Publication Date: June 2007
Publisher: Tax Policy Center
Author(s): Leonard E. Burman; Jane G. Gravelle; Jeff Rohaly
Research Area: Banking and finance
Keywords: Tax Policy; Tax Distribution and Economic Trends; Tax Reform; Taxation of Households
Tax reform is likely to combine elements of income and consumption taxes. Special problems arise in developing consistent methods for allocating incremental options that transcend the boundaries between income and consumption taxes. This paper discusses issues in allocating consumption taxes and shows how the choice of allocation method affects conclusions for two prototypes. It then discusses how hybrid income-consumption taxes and corporate taxes ought to be allocated under different scenarios. A concluding section sums up.
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