bepress Legal Repository

Behavioral Dimensions of Tax Reform

Edward J. McCaffery, USC and Caltech

Abstract

These are powerpoint slides from a presentation at a joint UCLA-Tax Policy Center Conference on Tax Policy in the Obama Era. The basic insight is that it will be difficult to raise significant revenue through the current tax system. Behavioral perspectives suggest that a series of small (or large) cuts, aiming towards a flattened rate structure – as we have seen in the Ronald Reagan and George W. Bush Administrations – are likely to be extremely popular. Undoing them with tax increases will be disproportionately psychically hard. Given that President Obama faces the perceived need for short term stimulus, likely meaning more small tax cuts, meeting his ultimate goals of reducing deficits and restoring more progression to the tax system will be difficult, if not impossible. Ultimately, the insights of behavioral economics may be most important in reconsidering the institutional mechanisms that produce tax and spending policy.

Subject Area

Economics, Law and Economics, Public Law and Legal Theory, Taxation

Recommended Citation

Edward J. McCaffery, "Behavioral Dimensions of Tax Reform" (April 2009). University of Southern California. University of Southern California Law and Economics Working Paper Series. Working Paper 91.
http://law.bepress.com/usclwps/lewps/art91

No readers' reactions have been posted for this article. To submit one, copy the URL for this article (http://law.bepress.com/usclwps/lewps/art91) and click here.