| Title: |
WHO BENEFITS FROM TAX-EXEMPT BONDS?: AN APPLICATION OF THE THEORY OF TAX INCIDENCE |
| Authors: |
Harvey Galper; Joseph Rosenberg; Kim Rueben; Eric Toder |
| Contributors: |
The Pennsylvania State University CiteSeerX Archives |
| Source: |
http://www.urban.org//UploadedPDF/412905-who-benefits-from-tax-exempt-bonds.pdf. |
| Publication Year: |
2013 |
| Collection: |
CiteSeerX |
| Description: |
This paper develops and applies a conceptual framework to estimate the distribution among income groups of benefits from the federal income tax exemption of interest on state and local bonds. We first review the general theory of tax incidence and how it is applied in practice by the Urban-Brookings Tax Policy Center (TPC) and federal agencies. We then apply that framework to the analysis of the effects of the state and local bond exemption, taking account of how the exemption might affect relative returns to different financial instruments and relative costs of private and public sector goods and services. Across a range of possible assumptions, we find that the exemption primarily benefits higher-income individuals even though all holders of debt assets benefit from tax-exemption, not just holders of municipal debt. We also show that the assumption of how state and local government budgets change in the presence of the exemption matters greatly and affects which households benefit from the exemption and how much. Finally, we apply this framework to estimate the distributional effects of the President’s proposal to limit the tax savings from the exemption of municipal bond interest to 28 percent of interest received. WHO BENEFITS FROM TAX-EXEMPT BONDS?: AN APPLICATION OF THE THEORY OF TAX INCIDENCE |
| Document Type: |
text |
| File Description: |
application/pdf |
| Language: |
English |
| Relation: |
http://citeseerx.ist.psu.edu/viewdoc/summary?doi=10.1.1.396.6395 |
| Availability: |
http://citeseerx.ist.psu.edu/viewdoc/summary?doi=10.1.1.396.6395; http://www.urban.org//UploadedPDF/412905-who-benefits-from-tax-exempt-bonds.pdf |
| Rights: |
Metadata may be used without restrictions as long as the oai identifier remains attached to it. |
| Accession Number: |
edsbas.E48FE788 |
| Database: |
BASE |