4th Annual Condliffe Memorial Lecture

Eric Crampton from the University of Canterbury pointed out that there will be an interesting presentation on tax policy on the Tuesday the 15th of July. It will be hosted at the University of Canterbury (further details below the flap).

The lecture will be presented by Professor Joel Slemrod and is titled Tax policy in the Real World – a very topical issue!

Anyone interested in attending should RSVP to Virginia McKenzie (virginia.mckenzie@canterbury.ac.nz) by Friday the 11th of July.

Further details about timing, the paper, and the authour are provided below the flap.

Date: Tuesday 15 July 2008

Time: 6:00 – 7:00pm

Venue: Coppertop, Level 2, Commerce Building

Brief synopsis of paper:

What looks good on paper often fails in the real world. Economists studying tax issues have devoted a lot of time to “optimal” tax policy but have spent comparatively little time squaring those policies with such real-world concerns as tax avoidance and policy implementability. No government can announce a tax system and then either rely on taxpayers’ sense of duty to remit what is owed or expect that individual behavior will not change as consequence. For example, the nine percentage-point gap between the top New Zealand marginal income tax rate and the corporate tax rate might induce firms to retain earnings rather than distribute dividends and further induce individuals to incorporate to lower their tax liability. This talk discusses recent developments that link traditional economic reasoning with how policy can be implemented. The insights gained then are applied to current tax policy issues such as the proper design of consumption taxes, business taxes, and how to “draw lines” in tax law.

Professor Joel Slemrod

Joel Slemrod, the University of Michigan’s Paul W. McCracken Collegiate Professor of Business Economics and Public Policy, is one of the world’s leading experts in tax policy. He has served as consultant to the World Bank, the OECD, the President’s Council of Economic Advisors, the U.S. Department of Treasury and the Canadian Ministry of Finance, and is a member of the Congressional Budget Office Panel of Economic Advisors. This real-world tax policy experience has shaped Professor Slemrod’s academic work in taxation. He shows that individual behavioral responses to taxation are important. Not only will people change how they report different types of income in response to tax changes, they also will substantially shift their real consumption, work and leisure choices. Indeed, in addition to his many prestigious honours, grants and fellowships, Professor Slemrod’s C.V. boasts an IgNobel prize for his work showing that changes in the American estate tax had a slight effect on reported deaths: individuals who could save a lot of money by surviving just a bit longer to take advantage of a favorable estate tax change were more likely to do so. Whether, as Professor Slemrod points out, individuals actually were able to hold on a little longer because of estate tax changes or instead were able to find a doctor willing to nudge the reported date of death slightly, that tax regimes can affect so fundamental and so seemingly-immutable a condition highlights the importance of accounting for behavioral responses to taxation. Professor Slemrod’s more recent work addresses this problem directly: economists’ blackboard renderings of optimal tax theory need to be modified when we take seriously individuals’ very real responses to any tax regime.

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