Revisiting Offsetting Tax Reductions

Takumi Haibara

FinanzArchiv: Public Finance Analysis, 2024, vol. 80, issue 4, 359-379

Abstract: The present paper makes a comparison of different non-revenue-neutral tax policy packages. We recommend that tax packages should be designed to neutralize either consumption or labor supply effects. The intent would be to offset the consumption or labor supply disruptions caused by domestic or external shocks. This paper aims to clarify which neutrality conditions, and which tax reductions can effectively counteract adverse events. The right policy responses will differ depending on the type of adverse events, the relationship between consumption and leisure, and the assumptions made about factor intensities. Among the array of policies under consideration, one stands out as particularly intriguing: reductions in both consumption and income taxes.

Keywords: consumption neutrality; labor supply neutrality; revenue neutrality; tax reductions; adverse shocks (search for similar items in EconPapers)
JEL-codes: F11 H12 H21 (search for similar items in EconPapers)
Date: 2024
References: Add references at CitEc
Citations:

Downloads: (external link)
https://www.mohrsiebeck.com/en/article/revisiting- ... s-101628fa-2025-0002
Fulltext access is included for subscribers to the printed version.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:mhr:finarc:urn:doi:10.1628/fa-2025-0002

Ordering information: This journal article can be ordered from
Mohr Siebeck GmbH & Co. KG, P.O.Box 2040, 72010 Tübingen, Germany

DOI: 10.1628/fa-2025-0002

Access Statistics for this article

FinanzArchiv: Public Finance Analysis is currently edited by Alfons Weichenrieder, Ronnie Schöb and Jean-François Tremblay

More articles in FinanzArchiv: Public Finance Analysis from Mohr Siebeck, Tübingen
Bibliographic data for series maintained by Thomas Wolpert ().