Neglected Effects on the Uses Side: Even a Uniform Tax Would Change Relative Goods Prices
18 Pages Posted: 20 Sep 2000 Last revised: 23 Sep 2022
Date Written: February 1997
Abstract
Fundamental tax reform may change relative prices of consumption goods and may therefore have important effects on the uses side that are ignored by most general equilibrium simulation models. For a uniform rate of tax, in our model, results on the uses side are driven by the nonuniform tax system being replaced. Similar effects occur under any uniform and comprehensive tax reform, whether the current system is replaced by a consumption tax, a wage tax, or a pure income tax. Any such reform that eliminates the current preferential treatment of housing would impose an additional one-time levy on the elderly, and any reform that eliminates the current double taxation of corporate capital would reduce the relative prices of corporate-capital-intensive goods bought by the poor.
Suggested Citation: Suggested Citation
Do you have negative results from your research you’d like to share?
Recommended Papers
-
By Don Fullerton and Gilbert E. Metcalf
-
Assessment of U.S. Cap-and-Trade Proposals
By Sergey Paltsev, John M. Reilly, ...
-
Lifetime Incidence and the Distributional Burden of Excise Taxes
-
By A. Lans Bovenberg, Lawrence H. Goulder, ...
-
Environmental Taxes and the Double-Dividend Hypothesis: Did You Really Expect Something for Nothing?
By Don Fullerton and Gilbert E. Metcalf
-
The Incidence of a U.S. Carbon Tax: A Lifetime and Regional Analysis
By Kevin A. Hassett, Aparna Mathur, ...
-
The General Equilibrium Incidence of Environmental Taxes
By Don Fullerton and Garth Heutel
-
The General Equilibrium Incidence of Environmental Mandates
By Don Fullerton and Garth Heutel
-
The Incidence of Pollution Control Policies
By Ian W. H. Parry, Hilary Sigman, ...