Distributional Effects of Adopting a National Retail Sales Tax

Daniel R. Feenberg, Andrew W. Mitrusi, James M. Poterba

NBER Working Paper No. 5885
Issued in January 1997
NBER Program(s):Public Economics

This paper describes a new household-level data file based on merged information from the IRS Individual Tax File, the Current Population Survey, the National Medical Expenditure Survey, and the Consumer Expenditure Survey. This new file includes descriptive data on household income as well as consumption. The data file can be linked to the NBER TAXSIM program and used to evaluate the distributional effects of changing the federal income tax code, as well as the distributional effects of replacing the individual income tax with a consumption tax. We use this data file to analyze the long-run distributional effects of adopting a national retail sales tax that raises enough revenue to replace the current federal individual income tax and corporation income tax, as well as federal estate and gift taxes. Our results highlight the sensitivity of the change in distributional burdens to provisions such as lump sum transfers, sometimes called 'demogrants,' the retail sales tax plan, and to the choice between income and consumption as a basis for categorizing households in distribution tables.

download in pdf format
   (2405 K)

email paper

A non-technical summary of this paper is available in the August 1997 NBER Digest.  You can sign up to receive the NBER Digest by email.

Machine-readable bibliographic record - MARC, RIS, BibTeX

Document Object Identifier (DOI): 10.3386/w5885

Published: Distributional Effects of Adopting a National Retail Sales Tax, Daniel R. Feenberg, Andrew W. Mitrusi, James M. Poterba. in Tax Policy and the Economy, Volume 11, Poterba. 1997

Users who downloaded this paper also downloaded* these:
Feenberg, Mitrusi, and Poterba Distributional Effects of Adopting a National Retail Sales Tax
Freeman and Gibbons Getting Together and Breaking Apart: The Decline of Centralized Collective Bargaining
Bachman, Haughton, Kotlikoff, Penalver, and Tuerck w12732 Taxing Sales Under the FairTax: What Rate Works?
Metcalf w4619 Lifecycle vs. Annual Perspectives on the Incidence of A Value Added Tax
Jokisch and Kotlikoff w11858 Simulating the Dynamic Macroeconomic and Microeconomic Effects of the FairTax
NBER Videos

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

Contact Us