The Force of Inertia

The force of inertia moves with glacial speed, but like a glacier it can increase in size as it moves. The inertia theory is applicable both to micro-level concerns about particular taxes, and to top-down concerns about longterm changes in the total revenue. The inertia theory demonstrates how tax revenue both continues and changes through the longue duree. The public-policy model shows that tax revenue is not a question of what politicians want; it is a function of laws, administrative procedures and the state of the economy. The public-policy model recognizes four possible ways in which politicians&s; decisions can shift revenue: new taxes can be introduced or established taxes repealed; a swap of new taxes for old can occur; the rate and base of existing taxes can be altered; or tax administration can be changed. Tax swapping is particularly likely to occur within a specific area of taxation.