Life Cycle versus Annual Perspectives on the Incidence of a Value Added Tax
Published Date
Copyright 1994
ISBN 0262660911
DOI 10.1086/tpe.8.20061818
This paper analyzes the steady-state distribution of tax burdens of a Value Added Tax (VAT) in the United States using a lifetime perspective. In contrast to an annual snapshot perspective, I find that a VAT on total expenditures would be proportional over the lifetime. Various modifications to the VAT (zero rating necessities or lump-sum household rebates) would increase the progressivity of the tax substantially. However, the additional progressivity comes at the cost of substantial tax revenue.
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Copy CitationGilbert E. Metcalf, Tax Policy and the Economy, Volume 8 (MIT Press, 1994), chap. 2, https://www.nber.org/books-and-chapters/tax-policy-and-economy-volume-8/life-cycle-versus-annual-perspectives-incidence-value-added-tax.