NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Which Effective Tax Rate?

Don Fullerton

NBER Working Paper No. 1123 (Also Reprint No. r0476)
Issued in May 1983
NBER Program(s):   PE

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.

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Document Object Identifier (DOI): 10.3386/w1123

Published: Fullerton, Don. "Which Effective Tax Rate?" National Tax Journal, Vol. 37 , No. 1 (March 1984), pp. 23-41.

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