Alternate Indexing Schemes for Nonbusiness Income Taxation: Distributional and Revenue Effects

As one of the consequences of the Economic Recovery Tax Act of 1981, individual income tax rate brackets (including the zero bracket amounts) and the personal exemption amount will be indexed beginning in calendar year 1985. The purpose of this indexation is to mitigate the effects of inflation on the tax system. In this research, indexation as a tax policy tool was examined. The distributional and revenue effects of the following systems were compared using 1973 as the base year and 1974-78 as the evaluation period: (1) a system in which the base year tax law (1973) was maintained for the period under study (1974-78) and the changes actually legislated were ignored (the 1973 Law Model); (2) a system in which indexation as specified by the Economic Recovery Tax Act of 1981 was added to the system simulated in step 1 (the ERTA Model), and (3) an alternate system which extended the simulation in step 2 by indexing nonbusiness credits and selected long term assets/liabilities (e.g., capital and interest items) (Alternate 0% and 60% Models).

Name thesis:degree_name

Ph.D.

Level thesis:degree_level

Dissertation

Discipline thesis:degree_discipline

Accountancy

Grantor

University of Illinois at Urbana-Champaign

Year dc:date

2014

Author dc:creator

• Ostrowski, Barbara Ann

• Business Administration, Accounting

Identifier

(UMI)AAI8410013

OAI identifier oai:identifier

oai:www.ideals.illinois.edu:2142/71386