IDEAS home Printed from https://ideas.repec.org/a/aea/jecper/v9y1995i1p121-40.html
   My bibliography  Save this article

Value-Added Taxation: A Tax Whose Time Has Come?

Author

Listed:
  • Gilbert E. Metcalf

Abstract

Value-added taxes (VATs) are used in a large number of developed countries and have been under consideration at the national level in the United States in recent years. This paper provides an introduction to the tax for those unfamiliar with it. The author begins by describing how VATs work and briefly surveys their use by other countries. The remainder of the paper considers the economic impact as well as design issues that are likely to arise if the United States were to implement a VAT.

Suggested Citation

  • Gilbert E. Metcalf, 1995. "Value-Added Taxation: A Tax Whose Time Has Come?," Journal of Economic Perspectives, American Economic Association, vol. 9(1), pages 121-140, Winter.
    • Handle: RePEc:aea:jecper:v:9:y:1995:i:1:p:121-40
    Note: DOI: 10.1257/jep.9.1.121
    as

    Download full text from publisher

    File URL: http://www.aeaweb.org/articles.php?doi=10.1257/jep.9.1.121
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Auerbach, Alan J & Kotlikoff, Laurence J & Skinner, Jonathan, 1983. "The Efficiency Gains from Dynamic Tax Reform," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 24(1), pages 81-100, February.
    2. Hausman, Jerry A & Poterba, James M, 1987. "Household Behavior and the Tax Reform Act of 1986," Journal of Economic Perspectives, American Economic Association, vol. 1(1), pages 101-119, Summer.
    3. Feenberg, Daniel R. & Rosen, Harvey S., 1987. "Tax structure and public sector growth," Journal of Public Economics, Elsevier, vol. 32(2), pages 185-201, March.
    4. Triest, Robert K, 1992. "The Effect of Income Taxation on Labor Supply when Deductions Are Endogenous," The Review of Economics and Statistics, MIT Press, vol. 74(1), pages 91-99, February.
    5. Charles E. Mclure, 1987. "The Value-Added Tax: Key to Deficit Reduction?," Books, American Enterprise Institute, number 725195, September.
    6. Grossman, Gene M., 1980. "Border tax adjustments: Do they distort trade?," Journal of International Economics, Elsevier, vol. 10(1), pages 117-128, February.
    7. Bernheim, B Douglas & Shleifer, Andrei & Summers, Lawrence H, 1986. "The Strategic Bequest Motive," Journal of Labor Economics, University of Chicago Press, vol. 4(3), pages 151-182, July.
    8. Heckman, James J, 1993. "What Has Been Learned about Labor Supply in the Past Twenty Years?," American Economic Review, American Economic Association, vol. 83(2), pages 116-121, May.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Daniel Raimi & Emily Grubert & Jake Higdon & Gilbert Metcalf & Sophie Pesek & Devyani Singh, 2023. "The Fiscal Implications of the US Transition Away from Fossil Fuels," Review of Environmental Economics and Policy, University of Chicago Press, vol. 17(2), pages 295-315.
    2. Tomáš Buus & Jaroslav Brada, 2010. "VAT and Tax Credits: A Way to Eliminate Tax-Evasive Use of Transfer Prices?," European Financial and Accounting Journal, Prague University of Economics and Business, vol. 2010(1), pages 28-50.
    3. Mare, Mauro, 2015. "Why and How should the EU budget be reformed?," MPRA Paper 76112, University Library of Munich, Germany.
    4. Gilbert E. Metcalf, 2014. "Using the Tax System to Address Competition Issues With a Carbon Tax," National Tax Journal, National Tax Association;National Tax Journal, vol. 67(4), pages 779-806, December.
    5. Antonio Gómez Gómez-Plana & Pedro Pascual Arzoz, 2011. "Fraude fiscal e IVA en España: incidencia en un modelo de equilibrio general," Hacienda Pública Española / Review of Public Economics, IEF, vol. 199(4), pages 9-52, December.
    6. Angela Mans, 1996. "Steuerpolitik in der Europäischen Union zwischen Wettbewerb und Harmonisierung," Vierteljahrshefte zur Wirtschaftsforschung / Quarterly Journal of Economic Research, DIW Berlin, German Institute for Economic Research, vol. 65(3), pages 331-353.
    7. Bibek Adhikari, 2015. "When Does Introducing a Value-Added Tax Increase Economic Efficiency? Evidence from the Synthetic Control Method," Working Papers 1524, Tulane University, Department of Economics, revised Nov 2015.
    8. James R. Hines Jr., 2007. "Taxing Consumption and Other Sins," Journal of Economic Perspectives, American Economic Association, vol. 21(1), pages 49-68, Winter.
    9. James R. Hines Jr. & Lawrence H. Summers, 2009. "How Globalization Affects Tax Design," NBER Chapters, in: Tax Policy and the Economy, Volume 23, pages 123-157, National Bureau of Economic Research, Inc.
    10. James Alm & Asmaa El-Ganainy, 2013. "Value-added taxation and consumption," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 20(1), pages 105-128, February.
    11. Hayley Pallan, 2022. "Do Investors Care About Consumption Taxes? Evidence from Equities in Advanced and Emerging Economies," IHEID Working Papers 14-2022, Economics Section, The Graduate Institute of International Studies.
    12. Tomáš Buus, 2012. "Daně z příjmů versus daň z přidaní hodnoty v malé otevřené ekonomice [Taxes on income vs. value added tax in small open economy]," Politická ekonomie, Prague University of Economics and Business, vol. 2012(1), pages 58-80.
    13. Christian R. Jaramillo H. & Jorge Tovar, 2007. "Incidencia Del Impuesto Al Valor Agregado Sobre Los Precios En Colombia," Documentos CEDE 2830, Universidad de los Andes, Facultad de Economía, CEDE.
    14. Liu, Qing & Lu, Yi, 2015. "Firm investment and exporting: Evidence from China's value-added tax reform," Journal of International Economics, Elsevier, vol. 97(2), pages 392-403.
    15. Sumru Altug & Erhan Uluceviz, 2011. "Leading Indicators of Real Activity and Inflation for Turkey, 2001-2010," Koç University-TUSIAD Economic Research Forum Working Papers 1134, Koc University-TUSIAD Economic Research Forum.
    16. Robinson, Sherman & Thierfelder, Karen, 2017. "Taxes, Prices, and the Exchange Rate in the Destination-Based Cash-Flow Tax (DBCFT) System," Conference papers 332910, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    17. Gilbert E. Metcalf, 1996. "Labor Supply and Welfare Effects of a Shift from Income to Consumption Taxation," NBER Chapters, in: Empirical Foundations of Household Taxation, pages 77-97, National Bureau of Economic Research, Inc.
    18. Chun-Yan Kuo & Hatice Jenkins & Glenn Jenkins, 2006. "Is The Value Added Tax Naturally Progressive?," Working Paper 1059, Economics Department, Queen's University.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Andreas PEICHL, 2008. "The Benefits of Linking CGE and Microsimulation Models - Evidence from a Flat Tax analysis," EcoMod2008 23800106, EcoMod.
    2. Gilbert E. Metcalf, 1994. "Life Cycle versus Annual Perspectives on the Incidence of a Value Added Tax," NBER Chapters, in: Tax Policy and the Economy, Volume 8, pages 45-64, National Bureau of Economic Research, Inc.
    3. Agell, Jonas & Persson, Mats & Sacklén, Hans, 1999. "Labour Supply Prediction When Tax Avoidance Matters," Seminar Papers 679, Stockholm University, Institute for International Economic Studies.
    4. Showalter, Mark H. & Thurston, Norman K., 1997. "Taxes and labor supply of high-income physicians," Journal of Public Economics, Elsevier, vol. 66(1), pages 73-97, October.
    5. Gagné, Robert & Nadeau, Jean-François & Vaillancourt, François, 2004. "Réactions des contribuables aux variations des taux marginaux d’impôt : une étude portant sur des données de panel au Canada," L'Actualité Economique, Société Canadienne de Science Economique, vol. 80(2), pages 383-404, Juin-Sept.
    6. Robert Gagné & Jean-François Nadeau & François Vaillancourt, 2000. "Taxpayers' Response to Tax Rate Changes: A Canadian Panel Study," CIRANO Working Papers 2000s-59, CIRANO.
    7. Martin S. Feldstein & Paul R. Krugman, 1990. "International Trade Effects of Value-Added Taxation," NBER Chapters, in: Taxation in the Global Economy, pages 263-282, National Bureau of Economic Research, Inc.
    8. Agell, Jonas & Persson, Mats & Sacklén, Hans, 1999. "Labor Supply When Tax Avoidance Matters," Working Paper Series 157, Trade Union Institute for Economic Research.
    9. Bernheim, B. Douglas, 2002. "Taxation and saving," Handbook of Public Economics, in: A. J. Auerbach & M. Feldstein (ed.), Handbook of Public Economics, edition 1, volume 3, chapter 18, pages 1173-1249, Elsevier.
    10. Agell, Jonas & Persson, Mats & Sacklen, Hans, 2004. "The effects of tax reform on labor supply, tax revenue and welfare when tax avoidance matters," European Journal of Political Economy, Elsevier, vol. 20(4), pages 963-982, November.
    11. Nada Eissa, 1996. "Tax Reforms and Labor Supply," NBER Chapters, in: Tax Policy and the Economy, Volume 10, pages 119-151, National Bureau of Economic Research, Inc.
    12. Kubik, Jeffrey D., 2004. "The incidence of personal income taxation: evidence from the tax reform act of 1986," Journal of Public Economics, Elsevier, vol. 88(7-8), pages 1567-1588, July.
    13. Kumar, Anil, 2008. "Labor supply, deadweight loss and tax reform act of 1986: A nonparametric evaluation using panel data," Journal of Public Economics, Elsevier, vol. 92(1-2), pages 236-253, February.
    14. Francisco Alvarez-Cuadrado & Ngo Van Long, 2012. "Envy and Inequality," Scandinavian Journal of Economics, Wiley Blackwell, vol. 114(3), pages 949-973, September.
    15. Korok Ray, 2007. "Performance Evaluations and Efficient Sorting," Journal of Accounting Research, Wiley Blackwell, vol. 45(4), pages 839-882, September.
    16. Nicholas Chesterley, 2017. "Defaults, Decision Costs and Welfare in Behavioural Policy Design," Economica, London School of Economics and Political Science, vol. 84(333), pages 16-33, January.
    17. Nelson Manolo Chávez Munoz, Omaira Dayana Velázquez Mantilla, Mauricio Alejandro Mateus Tovar, 2011. "Cambios estructurales en la participación laboral en Colombia desde 1984 - 2008: un análisis econométrico del mercado laboral urbano para la generación de políticas de empleo," Revista CIFE, Universidad Santo Tomás, June.
    18. Maristella Botticini & Aloysius Siow, 2003. "Why Dowries?," American Economic Review, American Economic Association, vol. 93(4), pages 1385-1398, September.
    19. Mengyuan Zhou, 2022. "Does the Source of Inheritance Matter in Bequest Attitudes? Evidence from Japan," Journal of Family and Economic Issues, Springer, vol. 43(4), pages 867-887, December.
    20. Elinder, Mikael & Erixson, Oscar & Waldenström, Daniel, 2018. "Inheritance and wealth inequality: Evidence from population registers," Journal of Public Economics, Elsevier, vol. 165(C), pages 17-30.

    More about this item

    JEL classification:

    • H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:aea:jecper:v:9:y:1995:i:1:p:121-40. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Michael P. Albert (email available below). General contact details of provider: https://edirc.repec.org/data/aeaaaea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.