Consumption Taxes and Redistribution

Isabel Correia ()

American Economic Review, 2010, vol. 100, issue 4, 1673-94

Abstract: This study considers replacing the current US tax system with only a flat tax consumption tax, showing, in contrast to the literature, that such a reform leads to a decline in inequality and increase in welfare for the welfare-poor. The results are obtained from a simple model that identifies the main channels through which the reform affects the economy. It is shown also that these novel results depend on the distribution of wealth and earnings, and that they hold for the relevant empirical distributions. (JEL D31, H23, H25)

JEL-codes: D31 H23 H25 (search for similar items in EconPapers)
Date: 2010
Note: DOI: 10.1257/aer.100.4.1673
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Citations: View citations in EconPapers (60)

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Working Paper: Consumption Taxes and Redistribution (2005)
Working Paper: Consumption Taxes and Redistribution (2005)
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