Economics

First Discussion: Tax Reform, discussion is based on

Chapter 2 of the book Showdown at Gucci Gulch

September 11, 2012

1. In what sense did tax reform allow "a rare chace for the goals of social equity and

economic e�ciency, which were usually in con�ict,to work hand in hand

(a) What is meant by social equity. How did tax reform serve the interest of social

equity?

(b) What is meant by economic e�ciency. How did tax reform serve the interest of

economic e�ciency

(c) Why do these goals typically con�ict?

(d) How does tax simplicity �t into these goals?

2. What shaped Bradley's view of the tax code?

(a) What was Bradley's view of the tax policy of 1981?

(b) What did Bradley's experience as a basketball player lead him to believe about

the tax code? How could he a�ect his taxable income?

(c) How did Bradley's 1978 political experience shape his view of the tax code?

3. What was the substance and importance of Bradley's 1981 tax proposal?

(a) Why did academic wisdom declare the income tax "obselete"?

(b) Why did Bradley consider reforms that lowered the top marginal rate?

(c) What fairness argument did Bradley make for his plans?

(d) What were the three key decisions that formed the backbone of his plan? Why

did he make them?

(e) How did Bradley reduce the top rate without providing a windfall to the wealthy?

i. Explain the Minarik plan for lowering deductions.

(f) What are the key elements of Bradley's eventual plan?

1

4. What happened to Bradley's plan in the short term?

(a) What facts interfered with its passage?

(b) Why was tax reform considered politically unlikely?

5. What was the state of tax policy in the 1982 era Congress

(a) What was Bob Dole's goals in tax policy? How did this lead to legislation?

(b) What was the House of Representatives view of tax policy in this era. How did

this a�ect outcomes?

(c) How did the banking and real estate industry a�ect tax policy? What provisions

of the tax codes did they lobby over?

(d) What was Mondale's view of tax reform and tax policy in general? How did this

a�ect the election of 1984?

i. What four reasons do the authors give for Mondale opposing tax reform?

ii. Why do the authors complain that Mondale's campaign was a campaign of

the special interests? How does this relate to tax reform?

6. Why did Bradley's reforms �nd support from some Republicans?

(a) Who are the supply-siders? What policies do they prefer? Why?

(b) Politically what was the overall condition of supply siders in the 1982-194 period.

Why?

(c) Where did supply siders agree with Bradley? Where did they disagree? What is

the merit of their disagreement? How did their eventual legislation disagree with

Bradley's? What were some of the limitations of their approach?

7. What was the Reagan administrations view of tax reform?

(a) Which forces in Reagan administration supported the idea? Why? What is the

relationship between tax reform and a �at tax? Which oppposed it?

(b) What was Reagan's approach to tax reform in the 1984 State of Union and

subsequent election? Was this seen as supportive of tax reform?

2