Simulating Fundamental Tax Reform in the United States
- 1 June 2001
- journal article
- research article
- Published by American Economic Association in American Economic Review
- Vol. 91 (3), 574-595
- https://doi.org/10.1257/aer.91.3.574
Abstract
This 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. (JEL H20, C68)This publication has 10 references indexed in Scilit:
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