A Comparison of Sales Taxes
AbstractWe describe the simple analytics of the four main types of sales taxes under revenue neutrality: the retail sales tax, the value added tax, a cascading sales tax and a manufacturers' sales tax. The retail sales tax is shown to be equivalent to a value added tax. In order to produce equal revenues these two taxes must be at a higher rate than a cascading tax. However, output under a retail sales tax exceeds that under a cascading sales tax and deadweight losses are lower. The manufacturers' sales tax offers the worst of all worlds: with revenue neutrality the manufacturers' sales tax has a higher tax rate, lower output and greater deadweight loss than all the other taxes.
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Bibliographic InfoArticle provided by in its journal Public Finance = Finances publiques.
Volume (Year): 51 (1996)
Issue (Month): 2 ()
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Other versions of this item:
- H2 - Public Economics - - Taxation, Subsidies, and Revenue
- H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
- H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies
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- "Watanabe, Satoshi", 2001. "Electronic Commerce and Indirect Taxation," Economic Review, Hitotsubashi University, vol. 52(1), pages 40-51, January.
- Arindam Das-Gupta, 2005. "With non-competitive firms, a turnover tax can dominate the VAT," Economics Bulletin, AccessEcon, vol. 8(9), pages 1-6.
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