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Simulating U.S. Tax Reform: Technical Paper 1997-6

Author

Listed:
  • David Altig
  • Alan J. Auerbach
  • Laurence J. Kotlikoff
  • Kent A. Smetters

Abstract

This paper uses a new large-scale dynamic simulation model to compare the equity, efficiency, and macroeconomic effects of five alternatives to the current U.S. federal income tax. These reforms are a proportional income tax, a proportional consumption tax, a flat tax, a flat tax with transition relief, and a progressive variant of the flat tax called the "X tax." The model incorporates intragenerational heterogeneity and kinked budget constraints. It predicts major macroeconomic gains (including an 11 percent increase in long-run output)

Suggested Citation

  • David Altig & Alan J. Auerbach & Laurence J. Kotlikoff & Kent A. Smetters, 1997. "Simulating U.S. Tax Reform: Technical Paper 1997-6," Working Papers 13351, Congressional Budget Office.
    • Handle: RePEc:cbo:wpaper:13351
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    File URL: https://www.cbo.gov/sites/default/files/105th-congress-1997-1998/workingpaper/19976_0.pdf
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    References listed on IDEAS

    as
    1. Joel Slemrod & Jon Bakija, 2004. "Taxing Ourselves, 3rd Edition: A Citizen's Guide to the Debate over Taxes," MIT Press Books, The MIT Press, edition 3, volume 1, number 026269302x, December.
    2. Charles T. Carlstrom & David Altig, 1999. "Marginal Tax Rates and Income Inequality in a Life-Cycle Model," American Economic Review, American Economic Association, vol. 89(5), pages 1197-1215, December.
    3. Alan J. Auerbach & Laurence J. Kotlikoff & Robert P. Hagemann & Giuseppe Nicoletti, 1989. "The Economic Dynamics of an Ageing Population: The Case of Four OECD Countries," OECD Economics Department Working Papers 62, OECD Publishing.
    4. Alan J. Auerbach & Joel Slemrod, 1997. "The Economic Effects of the Tax Reform Act of 1986," Journal of Economic Literature, American Economic Association, vol. 35(2), pages 589-632, June.
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