Lessons From 25 Years of Federal Individual Income Tax Changes

Abstract

This paper reviews federal individual income tax changes and related developments in empirical research over the past 25 years. Tax policy generally moved, with exceptions, in the direction of a broader base and lower rates, while increasingly administering anti‐poverty and health policy. Improvements in the accessibility of high‐quality data and empirical methods led to better identified estimates of behavioral responses. Estimated responses to tax policy were often smaller than found previously and tended to be concentrated on margins and among populations that were more adjustable. Tax noncompliance responses were better identified, with the estimated effects of enforcement actions generally sizeable.