Course Syllabus

 Course Description

This course gives students an immersive tour of government revenue systems. We begin with a brief summary of the revenue sources that are available to governments.  Next, we cover revenue forecasting and estimation and their role in the budgetary process; the characteristics of a good tax system and how the administrative choices affect these characteristics; and the prevalence and impacts of tax expenditures. This is followed by a discussion of current important policy issues relevant to each of the major taxes. We conclude the course by exploring some of the key components of revenue administration including the structure of revenue departments, tax collection mechanisms and revenue distribution.  While the course emphasizes taxes used by federal, state, and local governments in the United States, we will also discuss important taxes levied by other governments (particularly the value-added tax). We will also highlight some of the important design and administrative features practiced in other countries.

 Learning Outcomes 

The course explicitly seeks to develop the skills that are relevant to staff of tax departments, budget agencies, and policy research organizations so that you can be a productive contributor from your first day of work.  This skill development is the purpose of the exercises and the project. More specifically, students are expected to be able to:

1. Identify and describe the major elements of tax administration
2. Forecast tax revenues and estimate the revenue impacts of tax policy
3. Explain what tax expenditures are and estimate their budgetary impacts
4. Explain the connections between tax administration choices and the characteristics of taxes
5. Comfortably discuss current as well as longstanding tax policy issues

 Course Requirements 

Required Text and Materials

There is no textbook.  Readings are available on Canvas, from listed websites, or from the electronic journals collection of the library.  Additional readings may be assigned throughout the semester as new materials appear or as topics on the current outline expand in importance.  Not everything in the readings will be discussed in class and not everything discussed in class is covered in the readings.

Technical Requirements

You will need the following in order to participate in this course:

• Computer or tablet; 
• Reliable internet connection;
• Microphone;
• Some way to make and post a simple video (e.g., using a webcam, or a smartphone);
• Access to Canvas using a supported web browser.

I strongly recommend that you take a refresher course in Microsoft office (especially excel and word). Modules are available here: https://ittraining.iu.edu/. You may complete analytical work with the statistical software of your choice. However, I am only proficient in Excel, STATA, and R. Because R is open source, it is often favored by public/non-profit sectors. This implies that there is an advantage to using R, especially if you plan to work in the public/non-profit sectors.

 Technical Support

For additional help with technical issues, consult:

• University Information Technology Services (UITS) (human support)
• IU Knowledge Base (IUKB) (guides)
• IUware (download free software)

 Course Assessment & Grades

Course Assessment:

Your final grade will be based on the following elements:

Assignments                              40%

Discussions                               20%

Presentation                              10%

Analytical report                        30%

Assignments

You are assigned several exercises, cases, and problems to prepare for grading.   The exercises are designed to develop the skills that tax policy and administration professionals use regularly.  Some of the exercises are based on assigned readings and on materials presented in class, but most are accompanied by lengthy discussion materials that explain the exercise.  You may choose to discuss these assignments with your colleagues, but you will submit individual work for evaluation.  The exercises and necessary ancillary materials are posted on Canvas.  Most will involve numbers and many can be handled conveniently with Excel. However, some will require more sophisticated statistical software such as STATA or R.

Discussion

We will have one graded discussion every week except week 12. Each discussion is graded out of 100 points. Together, the discussions account for 20% of your total course grade. You must post a discussion point of your own and respond to two of your peers to receive full points.

Analytical Report and Presentation

The analytical report attempts to simulate work that fiscal staff in a budget agency, revenue department, legislative service agency, or research organization would be assigned.  You will undertake an investigation whose end product is a formal report and a presentation.

Guidelines for the report:

1. Several of the topics will require that you propose options for dealing with a problem. Some topics may require analysis of tax laws, others may require some use of quantitative analysis.  What you do will depend on your topic. 
2. The report should clearly explain the policy, the methods used to examine the policy, and the conclusions you have reached.
3. You will research the topic using academic studies, government documents, reports from independent research organizations, and data relevant to the topic at hand. You may source your academic studies from National Tax Journal, International Tax and Public Finance, State Tax Notes, Tax Notes, Tax Notes International, Public Budgeting & Finance, Public Finance Review, AEJ: policy, Journal of Public Economics, among others.
4. You should support your claims with more than theoretical arguments. Many of these topics have been studied extensively so there is plenty of empirical results to draw from. Keep in mind that policy analysis in the real world requires a lot of assumptions; this analytical report is no different. However, you are expected to justify your assumptions.
5. You should go to the source for any data you use, rather than working with data that has already been cleaned and analyzed by other analysts. If the data originate with the Internal Revenue Service, then use data from the Internal Revenue Service source, not the product of some other researcher’s manipulation of those data.
6. Many helpful materials are available on the internet, but use extreme caution because such sources are of widely varying quality. In particular, do not be misled by biased work prepared by narrow interest NGOs.  NGO is not the same thing as unbiased.  Indeed, most NGOs are both biased and unaccountable. Having “.org” at the end of the web address is not a guarantee of either quality or impartiality.  So be extremely critical as you read such reports.

Deliverables: 

1. Report: You will prepare a professional report on your investigation.
   1. Audience: Your audience is a policymaker who is exceptionally smart but knows almost nothing about taxes.
   2. Format: Because the policymaker is very busy, she does not have the time to read an extensive report. Therefore, your report should include two parts:
      1. An illustrative executive summary. I will provide an example of what I want at the beginning of class.
      2. Full length report
   3. Page limits:
      1. The illustrative summary should have no more than 10 pages (not including cover page).
      2. There is no page limit on the length of the full report; the policymaker will have an Aid dig through the report for clarifying information if required.
   4. Due dates: The report is due at 10:00pm on July 31, 2026 in electronic form (on canvas).
2. Presentation: You will prepare a formal presentation for the class. Your presentation will not exceed ten  The presentation will be in a form that would be appropriate for delivery to a legislative committee, an investigatory task force, or a budget agency. You will upload your presentation to the canvas site by July 22, 2026.

Grade/rubric: Your report grade will be based on your executive summary and the extent to which your full report supports the executive summary. Things to consider:

1. How well does the executive summary address the prompt for the topic you selected?
2. How well does the full report support the executive summary?
3. How easy is it to find the supporting information in the full report?
4. Quality of writing, presentation of graphical information (tables/graphs etc), and formatting of references.

Topics for report: There are 6 topics to choose from. Only one group per topic.  You get a topic by being the first to select it.

1. Marijuana Tax: Design an Indiana excise tax for legalized recreational marijuana. You must define the rate structure and base, the remittance policy (who remits the tax, to which agency, and how frequently), and a compliance (audit and penalty) mechanism. You will estimate the net revenue (revenue and administrative costs) that Indiana could collect from the tax and describe how the revenues are to be used. You will also discuss how the choices you have made impact the characteristics (efficiency, equity adequacy etc) of the tax you have designed. You may inform your choices by referencing similar taxes in states that have legalized recreational marijuana, although you may choose some other structure if you believe it to be more appropriate for Indiana.
2. Road mileage Tax: The road mileage tax is viewed as a promising revenue mechanism to fill the gap in states’ highway funds. Design a road mileage tax for the state of Indiana. Your report should provide a detailed account of how the fee would be administered, including but not limited to: rate structure, tax base (e.g., all miles, in-state miles, in-state and out-of-state miles, etc.), mileage collection technology, remittance policy, compliance (audit and penalty mechanism), and revenue estimation. Be sure to justify your choices and explain how your fee stacks up against the standard criteria for evaluation of tax policies.

3. Carbon tax on motor vehicles: Propose a carbon tax on motor vehicles. Your proposal must cover definition of tax base, tax rate, remittance policy, audit strategy and penalty. Write a report on the implications of adopting such a tax, with the Biden administration as your audience. In addition to detailing the design of your tax, the report must address the adequacy, fairness, and efficiency impacts of the policy.
4. Estimate effect of tax policies on economic growth. You will conduct an empirical analysis of the relationship between tax incentives and economic activity. For example, you might replicate the analysis in Gale (2015) and then extend the data to see if the results continue to replicate. Alternatively, you might evaluate other tax incentives: e.g., movie tax credits, property tax rebates and so on.
5. Estimate tax buoyancy and elasticity for US States. Collect data on personal income tax and sales tax and estimate the buoyancy of each tax. Does the presence of the income tax in a state affect the buoyancy of the sales tax? Pick one state and estimate the elasticity of both income and sales tax. Use your estimated elasticity to forecast revenue for the state you picked.
6. Indiana public safety local income tax. Local income tax data can be found here. You will use these data analyze changes in Indiana Local Optional Income Tax (LOIT) over the period 2008 – 2023. What types of local income taxes are used and by which taxing units. How have usage changed over time and space. What are the tax rates? How is the LOIT revenue used? Of particular interest is the LOIT that is dedicated to public safety. Can you say whether adoption of the LOIT for public safety has had any material effect on public safety expenditure? What about the effect on public safety? What do taxing jurisdictions buy with the public safety fund? You can find data on expenditure by fund here.
7. Topic of choice pending approval

Submitting Assignments

All coursework (assignment and analytical reports) must be typed using an appropriate software and must be submitted online via Canvas. DO NOT SUBMIT YOUR COURSEWORK VIA EMAIL.  You may submit any additional documentation (e.g., spread sheet with analysis) for coursework that require data analysis. Your assignments must be submitted in memo format addressed to the director of the state budget agency.

How Will I Know How I’m Doing in This Course?

Grades will be posted in Canvas within 48 hours of the due date. Since Canvas keeps track of all of your grades, you should always be able to calculate your current grade in the course. If you need assistance, please contact me.

Late Work

Each coursework has a due date and time. Each coursework will be opened between the first day of class and 2 hours after its due date/time. You may submit your coursework if you have access to it on canvas. Therefore, each coursework has a 2-hour grace period. Submissions outside the grace period will receive a grade of zero.