A Disaggregate Equilibrium Model of the Tax Distortions Among Assets, Sectors, and Industries
43 Pages Posted: 19 Feb 2004 Last revised: 17 Sep 2022
Date Written: April 1986
Abstract
This paper encompasses multiple sources of inefficiency introduced by the U.S. tax system into a single general equilibrium model. Using disaggregate calculations of user cost, we measure interasset distortions from the differential taxation of many types of assets. Simultaneously, we model the intersectoral distortions from the differential treatment of the corporate sector, noncorporate sector, and owner-occupied housing. Industries in the model have different uses of assets and degrees of incorporation. Results indicate that distortions between sectors are much smaller than those of the Harberger model. Distortions among industries arealso much smaller than those in models using average effective tax rates. Distortions among assets are larger, but the total of all these welfare costs is still below one percent of income.
Suggested Citation: Suggested Citation
Do you have negative results from your research you’d like to share?
Recommended Papers
-
By Enrique G. Mendoza, Assaf Razin, ...
-
Do Countries Compete Over Corporate Tax Rates?
By Michael P. Devereux, Ben Lockwood, ...
-
By Mervyn King and Don Fullerton
-
By Mervyn King and Don Fullerton
-
The Nonadjustment of Nominal Interest Rates: A Study of the Fisher Effect
-
Pitfalls in the Construction and Use of Effective Tax Rates
By David F. Bradford and Don Fullerton
-
Does Tax Competition Raise Voter Welfare?
By Timothy J. Besley and Michael Smart