On the Incidence of Substituting Consumption Taxes for Income Taxes
This 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.
|Date of creation:||Jul 2010|
|Date of revision:|
|Contact details of provider:|| Postal: Department of Economics and Related Studies, University of York, York, YO10 5DD, United Kingdom|
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