NATIONAL BUREAU OF ECONOMIC RESEARCH
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Tax Equivalences and their Implications

Alan J. Auerbach

NBER Working Paper No. 25158
Issued in October 2018
NBER Program(s):Public Economics

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.

This 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).

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Machine-readable bibliographic record - MARC, RIS, BibTeX

Document Object Identifier (DOI): 10.3386/w25158

Forthcoming: Tax Equivalences and Their Implications, Alan J. Auerbach. in Tax Policy and the Economy, Volume 33, Moffitt. 2019

 
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