may have missed Max's reply to my questions. Doug responded to the first one, about changes in tax burden (Tax obligation/income). But I guess I have to repeat the second one:

Max, when you make assertions about the burden of the tax on the rich, what are your incidence assumptions? what kind of model do you use to analyze the tax shifting?

(On this question, it is my more than humble opinion that in the long run, the corporate income tax is shifted to consumers and/or workers. The exception is where profits are on scarcity rents received on raw material extraction. But in that case, there are lots of tax breaks, so again the corpos don't pay the tax. I think the left's obsession with the corp. profits tax is just that, an obsession.)

Another question: if we're going to talk about tax incidence, we have to bring in the role of the state and local governments. Since the relative role of those gov'ts has increased, so has the relative role of their (relatively) regressive taxes. I don't have data, but there's a good case that this has contributed to increasing regressivity of the overall tax system.

Jim Devine jdevine at popmail.lmu.edu & http://clawww.lmu.edu/Departments/ECON/jdevine.html



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