Public Finance Public Policy 6th Edition

About this Book
	Cover Page
	Halftitle Page
	Title Page
	Copyright Page
	Dedication
	About the Author
	Brief Contents
	Contents
	From the Author
	What’s New in this Edition
	Presentation and Pedagogy
	Instructor Resources
	Acknowledgments
Part I Introduction and Background
	Chapter 1 Why Study Public Finance?
		1.1 The Four Questions of Public Finance
			When Should the Government Intervene in the Economy?
			Application: Modern Measles Epidemics
			How Might the Government Intervene?
			What Is the Effect of Those Interventions on Economic Outcomes?
			Application: The CBO: Government Scorekeepers
			Why Do Governments Choose to Intervene in the Way That They Do?
		1.2 Why Study Public Finance? Facts on Government in the United States and Around the World
			The Size and Growth of Government
			Decentralization
			Spending, Taxes, Deficits, and Debts
			Distribution of Spending
			Distribution of Revenue Sources
			Regulatory Role of the Government
		1.3 The Questions of Public Finance Are Front and Center in Health Care Debates
			When Should the Government Intervene?
			How Should the Government Intervene?
			What Are the Effects of Interventions?
			Why Governments Do What They Do
		1.4 Conclusion
		Highlights
		Questions and Problems
		Advanced Questions
	Chapter 2 Theoretical Tools of Public Finance
		2.1 Constrained Utility Maximization
			Preferences and Indifference Curves
			Utility Mapping of Preferences
			Budget Constraints
			Putting It All Together: Constrained Choice
			The Effects of Price Changes: Substitution and Income Effects
		2.2 Putting the Tools to Work: TANF and Labor Supply Among Single Mothers
			Identifying the Budget Constraint
			The Effect of TANF on the Budget Constraint
		2.3 Equilibrium and Social Welfare
			Demand Curves
			Supply Curves
			Equilibrium
			Social Efficiency
			Competitive Equilibrium Maximizes Social Efficiency
			From Social Efficiency to Social Welfare: The Role of Equity
			Choosing an Equity Criterion
		2.4 Welfare Implications of Benefit Reductions: The TANF Example Continued
		2.5 Conclusion
		Highlights
		Questions and Problems
		Advanced Questions
		Appendix to Chapter 2 The Mathematics of Utility Maximization
	Chapter 3 Empirical Tools of Public Finance
		3.1 The Important Distinction Between Correlation and Causality
			The Problem
		3.2 Measuring Causation with Data We’d Like to Have: Randomized Trials
			Randomized Trials as a Solution
			The Problem of Bias
			Randomized Trials of ERT
			Randomized Trials in the TANF Context
			Application: The Rise of Randomized Trials in Developing Economies
			Why We Need to Go Beyond Randomized Trials
		3.3 Estimating Causation with Data We Actually Get: Observational Data
			Time Series Analysis
			Cross-Sectional Regression Analysis
			Quasi-Experiments
			Structural Modeling
		3.4 Conclusion
		Highlights
		Questions and Problems
		Advanced Questions
		Appendix to Chapter 3 Cross-Sectional Regression Analysis
	Chapter 4 Budget Analysis and Deficit Financing
		4.1 Government Budgeting
			The Budget Deficit in Recent Years
			The Budget Process
			Application: Efforts to Control the Deficit
			State and International Deficit Rules
		4.2 Measuring the Budgetary Position of the Government: Alternative Approaches
			Real Versus Nominal
			Economic Conditions
			Cash Versus Capital Accounting
			Static Versus Dynamic Scoring
		4.3 Do Current Debts and Deficits Mean Anything? A Long-Run Perspective
			Background: Present Discounted Value
			Application: Present Discounted Value and Interpreting Sports Contracts
			Why Current Labels May Be Meaningless
			Measuring Long-Run Government Budgets
			What Does the U.S. Government Do?
			Application: The Financial Shenanigans of 2001 and 2018
		4.4 Why Do We Care About the Government’s Fiscal Position?
			Short-Run Versus Long-Run Effects of the Government on the Macroeconomy
			Background: Savings and Economic Growth
			The Federal Budget, Interest Rates, and Economic Growth
			Intergenerational Equity
		4.5 Conclusion
		Highlights
		Questions and Problems
		Advanced Questions
Part II Externalities and Public Goods
	Chapter 5 Externalities: Problems and Solutions
		5.1 Externality Theory
			Economics of Negative Production Externalities
			Negative Consumption Externalities
			Application: The Externality of SUVs
			Positive Externalities
		5.2 Private-Sector Solutions to Negative Externalities
			The Solution
			The Problems with Coasian Solutions
		5.3 Public-Sector Remedies for Externalities
			Corrective Taxation
			Application: Congestion Pricing
			Subsidies
			Regulation
		5.4 Distinctions Between Price and Quantity Approaches to Addressing Externalities
			Basic Model
			Price Regulation (Taxes) Versus Quantity Regulation in This Model
			Multiple Plants with Different Reduction Costs
			Uncertainty About Costs of Reduction
		5.5 Conclusion
		Highlights
		Questions and Problems
		Advanced Questions
	Chapter 6 Externalities in Action: Environmental and Health Externalities
		6.1 The Role of Economics in Environmental Regulation: The Case of Particulates
			History of Particulate Regulation
			Empirical Evidence: Estimating the Adverse Health Effects of Particulates
			Has the CAA Been a Success?
		6.2 Climate Change
			Application: The Montreal Protocol
			The Kyoto Treaty
			Can Trading Make Environmental Agreements More Cost-Effective?
			Application: Congress Takes On Climate Change and Fails
			The Paris Agreement and the Future
		6.3 The Economics of Smoking
			The Externalities of Smoking
		6.4 The Economics of Other Addictive Behaviors
			Drinking
			Empirical Evidence: The Effect of Legal Drinking at Age 21
			Illicit Drugs
			Application: Public Policy Toward Obesity
			Summary
		6.5 Conclusion
		Highlights
		Questions and Problems
		Advanced Questions
	Chapter 7 Public Goods
		7.1 Optimal Provision of Public Goods
			Optimal Provision of Private Goods
			Optimal Provision of Public Goods
		7.2 Private Provision of Public Goods
			Private-Sector Underprovision
			Application: The Free Rider Problem in Practice
			Can Private Providers Overcome the Free Rider Problem?
			Application: Business Improvement Districts
			When Is Private Provision Likely to Overcome the Free Rider Problem?
		7.3 Public Provision of Public Goods
			Empirical Evidence: Measuring Crowd-Out
			The Right Mix of Public and Private
			Application: The Good and Bad Sides of Contracting Out
			Measuring the Costs and Benefits of Public Goods
			How Can We Measure Preferences for Public Goods?
		7.4 Conclusion
		Highlights
		Questions and Problems
		Advanced Questions
		Appendix to Chapter 7 The Mathematics of Public Goods Provision
	Chapter 8 Cost-Benefit Analysis
		8.1 Measuring the Costs of Public Projects
			The Example
			Measuring Current Costs
		8.2 Measuring the Benefits of Public Projects
			Valuing Driving Time Saved
			Application: The Problems of Contingent Valuation
			Valuing Saved Lives
			Empirical Evidence: Valuing Time Savings
			Application: Valuing Life
			Empirical Evidence: How Much Does It Cost to Avoid a Traffic Fatality?
			Discounting Future Benefits
			Cost-Effectiveness Analysis
		8.3 Putting It All Together
			Other Issues in Cost-Benefit Analysis
		8.4 Conclusion
		Highlights
		Questions and Problems
		Advanced Questions
	Chapter 9 Political Economy
		9.1 Unanimous Consent on Public Goods Levels
			Problems with Lindahl Pricing
		9.2 Mechanisms for Aggregating Individual Preferences
			Application: Direct Democracy in the United States
			Majority Voting: When It Works
			Majority Voting: When It Doesn’t Work
			Arrow’s Impossibility Theorem
			Restricting Preferences to Solve the Impossibility Problem
			Median Voter Theory
			The Potential Inefficiency of the Median Voter Outcome
			Summary
		9.3 Representative Democracy
			Vote-Maximizing Politicians Represent the Median Voter
			Assumptions of the Median Voter Model
			Lobbying
			Application: Farm Policy in the United States
			Evidence on the Median Voter Model for Representative Democracy
			Empirical Evidence: Testing the Median Voter Model
			Increasing Polarization in American Politics
		9.4 Public Choice Theory: The Foundations of Government Failure
			Size-Maximizing Bureaucracy
			Leviathan Theory
			Corruption
			Application: Government Corruption
			The Implications of Government Failure
			Empirical Evidence: Government Failures and Economic Growth
		9.5 Conclusion
		Highlights
		Questions and Problems
		Advanced Questions
	Chapter 10 State and Local Government Expenditures
		10.1 Fiscal Federalism in the United States and Abroad
			Spending and Revenue of State and Local Governments
			Fiscal Federalism Abroad
		10.2 Optimal Fiscal Federalism
			The Tiebout Model
			Problems with the Tiebout Model
			Evidence on the Tiebout Model
			Optimal Fiscal Federalism
			Empirical Evidence: Evidence for Capitalization from California’s Proposition 13
		10.3 Redistribution Across Communities
			Should We Care?
			Application: Barriers to Tiebout and the “Great Divergence”
			Tools of Redistribution: Grants
			Redistribution in Action: School Finance Equalization
			Empirical Evidence: The Flypaper Effect: Here, Gone, and Back Again?
			Application: School Finance Equalization and Property Tax Limitations in California
		10.4 Conclusion
		Highlights
		Questions and Problems
		Advanced Questions
	Chapter 11 Education
		11.1 Why Should the Government Be Involved in Education?
			Productivity
			Citizenship
			Credit Market Failures
			Failure to Maximize Family Utility
			Redistribution
		11.2 How Is the Government Involved in Education?
			Free Public Education and Crowding Out
			Solving the Crowd-Out Problem: Vouchers
			Problems with Educational Vouchers
			Vouchers May Increase School Segregation
			Vouchers May Be an Inefficient and Inequitable Use of Public Resources
		11.3 Evidence on Competition in Education Markets
			Direct Experience with Vouchers
			Experience with Public School Choice
			Empirical Evidence: Estimating the Effects of Voucher Programs
			Experience with Public School Incentives
			Bottom Line on Vouchers and School Choice
		11.4 Measuring the Returns to Education
			Effects of Education Levels on Productivity
			Empirical Evidence: Estimating the Return to Education
			Effects of Education Levels on Other Outcomes
			The Impact of School Quality
			Empirical Evidence: Estimating the Effects of School Quality
		11.5 The Role of the Government in Higher Education
			Current Government Role
			What Is the Market Failure, and How Should It Be Addressed?
			Application: Addressing Student Loan Debt in the United States
		11.6 Conclusion
		Highlights
		Questions and Problems
		Advanced Questions
Part III Social Insurance and Redistribution
	Chapter 12 Social Insurance: The New Function of Government
		12.1 What Is Insurance and Why Do Individuals Value It?
			What Is Insurance?
			Why Do Individuals Value Insurance?
			Formalizing This Intuition: Expected Utility Model
		12.2 Why Have Social Insurance? Asymmetric Information and Adverse Selection
			Asymmetric Information
			Example with Full Information
			Example with Asymmetric Information
			The Problem of Adverse Selection
			Does Asymmetric Information Necessarily Lead to Market Failure?
			Application: Adverse Selection and Health Insurance “Death Spirals”
			How Does the Government Address Adverse Selection?
		12.3 Other Reasons for Government Intervention in Insurance Markets
			Externalities
			Administrative Costs
			Redistribution
			Paternalism
			Application: Flood Insurance and the Samaritan’s Dilemma
		12.4 Social Insurance Versus Self-Insurance: How Much Consumption Smoothing?
			Example: Unemployment Insurance
			Lessons for Consumption-Smoothing Role of Social Insurance
		12.5 The Problem with Insurance: Moral Hazard
			Application: The Problems with Assessing Workers’ Compensation Injuries
			What Determines Moral Hazard?
			Moral Hazard Is Multidimensional
			The Consequences of Moral Hazard
		12.6 Putting It All Together: Optimal Social Insurance
		12.7 Conclusion
		Highlights
		Questions and Problems
		Advanced Questions
		Appendix to Chapter 12 Mathematical Models of Expected Utility
	Chapter 13 Social Security
		13.1 What Is Social Security, and How Does It Work?
			Program Details
			Application: Why Choose 35 Years?
			How Does Social Security Work over Time?
			Application: Ida May Fuller
			How Does Social Security Redistribute in Practice?
		13.2 Consumption-Smoothing Benefits of Social Security
			Rationales for Social Security
			Does Social Security Smooth Consumption?
			Empirical Evidence: Measuring the Crowd-Out Effect of Social Security on Savings
		13.3 Social Security and Retirement
			Theory
			Evidence
			Application: Implicit Social Security Taxes and Retirement Behavior
			Implications
		13.4 Social Security Reform
			Reform Round I: The Greenspan Commission
			Application: The Social Security Trust Fund and National Savings
			Incremental Reforms
			Application: Early Entitlements: Liquidity Versus Behavioral Biases
			Fundamental Reform: Privatization
			Application: Company Stock in 401(k) Plans
			Application: Mixed Proposals for Social Security Reform
		13.5 Conclusion
		Highlights
		Questions and Problems
		Advanced Questions
	Chapter 14 Unemployment Insurance, Disability Insurance, and Workers’ Compensation
		14.1 Institutional Features of Unemployment Insurance, Disability Insurance, and Workers’ Compensation
			Institutional Features of Unemployment Insurance
			Institutional Features of Disability Insurance
			Institutional Features of Workers’ Compensation
			Comparison of the Features of UI, DI, and WC
			Application: The Duration of Social Insurance Benefits Around the World
		14.2 Consumption-Smoothing Benefits of Social Insurance Programs
		14.3 Moral Hazard Effects of Social Insurance Programs
			Moral Hazard Effects of Unemployment Insurance
			Empirical Evidence: Moral Hazard Effects of Unemployment Insurance
			Evidence for Moral Hazard in DI
			Empirical Evidence: Disability Insurance Screening and Labor Supply
			Evidence for Moral Hazard in WC
			Empirical Evidence: Moral Hazard Effects of Workers’ Compensation
		14.4 The Costs and Benefits of Social Insurance to Firms
			The Effects of Partial Experience Rating in UI on Layoffs
			The “Benefits” of Partial Experience Rating
			Application: The “Cash Cow” of Partial Experience Rating
			Workers’ Compensation and Firms
		14.5 Implications for Program Reform
			Benefits Generosity
			Targeting
			Experience Rating
			Worker Self-Insurance?
			Application: Reforming UI
		14.6 Conclusion
		Highlights
		Questions and Problems
		Advanced Questions
		Appendix to Chapter 14 Advanced Quasi-Experimental Analysis
	Chapter 15 Health Insurance I: Health Economics and Private Health Insurance
		15.1 An Overview of Health Care in the United States
			Application: Finding the Inefficiency in U.S. Health Care
			How Health Insurance Works: The Basics
			Private Insurance
			Medicare
			Medicaid
			TRICARE/CHAMPVA
			The Uninsured
			Empirical Evidence: Health Insurance and Mobility
		15.2 How Generous Should Insurance Be to Patients?
			Consumption-Smoothing Benefits of Health Insurance for Patients
			Moral Hazard Costs of Health Insurance for Patients
			How Elastic Is the Demand for Medical Care? The RAND Health Insurance Experiment
			Empirical Evidence: Estimating the Elasticity of Demand for Medical Care
			Optimal Health Insurance
			Application: Health Savings Accounts
		15.3 How Generous Should Insurance Be to Medical Providers?
			Managed Care and Prospective Reimbursement
			The Impacts of Managed Care
			How Should Providers Be Reimbursed?
		15.4 Conclusion
		Highlights
		Questions and Problems
		Advanced Questions
	Chapter 16 Health Insurance II: Medicare, Medicaid, and Health Care Reform
		16.1 The Medicaid Program for Low-Income Families
			How Medicaid Works
			Who Is Eligible for Medicaid?
			What Health Services Does Medicaid Cover?
			How Do Providers Get Paid?
		16.2 What Are the Benefits of the Medicaid Program?
			Does Medicaid Provide Financial Protection?
			Does Medicaid Improve Health?
			How Does Medicaid Affect Health? Evidence
			Empirical Evidence: Using State Medicaid Expansions to Estimate Program Effects
		16.3 The Medicare Program
			How Medicare Works
			Application: The Medicare Prescription Drug Debate
		16.4 What Are the Effects of the Medicare Program?
			The Prospective Payment System
			Problems with PPS
			Empirical Evidence: Short Stays in Long-Term Care Hospitals
			Lesson: The Difficulty of Partial Reform
			Medicare Managed Care
			Should Medicare Move to a Full-Choice Plan? Premium Support
			Application: A Premium Support System for Medicare
			Gaps in Medicare Coverage
		16.5 Long-Term Care
			Financing Long-Term Care
		16.6 Health Care Reform and the ACA
			The Historical Impasse
			The Massachusetts Experiment with Incremental Universalism
			The Affordable Care Act
			Application: Rising Health Care Costs and Cost Control Efforts in the ACA
			Early Evidence on the Effects of the ACA
			The ACA Runs into Trouble
		16.7 Conclusion
		Highlights
		Questions and Problems
		Advanced Questions
	Chapter 17 Income Distribution and Welfare Programs
		17.1 Facts on Income Distribution in the United States
			Relative Income Inequality
			Absolute Deprivation and Poverty Rates
			Application: Problems in Poverty Line Measurement
			What Matters—Relative or Absolute Deprivation?
		17.2 Welfare Policy in the United States
			Cash Welfare Programs
			In-Kind Programs
		17.3 The Moral Hazard Costs of Welfare Policy
			Moral Hazard Effects of a Means-Tested Transfer System
			Solving Moral Hazard by Lowering the Benefit Reduction Rate
			The “Iron Triangle” of Redistributive Programs
		17.4 Reducing the Moral Hazard of Welfare
			Moving to Categorical Welfare Payments
			Using “Ordeal Mechanisms”
			Application: An Example of Ordeal Mechanisms
			Increasing Outside Options
			Empirical Evidence: The Canadian Self-Sufficiency Project
			Empirical Evidence: Child Care, Preschool, and Child Outcomes
			Application: Evaluating the 1996 Welfare Reform
		17.5 Universal Basic Income?
			Empirical Evidence: The Alaska Permanent Fund Dividend and Labor Supply
		17.6 Conclusion
		Highlights
		Questions and Problems
		Advanced Questions
Part IV Taxation in Theory and Practice
	Chapter 18 Taxation: How It Works and What It Means
		18.1 Types of Taxation
			Taxes on Earnings
			Taxes on Individual Income
			Taxes on Corporate Income
			Taxes on Wealth
			Taxes on Consumption
			Taxation Around the World
		18.2 Structure of the Individual Income Tax in the United States
			Computing the Tax Base
			Tax Rates and Taxes Paid
		18.3 Measuring the Fairness of Tax Systems
			Average and Marginal Tax Rates
			Vertical and Horizontal Equity
			Measuring Vertical Equity
			Application: The Political Process of Measuring Tax Fairness
		18.4 Defining the Income Tax Base
			The Haig-Simons Comprehensive Income Definition
			Deviations due to Ability-to-Pay Considerations
			Deviations due to Costs of Earning Income
			Application: What Are Appropriate Business Deductions?
		18.5 Externality/Public Goods Rationales for Deviating from Haig-Simons
			Charitable Giving
			Spending Crowd-Out Versus Tax Subsidy Crowd-In
			Consumer Sovereignty Versus Imperfect Information
			Housing
			Empirical Evidence: The Social Benefits of Homeownership
			Tax Deductions Versus Tax Credits
			Application: The Refundability Debate
			Bottom Line: Tax Expenditures
			Application: A Tax Break for Olympians?
		18.6 The Appropriate Unit of Taxation
			The Problem of the “Marriage Tax”
			Marriage Taxes in Practice
		18.7 Conclusion
		Highlights
		Questions and Problems
		Advanced Questions
	Chapter 19 The Equity Implications of Taxation: Tax Incidence
		19.1 The Three Rules of Tax Incidence
			The Statutory Burden of a Tax Does Not Describe Who Really Bears the Tax
			The Side of the Market on Which the Tax Is Imposed Is Irrelevant to the Distribution of the Tax Burdens
			Parties with Inelastic Supply or Demand Bear Taxes; Parties with Elastic Supply or Demand Avoid Them
			Reminder: Tax Incidence Is About Prices, Not Quantities
		19.2 Tax Incidence Extensions
			Tax Incidence in Factor Markets
			Tax Incidence in Imperfectly Competitive Markets
		19.3 General Equilibrium Tax Incidence
			Effects of a Restaurant Tax: A General Equilibrium Example
			Issues to Consider in General Equilibrium Incidence Analysis
		19.4 The Incidence of Taxation in the United States
			Empirical Evidence: The Incidence of Taxation: Real-World Complications
			CBO/TPC Incidence Assumptions
			Results of CBO/TPC Incidence Analysis
			Current Versus Lifetime Income Incidence
		19.5 Conclusion
		Highlights
		Questions and Problems
		Advanced Questions
		Appendix to Chapter 19 The Mathematics of Tax Incidence
	Chapter 20 Tax Inefficiencies and Their Implications for Optimal Taxation
		20.1 Taxation and Economic Efficiency
			Graphical Approach
			Elasticities Determine Tax Inefficiency
			Empirical Evidence: The Window Tax
			Application: Tax Avoidance in Practice
			Determinants of Deadweight Loss
			Deadweight Loss and the Design of Efficient Tax Systems
			Application: Misperceived Taxes
		20.2 Optimal Commodity Taxation
			Ramsey Taxation: The Theory of Optimal Commodity Taxation
			Inverse Elasticity Rule
			Equity Implications of the Ramsey Model
			Application: Price Reform in Pakistan
		20.3 Optimal Income Taxes
			A Simple Example
			General Model with Behavioral Effects
			An Example
		20.4 Tax-Benefit Linkages and the Financing of Social Insurance Programs
			The Model
			Issues Raised by Tax-Benefit Linkage Analysis
			Empirical Evidence: A Group-Specific Employer Mandate
		20.5 Conclusion
		Highlights
		Questions and Problems
		Advanced Questions
		Appendix to Chapter 20 The Mathematics of Optimal Taxation
	Chapter 21 Taxes on Labor Supply
		21.1 Taxation and Labor Supply—Theory
			Basic Theory
			Limitations of the Theory: Constraints on Hours Worked and Overtime Pay Rules
		21.2 Taxation and Labor Supply—Evidence
			Limitations of Existing Studies
			Empirical Evidence: Estimating the Elasticity of Labor Supply
		21.3 Tax Policy to Promote Labor Supply: The Earned Income Tax Credit
			Background on the EITC
			Impact of EITC on Labor Supply: Theory
			Impact of EITC on Labor Supply: Evidence
			Empirical Evidence: The Effect of the EITC on Single-Mother Labor Supply
			Summary of the Evidence
			Application: EITC Reform
		21.4 The Tax Treatment of Child Care and Its Impact on Labor Supply
			The Tax Treatment of Child Care
			Empirical Evidence: The Effect of Child Care Costs on Maternal Labor Supply
			Options for Resolving Tax Wedges
			Comparing the Options
		21.5 Conclusion
		Highlights
		Questions and Problems
		Advanced Questions
	Chapter 22 Taxes on Savings
		22.1 Taxation and Savings—Theory and Evidence
			Traditional Theory
			Evidence: How Does the After-Tax Interest Rate Affect Savings?
			Inflation and the Taxation of Savings
		22.2 Alternative Models of Savings
			Precautionary Savings Models
			Self-Control Models
			Empirical Evidence: Social Insurance and Personal Savings
		22.3 Tax Incentives for Retirement Savings
			Available Tax Subsidies for Retirement Savings
			Theoretical Effects of Tax-Subsidized Retirement Savings
			Application: The Roth IRA
			Implications of Alternative Models
			Private Versus National Savings
			Evidence on Tax Incentives and Savings
			Empirical Evidence: Estimating the Impact of Tax Incentives for Savings on Savings Behavior
		22.4 Conclusion
		Highlights
		Questions and Problems
		Advanced Questions
	Chapter 23 Taxes on Risk Taking and Wealth
		23.1 Taxation and Risk Taking
			Basic Financial Investment Model
			Real-World Complications
			Evidence on Taxation and Risk Taking
			Labor Investment Applications
		23.2 Capital Gains Taxation
			Current Tax Treatment of Capital Gains
			What Are the Arguments for Tax Preferences for Capital Gains?
			What Are the Arguments Against Tax Preferences for Capital Gains?
			Application: Capital Gains Taxation of “Carried Interest”
		23.3 Transfer Taxation
			Why Tax Wealth? Arguments for the Estate Tax
			Arguments Against the Estate Tax
		23.4 Property Taxation
			Who Bears the Property Tax?
			Types of Property Taxation
			Application: Property Tax Breaks to Businesses
		23.5 Conclusion
		Highlights
		Questions and Problems
		Advanced Questions
	Chapter 24 Taxation of Business Income
		24.1 What Are Corporations, and Why Do We Tax Them?
			Ownership Versus Control
			Firm Financing
			Why Do We Have a Corporate Tax?
		24.2 The Structure of the Corporate Tax
			Revenues
			Expenses
			Application: What Is Economic Depreciation? The Case of Personal Computers
			Corporate Tax Rate
			Tax Credits
		24.3 The Incidence of the Corporate Tax
			Empirical Evidence: Corporate Taxation and Wages
		24.4 The Consequences of the Corporate Tax for Investment
			Theoretical Analysis of Corporate Tax and Investment Decisions
			Negative Effective Tax Rates
			Policy Implications of the Impact of the Corporate Tax on Investment
			Empirical Evidence: Accelerated Depreciation and Investment
		24.5 Treatment of International Corporate Income
			How to Tax International Income
			Application: The A(pple) B(urger King) C(aterpillar)s of Avoiding Corporate Taxes on International Income
			Global Versus Territorial Taxation
			Application: The 2017 Tax Reform and Corporate Tax Wedges
		24.6 The Consequences of the Corporate Tax for Financing
			The Impact of Taxes on Financing
			Why Not All Debt?
			Empirical Evidence: How Do Corporate Taxes Affect a Firm’s Financial Structure?
			The Dividend Paradox
			How Should Dividends Be Taxed?
			Application: The 2003 Dividend Tax Cut
			Corporate Tax Integration
		24.7 Conclusion
		Highlights
		Questions and Problems
		Advanced Questions
	Chapter 25 Fundamental Tax Reform and Consumption Taxation
		25.1 Why Fundamental Tax Reform?
			Improving Tax Compliance
			Application: Tax Evasion
			Empirical Evidence: What Determines Tax Compliance?
			Application: The 1997 IRS Hearings and Their Fallout for Tax Collection
			Making the Tax Code Simpler
			Improving Tax Efficiency
			Summary: The Benefits of Fundamental Tax Reform
		25.2 The Politics and Economics of Tax Reform
			Political Pressures for a Complicated Tax Code
			Economic Pressures Against Broadening the Tax Base
			Application: Grandfathering in Virginia
			The Conundrum
			Application: TRA 86 and Tax Shelters
		25.3 Consumption Taxation
			Why Might Consumption Make a Better Tax Base?
			Why Might Consumption Be a Worse Tax Base?
			Designing a Consumption Tax
			Backing into Consumption Taxation: Cash-Flow Taxation
		25.4 The Flat Tax
			Advantages of a Flat Tax
			Problems with the Flat Tax
		25.5 Conclusion
		Highlights
		Questions and Problems
		Advanced Questions
Notes
Glossary
References
Index
Backcover