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 rsquo x ability xx maintain xxx public xxxxxxxx The xxxxxxxx system xxxxx be xxxxxxxxxxxxx as x regressive xxx system x contrast xxxx the xxxxxxx progressive xxxxxxxx system xxx elimination xxx replacement xxxxx affect xxxxxxx players xx the xxxxxxx and xxxxx have xxxxxxxx effects xxxxxxxxxx The xxxxxx regimes xxxxxxxx by xxxxxx authorities xxx around xxx world xxx different xxx United xxxxxx federal xxxxxxxx system xx generally xxxxxxxxxxxxx as x progressive xxxxxxxx system xx that x tax xx imposed xxxxx on xxx income xxxxxxxxx by xxxx individuals xxx companies xxxxxxx tax xxxxx are xxxxxxxxxx for xxxxxxxxxxx having xxxxxx levels xx income xxx current xxxxxxxx system xxxxxxx a xxxxxxx of xxxxx for xxx United xxxxxx the xxxxx contributions xx taxes xxx levied xxxxx on xxxxx and xxxxxx The xxxxx source xx revenue xx the xxxxxx States xx by xxx individual xxxxxx tax xxxxxx corporate xxx payroll xxx and xxxxx revenue xxxxxxx such xx excise xxxxx custom xxxxxx and xxxxxxx gains xxxxxxxxxx argue xxxx this xxxxxx of xxxxxxxx of xxxxxx is xxxxxxxxxx as xx discourages xxxxxxx and xxxxxxxxxx The xxxxxxx regime xx income xxxxx have xxxx become xxxxxxxxxxxx complex x taxation xxxxxx based xx the xxxxxxxxxxx is xxxx as xxxxxxx to xxxxxxxx national xxxxxx and xxxxxxxx the xxxxxxxxxx of xxxxxxxxxx in xxx long xxx There xxx three xxxxx reasons xxxxxxxxxx advocate xxx a xxxxx in xxx current xxxxxx regime- xxxxxxxxxx efficiency xxx fairness xx the xxxx side xx the xxxxxxxx considering xxx replacement xx income xxx with x retail xxxxx tax xxxxx put xxxxxxxxxxxx pressure xx middle xxx low xxxxxx families xxxxxxxxx them xx spend xxxx of xxxxx income xxx consumption xxxxxxxx Lunceford xxxxxxxx analysis xx the xxxxxxx Fiscal xxxxxx experts xxxxxxxxx consider xxxx major xxxxx for xxx reforms xx taxing xxxxxx These xxxxx are xxxxxxxxx fairness xxxxxxxx simplicity xxx economic xxxxxxxxxx As xx understood xx economic xxxxxxxx of xxxxxx regimes xxxxxx policy xxxxxx need xx make xxxxxxxxxx between xxxxx five xxxxx goals xx taxing xxx implementation xx a xxxxxxxxxxx tax xxxxxx to xxxxxxx theincome xxx regime xxxx many xxxx of xxxxx implemented xxx Kentucky xxxxx legislation xxxxxxxx for xxx establishment xx the xxxxxxxx retail xxxxx tax xxxxxxxxxxx of x uniform xxxxxxxxx rate xxx the xxxxxx sales xx goods xxx services xx consumers xx proposed xx the xxxxxxxxxxx The xxxxxxxxxxx of xxx income xxx regime xxxxx need xxx federal xxxxxxxxxx to xxxx a xxxxxxxxxxx tax xx the xxxxxxxx of xxx consumer xxxxx and xxxxxxxx which xxxxxxx financial xxxxxxxx real xxxxxx groceries xxx medicine xxx recent xxxxx proposes xxxx a xxxxxxx tax xxxx to xxxxxxx the xxxxxxxxxx and xxxxxxxxx income xxx systems xxx some xxxxxxx contend xxxx the xxxxx must xxxxxxxx more xxxx to xxxx essential xxxxxxx outlays xxxx would xx disrupted xxxx the xxxxxxxxxxx of xxx income xxx regime xxx change xxxxx have xxxxx wage xxxxxxx price xxxxxxx and xxxxxxxxx rate xx interests xxxxxxx L xxxxxxx Sources xx RevenueIndividual xxxxx Social xxxxxxxxx tax xxxxxxxxxxx Tax xxxxxxxx tax xxxxxxxxx taxSource xx Tax xxxxxxxxxx The xxxxxx federal xxxxxxx on xxx taxing xxxxxx of xxx United xxxxxx shows xxx primary xxxxxx of xxxxxxx in xxx from xxxxxxxxxx income xxxxx Federal xxxxx and xxxxx The xxxxxxxxxx of xxxxxxx for xxx federal xxxxxxxxxx is xxxxxxxxxx to xxxx the xxxxxxx objectives xx the xxxxx A 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 xxxxx consumers xxxxx more xx their xxxxxx for xxxxxxxxxxx purpose xxx legislation xx proposing xx increase xxx sales xxx would xxxx the xxxxxxxxxxx more xxxxxxxxx It xxxxx benefit xxx richerpopulation xx they xxxxx now xx exempted xxxx shelling xxx their xxxxxxx and xxxxxxx their xxxxxx for xxxx consumption xxx investment xxxxxxxx This xxxxx create x larger xxxxxx amongst xxx haves xxx the xxxx not xxxxx 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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