TY  - JOUR
AU  - Auerbach,Alan J.
TI  - Tax Projections and the Budget: Lessons from the 1980s
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 5009
PY  - 1995
Y2  - June 1995
UR  - http://www.nber.org/papers/w5009
L1  - http://www.nber.org/papers/w5009.pdf
N1  - Author contact info:
Alan J. Auerbach
Department of Economics
530 Evans Hall, #3880
University of California, Berkeley
Berkeley, CA 94720-3880
Tel: 510/643-0711
Fax: 510/643-0413
E-Mail: auerbach@econ.berkeley.edu
M2  - featured in NBER digest on 1995-05-01
AB  - Some economists have argued that the disincentive effects of marginal tax rate increases in the 1980s caused revenue to rise by less than had been anticipated.  To evaluate the hypothesis, this paper considers OMB revenue forecasts and forecast errors for the period 1982-93.  If the revenue gains from tax increases, and the revenue losses from tax cuts, were overstated because of inadequate allowance for behavioral responses, then the forecast errors should be negatively related to the initial revenue estimates of the impact of policy changes. For excise taxes and corporate income taxes, the results suggest that the systematic overprediction of revenues during the period can be explained in part by an underestimate of behavioral responses to taxation.
ER  -