Paul L. Caron

Thursday, March 30, 2023

Harpaz Posts Two Tax Papers On SSRN

Assaf Harpaz (Drexel; Google Scholar) & C. Eugene Steuerle (Urban Institute; Google Scholar), Stanley Surrey's Lasting Influence, 86 Law & Contemp. Probs. __ (2023):

Stanley Surrey is perhaps best known for his promotion of the concept of tax expenditures - the characterization of various tax preferences as substitutes for direct expenditures. That emphasis understates his lasting influence on the tax policy process. An equally important and lasting achievement was establishing and promoting the integrity and professionalism of the Treasury’s Office of Tax Policy (OTP), while garnering support of much of the wider tax policy community for basing tax policy on the principles of fairness, simplicity, and efficiency.

In this article, we focus mainly on historical developments in the concept and use of tax expenditures both in the United States and abroad. We provide special attention to the significant role played by tax expenditures in the movement that led to the Tax Reform Act of 1986, which is the type of effort that Surrey championed. We relate tax expenditures to other base-defining measures such as economic income, consumption, and ability to pay in both development of that Act and within the continuing tax policy debate.

Assaf Harpaz (Drexel; Google Scholar), Tax Policy and COVID-19: An Argument for Targeted Crisis Relief, 31 Cornell J.L. & Pub. Pol'y 235 (2021):

The COVID-19 pandemic caused a sharp global economic decline. By the end of 2021, the U.S. government responded to the downturn with record fiscal legislation totaling over $5 trillion, which includes considerable tax relief. Most notably, the U.S. government distributed over $800 billion in three rounds of advanced refundable tax credits (known as recovery rebates, or stimulus checks) to most households. Tax relief has been unprecedented in scale but has often been the product of political circumstances rather than principled policy design. Tax relief thus remains largely undertheorized and politically motivated.

This Article examines the U.S. tax policy response to the COVID-19 crisis, focusing on recovery rebates for individuals. It evaluates considerations for reforming tax relief and proposes several changes for future crises. First, the Article recommends targeting credits to low-income households. This should be accomplished by decreasing phase out thresholds and increasing credit amounts. Second, the Article recommends targeting credits to households which lost income. This should be accomplished by implementing a recapture (repayment) requirement at the end of the tax year from households whose income increased beyond the phase out threshold, subject to a safe harbor. These proposals increase vertical equity and effectiveness, allow increased aid to those who suffered the most, and enhance economic stimulus. Additionally, the Article explores arguments for universal benefits and recurring payments. It thereby examines the widely publicized debate on fiscal response to COVID-19 and suggests meaningful improvements to tax policy response for future crises.

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