Implementing a Progressive Consumption Tax

Implementing a Progressive Consumption Tax

Implementing a Progressive Consumption Tax: Advantages of Adopting the VAT Credit-Method System

929 National Tax Journal Vol. LIX, No. 4 December 2006 Abstract A credit–method value–added tax, a payroll tax, and a business–level wage subsidy can approximate the economic and distributional consequences of a subtraction–method X–tax. Such a credit–method progressive consumption tax has administrative advantages as compared to a subtraction–method progressive consumption tax, once certain po...

On Innation as a Regressive Consumption Tax

Evidence on the portfolio holdings and transaction patterns of households suggests that the burden of innation is not evenly distributed. We build a monetary growth model consistent with key features of cross-sectional household data and use this framework to study the distributional impact of innation. At the aggregate level, our model economy behaves similarly to standard monetary growth mode...

Relative Consumption and Tax Evasion

Relative consumption effects or status concerns that feature jealousy (in the sense of Dupor and Liu, AER 2003) boost consumption expenditure. If consumption is financed by labour income, such status considerations increase labour supply and, hence, the tax base. A higher taxable income, in turn, can make tax evasion more attractive. We show for various specifications of preferences that the ta...

The Dynamic Welfare Comparison of seignorage Tax and Consumption Tax

This paper compares equilibrium paths and the welfare costs between a seignorage tax along both transitional dynamics and steady state. Using a framework that combines monetary policy with public finance, one of these two taxes is used to finance an exogenous stream of public spending in a fashion to balance the government budget. If only equilibrium paths in a steady state are compared, the we...