The limits of incrementalism: Carter's efforts at tax reform

Candidate Jimmy Carter adopted tax reform as a major presidential campaign issue in 1976, calling the tax system “a disgrace to the human race” and promising greater equity, efficiency, and simplicity. As president, however, Carter failed in his efforts to effect tax reform, primarily because he did not make his reform proposals sweeping or radical enough. This failure suggests that a policy of incrementalism, of step-by-step legislative change, has serious limits when applied to a long-entrenched governmental program. Incremental change may be appropriate for advancing or extending social programs but insufficient for curbing them or substantially shifting their direction.     

Preparing members of congress to make binary decisions on complex policy issues: The 1986 tax reform bill

Throughout 1985 and 1986, the House Committee on Ways and Means undertook a major revision of the federal income tax law. The product was the landmark Tax Reform Act of 1986. Because of the magnitude of the changes contained in this bill, the committee sought new ways of obtaining and disseminating necessary information. This article discusses the congressional policy-making process, the different kinds of information used in congressional decision making, and some new procedures employed by the committee during House action on the 1986 tax reform legislation.     

Requisites of radical reform: Income maintenance versus tax preferences

Why did tax reform succeed in gaining passage while the family assistance plan failed? Using cultural theory, we argue that the active consent of elites from three political cultures is required before radical policy proposals will win political support in America. Although the Nixon administration cast the income maintenance plan in integrative terms—support for the family—it failed because egalitarian leaders demanded more. Tax reform succeeded because elites of the three cultures—individualists, egalitarians, and supporters of hierarchy—saw benefits in the plan and were willing to compromise.     

超越税务:乌海联合办税对中国"府际关系"发展的启示

"府际关系"是政府过程研究中一个非常重要的领域.内蒙古乌海市在实践中探索出的国、地税联合办税模式,虽然只是发生在一个地方,仅涉及国税、地税两个部门的制度创新,但其在理论探索上的贡献,已经超越了税务行政本身的变革.乌海联合办税模式在构建"伙伴型府际关系"方面的主动探索,从纵横两个维度上,不仅为在实践中逐步化解条块矛盾,构建新型的横向"府际关系"和调整政府横向间的职能配置等提供了新的思路,同时也为在理论上深化中国的"府际关系"理论研究提供了一个新的方向.     

Federal tax reform and the financing of state and local governments

Although the Reagan Administration tax reform proposals would reduce federal income tax liabilities for most taxpayers, federal tax reform would also create strong pressures on state and local governments to cut taxes and public services. These pressures would arise primarily because itemizers would no longer be able to deduct state and local taxes in determining their federal income tax liabilities. In New York City and Boston, it is likely that the Administration's tax reform would induce cuts in spending that range from 2.5 to 7.5 percent. While the elimination of state and local tax deductibility may promote allocative efficiency in the provision of local public goods, the cost would be a decline in the degree of redistribution through the state and local public sector, and a reduction in local public services for the poor.     

ECONOMIC THEORY AND POLICY ANALYSIS: CONCEPTUAL GUIDELINES FOR PUBLIC POLICY-MAKERS

Abstract: Traditionally public policy analysis has been able to employ the conceptual framework offered by the theory of market failure in order to evaluate the efficiency of market outcomes. However, until fairly recently, no corresponding analytical structure existed which could facilitate the examination of the efficiency and equity characteristics of government or non-market outcomes. Quite apart from public choice theory, an embryonic normative theory of government failure has now been developed which can act as a conceptual analogue to the market failure paradigm. At present, three theories of government failure coexist in the literature: Wolf's theory of non-market failure; Le Grand's theory of government failure; and Vining and Weimer's theory of govern- ment production failure. These models form the basis for a more universal theory of government failure. Nevertheless, in its current state of development this seminal literature can still assist in rational public policy design subject to certain caveats. Foremost amongst these is the need for policy analysts to augment the efficiency and equity criteria with some additional broader normative measures, and the necessity for care to be taken in the use of allocative efficiency as a benchmark in non-market circumstances.     

The role of earnings and financial risk in distributional analyses of Social Security reform measures

The Social Security Trustees project that the Social Security program faces longterm financing difficulties. Several proposals that have been offered to shore‐up the finances of the Social Security program would create individual retirement accounts funded with part of the payroll tax. The authors of many of these proposals claim that future beneficiaries will be better off under their new system than under the current system. This study examines the consequences of differing earnings patterns and year‐to‐year differences in asset returns have for Social Security retired worker benefits in three Social Security reform proposals. Incorporating both actual earnings histories and variation in asset returns shows that none of the three individual account plans can always deliver benefits that are higher than payable current‐law benefits. © 2006 by the Association for Public Policy Analysis and Management     

Equity and Political Economy in Thomas Hobbes

Thomas Hobbes is often viewed as a seminal figure in the development of the homo economicus philosophical anthropology central to the acquisitive, bourgeois morality of liberal modernity. The present study challenges this interpretation of Hobbes as an antecedent to free market ideology by arguing that his political economy presupposed a complex relation between contract, law, and social networks of credit informed by prudence and robust norms of equity. The normative claims of equity permeate Hobbes's holistic account of political economy and inform his vision of liberal statecraft that gave priority to prudential judgment against economic determinism, especially as Hobbes understood trade, taxation, allocation of resources, and the provision of social welfare. I will conclude by reflecting upon how Hobbes's political economy both reveals the internal diversity within the liberal intellectual tradition and can help us to better understand and critique contemporary liberal states and democratic theory.     

Effects of Federal Tax Reform on Local Finances

The federal Tax Reform Act of 1986 promised to be fair, simple,and revenue neutral to the federal treasury. Tax reform, however,was not revenue neutral with respect to all state and localtreasuries. Indeed, tax reform entailed a restructuring of thebalance of power in federal-state-local relations. In particular,new restrictions on the tax-exempt bond authority of state andlocal governments are requiring significant shifts in traditionallocal debt policy. Furthermore, the Supreme Courts recent decision,South Carolina v. Baker, raises additional concerns about thestatus of state and local tax-exempt bond issues. The natureof future relations between the federal government and localgovernments is likely to be molded more by the federal tax codeand by erosion in state authority over fiscal matters than byfederal grant-in-aid programs of the kind that have characterizedthe past quarter century of intergovernmental relations.     

Winners, Losers, and Efficiency: Achieving Multiple Goals in Japan's Financial System Reforms

When giving policy advice, economists often proceed as if efficiency is the only valid social goal. Although efficiency is important, we argue that single-minded pursuit of it is counterproductive. It unnecessarily erects political hurdles to the enactment of efficiency-enhancing reforms because policy proposals that ignore valid, nonefficiency concerns are more likely to meet political and bureaucratic resistance. Moreover, such resistance may be avoided. A number of design principals can be employed to craft proposals that address political goals without abandoning efficiency. We describe three classes of principles: creative design of market mechanisms, maintenance of marginal incentives, and compensation for losers.We then illustrate their practical application in the context of Japanese financial-sector deregulation. This policy area usefully illustrates the importance of considering multiple goals in policy design. While efficiency is a frequently expressed goal, Japan's continued policy paralysis indicates that the bureaucratic and political goals of major stakeholders make the straightforward deregulation of financial markets difficult to achieve. We do not purport to resolve the entrenched barriers to economic reform in Japan, but to the extent that we identify and address valid nonefficiency goals, the conclusions of the analysis are relevant.     

Divergence or convergence? From ever-growing to ever-slowing European legislative decision making

Abstract.  This article examines different views of the European Union (EU) legislative decision-making process through a quantitative analysis of all Commission proposals initiated between 1984 and 1999. Using the positions of Member States, the analysis is innovative in two respects: the identification of the relative importance of institutions and preferences for the process of EU legislative decision making, and the empirical evaluation of the ongoing theoretical controversy between constructivists and spatial analysts about the converging or diverging effect of Member State positions. The findings reveal that the process of EU legislative integration is significantly slowing down, even though Council qualified majority voting facilitates decision making while parliamentary participation modestly increases the duration. Against the constructivist claims of convergence, the results show that the divergence of Member State positions significantly determines the duration of the legislative process, in particular in the key domains of EU integration: the larger the distance between the Member States' positions, the longer the EU decision-making process takes. This suggests that the accession of countries with diverging positions will slow down the EU's legislative process, but institutional reform of the Council's decision-making threshold is a promising solution for coping with this effect.     

Interstate tax competition after TRA86

When a governor announces that a tax increase is necessary, how do voters decide whether the governor is representing the situation honestly, or just preparing to line his or her pockets? This paper presents evidence that voters may look at the tax increases in neighboring states to obtain information on whether a tax increase is appropriate and, using this information, decide whether to reelect their governor. The data suggest that comparisons with neighbors influence gubernatorial behavior: Governors are more likely to raise taxes when neighbors are doing the same. TRA86 allows us an extra check on the rnodelpresented: I f the marginal dollar taken in state taxes is more costly to state residents, this may increase the extent to which residents use information provided through neighboring states to sort good governors from bad.     

Tax Increment Financing

Tax Increment Financing (TIP) uses the increase in taxes resulting from an area's redevelopment to help subsidize the costs of redevelopment. The paper focuses on the mechanisms and problems of using real property tax increments under Illinois law. Two distinct methods of calculating tax increments, the "aggregate" and "parcel" methods, are examined. A briefcase study is provided.     

State and federal tax equity: Estimates before and after the Tax Reform Act of 1986

The progressivity and equity of both state and federal individual income taxes, as well as the combined system of both taxes, are examined before and after the federal Tax Reform Act of 1986 using a variety of measures applied to federal Statistics of Income individual income tax data; state taxes are calculated using TAXSIM. Our findings are as follows: First, in both 1985 and 1987, state personal income taxes were generally less progressive and more horizontally equitable than the federal system. Second, in moving from 1985 to 1987, state personal income tax systems generally displayed decreased progressivity and horizontal inequity. The combination of the two systems displayed generally lower progressivity and horizontal equity scores when we compare 1987 to 1985. Last, the after-tax income distribution became more unequal when we compared 1987 to 1985.     

More Effective Than We Thought: Accounting for Legislative Hitchhikers Reveals a More Inclusive and Productive Lawmaking Process

For more than half a century, scholars have been studying legislative effectiveness using a single metric—whether the bills a member sponsors progress through the legislative process. We investigate a less orthodox form of effectiveness—bill proposals that become law as provisions of other bills. Counting these “hitchhiker” bills as additional cases of bill sponsorship success reveals a more productive, less hierarchical, and less partisan lawmaking process. We argue that agenda and procedural constraints are central to understanding why lawmakers pursue hitchhiker strategies. We also investigate the legislative vehicles that attract hitchhikers and find, among other things, that more Senate bills are enacted as hitchhikers on House laws than become law on their own.     

Tax earmarking, party politics and gubernatorial veto: theory and evidence from US states

This paper provides a theory of earmarking based on the relative power of a legislature and executive. The politically powerful use earmarking as a means of resolving uncertainty and insulating preferred policy from the reach of future government. Tax revenue will be earmarked more often when political power is unified under one party or when a party has the legislative majority needed to overturn a gubernatorial veto. An empirical test of the theoretical predictions are conducted using a panel of data for US states. A state with a legislature controlled by a single party with a large enough majority to overturn a gubernatorial veto will earmark 5% more of its tax revenue than other states and a state with a unified government will earmark 6.5% more. Together these explain 18.5% of the observed decrease in the percentage of state tax revenues earmarked from 1954 to 1997.     

Administration, Governance, and Policy Tools in Welfare Policy Implementation

Landmark welfare reform legislation passed in 1996 has been operating by legislative extensions since its expiration in September 2002. At this writing, reauthorization has been derailed by controversy over various legislative proposals. In this article, we contribute to the welfare policy debate by studying the importance of specific policy tools and the role of public administration in the dramatic fall in welfare caseloads from 1996 to 2000. Using administrative and survey data on welfare programs in 44 states, we test our theory that caseload reduction is a function of administrative commitments, policy design, and administrative actions linked to five sets of governance variables: environmental factors, client characteristics, treatments, administrative structures, and managerial roles and actions. We find strong evidence that administrative action to move clients into work, coupled with administrative commitments, can provide important links between policy goals and policy outcomes.     

马克思分配正义语境中的税收调节理论及其现实指导意义

按照马克思主义的分配正义理论，按劳分配中的不公平仍然需要政府进行调剂；一定的扣除和分配必须通过政府的权威性以及立法的形式来实施，而税收是唯一通过法的形式来筹集财政收入的渠道；“按劳分配”与“按需分配”的实现都需要发挥税收的调节作用，真正的按劳分配通过税收的调节和相应的社会保障、转移支付等措施必然会导致共同富裕；但税收的征收应体现公平，应采取量能负担的原则，收入多者多缴税，还应考虑家庭人口的多少，相比利润、公债等形式，税收在调节收入分配上具有不可替代的作用；税收调节的最终目标是社会公平，而其中，直接税比间接税对高收入者的调节作用更大等。这对税收政策的制定和新一轮税制改革具有重要的指导意义。税制改革的目标应由以往的效率激励向公平、正义、有序转变。加快推进以调节收入再分配为导向的直接税体系建设，构建以完善的个人所得税为主体，以财产税和社会保障税为两翼，其他税种相互协调配合的税制体系，完善鼓励公益捐赠的税收激励机制。     

BUILDING ENFORCEMENT CAPACITY: EVIDENCE FROM THE MEXICAN CIVIL SERVICE REFORM

Building enforcement capacity, that is, attaining and sustaining control in order to implement changes, is crucial for the success of public management reforms. However, this aspect of public management reform does not receive much theoretical or empirical attention. This paper analyzes the process of building enforcement capacity for the case of the Mexican Professional Civil Service reform. Although this reform experienced several complications (e.g., limited support, resources, and credibility), important goals were attained and some control was achieved. We study how officials attained control over implementation through the adaptive management of combinations of different types of control strategies (regulatory, normative, and procedural). The case study, focused on the analysis of in‐depth interviews with the highest officials involved in the implementation of this reform, finds evidence for three combinations of strategies next to a general pattern characterized by a trade‐off between compliance and coordination. This trade‐off shows that the process of building enforcement capacity may affect the goals of the reform, deviating from lawmakers' original intentions Copyright © 2014 John Wiley & Sons, Ltd.     

Legislative Organization and Pollution Taxation

The role of political institutions in shaping public policy has been analyzed in isolation from corruption, and legislative organization (specifically, bicameralism) has received minimal attention. We analyze pollution taxation when decisions are influenced by several veto players, such as legislative chambers. Our theory predicts that an increase in the number of veto players (e.g., moving from uni- to bi-cameralism) pushes the pollution tax towards the social optimum, with the effect being conditional on corruption. As such, dispersion around the optimal tax is lower under bicameralism. Empirical tests – using data from 86 countries – support the theory.