Simulating U.S. Business Cash Flow Taxation in a 17-Region Global Model

Seth Benzell (), Laurence Kotlikoff (), Guillermo LaGarda and Yifan Ye
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Laurence Kotlikoff: Boston University, The Gaidar Institute for Economic Policy, and NBER
Yifan Ye: Boston University

No dp-312, Boston University - Department of Economics - The Institute for Economic Development Working Papers Series from Boston University - Department of Economics

Abstract: This paper uses the Global Gaidar Model to simulate replacing a territorial corporate income tax with a wealth tax imposed in the form of a destination-based Business Cash Flow Tax. According to the model, the reform produces, over a decade, increases in the capital stock, GDP, and pre-tax wages for high- and low-skilled workers of 20.5 percent, 6.8 percent, 6.3 and 7.5 percent, respectively. Young workers benefit greatly from the change, and welfare loss for retirees is limited. The initially revenue neutral tax reform raises enough additional revenue over time to permit a reduction in personal income tax rates.

Keywords: Corporate Tax Reform; House Tax Plan; Economic Growth; Business Cash Flow Tax; Computable General Equilibrium; wealth taxation (search for similar items in EconPapers)
JEL-codes: F43 H20 H60 (search for similar items in EconPapers)
Pages: 62 pages
Date: 2018-11
New Economics Papers: this item is included in nep-acc, nep-cmp and nep-pbe
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