5 edition of The effects of tax policy on American agriculture found in the catalog.

The effects of tax policy on American agriculture

les Églises, les congrégations et lÉtat dans le département des Côtes-du-Nord de lan VIII à 1940

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Published by Administrator in U.S. Dept. of Agriculture, Economic Research Service

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  • United States
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    • U.S. Dept. of Agriculture, Economic Research Service


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      • Bibliography: p. 57-62.Cover title.February 1982--P.i.Item 42-C

        StatementU.S. Dept. of Agriculture, Economic Research Service
        PublishersU.S. Dept. of Agriculture, Economic Research Service
        Classifications
        LC Classifications1982
        The Physical Object
        Paginationxvi, 75 p. :
        Number of Pages41
        ID Numbers
        ISBN 10nodata
        Series
        1
        2no. 480
        3Agricultural economic report ;

        nodata File Size: 10MB.


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There is a theoretical presumption that such changes should raise the overall size of the economy in the long-term, though the effect and magnitude of the impact are subject to considerable uncertainty. First, debt-financed tax cuts will tend to boost short-term growth as in standard Keynesian models and in the literature using the narrative approachbut also tend to reduce long-term growth, if they are financed eventually by higher taxes.

In this paper, we focus on how tax changes affect economic growth. In 2014, for example, Representative Dave Camp R-MI proposed a sweeping reform to the income tax system that would reduce rates, greatly pare back subsidies in the tax code, and maintain revenue levels and the distribution of tax burdens across income classes Committee on Ways and Means 2014.

If they are not financed by spending cuts, tax cuts will lead to an increase in federal borrowing, which in turn, will reduce long-term growth.

While rate cuts would raise the after-tax return to working, saving, and investing, they would also raise the after-tax income people receive from their current level of activities, which lessens their need to work, save, and invest. Second, revenue-neutral income tax reform can provide a modest boost to economic growth.

Tax cuts financed by immediate cuts in unproductive government spending could raise output, but tax cuts financed by reductions in government investment could reduce output. Abstract This paper examines how changes to the individual income tax affect long-term economic growth.

The literature, which generally uses vector autoregression VAR models, finds that tax cuts that meet the exogeneity criteria raise short-term output and other economic activity. Introduction Policy makers and researchers have long been interested in how potential changes to the personal income tax system affect the size of the overall economy.

By 2017 The remainder of the paper is organized as follows. One fact that often escapes unnoticed is that broadening the tax base by reducing or eliminating tax expenditures raises the effective tax rate that people and firms face and hence will operate, in that regard, in a direction opposite to rate cuts and mitigate their effects on economic growth.

Effects of Income Tax Changes on Economic Growth

A fair assessment would conclude that well-designed tax policies have the potential to raise economic growth, but there are many stumbling blocks along the way and certainly no guarantee that all tax changes will improve economic performance. Section III provides an empirical starting point. We find that, while there is no doubt that tax policy can influence economic choices, it is by no means obvious, on an ex ante basis, that tax rate cuts will ultimately lead to a larger economy in the long run.

The historical evidence and simulation analyses suggest that tax cuts that are financed by debt for an extended period of time will have little positive impact on long-term growth and could reduce growth.

Effects of Income Tax Changes on Economic Growth

Given the various channels through which tax policy affects growth, a tax change will be more growth-inducing to the extent that it involves i large positive incentive substitution effects that encourage work, saving, and investment; ii small or negative income effects, including a careful targeting of tax cuts toward new economic activity, rather than providing windfall gains for previous activities; iii reductions in distortions across economic sectors and across different types of income and consumption; and iv minimal increases in, or reductions in, the budget deficit.

Consistent with the discussion in Section III, the studies find little evidence that tax cuts or tax reform since 1980 have impacted the long-term growth rate significantly. The first effect normally raises economic activity through so-called substitution effectswhile the second effect normally reduces it through so-called income effects. Section II provides a conceptual framework by discussing the channels through which tax changes can affect economic performance, including the many ways in which a positive substitution effect in response to a tax rate cut might be dissipated or even reversed by other factors.