Taxation, Taxpayer Behavior, and Economic Activity 2019

The NBER’s tax policy research will involve two initiatives. The first involves the continued development and expansion of the NBER TAXSIM model. TAXSIM is a computer program that does calculations similar to those of publicly-available tax preparation software. Researchers can configure it to perform calculations for all the households in a survey data base, or to consider the consequences of various tax reforms for household tax liabilities. TAXSIM offers an independent source of information on the likely effects of different tax reform proposals, distinct from the analyses that are presented by the U.S. Treasury Department and the Joint Committee on Taxation. This is a resource that also enables researchers to compute the total tax burden, and the marginal tax rate, on individuals or households with particular characteristics. It is widely used by researchers who are working with survey or administrative record data, since it facilitates calculating the relevant tax rates for surveyed households and then studying how tax rate variation affects household behavior. In 2018, there were 95 academic papers that used the TAXSIM calculator in some way, many in the most prestigious academic journals.
The second initiative involves inviting researchers who are experts on tax policy to investigate timely topics, and then to present their findings to their academic peers and to policy oriented economists at the Tax Policy and the Economy conference in Washington, D.C. By promoting such dialogue, the NBER can help make policy oriented economists aware of the latest developments in the academic research community, while also encouraging academic researchers to write about and study issues that are central for the policy-oriented community.