Category: Harvard

The Harvard archives of course syllabi and final examinations include materials for courses taught by visiting professors from other universities. Graduate public finance was a course normally taught by Otto Eckstein, who was appointed to the President’s Council of Economic Advisers in September 1964. To cover that important field course, the Harvard economics department brought in the Berkeley professor of public finance, George Farrington Break for 1964-65. Below you will find Break’s obituary from a University of California (Berkeley) press release, followed by the syllabus and readings for his graduate public finance course at Harvard. Both the mid-year and year-end examinations have been transcribed and can be found at the end of the post. Break’s c.v. can be downloaded at the Wayback Machine internet archive.

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Public finance scholar George F. Break dead at 88

By Kathleen Maclay
30 March 2009

BERKELEY — George F. Break, an emeritus professor of economics at the University of California, Berkeley, and an authority on public finance, died of heart failure at Alta Bates Summit Medical Center in Berkeley on March 13. He was 88.

George Break conducted influential empirical research on the effects of income taxation on work incentives, intergovernmental relations and tax reform in the United States and Canada.
He chaired UC Berkeley’s Department of Economics from 1969 to 1973. Break also served on numerous campus advisory committees and in 1990 was honored with the Berkeley Citation, one of the campus’s highest honors.

He was born June 10, 1920, in the city of London in Southwest Ontario, Canada. From 1942-1945, Break served in a meteorological office attached to the Royal Canadian Air Force and was a flying officer with its Meteorological Division in 1945. He married Helen Dean Schnacke on July 31, 1948.

Break went on to earn his Ph.D. in economics at UC Berkeley in 1951, and joined the economics department as an assistant professor the same year. Among his many students at UC Berkeley was Michael Boskin, chair of the Council of Economic Advisors under President George H.W. Bush. Break retired from the faculty in 1990.

Of the 11 books authored by Break, the best known are “Public Finance” (1961), which he wrote with Earl Rolph, and “Federal Tax Reform: The Impossible Dream?” (1975), authored with Joseph Pechman, which served as a foundation for the U.S. Tax Reform Act of 1986. Break also wrote “Financing Government in a Federal System” (1980), edited two books and wrote 74 articles or book chapters.

He was president of the National Tax Association from 1982 to 1984, and was honored in 1996 with the association’s Daniel M. Holland Medal for outstanding contributions to the study and practice of public finance. Break was a member of the American Economics Association, National Tax Association and Canadian Economics Association.

He was appointed by California Gov. George Deukmejian to the Tax Reform Advisory Commission, whose 1985 report suggested reducing corporate and individual income taxes and broadening the sales tax by including food, medical care and household utilities.

Break also assisted the U.S. Treasury Department’s Office of Tax Analysis, testified before congressional committees, consulted for various tax agencies within the United States and Canadian governments, and evaluated the tax systems of Greece and Jamaica.

Break was preceded in death by his wife, Helen, who died in 2007. He is survived by several nephews and nieces.

[…]

Source: UCBerkeleyNews. Press Release, 30 March 2009.
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Course Announcement

Economics 251. Public Finance
Full course. M., W., (F.), at 10. Professor George Break (University of California).

Public finance in the context of the theory of economic policy; fiscal policy and the theory of output and prices; economics of public expenditure; theory of multi-level finance.

Source: Harvard University, Faculty of Arts and Sciences. Courses of Instruction for Harvard and Radcliffe, 1964-65, p. 117.

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Syllabus and Course Readings

HARVARD UNIVERSITY
Department of Economics
Economics 251
Public Finance

Professor George F. Break

Fall Term 1964

1. Recommended for purchase: R. A. Musgrave, The Theory of Public Finance (McGraw Hill, 1959)
2. Henry C. Simons, Personal Income Taxation (Univ. of Chicago Press, 1938)
3. General Texts and Treatises: Due, John F., Government Finance (Irwin, 1959)
4. Groves, H. M., Financing Government (5th ed. Holt, 1958)
5. Schultz, W. J. and Harriss, C. L., American Public Finance (7th ed., Prentice-Hall, 1961)
6. Buchanan, J. M., The Public Finances (Irwin, 1960)
7. Rolph, E. R. and Break, G. F., Public Finance (Ronald, 1961)
8. Hicks, U. K., Public Finance (2nd ed., Cambridge, 1955)
9. Prest, A. R., Public Finance (Quadrangle, 1960)
10. Dalton, Hugh, Principles of Public Finance (4th ed., Routledge, 1954)
11. Pigou, A. C., A Study in Public Finance (3rd ed., Macmillan, 1947)
12. Colm, Gerhard, Essays in Public Finance and Fiscal Policy (Oxford, 1955)
13. Rolph, E. R., The Theory of Fiscal Economics (California, 1954)
14. Blough, Roy, The Federal Taxing Process (Prentice-Hall, 1952)
15. Universities–National Bureau Conference, The Public Finances (Princeton, 1961)
16. Musgrave, R. A. and Peacock, A. T. (eds.): Classics in the Theory of Public Finance (Macmillan, 1958)
17. Musgrave, R. A. and Shoup, C. S., (eds.), Readings in the Economics of Taxation (AEA series, Irwin, 1959)
18. Hall, Challis A. Jr., Fiscal Policy for Stable Growth (Holt, 1960)
19. Smithies, A. and Butters, J. K. (eds.), Readings in Fiscal Policy (AEA series, Irwin, 1955)
20. Smith, D. T., Federal Tax Reform (McGraw-Hill, 1961)
21. Smithies, A., The Budgetary System in the United States (McGraw-Hill, 1955)
22. Burkhead, Jesse, Government Budgeting (Wiley, 1936)
23. Harvard Law School International Program in Taxation, World Tax Series (volumes on Australia, Brazil, Mexico, India, Sweden, United Kingdom, United States, published)
24. Joint Economic Committee, The Federal Revenue System: Facts and Problems, 1964
25. Joint Economic Committee, Federal Tax Policy for Economic Growth and Stability, 1955
26. Joint Economic Committee, Federal Expenditure Policy for Economic Growth and Stability, 1957
27. Committee on Ways and Means, Tax Revision Compendium (3 vols., 1960)

Serial Publications and Periodicals

U. S. Treasury Department, Treasury Bulletin (monthly)
U. S. Treasury Department, Annual Report of the Secretary of the Treasury
Budget Message of the President
Economic Report of the President
National Tax Association, Annual Proceedings
National Tax Journal
Taxes, The Tax Magazine
Public Finance (Finances Publiques)
Commerce Clearing House, Inc., and Prentice-Hall publish looseleaf tax services (in Law and Business School Libraries)

*  *  *  *  *  *  *  *  *  *  *  *

1. The Fiscal Setting

7: Chs. 1, 2, 4, 5.

*1: Ch. 9.

21: Chs. 3-4; (5-7); 8-10.

22: Chs. *6-9; (Part III).

Symposium on Budgetary Concept. RES (May 1963):

Bator
Eckstein
*Musgrave
Taylor, Wendell and Brill

Andrew E. Gantt, II., “Central Governments: Cash Deficits and Surpluses, RES (Feb. 1963).

Survey of Current Business (July, 1964), pp. 1823.

Office of Business Economics, Dept. of Commerce, U.S. Income and Output (1958), pp. 55-7 and 164-79.

Joint Economic Committee (Roy Moor), The Federal Budget as an Economic Document (1962), pp. 524; *109-128; 138-148.

Alan T. Peacock and Jack Wiseman, The Growth of Public Expenditure in the United Kingdom (NBER, 1961).

Anthony Downs, “Why the Government Budget is Too Small in a Democracy,” World Politics (July, 1960).

2. Principles of Taxation

*1: Chs. 4, 5.

*2: Ch. 1.

16: Knut Wicksell, pp. 72-118.

17: Elmer D. Fagan No. 3, (JPE, 1938).

11: Part II, Chs. 1, 4-7.

20: Ch. 1.

W. J. Blum and H. Kalven, Jr., The Uneasy Case for Progressive Taxation (Chicago, 1953). Phoenix Paperback Edition, 1963.

Robert J, Lampman, “Recent Thought on Egalitarianism,” QJE (May, 1957).

3. Income, Spending and Net Wealth

*1: pp. 160-64.

2: Ch; pp. 89-100.

17: Robert Murray Haig, No. 4, (The Federal Income Tax, 1921).

*William Vickrey, Agenda for Progressive Taxation (Ronald, 1947), Ch. 1.

Irving Fisher, The Nature of Capital and Income (1906) Chs. 1, 2, 4, 7, 10.

__________, “Income in Theory and Income Taxation in Practice,” Econometrica (January, 1937).

Break, George F., “Capital Maintenance and the Concept of Income,” JPE (February, 1954).

Nicholas Kaldor, An Expenditure Tax (Allen and Unwin, 1955), pp. 21-53.

4. The Scope of Income Taxation

*2: Chs. 5, 7, 8.

*20: Chs. 3, 5.

*Vickrey: Chs. 2, 3, 5-I.

David J. Ott and Allen H. Meltzer, Federal Tax Treatment of State and Local Securities (Brooking, 1963) Chs. 1, 2, 8.

Richard Goode, “Policyholders’ Interest Income from Life Insurance under the Income Tax, Vanderbilt Law Review (Dec. 1962).

C. Harry Kahn, Business and Professional Income Under the Personal Income Tax, NBER, 1964.

5. The Definition of Net Income

*20: Ch. 4.

*Vickrey: Ch. 4.

E. Cary Brown, “The New Depreciation Policy under the Income Tax: an Economic Analysis,” NTJ (March 1955).

Norman B. Ture, “Tax Reform: Depreciation Problems,” AER (May, 1963), pp. 334-53.

Murray Brown, “Depreciation and Corporate Profits,” SCB (Oct. 1963).

Evsey Domar, The Case for Accelerated Depreciation,” QJE (Nov. 1953) and his Essays in The Theory of Economic Growth.

Treasury Department, Internal Revenue Service, Depreciation Guidelines and Rules, Publication No. 456 (7/62).

C. Harry Kahn, Personal Deductions in the Federal Income Tax (NBER, 1960).

*Richard Goode, “Educational Expenditures and the Income Tax,” in Selma Mushkin, ed., Economics of Higher Education (Washington, 1962).

6. The Taxpaying Unit

*Vickrey, Ch. 10-I, III.

*Harold M. Croves, Federal Tax Treatment of the Family (Brookings, 1963).

Reed R. Hansen, “The Diminishing Exemption — a New Look at Equity,” Canadian Tax Journal (July-August, 1963).

Yung-Ping Chen, “Income Tax Exemptions for the Aged as a Policy Instrument,” NTJ (Dec. 1963).

7. Integration of the Personal and Corporate Income Taxes

*2: Ch. 9.

*20: Ch. 7.

*Vickrey, Ch. 5-II.

*Daniel M. Holland, Dividends Under the Income Tax (NBER, 1962), Ch. 4.

Holland, The Income-Tax Burden on Stockholders (NBER, 1958) Chs. 1, 2, 7.

Goode, The Corporation Income Tax (Wiley, 1951) Chs. 2, 3, 10.

Carl S. Shoup, “The Dividend Exclusion and Credit in the Revenue Code of 1954,” NTJ (March, 1955).

8. Income Tax Administration

*M. Farioletti, “Some Results of the First Year’s Audit Control Program of the Bureau of Internal Revenue,” NTJ (March, 1952).

Harold M. Groves, “Empirical Studies of Income-Tax Compliance,” NTJ (Dec. 1958).

W. H. Smith, “Electronic Date Processing in the Internal Revenue Service, NTJ (September, 1961).

Holland, Dividends Under the Income Tax, Ch. 2.

H. H. Hinrichs, “Underreporting of Capital Gains on Tax Returns…,” NTJ (June, 1964).

9. Income Taxation and Work Incentives

1: Ch. 11.

13: Ch. 10.

17: Goode, No. 29 (JPE, 1949).

*Gershon Cooper, No. 30 (QJE, 1952).

7: pp. 153-58.

*Break, “Income Taxes and Incentives to Work,” AER (September, 1957).

Kaldor, Ch. 4.

Break, “Income Taxes, Wage Rates, and the Incentive to Supply Labor Services,” NTJ (Dec. 1953).

10. Income Taxation and Investment Incentives

*1: Ch. 14.

 7: pp. 159-64.

13: Chs. 11, 12.

17: Domar and Musgrave, No. 31 (OJE, 1944).

E. Cary Brown, No. 32 (Income and Employment and Public Policy: Essays in Honor of Alvin B. Hansen (Norton, 1948).

Brown, “Mr. Kaldor on Taxation and Risk Bearing,” Rev. of Ec. Studies Vol. XXV:1.

Kaldor, Ch. III.

*Brown, “Tax Incentives for Investment,” AER (May, 1962).

*Goode, “Accelerated Depreciation Allowances as a Stimulus to Investment, QJE (May, 1955).

Goode, “Special Tax Measures to Restrain Investment,” IMF: Staff Papers (February, 1957).

*Sam B. Chase, Jr., “Tax Credits for Investment Spending,” NTJ (March, 1962), and comment by Brown in NTJ (June, 1962).

11. Income Taxation and Corporate Financial Policies

7: pp. 221-2; 229-30; and studies there cited by Lintner, Smith and Darling.

John A. Brittain,”The Tax Structure and Corporate Dividend Policy,” AER (May, 1964).

Miller and Shelton, “Effects of a Shifted Corporate Income Tax on Capital Structure,” NTJ (1955).

12. The Incidence of Sales and Excise Taxes

1: Chs. 15, 16, especially pp. 379-82.

*13: Chs. 6, 7. or JPE (April 1952) and AER (Sept. 1952) for Ch. 6.

17:   Harry Gunnison Brown, No. 21 (JPE 1939)

John F. Due, No. 22 (The Theory of Incidence of Sales Taxation, 1942)

Rolph and Break, No. 7 (JPE, 1949)

*Due, “Toward a General Theory of Sales Tax Incidence,” QJE (May, 1953).

*Due, “Sales Taxation and the Consumer,” AER (December, 1963).

*J. M. Buchanan, Fiscal Theory and Political Economy (Chapel Hill, 1960).

Break, “Excise Tax Burdens and Benefits,” AER (September, 1954).

Break, “Allocation and Excess Burden Effects of Excise and Sales Taxes,” in Committee on Ways and Means, Excise Tax Compendium (Washington, 1964).

*J. A. Stockfisch, “The Capitalization and Investment Aspects of Excise Taxes under Competition,” AER (June, 1954).

Paul Davidson, “Rolph on the Aggregate Effects of a General Excise Tax,” SEJ (July, 1960).

13. Incidence of a Corporation Income Tax

17: Shoup, No. 20 (NTJ 1948).

7: pp. 210-20.

27: Harberger, Volume I, pp. 231-50.

*Arnold C. Harberger, “The Incidence of the Corporation Income Tax,” JPE (June 1962)

*Kerzyzaniak and Musgrave, The Shifting of the Corporation Income Tax (Johns Hopkins, 1963).

Diran Bodenhorn, “The Shifting of the Corporation Income Tax in a Growing Economy,” QJE (November, 1956).

*Challis A. Hall, Jr., “Direct Shifting of the Corporation Income Tax in Manufacturing.” AER (May: 1964).

14. Taxation of the Oil and Gas Industry

7: pp. 230-34.

Douglas M. Eldridge, “Tax Incentives for Mineral Enterprises,” JPE (June, 1950).

Stephen L. McDonald, Federal Tax Treatment of Income from Oil and Gas (Brookings, 1963).

McDonald, “Percentage Depletion and the Allocation of Resources: The Case of Oil and Gas,” NTJ (December, 1961); comments by Musgrave and Eldridge in NTJ (June, 1962), and McDonald’s reply in NTJ (September 1962).

Peter O. Steiner, “The Non-Neutrality of Corporate Income Taxation: with and Without Depletion,” NTJ (Sept. 1963), and comments by McDonald and Steiner in NTJ (March, 1964).

Paul Davidson, “Policy Problems of the Crude Oil Industry,” AER (March 1963) and discussion in AER (March, 1964).

A. E. Kahn, “The Depletion Allowance and Cartelization,” AER (June 1964).

15. Taxation of Capital Gains and Losses

25: Walter Heller, pp. 381-94.

2: Ch. 7.

7: pp. 123-29.

Lawrence H. Seltzer, The Nature and Tax Treatment of Capital Gains and Losses (NBER, 1951) Chs. 1, 4-6, 9.

Harold M. Somers, “Reconsideration of the Capital Gains Tax,” NTJ (Dec. 1960).

Martin David, “Economic Effects of the Capital Gains Tax,” AER (May, 1964).

Holt and Shelton, “The Implications of the Capital Gains Tax for Investment Decisions,” JF (Dec. 1961).

Alice J. Vandermeulen, “Capital Gains: Two Tests for the Taxpayer and Proposal for the President,” NTJ (Dec. 1963).

H. H. Hinrichs, “An Empirical Measure of Investors’ Responsiveness to Differentials in Capital Gains Tax Rates Among Income Groups, NTJ (Sept. 1963).

Holt and Shelton, “The Lock-in Effect of the Capital Gains Tax,” NTJ (Dec. 1962).

Lent and Menge, “The Importance of Restricted Stock Options in Executive Compensation, ” Management Record (June, 1962)

Holland and Lewellen, “Probing the Record of Stock Options,” HBR April, 1962).

16. The Redistributive Effects of U. S. Taxation

27:   Pechman, pp. 251-82. (Volume 1)

Hellmuth, pp. 283-316. (Volume 1)

*Musgrave, pp. 2223-2234. (Volume 3)

*Lampman, pp. 2235-2246. (Volume 3)

*Joseph A. Pechman, “Erosion of the Individual Income Tax,” NTJ (March, 1957).

Musgrave and others, “Distribution of Tax Payments by Income Groups: a Case Study for 1948,” NTJ (March, 1951), and discussion in NTJ (Sept.1951) and March, 1952).
Also later computations by Musgrave in No. 25, pp. 96-113.

James R. Beaton, “Family Tax Burdens by Income Levels,” NTJ (March, 1962).

George A. Bishop, “The Tax Burden by Income Class, 1958,” NTJ (March, 1961).

*A. R. Prest, “Statistical Calculations of Tax Burdens,” Economica (Aug. 1955).

Annual articles on the size distribution of income in SCB, e.g. (April, 1964).

17. The Structure of U. S. Taxation

27: Volume 1, pp. 1-250.

*NBER and Brookings, The Role of Direct and Indirect Taxes in the Federal Revenue System (Princeton, 1964), especially papers by Due, Eldridge, Eckstein and Chase.

*Committee on Way and Mean, Excise Tax Compendium (Washington, 1964), especially papers by Due, Eldridge, Shoup, and Stockfisch.

18. The Income Sensitivity of U. S. Taxes

*Pechman, “Yield of the Individual Income Tax During a Recession,” NTJ (March, 1954).

Leo Cohen, “An Empirical Measurement of the Built-in Flexibility of the Individual Income Tax,” AER (May, 1959). See also NTJ (June, 1960).

Paul E. Smith, “Built in Flexibility of the Individual Income Tax: Quarterly Estimates,” NTJ (June, 1962).

Smith, “A Note on the Built-in Flexibility of the Individual Income Tax,” Econometrica (Oct. 1963).

Wilfred Lewis, Jr., Federal Fiscal Policy in the Postwar Recessions (Brookings, 1962) Chs. 2 and 3.

*Groves and Kahn, “The Stability of State and Local Tax Yields,” AER (March, 1952).

*Dick Netzer, “Income Elasticity of the Property Tax: a Post-Mortem Note,” NTJ (June, 1964); also No. 15, pp. 23-40.

D. G. Davies, “The Sensitivity of Consumption Taxes to Fluctuations in Income,” NTJ (Sept. 1962).

Brown and Kruizenga, “Income Sensitivity of a Simple Personal Income Tax, RES (Aug. 1959).

M. O. Clement, “The Quantitative Impact of Automatic Stabilizers,” RES (Feb. 1960).

19. Value Added Taxation

*Shoup, “Theory and Background of the Value-Added Tax,” National Tax Association Proceedings (1955) pp. 6-19.

*Excise Tax Compendium, Papers by Smith and Rolph.

The Role of Direct and Indirect Taxes in the Federal Revenue System. Paper by Musgrave and Richman.

20. Spendings and Net Worth Taxes

7: Chs. 8, 9.

Kaldor, An Expenditure Tax.

Vickrey, Ch. 12.

Katona and Lansing, “The Wealth of the Wealthy,” RES (Feb. 1964).

Source: Harvard University Archives. Syllabi, course outlines and reading lists in Economics, 1895-2003. Box 9, Folder “Economics, 1964-1965 (2 of 2)”.

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Mid-year Examination

HARVARD UNIVERSITY
Department of Economics
Economics 251

Fall 1964

Answer any three questions

1. There has been much discussion concerning, the role that the principle of taxation according to benefits received should play in modern fiscal systems. Contrast the views on this subject of Henry Simons and the voluntary exchange theorists. Set forth your own views and justify them.
2. Discuss the incidence of a property tax levied by a single State (assume, if you like, that one State raises its tax rates while others hold them constant) on the land, buildings, and equipment of businesses operating within its borders. The tax applies both to local retail enterprises and to manufacturing corporations selling in national markets.
3. “In a rational system of income taxation according to ability to pay there is no place for a separate tax on corporate income.” Discuss.
4. Each of the following is a controversial aspect of the federal individual income tax:
   1. Employer contributions to the cost of employee life, accident, hospital and medical insurance.
   2. Social security retirement benefits.
   3. Income splitting.
   4. Deductions for state and local taxes and for interest on consumer indebtedness.
   5. Expenditures for higher education.
   6. Travelling and entertainment expenditures by businessmen.
   7. Personal exemptions.
   8. Interest on state and local debt.

Select any four of the above and discuss the problems to which they give rise. Include in your answer your own recommendations as to their treatment for tax purposes.

5. Many critics of the U.S. tax system feel that it unduly impairs incentives to invest. Discuss this question both in general and with respect to the following specific characteristics of the tax system:
   1. depreciation allowances,
   2. loss carryovers,
   3. progressive individual income tax rates, and
   4. capital gains and losses.

Source:  Harvard University Archives. Papers Printed for Mid-Year Examinations [in] History, History of Religions, … , Economics, … , Naval Science, Air Science (January, 1965) in the bound volume Social Sciences: Final Examinations, January 1965 (HUC 7000.28, Vol. 157).

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Year-end Examination

Economics 251
Final Examination
Spring Term, 1965

Part I

Answer both questions.

1. (25%)
   (a) Compute the built-in flexibility and the yield elasticity of the federal individual income tax from the following data:

Y = 0.6 + 0.38X,

where Y = taxable individual income
and X =  gross national product,
both in billions of dollars

The equation was fitted to the period 1955-1963 during which income tax liabilities were 23 percent of taxable individual incomes in each year, and, on the average over the period, individual income tax liabilities were 7.9 percent of GNP

(b) Are there any reasons to expect the built-in flexibility of the individual income tax to be different in the upswing of the business cycle from what it is in the downswing? In the long run compared to what it is in the short run? Discuss.

(c) What effects, if any, would you expect a reduction in the corporate income tax to have on the built-in flexibility of the individual income tax?

2. (25%)
   Evaluate each of the following as countercyclical fiscal policies:

1. 1. changes in excise tax rates
   2. variations in public works spending
   3. public debt operations

Part II

Answer any two questions.

3. (25%) Write a critical analysis of the balanced budget theorem.
4. (25%) Evaluate the major ways in which the federal government could increase its financial assistance to state and local governments.
5. (25%) Discuss the problems involved in estimating social and private rates of return to investment in higher education.
6. (25%) Discuss the importance of each of the following in benefit-cost analysis as applied to governmental spending programs:
   1. The rate of return on reinvested earnings
   2. Intangible benefits
   3. Pecuniary and technological spillovers
   4. Secondary benefits

Source: Harvard University Archives. Bound volume Social Sciences: Final Examinations, June 1965 (HUC 7000.28, vol. 159).

Image Source: George F. Break’s faculty profile page at the Berkeley economics department website.