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On the Incidence of Substituting Consumption Taxes for Income Taxes

Alan Krause

Discussion Papers from Department of Economics, University of York

Abstract: This paper shows that tax reforms involving an increase in consumption taxes and a decrease in income taxes cannot always be designed in a way that protects the welfare of some chosen class of consumer (e.g., low-income households), even if the government is indifferent to the welfare effects on all other consumers. This is contrary to common intuition and claims by some governments.

Keywords: Tax incidence; consumption taxes; income taxes; tax reform. (search for similar items in EconPapers)
JEL-codes: D6 H22 (search for similar items in EconPapers)
Date: 2010-07
New Economics Papers: this item is included in nep-acc, nep-pbe and nep-pub
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Persistent link: https://EconPapers.repec.org/RePEc:yor:yorken:10/17

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