A positive theory of tax reform

On 19 February 2014 from 12:30 to 14:00

The Institute for Fiscal Studies

<p>7 Ridgmount Street<br />London<br />WC1E 7AE</p>

The political impediments to tax reform and the political forces allowing its success are studied in a model where the tax base and the tax rate are policy instruments.

Speaker: Ethan Ilzetzki (LSE) will open the IFS-STICERD seminar series this term.

The model predicts that large changes in the tax code are politically feasible even at times when marginal reforms would be rejected. This contrasts with a large literature that suggests that larger reforms face greater political difficulties.

Politically feasible tax reform will tend to occur when revenue needs are large, but will nonetheless involve reductions in marginal tax rates. Adopting tax reform may involve large shifts in political platforms.

The recent history of tax reform in the US and other industrialized countries is discussed and shown to be in line with the model's predictions.

 

Event details

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IFS

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