Silent Tax Changes: The Political Economy of Indexing for Inflation

36 Pages Posted: 23 Sep 2015

See all articles by Alan Feld

Alan Feld

Boston University - School of Law

Date Written: September 21, 2015

Abstract

The federal income tax adjusts many but not all of its dollar components automatically to account for inflation. In this article I analyze the benefits and burdens this process confers on some taxpayers and the political logic behind them. I discuss the choice of the proper index for making the adjustments, as well as the effects of the failure to adjust specific dollar amounts. I conclude that some adjustments have become overly generous, while unadjusted provisions suffer slow repeal, sometimes intentionally. Indexation thus can have the effect of tax legislation by stealth.

Keywords: inflation, indexation, income taxation, political economy, consumer price index, social security, child care, standard deduction

JEL Classification: K34, H20, E62

Suggested Citation

Feld, Alan, Silent Tax Changes: The Political Economy of Indexing for Inflation (September 21, 2015). Boston Univ. School of Law, Law and Economics Research Paper No. 15-35, Available at SSRN: https://ssrn.com/abstract=2663443 or http://dx.doi.org/10.2139/ssrn.2663443

Alan Feld (Contact Author)

Boston University - School of Law ( email )

765 Commonwealth Avenue
Boston, MA 02215
United States

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