Behavioral Dimensions of Tax Reform

13 Pages Posted: 15 Apr 2009 Last revised: 12 Nov 2013


These are powerpoint slides from a presentation at a joint UCLA-Tax Policy Center Conference on Tax Policy in the Obama Era. The basic insight is that it will be difficult to raise significant revenue through the current tax system. Behavioral perspectives suggest that a series of small (or large) cuts, aiming towards a flattened rate structure - as we have seen in the Ronald Reagan and George W. Bush Administrations - are likely to be extremely popular. Undoing them with tax increases will be disproportionately psychically hard. Given that President Obama faces the perceived need for short term stimulus, likely meaning more small tax cuts, meeting his ultimate goals of reducing deficits and restoring more progression to the tax system will be difficult, if not impossible. Ultimately, the insights of behavioral economics may be most important in reconsidering the institutional mechanisms that produce tax and spending policy.

Suggested Citation

McCaffery, Edward J., Behavioral Dimensions of Tax Reform. USC CLEO Research Paper No. C09-6; USC Law Legal Studies Paper No. 09-7. Available at SSRN: or

Edward J. McCaffery (Contact Author)

USC Gould School of Law ( email )

699 Exposition Boulevard
Los Angeles, CA 90089
United States
213-740-2567 (Phone)
213-740-5502 (Fax)

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