Research Report Implications of Different Bases for a VAT
Eric Toder, James R. Nunns, Joseph Rosenberg
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A value added tax (VAT) with a broad base and a VAT that excludes food, housing, and medical care would both impose larger burdens as a share of income on low-income than on high-income taxpayers. A rebate aimed at low-income taxpayers would reduce their VAT burden more than exclusions of selected goods and services. A broad-based VAT that was accompanied by a rebate consisting of an earnings credit up to a ceiling amount and an adjustment in cash transfer payments would impose relatively smaller burdens on lower than on higher income taxpayers throughout most of the income distribution.
Research Areas Economic mobility and inequality Taxes and budgets
Tags Fiscal policy Individual taxes Federal budget and economy Campaigns, proposals, and reforms Federal tax issues and reform proposals
Policy Centers Urban-Brookings Tax Policy Center