Popular Substitution Effects: Excess Burden Estimates for General Sales Taxes

Richard R. Hawkins

National Tax Journal, 2002, vol. 55, issue 4, 755-70

Abstract: In this paper, a partial equilibrium model is used to evaluate the efficiency of some popular sales tax structures, including structures with pyramiding from levies on production inputs. The results generally support expectations--inefficiency increases when retail exemptions are large and the general rate is high--but two findings are surprising. First, the input taxes considered here fall heavily on price-inelastic and exempt goods and actually improve tax efficiency. Second, equal-yield sales tax systems can have different median tax payments and a large majority of households may prefer exemptions and high rates.

Date: 2002
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Citations: View citations in EconPapers (4)

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Persistent link: https://EconPapers.repec.org/RePEc:ntj:journl:v:55:y:2002:i:4:p:755-70

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