Taxation, Taxpayer Behavior, and Economic Activity 2022

The NBER supports research on the economic effects of tax policies in two ways. First, it maintains a sophisticated federal and state income tax calculator (TAXSIM) that can be used to estimate the total tax burdens as well as the marginal tax rates on households with various characteristics. Computing these tax rates makes it possible to carry out a wide range of empirical research on the links between taxes and household behavior. For example, a researcher who is interested in studying the portfolio effects of the differential tax burden on interest income relative to that on capital gains might use the TAXSIM calculator to estimate the marginal interest, dividend, and capital gains tax rates on a sample of households in a survey database that includes information on financial asset holdings, and then test whether those with relatively higher tax rates on interest income tend to invest more of their assets in equity rather than bonds.

Second, each year the NBER convenes a research meeting, the Tax Policy and the Economy (TP&E) meeting, at which researchers present their latest findings on the behavioral impact of taxation or government transfer programs. TP&E, which has been generously supported by the Bradley Foundation since 2010, convenes leading scholars from the research community and key policy-makers from the Washington tax policy community. It is an important channel for making participants in the policy process aware of new research findings related to the tax system and to closely-connected benefit programs, and for helping academic researchers to identify emerging issues on the policy agenda. This proposal requests support for further development of the TAXSIM model and for the 2022 TP&E meeting.