; ; ; "ActiveFedora::Aggregation::ListSource" . a , ; "The Efficiency and Welfare Effects of Tax Reform: Are Fewer Tax Brackets Better Than More?"; ; "batchuser@example.com"; "Altig, David, 1956-", "Carlstrom, Charles T., 1960-"; "Federal Reserve Bank of Minneapolis"; "H21 - Taxation and Subsidies: Efficiency; Optimal Taxation", "E62 - Fiscal Policy"; "Using the well-known dynamic fiscal policy framework pioneered by Auerbach and Kotlikoff, we examine the efficiency and welfare implications of shifting from a linear marginal tax rate structure to a discrete rate structure characterized by two regions of flat tax rates of 15 and 28 percent. For a wide range of parameter values, we find that there is no sequence of lump-sum transfers that the (model) government can feasibly implement to make the shift from the linear to the discrete structure Pareto-improving. We conclude that the worldwide trend toward replacing rate structures having many small steps between tax rates with structures characterized by just a few large jumps is not easily accounted for by efficiency arguments. In the process of our analysis, we introduce a simple algorithm for solving dynamic fiscal policy models that include “kinks” in individual budget surfaces due to discrete tax codes. In addition to providing a relatively straightforward way of extending Auerbach-Kotlikoff-type models to this class of problems, our approach has the side benefit of facilitating the interpretation of our results. "^^; "1992-12-01"; "2019-05-21T17:59:25.264458505+00:00"^^; "https://doi.org/10.21034/dp.78"; ; "https://creativecommons.org/licenses/by-nc/4.0/"; "Wed Apr 22 16:46:10 2020"; "https://creativecommons.org/licenses/by-nc/4.0/"; "Research Paper"; "119", "17"; "Discussion paper (Federal Reserve Bank of Minneapolis. Institute for Empirical Macroeconomics)"; "078"; ; ; ; ; "Federal Reserve Bank of Minneapolis. Institute for Empirical Macroeconomics"; "Published in: _Federal Reserve Bank of Cleveland Economic Review_ (Vol. 30, No. 4, 4th Quarter 1994, pp. 30-42)."^^; ; "Publication" . ; .