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.
CitationAltig, David, Alan J. Auerbach, Laurence J. Koltikoff, Kent A. Smetters, and Jan Walliser. 2001. "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