NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Is A Value Added Tax Progressive? Annual Versus Lifetime Incidence Measures

Erik Caspersen, Gilbert Metcalf

NBER Working Paper No. 4387 (Also Reprint No. r1937)
Issued in June 1993
NBER Program(s):   PE

We measure the lifetime incidence of a value added tax (V AT) using income data from the Panel Study of Income Dynamics (PSID) and consumption data from the Consumer Expenditure Survey (CEX). When annual income is used as a measure of economic well-being, a VAT looks quite regressive. However, the results change significantly when the analysis is done using lifetime income. Using two different measures of lifetime income, we find that a VAT in the United States would be proportional to slightly progressive over the lifetime.

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Document Object Identifier (DOI): 10.3386/w4387

Published: National Tax Journal, 47 (1994): pp. 731-746 citation courtesy of

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