Lifetime vs. Annual Perspectives on Tax Incidence / Don Fullerton, Diane Lim Rogers.

Format:

Book

Author/Creator:

Fullerton, Don.

Contributor:

National Bureau of Economic Research.

Rogers, Diane Lim.

Series:

Working Paper Series (National Bureau of Economic Research) no. w3750.

NBER working paper series no. w3750

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 1991.

Summary:

Recent academic research on tax incidence has shifted from an emphasis on static and annual perspectives to examinations of dynamic and lifetime issues. Meanwhile, policy economists are forced to rely on annual data and hence annual analyses. The purpose of this paper is to discuss the nature and analysis of lifetime tax incidence, and to compare and contrast this lifetime perspective with the more familiar annual perspective. In our comparison, we find that (1) the lifetime perspective requires much more data over longer periods of time, because results depends critically on the whole shape of the lifetime earnings profile, (2) individuals classified by annual income decile are often reclassified into very different lifetime income deciles, (3) the personal income tax and corporate income tax appear less progressive on a lifetime basis, while consumption taxes appear less regressive on a lifetime basis, and (4) despite the different approaches and the different reasons underlying the incidence of each particular tax, the lifetime incidence of the entire U.S. tax system is strikingly similar to the annual incidence.

Notes:

Print version record

June 1991.