Economic Effects of a Personal Capital Income Tax Add-On to a Consumption Tax

John Diamond and George Zodrow ()

International Center for Public Policy Working Paper Series, at AYSPS, GSU from International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University

Abstract: In this paper, we compare the economic effects of such an approach to tax reform, relative to the enactment of a pure consumption tax such as the Hall and Rabushka (1983, 1995) Flat Tax. For the former approach, we analyze a stylized version of the GIT, which provides for consumption tax treatment at the business level (a cash flow tax on real transactions that allows expensing of all purchases of depreciable equipment and disallows interest deductions), supplemented by an individual-level flat rate tax on interest income, dividends and capital gains.

Keywords: Personal Capital Income Tax; Consumption Tax; tax reform (search for similar items in EconPapers)
Pages: 68 pages
Date: 2006-12-01
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Citations: View citations in EconPapers (2)

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Related works:
Working Paper: Economic Effects of A Personal Capital Income Tax Add-on to a Consumption Tax (2007)
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Persistent link: https://EconPapers.repec.org/RePEc:ays:ispwps:paper0629

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