The effect of income shifting on the efficiency properties of consumption-tax systems

Clemens Fuest and Bernd Huber

Munich Reprints in Economics from University of Munich, Department of Economics

Abstract: It is well known that consumption-tax systems have several advantagesover existing income-tax systems, such as greater administrativesimplicity and intertemporal neutrality. Despite these advantages,proposals to introduce consumption taxes have only had very limitedsuccess. This paper discusses possible explanations for the reluctanceof governments to switch to consumption taxation. Our analysis focuseson the role of income shifting as a drawback for consumption-tax reform.We consider a model where taxpayers may shift income between thepersonal and the corporate income-tax base. In this model, aconsumption-tax system characterized by intertemporal neutrality anduniform tax rates on personal and corporate income is not second-bestefficient.

Date: 2005
References: Add references at CitEc
Citations:

Published in FinanzArchiv 2 61(2005): pp. 139-153

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

Related works:
Journal Article: The Effect of Income Shifting on the Efficiency Properties of Consumption-Tax Systems (2005)
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:lmu:muenar:20332

Access Statistics for this paper

More papers in Munich Reprints in Economics from University of Munich, Department of Economics Ludwigstr. 28, 80539 Munich, Germany. Contact information at EDIRC.
Bibliographic data for series maintained by Tamilla Benkelberg ().