Simulating Fundamental Tax Reform in the United States
- (pp. 574-595)
AbstractThis paper uses a new, large-scale, dynamic life-cycle simulation model to compare the welfare and macroeconomic effects of transitions to five fundamental alternatives to the U.S. federal income tax, including a proportional consumption tax and a flat tax. The model incorporates intragenerational heterogeneity and a detailed specification of alternative tax systems. Simulation results project significant long-run increases in output for some reforms. For other reforms, namely those that seek to insulate the poor and initial older generations from adverse welfare changes, long-run output gains are modest.
Citation2001. "Simulating Fundamental Tax Reform in the United States." American Economic Review, 91(3): 574-595. DOI: 10.1257/aer.91.3.574
- E62 Fiscal Policy
- H24 Personal Income and Other Nonbusiness Taxes and Subsidies; includes inheritance and gift taxes
- H30 Fiscal Policies and Behavior of Economic Agents: General