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This is especially the case if the ﬁnal product to emerge from the legislative process falls far short of the pure reforms advocated by current proponents of proposals like the ﬂat tax and the NRST. CONCLUSION The chapters presented in this volume provide a wealth of information on the state of the art in current academic thinking on the relative desirability of both fundamental tax reform and more incremental reform of the existing income tax structure. In particular, they cover in great detail a wide range of issues that shed light on what we believe to be the “fundamental question” of fundamental tax reform – why the enactment of a consumption-based tax does not appear to be a viable tax reform option for the new millennium and any tax reform that might occur is much more likely to be incremental income tax reform – despite the fact that the virtues of consumption taxes have been promoted, at least in some circles, for nearly twenty-ﬁve years.
Gravelle United States were followed by both price increases and declines in output. Can we reject the magnitude of the DRI/McGraw-Hill short-run results as unreasonable? These models are viewed with some suspicion, particularly when used for policy analysis. Several objections were enumerated by Reifschneider (1997) at the JCT conference: a weak correspondence between theory and model speciﬁcation, limited treatment of expectations, and problems with identiﬁcation. There is some ﬂux in the theories regarding the causes of recessions (see Auerbach and Kotlikoff, 1995, for a summary).
Models with low elasticities will have less pronounced effects, other things being equal. Some models, for example, keep labor supply ﬁxed, as in the case of the early life-cycle model of Summers (1981a) and the inﬁnite-horizon model of Chamley (1981). But the differences between models are not limited to the fundamental differences. , perfect foresight versus myopia; bequests; multiple or representative households and producers; open or closed economies; risk). We begin this analysis with some fundamentals on how basic structural type affects outcomes, by holding elasticities across similar model types constant, based on work by three researchers participating in the JCT study (Engen, Gravelle, and Smetters, 1997).