LC I 4. (8/5 ~' Rpyt. 99: 79 -/‘M96 Report No. 79-196 E NVA SELECTED REFERENCES on INFLATION AND TAXES 1974 — July 1979 O «. .S .' - 5"“; L_uam~w§“”“ K 51'. LGWS’ M0’ by Louis Alan Talley Analyst in Taxation Economics Division January 23, 1973 Updated September 5, 1979 CONGRESSIONAL RESEARCH SERVKHE HJ 4625 U.S. A UBRARYCW CONGRESS The Congressional Research Service works exclusively for the Congress, conducting research, analyzing legislation, and providing information at the request of Committees, Mem- bers and their staffs. The Service makes such research available, without partisan bias, in many forms including studies, reports, compilations, digests, and background briefings. Upon request, the CRS assists Committees in analyzing legislative proposals and issues, and in assessing the possible effects of these proposals and their alternatives. The Service’s senior specialists and sub- ject analysts are also available for personal consultations in their respective fields of expertise. SUMMARY Numerous bills have been introduced in Congress designed to index the Federal tax laws. While indexation has become a recurring major issue in tax policy debates, the Administration has not proposed indexing our income tax laws. This bibliography has been prepared as an overview of the recent literature written on indexation of both individual and/or corporate taxes and includes articles written by both proponents and opponents of indexation. THE LIBRARY OF CONGRESS Congressional Research Service WASHINGTON, D.C. 20540 SELECTED REFERENCES on INFLATION AND TAXES ,1974 — July 1979 Aaron, Henry. Inflation and the income tax. American economic review, v. 66, May 1976: 193-199. Suggests that there ought to be more research in indexation before the U.S. considers indexation of the income tax system. Aaron, Henry J., ed. Inflation and the income tax. Washington, Brookings Institutions c1976, 340 p. (Brookings Institution, Washington, D.C. National Committee on Government Finance. Studies of government finance. Series 2, no. 4) Partial contents.--Inflation and the income tax: an intro- duction, by H. Aaron.--The tax treatment of business profits under inflationary conditions, by T. Tideman and D. Tucker.-- Inflation accounting: implications of the FASB proposal, by S. Davidson and R. Weil.--Inflation and the definition of taxable personal income, by R. Brinner.--Inflation adjustment for the individual income tax, by E. Sunley, Jr., and J. A. Pechman.--The implication for economic stability of indexing the individual income tax, by J. Pierce and J. Enzler.-- Adjusting taxable profits for inflation: the foreign experience, by G. Lent.--The economic and budgetary effects of indexing the tax system, by E. Gramlich. Adjusting income tax systems for inflation. OECD observer, no. 78, Nov.-Dec. 1975: 20-22. Summarizes a recent OECD report, the adjustment of per- sonal income tax systems for inflation, which "describes the alternative methods of adjustment, draws some policy implica- tions and discusses some of the practical problems involved in the implementation of indexation schemes." Allan, J. R., D. A. Dodge, and S. N. Poddar. Indexing the personal income tax: a Federal perspective. Canadian tax journal, v. 22, July-Aug. 1974: 355-367. "The federal government's introduction of indexing into the personal income tax structure in order to offset the inflationary rise in the cost of living has caused great in- terest and some controversy. In this article three senior civil servants describe the reasons indexation is considered necessary, and its applications for individual taxpayers and for the built-in stability of the personal tax system. They also attempt to assess its impact on the progressivity of the tax system and on government revenues." Allen, Arak, Auld, Beer, Berliner, Robert W. Brinner, Roger, and Alicia Munnell. CRS-2 R. I. G., and D. Savage. Inflation and the personal income tax. National Institute economic review, no. 70, Nov. 1974: 61-74. Marcelle. The effect of the Federal individual income tax on real after-tax incomes during inflation. Southern economic journal, v. 42, Apr. 1976: 720-724. Concludes that "estimates of the percentage loss in real after-tax income accompanying a 1 percent price level rise indicate that the impact of inflation varies considerably from one income level to another with taxpayers in the $9,000- 20,000 income range substantially better able to maintain their purchasing power than taxpayers with lower incomes or moderately higher incomes." D. A. L. Taxation and inflation: a survey of recent theory and empirical evidence. Public finance quarterly, V. 5, Oct. 1977: 403-418. "The past decade has witnessed considerable attention devoted to the relationship between tax increases and wage/ price inflation. This paper surveys briefly the theoretical and empirical evidence of this period with emphasis on how tax variables have been incorporated into theoretical and empirical modes of wage and price determination." Examines data for the United States, Great Britain, and Canada. Inflation and the progres~ California Western Gerald A., and Henry W. Walther. sivity of the Federal individual income tax. law review, v. 10, spring 1974: 534-550. "The purpose of this article is to demonstrate that infla- tion enhances the progressivity of our Federal individual income tax." Inflation accounting: implications for income taxation. Tax executive, v. 28, July 1976: 3234333. Examines the impact of inflation on financial statements and the implications of developments in the evolution of infla- tion accounting for income taxation in Brazil, the United Kingdom, Australia, Canada, and the United States. Taxation of capital gains: inflation and other problems. Federal Reserve Bank of Boston. New England economic review, Sept.-Oct. 19741 3‘21- Says Congress‘ proposal for including a declining propor- tion of the gain in taxable income the longer the holding period is an inappropriate remedy for gains due solely to inflation. Suggests that to provide a satisfactory and equitable solution, inflationary gains should be eliminated from the tax base, Then the difference between the sales price and the inflated purchase price can be included in taxable income. CRS-3 Brown, Marilyn V. Reducing taxation of the corporate income stream. Financial analysts journal, v. 34, May-June 1978: 57-63. Adapted and expanded version of testimony of Ms. Brown and Theodore R. Lilley before the House Ways and Means Com- mittee in Mar.-Apr. 1978. Focuses on the effects of infla- tion on corporate profits and taxes, benefits from a reduction of tax rates, and methods of reducing double taxation of dividends. Bucovetsky, Meyer W. Inflation and the personal tax base: the capital gains issue. Canadian tax journal, v. 25, Jan.-Feb. 1977: 77-107. "In the author's view, defining a personal capital gain or loss and when it should be taxed is vital when establishing an entire income tax base--particularly in a climate of infla- tion. Only real capital gains--those representing an increase in purchasing power should be taxed, but taxed so that asset ownership is neither favored nor discouraged. Beginning with a discussion of price inflation and its relation to capital gains, the author develops the broader theme of capital gains tax reform and discusses briefly the appropriate tax treat- ment of interest income." Burger, Albert E. The current inflation: the United States exper- ience. Federal Reserve Bank of St. Louis review, Sept. 1974: 13-23. "The way to reduce inflationary pressures in the United States economy is to slow the growth of the money stock. On an average-of-year to average-of-year basis, the money stock grew at about-a 7 percent rate from 1970 to 1973. It seems to be a generally accepted proposition in economics that the growth of prices adjusts to the growth of money over an extended period of time." Cheeseman, Henry R. How to create an inflation neutral tax system. Journal of accountancy, v. 140, Aug. 1975: 44-51. Commerce Clearing House. Colorado knocks the wind out of infla- tion. State tax review, v. 39, May 16, 1978: 1-2. Corcoran, Patrick J. Inflation, taxes, and corporate investment incentives. Federal Reserve Bank of New York quarterly review, v. 2, autumn 1977: 1-10. ' Analyzes the interaction of inflation and the corporate tax structure as an important reason behind the dramatic increase in corporate use of debt financing in recent years. CR8-4 Daly, John Charles, and others. Does the government profit from inflation? Washington, American Enterprise Institute for Public Research, 1977. 42 p. (American Enterprise Institute for Public Policy Research. AEI public policy forum 7) This is an edited transcript of an AEI Public Policy Forum held on May 25, 1977, dealing with the effects of inflation on real income. The round table discussion also examines proposals to index the tax system as a way of combating the effects of inflation. DeJantscher, Milka Casanegra. Taxing business profits during infla- tion: the Latin American experience. International tax jour- nal, v. 2, winter 1976: 128-146. "Latin American countries have extensive experience in adjusting business profits for income tax purposes in an infla- tionary setting. The methods used range from one-time reval- uations of limited classes of assets to comprehensive and permanent mechanisms extending to all of the firm's assets and liabilities. Some plans aim only to eliminate illusory profits from the income tax base. Others go further and attempt to tax the real gains that some firms derive from inflation. Highly sophisticated schemes, such as those of Brazil and Chile, have proved feasible both for taxpayers and the tax administrators." Dernburg, Thomas F. Studies in fiscal policy; paper no. 2--indexing the individual income tax for inflation: will this help to stabilize the economy? A study prepared for the use of the Subcommittee on Fiscal Policy of the Joint Economic Committee, Congress of the United States. Washington, U.S. Govt. Print. Off., 1976. 20 p. At head of title: 94th Cong., 2d sess. Joint committee print. Contents.--Inflation distortion and the mechanics of in- dexing.--Scope of the present analysis.--Indexing and stabi- lization policy.--Policy issues for the near future. Diamond, P. A. Inflation and the comprehensive tax base. Journal of public economics, v. 4, Aug. 1975: 227*244. "Adjusting the basis of assets for inflation is discussed and compared with partial inclusion of gains. The importance of deferral is discussed and compared with the importance of adjustment for inflation." Edmunds, Stahrl W. Who pays the costs of inflation? Policy studies journal, v. 7, spring 1979: 568-577. Compares the inflation cost by family-income class with the alternative income taxes needed to avoid inflation by eliminating government deficits. "By this calculation for 1965-75, the inflation cost was highly regressive, with an effective rate of 17 percent on families below $5,000, and CRS"5 17 times greater than such families would have had to pay in income taxes. Meantime, the effective inflationary tax rate for wealthy families over $50,000 in income was a bonus, or tax rebate, of one percent." Edserton, Jerry. The tax reform you may need most. Money, v. 7, June 1978: 48-51. "Letting inflation push you into the 50 percent bracket is an honor you'd probably rather skip. Here's how to decline it." Includes a short article on why Senator Long opposes indexing. Feldstein, Martin. Adjusting tax rules for inflation~~capital gains and capital income. Tax review, V. 40, Jan. 1979: 55"58. "In this issue, Professor Feldstein maintains that, while some progress was made under the Revenue Act of 1978 toward reducing tax obstacles to capital formation, ‘the most fun- damental tax problem affecting capital formation has not been tackled.’ He emphasizes the need to adjust tax policy for the effect of inflation, particularly to achieve a more realistic measurement of capital income subject to tax." -----, and Joel Slemrod. Inflation and the excess taxation of capital gains on corporate stock. Cambridge, Mass., National Bureau of Economic Research, 1978. 21 p. (National Bureau of Economic Research. Working paper no. 234) "The present study shows that in 1973 individuals paid nearly $500 million of extra tax on corporate stock capital gains because of the distorting effect of inflation. A detailed analysis shows that the distortion was greatest for middle income sellers of corporate stock." *----, and Lawrence Summers. Inflation, tax rules, and the long-term interest rate. Cambridge, Mass., National Bureau of Economic Research, 1978. 1 v. (various pagings) (National Bureau of Economic Research. Working paper no. 232) Uses a mathematic model to find that the "nominal long- term interest rate does rise by approximately the rate of inflation." Also estimates that "corporate tax reductions and liberalized depreciation may have raised the real interest rate by about 50 basis points over the past two decades." Concludes that "the changes designed to stimulate corporate investment were not offset by induced increases in the interest rate." CRS-6 Fellner, William. Problems to keep in mind when it comes to tax reform. Washington, American Enterprise Institute for Public Policy Research 1977. 26 p. (Studies in tax policy. American Enterprise Institute for Public Policy Research. AEI studies, 167) Criticizes the view that "there is a large potential payoff in broadening the tax base.” Also, discusses overtaxation as a result of inflation and double taxation of the dividend component of profits. --—--, Kenneth W. Clarkson, and John H. Moore. Correcting taxes for inflation. Washington, American Enterprise Institute for Public Policy Research c1975, 47 p. (American Enterprise Institute for Public Policy Research. Domestic affairs study 34) Authors explore the distorting effect of the recent steep inflation on the U.S. Federal tax system and suggest specific "indexing" operations for avoiding future distortions. Galper, Harvey, and John Mendenhall. Inflation and the tax struc- ture. (Washington) U.S. Department of the Treasury, Assistant Secretary for Tax Policy, Office of Tax Analysis. 1976. 36 p. (Office of Tax Analysis. OTA paper 19) Gay, William C., Jr. Inflation, indexation, and the violation of human rights. Price Waterhouse review, v. 23, no. 2, 1978: 20, 22*29. Contends that the recent inflation has violated the "human rights" of consumers and calls for the adoption of a system of indexation to eliminate major inequities resulting from inflation. Giersch, Herbert, and others. Essays on inflation and indexation. Washington, American Enterprise Institute for Public Policy Research c1974, 98 p. (American Enterprise Institute for Public Policy Research. Domestic affairs study 24) Contents.--Index clauses and the fight against inflation, by H. Giersch.--Monetary correction, by M. Friedman.--The controversial issue of comprehensive indexation, by W. Fellner.-— Indexing money payments in a large and prolonged inflation, by E. Bernstein,——Indexing for inflation in Brazil, by A. Kafka. Greytak, David, and Richard McHugh. Inf13ti0D and the indiVidUa1 income tax. Southern economic journal, v. 45, July 1978: 168-180. _ "Some countries (e.g., Brazil and Canada) have introduced forms of indexation into their tax systems. Whether these achieve full equity or whether the costs of a shift to a real income tax system in the United States is warranted during moderate inflation are questions beyond the scope of this Greytak, David, and Richard McHugh. Harriss, C. Lowell. Holm, Hull, CRS-7 study. Other methods, although certainly less equitable than full indexation, are available, and, on the basis of their simplicity, may appear desirable. The periodic changes which have occurred in the tax law can be viewed as an attempt to deal with the problem." The effects of Federal income taxation and inflation on regional income inequalities. Jour- nal of regional science, v. 18, Apr. 1978: 57-71. The authors examine the differential impact of inflation on tax rates on a regional basis during 1972-74. Inflation and tax reform. Tax review, v. 35, May 1974: 19-22. Considers the tax effects of inflation on the effective tax rate, capital gains and losses, inventory profits, and the business depreciation deduction. Douglas R. Compensating for inflation in tax laws. Tax executive, v. 25, Jan. 1973: 101-107. "This proposal for recognizing inflation within the tax laws has demonstrated the following: 1. There is a serious need for relief and equity. 2. Procedural and administrative problems are minimal. 3. Total tax revenues do not necessarily have to decline if existing loopholes are closed and, if necessary, compensating rate increases are adopted. 4. The overall flow of capital throughout the country would be improved." Indexing the personal income Canadian tax journal, v. 22, Brian, and Lawrence Leonard. tax: an Ontario perspective. July-Aug. 1974: 370-377. "This article outlines the methodology and results of an intensive quantitative examination of indexing undertaken in the Ontario government, based largely on the analytic capacity developed during the long debate on national tax reform." Indexing and inflation: An AEI round table held on 17 July 1974 Inflation and taxation in Latin America. at the American Enterprise Institute for Public Policy Research, Washington, D.C.; Eileen Shanahan, moderator; Milton Friedman ... et al. Washington, American Enterprise Institute for Public Policy Research, 1974. 56 p. Development financing, v. 2, June 1978: 5-21. "This paper studies the effects of inflation, internal and imported, on the behavior of the tax system in some Latin American countries." Focuses on Argentina, Brazil, Chile, Peru, and Uruguay. CRS-8 Inflation: the taxman's favorite pickpocket. First National City Bank monthly economic letter, Jan. 1975: 9-12. "Today's high inflation is countering the ‘built-in stabilizer’ properties of the progressive income tax. The result is an uneven squeeze on taxpayers‘ real after-tax incomes." Inflation: Treasury official reaffirms administration opposition to indexing taxes. Daily tax report, no. 143, July 24, 1979, p. G4-G7. International Institute of Public Finance. The impact of economic growth on taxation; XXIXe session, Congres de Barcelona, 9/13- IX-1973. Madrid, Asociacion Expanola de Derecho Financiers, 1975. 403 p. Kau, Randall K. C., and Michael L. Schler. Inflation and the Federal income tax. Yale law journal, v. 82, Mar. 1973: 716-744. "The first part of this . . . coment sets forth the major code revisions that would be necessary to produce a compre-A hensive system of ‘real income taxation’ from which the effects of inflation would have been eliminated. The second part evaluates such an inflation-neutral system in terms of some of the broader objectives of income taxation." Kelley, William A., Jr., and others. Indexing for inflation. Tax lawyer, v. 31, fall 1977: 17-35. 1 Article examines "the fundamental concepts and problems involved in the consideration of proposals to index the income tax for inflation." Considers both personal and corporate taxes. ' Kreiser, Larry, and James W. Minnery. 1979--the year for indexing the personal income tax. Taxes, v. 57, May 1979: 301-305. "According to the authors, indexing the personal income tax may become a reality in 1979. In their article, they discuss the effects indexing is likely to have on the tax- payers, the government and the economy." Kroger, William.‘ Rescue for the inflation-weary taxpayer? Nation's business, v. 66, July 1978: 65-68. Kuhn, James W. Indexing: pro and con. In Harriss, C. Lowell, ed. Inflation: long-term problems. New York, Academy of Poltical Science, 1975. (Proceedings, v. 31, no. 4) p. 142-155. Lent, George E. Adjustment of taxable profits for inflation. International Monetary Fund staff papers, v. 22, Nov. 1975: 641-679. "This paper reviews the principles of accounting for in- flation including the accounting techniques that have been CRS-9 proposed, and describes their application to the taxation of business profits in some 20 countries for which infor- mation is available. This is followed by an analysis of the probable effects of such measures on the economy, equity, and tax administration. Possible alternatives are also examined." McDonald, Robert J. Inflation: concepts of income, tax reform. Tax lawyer, v. 28, spring 1975: 533-553. Examines the impact of inflation on taxable income and the practicality of indexing as a means of reducing the dis- tortive effect of inflation on income. Mendenhall, John. Taxing inflationary profits. Tax executive, v. 28, July 1976: 297-311. "If our tax system continues to ignore inflation, it will produce unfair results and increase our tax system's bias against saving at a time when massive capital formation is desperately needed." Minarik, Joseph J. Are we ready for indexation? Taxing and spending, v. 2, July 1979: 24-27. Examines some of the pros and cons of indexing the income tax for inflation. Concludes that "a correctly indexed tax system would hold real taxes constant for constant real in- comes, and would eliminate distortions in the measurement of capital gains and interest income; but it would do so only at the cost of considerable administrative complexity and a dramatic change in the liabilities of individual taxpayers." Murray, Alan P. Income tax progression and inflation. Tax review, v. 35, Dec. 1974: 47-50. "Graduated income tax rates designed to take progressively higher percentages of real income operate to produce unlegis- lated tax increases at a time of persistent inflation. The author believes the public would balk if regular tax increases came from legislation instead of inflation. He proposes that an official agency compute and publish annual estimates of inflation-induced changes in effective rates." Nadiri, M. Ishaq, ed. and Affonso C. Pastore, ed. Indexation, the Brazilian experience. Exploration in economic research, v. 4, winter 1977: whole issue. Contents.--Reflection on the Brazilian experience with indexation, by A. Pastore, R. Almonacid, and J. Barros.--An analysis of Friedman's hypotheses on monetary correction, by A. Lemsruber.-+Indexing and the fight against inflation, by S. Morley.--Indexation: optimality conditions for revenue from inflation and social gain, by R. Fendt, Jr.--The basis of the minidevaluation policy, by A. da Silva.--A critical CRS-10 review of the relation between the post-1964 wage policy and the worsening of Brazil's size income distibution in the sixties, by R. Macedo. Organization for Economic Cooperation and Development. Committee on Fiscal Affairs. The adjustment of personal income tax systems for inflation; a report. Paris, 1976. 71 p. Considers the likely effects of inflation on the personal income tax system from the points of view of both OECD gov- ernments and taxpayers, in the absence of off-setting govern- ment measures. Discusses such related issues as the effects of government actions in the field of income distribution, the efficacy of stabilization policies, government revenue needs and trade union attitudes; finally draws attention to some of the resulting technical questions and their policy implications should government choose indexation. Parker, James E. Inflation's impact on corporate tax rates. Taxes, V. 54, Sept. 1976: 580-586. "In his study involving 1,050 U.S. corporations, the author shows that the impact of inflation does not fall evenly, thus doing serious damage to the idea of having an equitable dis- tribution of the tax burden among business firms." -----, and Eugene L. Zieha. Inflation, income taxes and the incentive for capital investment. National tax journal, v. 29, June 1976: 179-189. "The purpose of this article is to measure, under various rates of inflation, the overall incentive (disincentive) toward capital investment provided by certain fixed asset related provisions of the income tax law." Penick, William C. Inflation, inventories and related accounting matters. Taxes, v. 52, Dec. 1974: 733-745. Discusses the impact of the present high inflation on our tax system and urges congressional action to recognize the inflationary element in capital gains so that our capital problems will be alleviated. Paper presented to the 27th annual Federal Tax Conference of the University of Chicago Law School held on Oct. 23-25, 1974. Petrei, Amalio Humberto. Inflation adjustment schemes under the personal income tax. International Monetary Fund staff papers, V. 22, July 1975: 539-564. "Section I describes the various inflation adjustment schemes and proposals incorporating automatic provisions to cope with the problem of unintended tax burden changes as a result of inflation. Section II then compares the technical aspects of the different schemes. Finally, Section III discusses CRS-ll advantages and disadvantages of adopting an adjustment scheme for the personal income tax, with major emphasis on the dis- tributional effects of inflation on the progressive tax, since this concern has given rise to most adjustment schemes." Petrei, Amalio Humberto. Inflation and personal income tax. Finance and development, v. 11, Sept. 1974: 38-41. "Inflation threatens to become a permanent fact in many economies. One result is that distortions arise in personal income tax systems. The author considers the desirability of schemes for automatically adjusting taxation to inflation." Phillips, Lawrence C. Tax implications of accounting for infla- tion. Tax adviser, v. 7, Aug. 1976: 465-470. "The purpose of this article is to provide a framework for comparing the general price-level and replacement cost approaches in terms of their adaptability to the Federal income tax law, and to point out a number of unresolved issues that arise when these approaches are implemented. Specific policy recommendations are set forth for both methods." Price, Waterhouse and Company. Common sense accounting in an era of persistent inflation; a position paper. New York,‘ 1977. 12 p. Recommends that "the U.S. business community should firmly reject any notion of abandoning historical cost based accounting and reporting" and that "business reports of publicly held U.S. entities should be supplemented by understandable data that express historical costs in dollars of uniform worth." Robbins, John W. The case against indexation. Greenwich, Conn. Committee for Monetary Research and Education, 1976. 34 p. (Monetary tract no. 16) Deals with "(l) the impact of changing price levels on various groups; (2) the dangers of attempting to eliminate the impact by relating payments and the value of assets to a cost of living index; and finally (3) the fundamental weak- nesses of the Consumer Price Index as a basis for indexation. Despite its popularity, indexation does not eliminate the causes of inflation, its economic effects are likely to be adverse, and the whole scheme rests on a highly questionable foundation." Rosenn, Keith S. Adjusting taxation of business income for infla- tion: lessons from Brazil and Chile. Texas international law journal, v. 13, spring 1978: 165-197. Focuses on the "increasingly sophisticated" adjustment techniques developed by Brazil and Chile. Believes that "the case for taxation of business entities on real rather than nominal income appears overwhelming." CRS-12 Senese, Donald J. Indexing the inflationary impact of taxes: the necessary economic reform. Washington, Heritage Founation, 1978. 58 p. ' Contents.--Major arguments for indexing: theoretical justi- fications.--The advantages of tax indexation.--How and what to index.--Tax indexing objections.--Conclusion.--Bibliography. Shanahan, Eileen. Indexing and inflation. Washington, American Enterprise Institute for Public Policy Research, c1974. 56 p. "An AEI Round Table held on 17 July 1974 at the American Enterprise Institute for Public Policy Research, Washington, D.C." Sjostrand, Gene 0. From the thoughtful tax man: incorporate general price-level adjustments into the Federal income tax system. Taxes, v. 52, Oct. 1974: 580-583. Suggests incorporating general price-level adjustments into the Federal income tax system to provide a fairer measure of income than the present system to alleviate the effect of the accelerated inflation. Smith, Dan Throop. Progressive income taxation discriminates against larger incomes during inflation. Tax review, v. 36, June 1975: 23-28. I The burden of a tax increase, author notes, should be measured by its effect on after-tax income, and not by the increase in the tax itself. In a tightly knit argument, author demon- strates how the progressive income tax in fact discriminates against larger incomes during inflation. Steiss, C. F. Indexation of Canada's individual income tax system. Tax review, v. 39, May 1978: 19-22. "Since 1974, Canada has applied indexation to its individual income tax brackets by an annually computed inflation factor. Mr. Steiss discusses the philosophy and circumstances leading to the introduction of the indexation system, and gives examples of its effects today." Stone, George, and Patricia Goldman. Background on the pros and cons of indexation: a proposal to fight inflation. Washing- ton, House Wednesday Group, 1974. 5 1. Strain, W. J. Inflation and taxation: world developments. Cana- dian tax journal, v. 25, Jan.-Feb. 1977: 40-46. "The different systems adopted by various countries to combat the effects of inflation on individual and corporate taxpayers and the potential need for more fundamental and permanent changes are examined in this article." Suyderhoud, Jack P., and Michael Veseth. Sweeney, Henry W. Tanzi, Vito. CRS-13 The effect of inflation on the income elasticity of taxes. Public finance quarterly, V. 4, July 1976: 323-337. "This paper defines the relationship between the nominal (or money) income elasticity and the real income elasticity of a tax system. Under most circumstances, the real and the nominal income elasticities differ. This difference has not been recognized by economists who rely strictly on nominal elasticities as an indicator of revenue adequacy or tax bur- dens, a practice which can be misleading, especially under conditions of general price inflation. The income tax, sales tax and property tax are analyzed briefly in terms of their elasticity features." The feasibility of adjusting for inflation in computing taxable income. Washington law review, v. 49, May 1974: 873-911. "This comment discusses the effect inflation (and defla- tion) has upon the measurement of taxable income, concluding, in short, that the present standard of measuring income for income tax purposes would be much more equitable if, instead of focusing solely upon the number of dollars received, it accounted for changes in the value of the dollar (as measured by a price index or price indices) by considering the pur- chasing power of the dollar received." Inflation and the indexation of personal income taxes in theory and practice. Banca Nazionale del Lavoro quarterly review, no. 118, Sept. 1976: 241-271. Abstract discussion is followed by remarks on tax indexing in Canada, France, the Netherlands, Brazil, and other countries. Inflation, lags in collection, and the real value of tax revenue. International Monetary Fund staff papers, v. 24, Mar. 1977: 154-167. "After a theoretical discussion of the issues, the paper will use Argentina as a concrete example of a country in which the combination of high inflation, a relatively long average lag in tax collection, and a low elasticity of the tax system has recently brought about a drastic fall in real revenue. The paper will focus on the effects of the lags, and will thus ignore the inflation-induced distortions in taxable bases that may also affect real revenues." Inflation and the incidence of income taxes on interest income: some results for the United States, 1972-74. International Monetary Fund staff papers, v. 24, July 1977: 500-513. Shows "to what extent income classes have gained or lost because of the tax treatment of interest incomes and payments Tatom, CRS-14 during the inflation of 1972-74. The main beneficiaries were the middle-income classes, which were more likely to have substantial deductions related to their home mortgages." government was also a net gainer from inflation. The John A., and James E. Turley. Inflation and taxes: disin- centives for capital formation. Federal Reserve Bank of St. Louis review, v. 60, Jan. 1978: 2-8. "Substantial changes in the tax system would be required to insulate investment decisions from the adverse effects of inflation. The requirements include tying the income levels for personal income tax brackets, as well as deductions and exemptions, to the rate of inflation in order to avoid the ydisincentives associated with progressivity of the personal Ture, income tax. In addition, the personal income tax would have to be altered so as to eliminate the taxation of inflation premiums in interest income from bonds and dividend income from stacks as well as the taxation of inflation-generated capital gains." Norman B. Capital needs, profits, and inflation. Tax review, v. 36, Jan. 1975: 1-4. Inflation demands an about face in the U.S. tax policy, the author says, but "this is not the appropriate time for broad-scale tax reductions aimed at bolstering consumption to combat recession." He explains how changes in the tax system to remove its built-in bias against saving would better serve the interest of all Americans. Advisory Commission on Intergovernmental Relations. Infla- tion and Federal and State income taxes; a commission report. Washington, For sale by the Supt. of Docs., U.S. Govt. Print. Off., 1976. 88 p. Partial contents.--Major non-indexed features of.the tax code.--Inflation and tax burdens: recent empirical evidence.-- - Indexing and progressive personal income taxation: intergov- ernmental fiscal effects.--The Canadian experience.--Appendix A-- indexation of the Virginia personal income tax: a case study. Congress. Senate. Committee on Finance. Subcommittee on Taxation and Debt Management Generally. Indexation of certain provisions of the tax laws. Hearing, 95th Cong., 2d sess. on S. 2738. Apro 24: 1978- W3Shin8t0H. U.S. Govt. Print. Off., 1978. 160 P- ‘ "A bill to amend the Internal Revenue Code of 1954 to pro- vide for the indexation of certain provisions of the tax laws." Committee on Banking, Housing and Urban Congress. Senate. Affairs. Subcommittee on Production and Stabilization. Indexing. Hearings, 93d Cong., 2d ses. June 10 and 11, 1974. Washington, U.S. Govt. Print. Off., 1974. 71 p- VonFurstenberg, George M. Waggoner, Michael J. dd CRS-15 Congress. Joint Economic Committee. Review of the economy, 1978; report together with minority, additional, and supplemental views. Washington, U.S. Govt. Print. Off., 1978. 357 p. At head of title: 95th Cong., 2d SeSS- Joint Comittee print. "In this report, the committee sets forth an analysis of key economic issues including an assessment of the system of floating exchange rates, a discussion of the inflation indexing of personal and corporate taxes, an examination of the feasibility of implementing a tax-based incomes policy (TIP), and an analysis of tax reduction proposals." Library of Congress. Congressional Research Service. Revenue effects of indexing the personal income tax, by Thomas Gallagher. [Washington] 1979. 6 p. Revenue estimates for H.R. 12153, a bill to index the per— sonal income tax, by Thomas Gallagher. [Washington] 1978. 7 p. A comparison of various congressional proposals for tax inde- xation, by Louis Alan Talley. [Washington] 1978- 7 P- Individual income taxation and infla- tion. National tax journal, v. 28, Mar. 1975: 117-125. "It is found that the elasticity of the income tax rates with respect to inflation is at least 0.6 on average. This implies that taxes are raised by more than 16 percent after one year of 10 percent inflation." Eliminating the capital gains preference. Part I: the problems of inflation, bunching and lock-in. University of Colorado law review, v. 48, spring 1977: 313-398. Article discusses "some of the justifications for the present tax preference for capital gains" and concludes "that the capital gains system does not adequately respond to those justifications.” Also, the author "recognizes the serious- ness of problems such as inflation, bunching, and lock-in, and proposes mechanisms to solve such problems generally, not merely in the capital gains area." UBRARY OF WASHINGTON umsver-zssw gr. Lousg « MO. CRS79—l96ESpecSheet.txt MU Libraries University of Missouri——Columbia Digitization Information for Congressional Research Service Digitization Project Local identifier CRS Capture information Date captured Scanner manufacturer Zeutschel Scanner model OS l5000 Scanning system software Omniscan v.l2.4 SR4 (1947) 64-bit Optical resolution 600 dpi Color settings 8 bit grayscale File types tiff Source information Format Book Content type Text Notes Stamped with property stamp for Washington University including deaccession stamp Some have labels on front page Some have black out markings on front page SuDoc numbers handwritten on front page Item not added to University of Missouri collection Some items have very light print Some front pages have colored backgrounds Derivatives — Access copy Compression Tiff compression: LZW Editing software Adobe Photoshop Resolution 6OO dpi Color bitonal File types tiff Notes Pages cropped, resized, and brightened Page 1