Abstract This article presents a reply to the comments made by professor Tsvi Ophir to the author's article on gift tax computation. The author was trying to show that the decision to make a gift is determined by how long the individual is expected to live. It was stated clearly that the property did not appreciate or depreciate during the period of time between the date of gift and date of death of the donor. Thus, in his example the estate tax of $150,000 remained the same whether the individual lived five more years or ten years. What did change, however, was the fact that the taxpayer who elected not to make the gift has the use of the funds in his estate for five additional years. Present value refers to the broad area of time value of money. To be more precise he was attempting to incorporate the concept of time value of money into the problem under consideration. bracket. But the gift tax rate schedule is progressive in nature. As more and more gifts are made, the donor moves into a higher and higher gift tax bracket. After a point the individual's gift tax bracket may become higher than his estate tax bracket.

Abstract The article argues that behavioral implications should be considered in the formulation of tax law and policy in the United States. The income tax policy of the United States has many objectives including raising revenue, encouraging economic growth, stabilizing the economy, redistributing income and wealth and encouraging certain industries. Although taxation does influence human behavior, most tax laws are enacted without adequate consideration of their behavioral effects. A person on welfare cannot better himself by working unless he can get off welfare altogether. Proponents of the negative income tax, both conservatives and liberals, indicate that under a negative income tax system the individual's payments would not be reduced dollar-for-dollar as earnings rise. The households were drawn from a stratified sample of eligible households and were assigned to either an experimental or control group. An increase in income has had little impact on family stability. The power of incentives and disincentives is enormous. They may be used to safeguard or to exploit, to subsidize one interest or to destroy another, to simplify administration or to confuse it. Taxation does influence human behavior, but the important thing is to learn which provisions influence behavior in what way-- and whether the resulting behavior is that which is desired.