Is A Value Added Tax Progressive? Annual Versus Lifetime Incidence Measures

Erik Caspersen and Gilbert Metcalf

No 4387, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: We measure the lifetime incidence of a value added tax (V AT) using income data from the Panel Study of Income Dynamics (PSID) and consumption data from the Consumer Expenditure Survey (CEX). When annual income is used as a measure of economic well-being, a VAT looks quite regressive. However, the results change significantly when the analysis is done using lifetime income. Using two different measures of lifetime income, we find that a VAT in the United States would be proportional to slightly progressive over the lifetime.

JEL-codes: H20 H22 (search for similar items in EconPapers)
Date: 1993-06
Note: PE
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6)

Published as National Tax Journal, 47 (1994): pp. 731-746

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Journal Article: Is a Value Added Tax Regressive? Annual Versus Lifetime Incidence Measures (1994)
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