M. L. Balinski, W. J. Baumol; The Dual in Nonlinear Programming and its Economic Interpretation1, The Review of Economic Studies, Volume 35, Issue 3, 1 Jul

This paper investigates the household demand for four financial assets: marketable bonds, time and savings deposits at commercial banks, life insurance reserves, and savings accounts at other financial institutions-credit unions, savings and loan associations, and mutual savings banks. The focus of the analysis is on the substitution relationships among liquid assets, and between these assets and marketable securities. The explanatory variables used in the study are: income, wealth, and the yields on various assets included in household portfolios.

T HE effective tax rate on individual returns (to be denoted etr) remained approximately constant at 23.4 per cent from 1955 to 1962, while taxable income increased more than 50 per cent. Since the individual income tax structure is progressive, this seems at first glance to be a strange result. Explanations which exist in the literature allude to the possibility that shifting between types of returns has occurred, that the pattern of deductions and exemptions has changed over time, and that the tax rate of new taxpayers has been less than the existing average. The objectives of this paper are to evaluate these arguments and to analyse in detail the nature of the etr constancy. The first problem in analysing the etr is to decide whether or not the constancy is in fact a surprising result. That is, although almost everyone would be willing to predict a larger etr as a result of a taxable income increase of 50 per cent, most would be hard pressed to predict the magnitude of the increase. Yet the constancy can hardly be considered a curiosum if the etr is, in general, very insensitive to taxable income growth. In fact it should be realized that under certain general conditions an increase in the taxable income of every taxpayer will result in a decrease in the etr. Assume first that only incomes in the lowest tax bracket increase, and that no income increases sufficiently to move it to a higher tax bracket. Then the overall etr will decrease since the lowest bracket rate is weighted relatively more heavily. But clearly a reduction in the etr may result without such extreme assumptions. What is required is that taxable income in low brackets grows sufficiently rapidly (relative to taxable income in high brackets) to enable the effect of increased densities of returns with marginal tax rates less than the average, to offset the effect of higher rates on certain incomes. Since marginal rates in the two lowest brackets are less than 23.4 per cent, rapid taxable income growth at these income levels will tend to prevent the etr from rising, and may in fact even cause it to decline.1 Further, the etr may be reduced even without an increase in the density of returns with marginal rates less than the average. Suppose, for example, that a joint return taxable at $5,000 in 1955 increases to $9,000 by 1962, thus decreasing the density of returns with marginal rates below the aggregate etr, and increasing the density of those with marginal rates above. But the growth from $5,000 to $9,000 consists of an increase in income of $3,000 taxable at 22 per cent and $1,000 taxable at 26 per cent which is equivalent to adding $4,000 at 23 per cent, and hence the aggregate etr of 23.4 per cent will be reduced. Similarly, the average and not the marginal rate on a new return is the relevant factor in determining whether or not the aggregate etr will decline when the return becomes taxable. For example a new return with a marginal tax rate of 26 per cent will also involve income taxable at 20 and 22 per cent, and provided the weighted average of the rates is less than the aggregate etr, the latter will fall. The extent to which taxable income growth diverges from proportionality (across individuals) is therefore of great interest. There are three major reasons for expecting taxable income growth to be nonproportional. First, proportional growth of adjusted gross income (to be denoted AGI) is probably a more realistic assumption than proportional growth of taxable income.2 Second, the annual distribution of new taxpayers probably differs from the distribution of existing taxpayers. Third, the growth in deductions and exemptions differs for various income levels. As discussed below all

Journal Article Capital Aggregation and Optimality Conditions Get access J. K. Whitaker J. K. Whitaker Bristol University and University of Virginia Search for other works by this author on: Oxford Academic Google Scholar The Review of Economic Studies, Volume 35, Issue 4, October 1968, Pages 429–442, https://doi.org/10.2307/2296770 Published: 01 October 1968

Journal Article An Invariably Stable Cobweb Model Get access J. A. Carlson J. A. Carlson Purdue University Search for other works by this author on: Oxford Academic Google Scholar The Review of Economic Studies, Volume 35, Issue 3, July 1968, Pages 360–362, https://doi.org/10.2307/2296670 Published: 01 July 1968

Reviews the book "Management Information and Statistical Method," by L.W. Shaw.

Reviews the book "The Financial Executive and The New Accounting," by Maurice E. Peloubet.

Peter A. Firmin, Seymour S. Goodman, Thomas E. Hendricks, James J. Linn, University Cost Structure and Behavior: An Empirical Study, Journal of Accounting Research, Vol. 6, Empirical Research in Accounting: Selected Studies 1968 (1968), pp. 122-155