Revenue neutrality doesn’t mean static receipts

We need a term to describe changes in tax laws that leave the government bringing in the same amount of revenue (as in earlier periods) given changes in the economy.  Revenue neutrality means something else:  changes in tax laws will result in the government bringing in the same amount of revenue if economic circumstances DON’T change.  Budget neutrality and deficit neutrality mean pretty much the same thing as revenue neutrality.

A government may need a certain amount of revenue to do what it does, that is, it may need static receipts — even when the economy grows or shrinks.  In a shrinking economy, tighter tax rules or higher rates are needed to produce static receipts.  (Now that may be oversimple:  government may need higher receipts in bad times for unemployment benefits and the like.  But I’m disregarding that need for now.)

So what’s the term for tax law changes that produce static receipts in a changing economy?  Funding neutrality?  Receipts neutrality?  Steady revenues?

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Author: patoglesby

From 1982 to 1990, I worked in tax policy for Committees of the United States Congress. In recent years, I was Adjunct Lecturer at UNC-Chapel Hill's Business School and then Adjunct Professor at its Law School.

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