This paper discusses how the effects of taxes on economic behavior are important for revenue estimation, for calculating efficiency effects, and for understanding short-term macroeconomic consequences. The primary focus is on taxes on labor income but some attention is given to taxes on the income from saving. Specific calculations illustrate the importance of behavioral responses for accurate calculation of the revenue effects and deadweight losses of tax changes.
INTRODUCTION
I am pleased to be part of this National Tax Journal forum celebrating the 100th anniversary of the National Tax Association and grateful for the invitation to discuss the effects of taxes on economic ...