Generalized Cash Flow Taxation
AbstractWe show the unique form that must be taken by a tax system based entirely on realization accounting to implement a uniform capital income tax, or, equivalently, a uniform wealth tax. This system combines elements of an accrual based capital income tax and a traditional cash flow tax, having many of the attributes of the latter while still imposing a tax burden on marginal capital income. Like the traditional cash flow tax, this system may be integrated with a tax on labor income. We also show how such a tax can be supplemented with an optional accounting for a segregated subset of actively traded securities, subjected separately to mark-to-market taxation at the uniform capital income tax rate, to permit a fully graduated tax system applicable to labor income.
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Bibliographic InfoPaper provided by CESifo Group Munich in its series CESifo Working Paper Series with number 425.
Date of creation: 2001
Date of revision:
Other versions of this item:
- Alan J. Auerbach & David F. Bradford, 2001. "Generalized Cash Flow Taxation," Working Papers, Princeton University, Department of Economics, Center for Economic Policy Studies. 131, Princeton University, Department of Economics, Center for Economic Policy Studies..
- Alan A. Auerbach & David F. Bradford, 2001. "Generalized Cash Flow Taxation," NBER Working Papers 8122, National Bureau of Economic Research, Inc.
- H24 - Public Economics - - Taxation, Subsidies, and Revenue - - - Personal Income and Other Nonbusiness Taxes and Subsidies
- G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
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