Neglected Effects on the Uses Side: Even a Uniform Tax Would Change Relative Goods Prices / 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. w5937.

NBER working paper series no. w5937

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Other Title:

Neglected Effects on the Uses Side

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 1997.

Summary:

Fundamental tax reform may change relative prices of consumption goods and may therefore have important effects on the uses side that are ignored by most general equilibrium simulation models. For a uniform rate of tax, in our model, results on the uses side are driven by the nonuniform tax system being replaced. Similar effects occur under any uniform and comprehensive tax reform, whether the current system is replaced by a consumption tax, a wage tax, or a pure income tax. Any such reform that eliminates the current preferential treatment of housing would impose an additional one-time levy on the elderly, and any reform that eliminates the current double taxation of corporate capital would reduce the relative prices of corporate-capital-intensive goods bought by the poor.

Notes:

Print version record

February 1997.