Simulating Fundamental Tax Reform in the United States

Altig, David; Auerbach, Alan J.; Kotlikoff, Laurence J.; Smetters, Kent; Walliser, Jan

doi:10.1017/cbo9780511610141.013

Cited by 103 publications

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“…At the same time, public debt stabilization in the short run is translated into a reduced fiscal burden and expectations of lower capital taxes in the future, which can stimulate investment. In other words, the standard capital levy mechanism is important to both the efficiency and the long-run welfare gains from a smaller public sector (see also Altig et al, 2001, for the US).…”

Section: Inspection Of Tables 4a-c and Figures 1a-c Reveals That As mentioning

confidence: 99%

“…Thus, as usually, the answer to the question "are such reforms worth it?" requires a value judgement (see also Altig et al, 2001). …”

Section: Conclusion and Possible Extensionsmentioning

confidence: 99%

“…For instance, there is a rich literature on the implications of changes in the tax mix given spending (see e.g. Lucas, 1990, Cooley and Hansen, 1992, McGrattan, 1994, Altig et al, 2001, and House and Shapiro, 2006, for the US, and Angelopoulos et al, 2012, for the UK). Here, we focus on a smaller size of the public sector and the choice of the public financing instrument.…”

Section: Introductionmentioning

confidence: 99%

See 2 more Smart Citations

Smaller Public Sectors in the Euro Area: Aggregate and Distributional Implications

Economides

Papageorgiou²,

Philippopoulos

et al. 2012

CESifo Economic Studies

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. In this paper, we study the aggregate and distributional implications of a smaller public sector in the euro area. By a smaller public sector, we mean a reduction in public debt and/or cuts in public spending, when such changes in fiscal policy are accommodated by adjustment in various taxes. Aggregate implications have to do with per capita output and welfare, while distribution refers to differences in income and welfare between private and public sector employees. We solve the model numerically using fiscal data from the euro area and then do a number of policy experiments. The general message is that the issue is not just a smaller public sector, but also the spending-tax mix chosen. Terms of use: Documents in EconStor mayJEL-Code: H100, H300, H200.

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Section: Inspection Of Tables 4a-c and Figures 1a-c Reveals That As mentioning

confidence: 99%

“…Thus, as usually, the answer to the question "are such reforms worth it?" requires a value judgement (see also Altig et al, 2001). …”

Section: Conclusion and Possible Extensionsmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

See 1 more Smart Citation

Smaller Public Sectors in the Euro Area: Aggregate and Distributional Implications

Economides

Papageorgiou²,

Philippopoulos

et al. 2012

CESifo Economic Studies

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“…The s are chosen based on the respective averages of age-specific labor productivity for households belonging to various income groups as provided in Altig et al (2001). 13 Table 2 provides the chosen values for the response parameters in the functional forms describing production and consumption technologies (see Figs.…”

Section: Data and Calibrationmentioning

confidence: 99%

“…Our model setup is similar to Auerbach and Kotlikoff (1987) and Altig et al (2001) where households with rational expectations live for a finite number of periods and maximize their lifetime utility by choosing optimal life-cycle consumption and savings behavior. A key difference is the disaggregated multi-sectoral production structure of the model including intermediate production, specific detail on the energy sector both in terms of primary energy carriers and energy-intensive industries, and sectorand fuel-specific carbon inputs.…”

Section: Introductionmentioning

confidence: 99%

The Intergenerational Incidence of Green Tax Reform

Yonezawa

2018

Clim. Change Econ.

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We examine the lifetime incidence and intergenerational distributional effects of an economy-wide carbon tax swap using a numerical dynamic general equilibrium model with overlapping generations of the U.S. economy. We highlight various fundamental choices in policy design including (1) the level of the initial carbon tax, (2) the growth rate of the carbon tax trajectory of over time, and (3) alternative ways for revenue recycling. Without revenue recycling, we find that generations born before the tax is introduced experience smaller welfare losses, or even gain, relative to future generations. For sufficiently low growth rates of the tax trajectory, the impacts for distant future generations decrease over time. For future generations born after the introduction of the tax, the negative welfare impacts are the smallest (largest) when revenues are recycled through lowering pre-existing capital income taxes (through per-capita lump-sum rebates). For generations born before the tax is introduced, we find that lump-sum rebates favor very old generations and labor (capital) income tax recycling favors very young generations (generations of intermediate age).

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Innovation and the Long‐Run Elasticity of Total Taxable Income

Russo

2009

Southern Economic Journal

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The elasticity of taxable income determines revenue and welfare responses to taxes. Measurement of this elasticity is an ongoing focus of tax policy research. Empirical studies report short‐run elasticities. However, general equilibrium relationships can cause short‐run and long‐run elasticities to diverge. This paper uses a Computable General Equilibrium simulation model to construct long‐run taxable income elasticities. The model differs from most previous simulation analyses of tax policy by its inclusion of endogenous, profit‐motivated Research and Development and innovation. The results indicate that (i) taxable income elasticities can be relatively large, even if tax rate changes initially have only modest effects on labor supply and saving; (ii) total taxable income could be much more responsive to the corporate tax than to the individual tax; and (iii) the elasticities are substantially larger under endogenous innovation than under exogenous innovation. Together the results indicate an increase in the likelihood that the incidence of capital income taxes shifts away from capital as economies evolve toward higher levels of innovation.

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Simulating Fundamental Tax Reform in the United States

Cited by 103 publications

References 0 publications

Smaller Public Sectors in the Euro Area: Aggregate and Distributional Implications

Smaller Public Sectors in the Euro Area: Aggregate and Distributional Implications

The Intergenerational Incidence of Green Tax Reform

Innovation and the Long‐Run Elasticity of Total Taxable Income

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