Federal Tax Policy / Edition 5

by Joseph A. Pechman

Overview

"One of the major architects of comprehensive tax reform has revised his widely acclaimed book on tax policy to reflect the changes brought about by the Tax Reform Act of 1986 and all other major changes in tax laws since 1983. Joseph A. Pechman's Federal Tax Policy is a nontechnical book for general readers and students interested in taxation as an instrument of public policy. It emphasizes such current issues as a comprehensive income taxation, inflation adjustments in income taxation, graduated income taxes versus expenditure taxes, the effects of taxation on economic incentives, and fiscal relations between the federal and state and local governments. Pechman presents and evaluates contrasting views on most forms of taxation—personal and corporate income, general and selective consumption, payroll, estate and gift, property, and state and local—and offers a perceptive analysis of the process of tax legislation and the role of taxation in the fiscal policy. He also provides a valuable series of statistical table on tax developments and an extensive bibliography on tax theory and practice.

"

Product Details

ISBN-13:	9780815769613
Publisher:	Rowman & Littlefield Publishers, Inc.
Publication date:	08/01/1987
Series:	Studies of Government Finance
Edition description:	Fifth Edition
Pages:	452
Product dimensions:	6.00(w) x 9.00(h) x 1.06(d)

About the Author

Joseph A. Pechman is a former director of Economic Studies and senior fellow at the Brookings Institution.

Table of Contents

1.	Introduction	1
	Features of the U.S. Tax System	1
	Goals of Taxation	5
2.	Taxes and Economic Policy	8
	Stabilization Policy	9
	Fiscal Policy	9
	Built-in Stabilizers	12
	The High-Employment Surplus or Deficit	14
	Adjusting Expenditures and Taxes to Promote Stability	20
	Automatic Budget Rules	23
	Monetary Policy	24
	Rational Expectations	26
	Policies to Promote Economic Growth	27
	Achieving Full Employment and Stable Prices	28
	Raising the Growth Rate	30
	The Debt Burden	32
	Summary	35
3.	The Tax Legislative Process	38
	Executive Preparation of a Tax Bill	41
	The Bill in Congress	44
	The Ways and Means Committee	45
	House Approval	48
	The Senate Finance Committee	49
	The Senate Debate	50
	The Bill in Conference	51
	Presidential Action	52
	Improving the Process	54
	Simplifying the Tax Law	54
	Representation of the Public Interest	55
	Reforming the Tax Structure	57
	Consideration of Overall Fiscal Policies	58
	Summary	61
4.	The Individual Income Tax	63
	The Structure of the Federal Income Tax	64
	Adjusted Gross Income and Taxable Income	65
	Tax Rates	66
	Reporting Requirements	69
	Methods of Tax Payment	70
	Final Tax Reconciliation	72
	Possible Modification of the Current Payment System	73
	Economic Effects	73
	Role as Stabilizer	74
	Work Incentives	76
	Effect on Saving	77
	Structural Problems	78
	Personal Exemptions	81
	The Negative Income Tax	86
	Personal Deductions	91
	Transfer Payments and Wage Supplements	100
	The Family	102
	The Aged	107
	Earned Income	109
	Indexing for Inflation	114
	Capital Gains and Losses	116
	Saving Incentives	122
	State and Local Government Bond Interest	123
	Income Averaging	127
	Minimum Tax	128
	Tax Shelters	130
	Tax Simplification	131
	Summary	133
5.	The Corporation Income Tax	135
	Characteristics of the Tax	137
	The Tax Base	137
	Tax Rates	140
	Tax Payment	141
	Shifting and Incidence of the Tax	141
	The Shifting Mechanism	142
	The Evidence	145
	Economic Issues	146
	Investment and Saving	147
	Equity and Debt Finance	151
	Resource Allocation	152
	Built-in Flexibility	154
	Balance of Payments	155
	Structural Features	156
	Capital-Consumption Allowances	157
	Allowances for the Mineral Industries	164
	Financial Institutions	166
	Tax-Exempt Organizations	169
	Corporate Acquisitions and Reorganizations	171
	Foreign and Export Income	171
	Inflation Accounting	173
	Depreciation	174
	Inventories	175
	Net Financial Assets and Liabilities	176
	Choice of Adjustments	177
	Integration of the Corporation and Individual Income Taxes	179
	The Additional Burden on Dividends	179
	Methods of Integration	181
	Summary	188
6.	Consumption Taxes	190
	Types of Consumption Taxes	190
	Issues in Excise Taxation	192
	Economic Effects of Excise Taxes	192
	Equity Considerations	199
	A General Consumption Tax?	201
	The General Sales Tax	201
	The Value-Added Tax	204
	Sales or Value-Added Taxes versus Income Taxes	207
	The Expenditure Tax	208
	Summary	212
7.	Payroll Taxes	214
	The Development of Payroll Taxes	214
	The Insurance Analogy	219
	Features of Payroll Taxes	219
	Regressivity	220
	Built-in Flexibility	221
	Effect on Prices, Employment, and Wages	223
	Effect on Personal and Public Saving	225
	Taxation of Benefits	226
	Financing Social Security	227
	The Contributory System	227
	Proposals for Reform	229
	Financing Unemployment Insurance	231
	Summary	232
8.	Estate and Gift Taxes	234
	The Role of Wealth Transfer Taxes	234
	Characteristics of the Taxes	236
	The Estate Tax	237
	The Gift Tax	238
	The Tax Base	238
	Structural Problems	240
	Transfers by Husbands and Wives	240
	Imperfect Unification of Estates and Gifts	243
	Generation Skipping through Trusts	245
	Generation Skipping through Outright Transfers	249
	Charitable Contributions	250
	Small Business and Farm Property	251
	Other Methods of Taxing Wealth	252
	Inheritance or Accessions Taxes	252
	The Annual Wealth Tax	254
	Summary	255
9.	State and Local Taxes	256
	The State and Local Structure	257
	State Taxes	259
	Local Taxes	262
	State and Local Fiscal Performance, Capacity, and Effort	263
	Major Issues	264
	Income Taxes versus Sales Taxes	264
	Deductibility	267
	The Property Tax	269
	Tax Coordination	278
	State and Local Fiscal Relations	285
	Federal Aid	289
	The Plight of the Cities	295
	Summary	297
	Appendixes
A.	Historical Summary of the Major Federal Taxes	299
B.	Tax Bases of the Major Federal Taxes	338
C.	Tax Expenditures	355
D.	Statistical Tables	364
E.	Bibliographical Notes	400
	Index	421

Editorial Reviews

"Joseph A. Pechman's Federal Tax Policy, now in its Fourth Edition, is a classic...Indeed, the book is a remarkable compendium of taxes, covering their history and current status, the legislative process that enacts them, and the policy issues being debated." — National Forum

"...a gem as an introduction to the subject--a shining combination of good writing and good thinking." — National Tax Journal

"...a gem as an introduction to the subject--a shining combination of good writing and good thinking. Pechman demonstrates again his ability to clarify both the fiscal and social significance of U.S. tax policy. This third edition...is crammed with useful information for officials, economists, and taxpayers." — The Wilson Quarterly

"Joseph Pechman's Federal Tax Policy, written in a style accessible to the nonspecialist, is a superb introduction to this complex area of public policy." — The Wall Street Review of Books

"...retains the same eminently readable style. The author again manages to summarize policy issues in clear and concise manner without repressing his own view point. Written to inform the nonexpert, the book provides valuable insights for expert and nonexpert alike." — Journal of Finance

From the Publisher