Lifetime vs. Annual Perspectives on Tax Incidence

Don Fullerton, Diane Lim Rogers

NBER Working Paper No. 3750 (Also Reprint No. r1684)
Issued in June 1991
NBER Program(s):   PE

Recent academic research on tax incidence has shifted from an emphasis on static and annual perspectives to examinations of dynamic and lifetime issues. Meanwhile, policy economists are forced to rely on annual data and hence annual analyses. The purpose of this paper is to discuss the nature and analysis of lifetime tax incidence, and to compare and contrast this lifetime perspective with the more familiar annual perspective. In our comparison, we find that (1) the lifetime perspective requires much more data over longer periods of time, because results depends critically on the whole shape of the lifetime earnings profile, (2) individuals classified by annual income decile are often reclassified into very different lifetime income deciles, (3) the personal income tax and corporate income tax appear less progressive on a lifetime basis, while consumption taxes appear less regressive on a lifetime basis, and (4) despite the different approaches and the different reasons underlying the incidence of each particular tax, the lifetime incidence of the entire U.S. tax system is strikingly similar to the annual incidence.

download in pdf format
   (218 K)

download in djvu format
   (153 K)

email paper

This paper is available as PDF (218 K) or DjVu (153 K) (Download viewer) or via email.

Machine-readable bibliographic record - MARC, RIS, BibTeX

Document Object Identifier (DOI): 10.3386/w3750

Published: "Lifetime Versus Annual Perspectives on Tax Incidence." From National Tax Journal, Vol. XLIV, No. 3, pp. 277-287, (September 1991).

Users who downloaded this paper also downloaded these:
Fullerton and Metcalf w8829 Tax Incidence
Metcalf Life Cycle versus Annual Perspectives on the Incidence of a Value Added Tax
Poterba w2833 Lifetime Incidence and the Distributional Burden of Excise Taxes
Davies Tax Incidence: Annual and Lifetime Perspectives in the United States and Canada
Caspersen and Metcalf w4387 Is A Value Added Tax Progressive? Annual Versus Lifetime Incidence Measures
NBER Videos

National Bureau of Economic Research, 1050 Massachusetts Ave., Cambridge, MA 02138; 617-868-3900; email:

Contact Us