Lifecycle vs. Annual Perspectives on the Incidence of A Value Added Tax
This paper analyzes the steady state distribution of tax burdens of a Value Added Tax (VAT) in the United States using a lifetime perspective. In contrast to an annual snapshot perspective, I find that a VAT on total expenditures would be proportional over the lifetime. Various modifications to the VAT (zero rating necessities or giving lump sum household rebates) would increase the progressivity of the tax substantially. However, the additional progressivity comes at the cost of substantial tax revenue.
|Date of creation:||Jan 1994|
|Date of revision:|
|Publication status:||published as Tax Policy and the Economy, vol. 8, ed. James M. Poterba, MIT Press, 1994|
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- David M. Cutler & Lawrence F. Katz, 1991. "Macroeconomic Performance and the Disadvantaged," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 22(2), pages 1-74.
- B. Douglas Bernheim, 1987.
"Ricardian Equivalence: An Evaluation of Theory and Evidence,"
in: NBER Macroeconomics Annual 1987, Volume 2, pages 263-316
National Bureau of Economic Research, Inc.
- B. Douglas Bernheim, 1988. "Ricardian Equivalence: An Evaluation of Theory and Evidence," NBER Working Papers 2330, National Bureau of Economic Research, Inc.
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