Estimating Long-Run Revenue Effects of Tax Law Changes

Jane G. Gravelle ()

Eastern Economic Journal, 1993, vol. 19, issue 4, pages 481-494

Abstract: Constraints aimed at controlling the deficit place a premium on the revenue effects of proposals within the budget horizon, which is typically five years. Yet, many tax provisions have uneven patterns of cost: long-run costs may differ in magnitude, and even direction, from the short-run costs. Examples include tax treatment of intangibles, investment subsidies, prospective indexation of capital gains and "backloaded" vs. "frontloaded" individual retirement accounts. Some provisions, such as tax payment speedups, may be driven solely by budget considerations. This paper proposes one solution-to require a standardized form of revenue estimating, based on present value calculations.

Keywords: Deficit; Law; Tax Law; Tax (search for similar items in EconPapers)
JEL-codes: E62 K34 (search for similar items in EconPapers)
Date: 1993
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