Class Notes 033108 Tax Revenue Targets

Class Notes 033108 Tax Revenue Targets - 03/31/08 Income...

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03/31/08 Income Tax Review: 1. 2. U.S. systems saxes income, but  IRAs/401(k)s turn it into a consumption tax for most   people. 3. Many complications  in our tax system are associated with preferences  for certain  activities (home ownership; attending college). 4. Given      revenue target, any decrease in tax base requires increase in someone’s tax rate . Detour —effect of tax preferences. Ex. —home mortgage interest,  Q: Does deductibility raise homeownership? A: Depends on elasticities  See Figure A in NOTES Why do we have so many preferences?  (Deductions, Exemptions, Credits, etc.) Easy for Congress to do, pandering to voters. But      some goals may be best achieved through taxes instead of direct action by  government. Tax Data
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Class Notes 033108 Tax Revenue Targets - 03/31/08 Income...

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