Towards a More Consistent Distributional Analysis

Research Report

Towards a More Consistent Distributional Analysis

Abstract

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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