Working Paper: NBER ID: w12307
Authors: Alan J. Auerbach
Abstract: It has now been nearly three decades since the publication of two important volumes that laid out many of the details of how one might implement a progressive consumption tax (Institute for Fiscal Studies, 1978; U.S. Treasury, 1977). Over the years since, many contributions have analyzed the mechanics of the different variants of consumption taxation, the potential efficiency and distributional effects of their adoption, the issues of administration and transition from the current tax system, and the problems relating to certain types of transactions. But much of what we "know" is not part of the general policy discussion and there are important issues that the literature has recognized but still not resolved. The aim of this paper is to lay out the key economic issues involved in deciding whether and how to adopt a consumption tax and to discuss what theory and evidence have told us and could tell us about these issues.
Keywords: No keywords provided
JEL Codes: H20
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Consumption tax (H25) | Economic efficiency (D61) |
| Income tax (H26) | Economic efficiency (D61) |
| Wage tax (J31) | Economic efficiency (D61) |
| Consumption tax (H25) | Output (Y10) |
| Consumption tax (H25) | Welfare (I38) |
| Consumption tax (H25) | Capital levy on existing assets (G31) |