About | HeinOnline Law Journal Library | HeinOnline Law Journal Library | HeinOnline
LOG IN
LOG IN

1 Arthur P. Hall, The Cost of Unstable Tax Laws 1 (1994)

handle is hein.taxfoundation/srebxz0001 and id is 1 raw text is: FOUNDATION October 1994 Number 41 The Cost of Unstable Tax Laws The Internal Revenue Act of 1954 was landmark legislation that, for the first time, placed the income tax at the core of the fed- eral tax system. In the 40 years since the pas- sage of that Act, 31 significant federal tax en- actments have taken place. On average, that amounts to a substantial amendment to the federal tax code every 1.3 years. Such instabil- ity in the tax code creates economic uncer- tainty among taxpayers, which, in turn, gener- ates economic costs. Table I provides a more detailed measure Figure 1 Instability in the Federal Income Tax Code Based on Selected Code Items 3.0 2.5- 1.5 1.0 0.5 0.0 1955-1965 1966-1975 1976-1985 1986-1994 Source: Tax Foundation compilation from U.S. Code Annotated (Titled 26). of how unstable the federal income tax code has been since the Internal Revenue Act of 1954. It lists a sample of the core sections of the federal income tax code (approximately one-fifth of all sections) relating to rates of tax, credits against tax, and base of tax for individu- als, partnerships, and corporations doing busi- ness both within and outside the United States. In compiling Table 1, no attempt was made to select code sections that have been the most amended. Indeed, selecting only core sections resulted in the omission of some of the most frequently amended code sections. Along with the number of times each of the selected code sections have been amended (broken down into 10-year increments), Table I also provides an instability ratio for each section. This ratio divides the number of times a code section has been amended by the num- ber of years it has existed. The higher the ra- tio, the more unstable the code section. The average instability ratio for the entire sample is 0.24, indicating that each section in the sample, on average, has been amended once for every four years it has existed within the tax code. Figure 1 summarizes, in 10-year incre- ments, the average number of times the Table I sample of income tax code sections have been amended. It reveals that the income tax code has become much more unstable during the past 20 years than it was during the 20 years immediately following the 1954 Act. The greatest instability came in the 1976 to 1985 period in which the average income tax code section from the sample was amended almost three times, or once every 3.3 years. Taxpay- ers in this 10-year period witnessed the pas- sage of seven major tax bills. Taxpayers in the most recent period, 1986 to 1994, have wit- nessed the passage of six major tax bills. By Arthur P. Hall, Ph.D. Senior Economist Tax Foundation I

What Is HeinOnline?

HeinOnline is a subscription-based resource containing thousands of academic and legal journals from inception; complete coverage of government documents such as U.S. Statutes at Large, U.S. Code, Federal Register, Code of Federal Regulations, U.S. Reports, and much more. Documents are image-based, fully searchable PDFs with the authority of print combined with the accessibility of a user-friendly and powerful database. For more information, request a quote or trial for your organization below.



Contact us for annual subscription options:

Contact Us

Already a HeinOnline Subscriber?

Log In

profiles profiles most