On the Incidence of Substituting Consumption Taxes for Income Taxes
AbstractThis paper shows that tax reforms involving an increase in consumption taxes and a decrease in income taxes cannot always be designed in a way that protects the welfare of some chosen class of consumer (e.g., low-income households), even if the government is indifferent to the welfare effects on all other consumers. This is contrary to common intuition and claims by some governments.
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Bibliographic InfoPaper provided by Department of Economics, University of York in its series Discussion Papers with number 10/17.
Date of creation: Jul 2010
Date of revision:
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Postal: Department of Economics and Related Studies, University of York, York, YO10 5DD, United Kingdom
Phone: (0)1904 323776
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Web page: http://www.york.ac.uk/economics/
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Tax incidence; consumption taxes; income taxes; tax reform.;
Find related papers by JEL classification:
- D6 - Microeconomics - - Welfare Economics
- H22 - Public Economics - - Taxation, Subsidies, and Revenue - - - Incidence
This paper has been announced in the following NEP Reports:
- NEP-ACC-2010-07-17 (Accounting & Auditing)
- NEP-ALL-2010-07-17 (All new papers)
- NEP-PBE-2010-07-17 (Public Economics)
- NEP-PUB-2010-07-17 (Public Finance)
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