Flat Taxes and Effective Tax Planning

Michael Calegari

National Tax Journal, 1998, vol. 51, issue 4, 689-713

Abstract: Stiglitz (1985) shows that income deferral opportunities and differentially taxed economic activities provide incentives for investors to engage in tax avoidance strategies. In this paper, I describe several tax avoidance strategies that can be used by taxpayers in a Hall-Rabushka flat tax system to reduce or eliminate their tax liabilities. Effective tax planning continues to be viable in a flat tax regime because the idealized environment envisioned by the proposal does not consider taxpayers’ strategic response to the new system. These tax planning techniques can affect economic behavior, compliance and enforcement costs, and the distribution of the tax burden.

Date: 1998
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Persistent link: https://EconPapers.repec.org/RePEc:ntj:journl:v:51:y:1998:i:4:p:689-713

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