A Reexamination of Tax Distortions in General Equilibrium Models

Don Fullerton () and Roger Gordon

No 673, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: General equilibrium models have recently been used to simulate the effects of many proposed tax changes. However, in modeling the effects of the government on the economy, these models have assumed for simplicity that marginal tax rates equal the observed average tax rates, and that marginal benefit rates are zero. The main purpose of this paper is to derive improved estimates of various marginal tax and benefit rates. Most importantly, we include in the model recent theories concerning the effects of combined corporate and personal taxes on corporate financial and investment decisions. The conclusions previously derived concerning the effects of corporate tax integration are then reexamined in light of the proposed changes.

Date: 1981-05
Note: PE
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Published as Fullerton, Don and Gordon, Roger H. "A Reexamination of Tax Distortions in General Equilibrium Models." Behavioral Simulation Methods in Tax Policy Analysis, edited by Martin Feldstein. Chicago: University of Chicago Press, (1983), pp. 369-462.
Published as A Reexamination of Tax Distortions in General Equilibrium Models , Don Fullerton, Roger H. Gordon. in Behavioral Simulation Methods in Tax Policy Analysis , Feldstein. 1983

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Chapter: A Reexamination of Tax Distortions in General Equilibrium Models (1983)
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