Working Paper: NBER ID: w25158
Authors: Alan J. Auerbach
Abstract: In economic analyses of the effects of tax policies, one commonly encounters discussions of the equivalence of apparently different policies, where equivalence is defined as the policies having the same impact on fundamental economic outcomes. These related tax policies may differ in many respects, which give rise to conditions under which the equivalences may break down.\nThis paper draws out the key issues that relate to tax equivalences, using several illustrations from important instances of such equivalences that span different areas of taxation, with many of these illustrations relating to the taxation of capital income. Recognition of equivalences and the ways in which they may fail to hold is important both for positive analysis (e.g., the political reasons for choosing one approach over another) and for normative analysis (to determine which approach may be a more effective way of implementing a policy).
Keywords: No keywords provided
JEL Codes: H20; H30
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| tax imposed on consumers (H22) | market equilibrium (D53) |
| tax imposed on producers (H25) | market equilibrium (D53) |
| tax incidence (H22) | market prices (P22) |
| tax structure (H20) | taxpayer behavior (H26) |
| tax timing (H20) | market behavior (D40) |