Working Paper: NBER ID: w1123
Authors: Don Fullerton
Abstract: In estimating the effects of capital income taxation, different studies measure different effective tax rates. This paper categorizes effective tax rate estimates into six basic types, and discusses the usefulness of each. For marginal effective tax rates, some studies estimate the additional taxes associated with a marginal increase in the inflation and interest rates, while others estimate the additional taxes associated with a marginal increase in investment. Because there are six basic types of rates, because of the different procedures that can be used to estimate each type, and because of different assumptions about the margin, care should be taken in the application and use of effective tax rate estimates.
Keywords: No keywords provided
JEL Codes: No JEL codes provided
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| effective tax rates (H29) | investment incentives (O31) |
| higher effective tax rates (H29) | lower investment incentives (G31) |
| effective tax rates (H29) | capital allocation (G31) |
| effective tax rates (H29) | economic efficiency (D61) |
| marginal effective tax rate (H21) | investment decisions (G11) |
| marginal effective tax rate (H21) | specific investments (G11) |