Question.2579 - Policy Memorandum Instructions The policy issue: The state of Kentucky legislature is considering eliminating the state income tax entirely and by making up for some of its revenue by expanding the retail sales tax base to include some, but not all, services. Evaluate this reform using the principles we considered in the class, including but not necessarily limited to, efficiency, equity, and social welfare. Now that I have written the policy question, I would like to modify the precise elements of it from the paragraph on the syllabus. The syllabus paragraph should now read (changes in bold): There will be a single policy evaluation exercise during the course on a topic of the instructor’s choosing. Each student will submit a memorandum—written to an economist, not a politician—detailing their (1) economic analysis of the problem (the policy issue), (2) any modifications to the policy proposal that would improve it, and (3) the economic analysis that yielded these recommendations. The paper must be backed by high quality economic analysis. This means it should include theoretical graphs or math relating to the course concepts. No late assignments will be accepted, so please plan ahead! For the policy memorandum, you may consult with any online resources or course materials, but you cannot consult with other students in the class or other people. Please be sure to fully cite all sources and materials used in the analysis. Due date: March 31 at 11:59 PM via canvas. Memo Guidelines: 1. Three pages (not including works cited / appendices / figures or tables), at least 1.5 spaced, Times New Roman, font size 12. I expect you will include tables, figures, and appendix materials to back up the content of your memorandum. 2. You are addressing your memorandum to the lead economist in the legislative analysists office. Thus, you should write it as a piece of economic analysis, using advanced models and methods. 3. Note, that the memorandum is not a policy memorandum written to a politician. You are writing it to someone who understands economic models. 4. You should include all three items listed in the first paragraph in your paper, devoting the most space to the analysis of the original proposal. 5. Treat it as if you were actually assigned this topic but did not have expertise in it. So you may need to do background research. 6. Submit your paper as a .pdf file via canvas.
Answer Below:
Summary xxx elimination xx the xxxxx income xxx regime xxx expanding xxx retail xxxxx tax xxxx extending xx to xxxxxxx services xxxxx tilt xxxxx taxes xxxxxxx middle xxx lower-income xxxxxx It xxxxx also xxxxxxxx the xxxxx s xxxxxxx to xxxxxxxx its xxxxxx services xxx taxation xxxxxx would xx characterized xx a xxxxxxxxxx tax xxxxxx a xxxxxxxx from xxx current xxxxxxxxxxx taxation xxxxxx The xxxxxxxxxxx and xxxxxxxxxxx would xxxxxx various xxxxxxx in xxx economy xxx would xxxx alarming xxxxxxx Background xxx taxing xxxxxxx utilized xx taxing xxxxxxxxxxx all xxxxxx the xxxxx are xxxxxxxxx The xxxxxx States xxxxxxx taxation xxxxxx is xxxxxxxxx characterized xx a xxxxxxxxxxx taxation xxxxxx in xxxx a xxx is xxxxxxx based xx the xxxxxx generated xx both xxxxxxxxxxx and xxxxxxxxx Greater xxx rates xxx applicable xxx individuals xxxxxx higher xxxxxx of xxxxxx The xxxxxxx taxation xxxxxx employs x variety xx taxes xxx the xxxxxx States xxx major xxxxxxxxxxxxx of xxxxx are xxxxxx based xx wages xxx income xxx major xxxxxx of xxxxxxx to xxx United xxxxxx is xx the xxxxxxxxxx income xxx regime xxxxxxxxx tax xxxxxxx tax xxx other xxxxxxx sources xxxx as xxxxxx taxes xxxxxx duties xxx capital xxxxx Economists xxxxx that xxxx system xx taxation xx income xx regressive xx it xxxxxxxxxxx savings xxx investment xxx current xxxxxx of xxxxxx taxes xxxx also xxxxxx increasingly xxxxxxx A xxxxxxxx regime xxxxx on xxx consumption xx seen xx methods xx increase xxxxxxxx saving xxx increase xxx propensity xx investment xx the xxxx run xxxxx are xxxxx major xxxxxxx economists xxxxxxxx for x shift xx the xxxxxxx taxing xxxxxxx simplicity xxxxxxxxxx and xxxxxxxx On xxx flip xxxx of xxx argument xxxxxxxxxxx the xxxxxxxxxxx of xxxxxx tax xxxx a xxxxxx sales xxx would xxx considerable xxxxxxxx on xxxxxx and xxx income xxxxxxxx requiring xxxx to xxxxx more xx their xxxxxx for xxxxxxxxxxx purposes xxxxxxxxx Economic xxxxxxxx of xxx problem xxxxxx policy xxxxxxx generally xxxxxxxx five xxxxx goals xxx any xxxxxxx to xxxxxx policy xxxxx goals xxx stability xxxxxxxx adequacy xxxxxxxxxx and xxxxxxxx efficiency xx is xxxxxxxxxx in xxxxxxxx analysis xx taxing xxxxxxx fiscal xxxxxx makers xxxx to xxxx trade-offs xxxxxxx these xxxx major xxxxx of xxxxxx The xxxxxxxxxxxxxx of x consumption xxx regime xx replace xxxxxxxxx tax xxxxxx have xxxx ways xx being xxxxxxxxxxx The xxxxxxxx state xxxxxxxxxxx proposes xxx the xxxxxxxxxxxxx of xxx National xxxxxx sales xxx Application xx a xxxxxxx sales-tax xxxx for xxx retail xxxxx of xxxxx and xxxxxxxx to xxxxxxxxx is xxxxxxxx by xxx legislation xxx elimination xx the xxxxxx tax xxxxxx would xxxx the xxxxxxx government xx levy x substantial xxx on xxx purchase xx all xxxxxxxx goods xxx services xxxxx include xxxxxxxxx services xxxx estate xxxxxxxxx and xxxxxxxx The xxxxxx study xxxxxxxx that x percent xxx rate xx replace xxx individual xxx corporate xxxxxx tax xxxxxxx but xxxx critics xxxxxxx that xxx rates xxxx increase xxxx than xx fund xxxxxxxxx federal xxxxxxx that xxxxx be xxxxxxxxx with xxx elimination xx the xxxxxx tax xxxxxx The xxxxxx would xxxx large xxxx effects xxxxx effects xxx uncertain xxxx of xxxxxxxxx Charles x Ballard xxxxxxx of xxxxxxxxxxxxxxxxx taxes xxxxxx insurance xxx Consumption xxx Property xxx corporate xxxxxxxxx US xxx Foundation xxx recent xxxxxxx reports xx the xxxxxx system xx the xxxxxx States xxxxx the xxxxxxx source xx revenue xx was xxxx individual xxxxxx taxes xxxxxxx state xxx local xxx generation xx revenue xxx the xxxxxxx government xx imperative xx meet xxx welfare xxxxxxxxxx of xxx state x replacement xx the xxxxxxxxxxxx of xxx income xxx with x sales xxx regime xxxxx put xxxxxx burden xx the xxxxxxxxx especially xxx consumers xxxx middle xxx lower xxxxxxx These xxxxxxxxx spend xxxx of xxxxx income xxx consumption xxxxxxx The xxxxxxxxxxx in xxxxxxxxx to xxxxxxxx the xxxxx tax xxxxx make xxx consumption xxxx expensive xx would xxxxxxx the xxxxxxxxxxxxxxxx as xxxx would xxx be xxxxxxxx from xxxxxxxx out xxxxx incomes xxx utilize xxxxx income xxx only xxxxxxxxxxx and xxxxxxxxxx purposes xxxx would xxxxxx a xxxxxx divide xxxxxxx the xxxxx and xxx have xxx s xxx economic xxxxxxxx of xxxxxxxx from xxx federal xxx regime xx the xxxxx tax xxxxxx can xx examined xxxx in xxx long xxx and xx the xxxxx run xxxx Hansena xxxxxxxx suggests xxxx the xxxxxx would xxxxx the xxxx GDP xx the xxxx run xxx this xxxxxxxxxx is xxxxx only xx the xxxxxxx operates xx full xxxxxxxxxx The xxxxxxxxxx of xxxxx simulations xx implement x tax xxxxxx would xxxxxx erode xxx long-term xxxxx in xxxxxxxx efficiency xxx switch xx a xxxxx tax xxxxxx would xx that xxx savings xxxx relative xx the xxxxxx rises xxxx rise xx income xx the xxxxxx perspective xxxxxxx when xxxxxx are xxxx to xxxx consumption xxxxxxxxx for xxx lifetime xxxxxx then xxxxxxxxxxx to xxx income xxxxx would xx very xxx for xxxx income xxxxxxxxxxx and xxxx high xxx low xxxxxx individuals xxx shift xxxxx result xx high-income xxxxxxxxx receiving x higher xxx cut xxx transitional xxxxxx of xxx tax xxxxxx would xx too xxxx of x burden xxx the xxxxxxx that xx already xx the xxxxx of x recession xxx table xxxxx analyses xxx simulation xx the xxxxxxxxxx of xxx tax xxxxxx Shaviro xxxxxxxxxxxx consumption xxx Flat xxx Flat xxx with xxxxxxxxxx effect x - x - xxxx Output xxxxxxx stock xxxxxx Supply xxxxx of xxxxxxxx assestsThe xxxxx shows xxx percentage xxxxxxxxxx of xxxxxxxxx in xxx long-run xxxx the xxxxxxx baseline xxxx reflected xx the xxxxxxx federal xxx system xxxxx systems xxxxxxx the xxxxxxxxxxx of xxx federal xxxxxx tax xxxxxx A xxxx tax xxxx the xxxxxxxx deduction xxx wage xxxxxx and xxxxxxxxx the xxxxxxxx income xx owner-occupied xxxxxx E xxxxxxxxxxxxx to xxx policy xxxxxxxx The xxxxxxxxxxx of xxx income xxx and xxxxxxxxxx to xxx sales xxx in xxxxxx is xxxxxx and xxxx efficiency xx the xxxxx of xxxxxxx and xxxxxxxxxx is xxxxx This xx however xxxxxxxx when xx consider xxx difficulties xx transiting xx the xxxxxxx income xxx regime xx the xxxxxxxxxxxxxxxxxxx tax xxxxxx The xxxxxxxx of xxxx moment xx also xxxxxx into xxxxxxxx The xxxxxxxxxx would xxxx benefits xx the xxxxxxx in xxx long xxx the xxxxxxxxxxxx difficulties xxxx always xxxx obstacles xxx change xxx be xxxxxxxx by xxxxx of x gradual xxxxxx a xxxxxxxx of xxx increase xx reliance xx the xxxxxxxxxxx tax xxxx on xxx income xxx It xxx be xxxx in xxxxxx to xxxxxx that xxx transition xxxx not xxxxx the xxxxxxx and xxx intended xxxxxxx would xxx be xxxxxxxx The xxxxxx replacement xx the xxx regime xxxx contributes xx major xxxxxxx for xxx federal xxxxxxxxxx would xxxx the xxxxxxxx effect xx the xxxxxxx A xxxxxxxx tax xxxxxx can xx introduced xxxx can xx operated xxxx by xxxx with xxx income xxx regime xxx lifting xxx the xxxxxx of xxx income xxx on xxxxxx and xxxx the xxxxxxxx of xxx federal xxxxxxxxxx on xxx income xxx regime xxxxxxx Economic xxxxxxxx of xxx recommendations xxx slow xxx phased xxxxxx of xxxxxxxxxxxxxx of xxx transition xxxxx not xxxxx the xxxxxxx The xxxxxx of xxxxxxxxx commodities xxxxx gradually xxxx giving xxxxx and xxxxxx income xxxxxx the xxxxxxx to xxxxxxxx their xxxxxxx during xxx transition xxxxxx to xxxx offset xxx rise xx consumption xxxxxxxxxxx When xxx economic xxxxxxxx on xxxxxxx players xx the xxxxxx is xxxxx with xx phases xx can xxxx a xxxx positive xxxxxx on xxx economy xx the xxxx run xxxxx the xxxxxxxxxxxxx of xxx proposed xxxxxx on xxx lower xxx middle xxxxxx groups xxxxx still xx present xxx phased xxxxxxxxxxxxxx of xx would xxxx in xxxxxxxxxx the xxxxxx shock xxx rising xxxxxx can xx dealt xxxx more xxxxxxxxxxx when xxxxx is xx anticipation xx the xxxx Introducing xxxx complexity xx the xxxxxxxxxx phase xxxx as xxx taxing xx only xxx corporate xxxxxx would xxxx to x counterproductive xxxxxx It xxxxx make xxx taxing xxxxxx more xxxxxxx the xxxxxxxxx that xxx current xxxxxxxxxxxxxx seeks xx eradicate xxxxxxx Conclusion xxx generation xx revenue xx imperative xx meet xxx welfare xxxxxxxxxx of xxx state xxxxxxxxxxx of xxx contribution xx the xxxxxx tax xxxx a xxxxx tax xxxxxx would xxx higher xxxxxx on xxx consumers xxxxxxxxxx the xxxxxxxxx from xxxxxx and xxxxx classes xxx legislation xx proposing xx increase xxx sales xxx would xxxx the xxxxxxxxxxx more xxxxxxxxx Garner xxx complete xxxxxxxxxxx of xxx income xxx regime xxx a xxxxxxxxxxx of xxx same xx means xx the xxxxx tax xxx certain xxxxxxxx has xxxx advantages xx the xxxx of xx however xxx process xx implementation xx these xxxxxxxxxxxxxx must xx slow xxx phased xx ensure xxxx the xxxxxxx isnot xxxxxxxxxxxxxxxxx The xxxxxxxx State xxxxxxxxxxx on xxxxxxxxxxx State xxxxxx tax xxx generating xxxxxxx by xxxxxxxxx retail xxxxx tax xxxx including xxxx services xxxxx be xxxxxxxxxx to xxx economy xxxx if xxx process xx the xxxxxxxxxx is xxxxxxx out xxxxxxxxxxx BibliographyCharles x Ballard x F xxxxxxxxx the xxxxxxxx Income xxx with x Progressive xxxxxxxxxxx Tax xxxxxxx URL xxxx www xxxx org xxxxxxxx c xxxxxxxxxx of xxxxxxx Press x R xxxxxxxxxxx Taxes xx Income xxxxx implications xxx economic xxxxxx National xxx Association xxxxxx C x Consumption xxxxx Macroeconomic xxxxxxx and xxxxxx Issues xxxxxxx RESERVE xxxx OF xxxxxx CITY xxxx Hansena x Replacing xxxxxx taxation xxxx consumption xxxxxxxx in xxxxx Journal xx The xxxxxxxx and xxxxxxxxxxxxx Economies xxxxxxxxx L x The xxxxxxxxxxxxx Implications xx Replacing xxx U x Federal xxx System xxxx a xxxxxxxxxxx Tax xxxxxx Program xxx Undergraduate xxxxxxxx SPUR xxxxxxxxx at xxxxx repository xxxxx edu xxxx Marples x J xxxxxxxxxxx Taxes xx Overview xxxxxxxxxxxxx Research xxxxxxx https xxxxxxxxxx congress xxx Metcalf x E xxxxxxxxxxx taxation xxxxx University xxxxxxx D x Replacing xxx Income xxx with x Progressive xxxxxxxxxxx Tax xxx York xxxxxxxxxx School xx LawMore Articles From Finance
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