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

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  • 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
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    File URL: http://www.aeaweb.org/articles.php?doi=10.1257/jep.9.1.121
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    References listed on IDEAS

    as
    1. 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.
    2. 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.
    3. Grossman, Gene M., 1980. "Border tax adjustments: Do they distort trade?," Journal of International Economics, Elsevier, vol. 10(1), pages 117-128, February.
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Tomáš Buus & Jaroslav BRADA, 2010. "VAT and Tax Credits: A Way to Eliminate Tax-Evasive Use of Transfer Prices?," European Financial and Accounting Journal, University of Economics, Prague, vol. 2010(1), pages 28-50.
    2. 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.
    3. 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.
    4. 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.
    5. Glenn P. Jenkins & Hatice Jenkins & Chun-Yan Kuo, 2006. "Is the Value Added Tax Naturally Progressive?," Working Papers 1059, Queen's University, Department of Economics.
    6. Antonio Gómez Gómez-Plana & Pedro Pascual Arzoz, 2011. "Fraude fiscal e IVA en España: incidencia en un modelo de equilibrio general," Hacienda Pública Española, IEF, vol. 199(4), pages 9-52, December.
    7. James R. Hines Jr., 2007. "Taxing Consumption and Other Sins," Journal of Economic Perspectives, American Economic Association, vol. 21(1), pages 49-68, Winter.
    8. 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.
    9. Gilbert E. Metcalf, 2014. "Using the Tax System to Address Competition Issues With a Carbon Tax," National Tax Journal, National Tax Association, vol. 67(4), pages 779-806, December.
    10. 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, University of Economics, Prague, vol. 2012(1), pages 58-80.
    11. Mare, Mauro, 2015. "Why and How should the EU budget be reformed?," MPRA Paper 76112, University Library of Munich, Germany.
    12. Christian R. Jaramillo H. & Jorge Tovar, 2007. "Incidencia Del Impuesto Al Valor Agregado Sobre Los Precios En Colombia," DOCUMENTOS CEDE 002830, UNIVERSIDAD DE LOS ANDES-CEDE.
    13. 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.

    More about this item

    JEL classification:

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

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