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Flat Taxes and Effective Tax Planning

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  • Calegari, Michael

Abstract

Stiglitz (1985) shows that income deferral opportunities and differentially taxed economic activities provide incentives for investors to engage in tax avoidance strategies. In this paper, I describe several tax avoidance strategies that can be used by taxpayers in a Hall-Rabushka flat tax system to reduce or eliminate their tax liabilities. Effective tax planning continues to be viable in a flat tax regime because the idealized environment envisioned by the proposal does not consider taxpayers’ strategic response to the new system. These tax planning techniques can affect economic behavior, compliance and enforcement costs, and the distribution of the tax burden.

Suggested Citation

  • Calegari, Michael, 1998. "Flat Taxes and Effective Tax Planning," National Tax Journal, National Tax Association;National Tax Journal, vol. 51(4), pages 689-713, December.
    • Handle: RePEc:ntj:journl:v:51:y:1998:i:4:p:689-713
    DOI: 10.1086/NTJ41789363
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    References listed on IDEAS

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    1. Blumenthal, Marsha & Slemrod, Joel, 1992. "The Compliance Cost of the U.S. Individual Income Tax System: A Second Look After Tax Reform," National Tax Journal, National Tax Association;National Tax Journal, vol. 45(2), pages 185-202, June.
    2. Blumenthal, Marsha & Slemrod, Joel, 1992. "The Compliance Cost of the U.S. Individual Income Tax System: A Second Look After Tax Reform," National Tax Journal, National Tax Association, vol. 45(2), pages 185-202, June.
    3. Dunbar, Amy & Pogue, Thomas F., 1998. "Estimating Flat Tax Incidence and Yield: A Sensitivity Analysis," National Tax Journal, National Tax Association, vol. 51(n. 2), pages 303-24, June.
    4. Dunbar, Amy & Pogue, Thomas F., 1998. "Estimating Flat Tax Incidence and Yield: A Sensitivity Analysis," National Tax Journal, National Tax Association;National Tax Journal, vol. 51(2), pages 303-324, June.
    5. Feld, Alan L., 1995. "Living With the Flat Tax," National Tax Journal, National Tax Association;National Tax Journal, vol. 48(4), pages 603-617, December.
    6. Feld, Alan L., 1995. "Living With the Flat Tax," National Tax Journal, National Tax Association, vol. 48(4), pages 603-17, December.
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    Cited by:

    1. Sandra Hadler & Christine Moloi & Sally Wallace, 2007. "Flat Rate Taxes; A Policy Note," International Center for Public Policy Working Paper Series, at AYSPS, GSU paper0706, International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University.

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