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

Erik Caspersen | Zendy; Gilbert E. Metcalf | Zendy

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

Author(s) -

Erik Caspersen,

Gilbert E. Metcalf

Publication year - 1993

Publication title -

nber working paper series

Language(s) - English

Resource type - Reports

DOI - 10.3386/w4387

Subject(s) - economics , value (mathematics) , tax incidence , value added tax , incidence (geometry) , econometrics , demographic economics , public economics , indirect tax , tax reform , mathematics , statistics , geometry

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.

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