a tax used to encourage people to buy less of a particular good or service by increasing its price. This type of tax is often levied in times of national hardship.
Aggregate consumption Euler equations fit financial asset return data poorly. But they fit the return on the capital stock well, which leads to three empirical findings relating to the capital income tax burden. First, capital taxation drives a wedge between consumption growth and the expected pre-tax capital return. Second, capital...
This paper accepts for the sake of argument the hypothesis that much of the time series correlation between tax and profit rates is spurious, and shows how nonetheless time series for profit rates, tax rates, and consumption can be organized, compared and interpreted using Fisher's (1930) theory of consumption in...
This paper accepts for the sake of argument the hypothesis that much of the time series correlation between tax and profit rates is spurious. Discussion in the paper shows how nonetheless time series for profit rates, tax rates, and consumption can be organized, compared and interpreted using Fisher's (1930) theory...
Consumption-based tax plans, including the flat tax and the national retail sales tax, have gained widespread support because they would reduce the tax burden on saving and investment and spur greater economic growth. In addition, those tax proposals hold great promise for vastly simplifying the increasingly complicated federal tax system....
The paper examines optimal taxes in an overlapping generations economy in which each consumer's utility depends on consumption relative to a weighted average of consumption by others the benchmark level of consumption as well as on the level of the consumer's own consumption. The socially optimal balanced growth path is...
Byline: Mark Battersby While trying not to compromise the tax reform panel's deliberations, White House economic adviser Kristin J. Forbes disclosed the Bush administration's interest in moving to a more consumption-based tax system. Sp ...
This paper uses the consumption Euler equation to derive a decomposition of consumption growth into four sources. These are new information and three sources of predictable consumption growth: inter-temporal substitution, changes in the preferences for consumption, and incomplete markets for consumption insurance. The economic importance of precautionary saving rivals that...
This paper examine the problem of optimal taxation in a dynamic economy with imperfectly competitive markets and finds that the optimal tax system will tend to provide subsidies for the purchase of capital goods to offset gaps between price and marginal cost. The average tax on capital income will be...
The Fair Tax Act of 2005 (House Resolution 25 and Senate Bill 25) is a national retail sales tax, also called a consumption tax, which would completely abolish the Internal Revenue Service and the entire income tax code and replace them with a simple The Fair...
How tax reform affects corporate financial decisions helps determine whether reform will increase capital formation and simplify the tax system. This paper describes the effects of fundamental tax reform on corporate tax planning and summarizes economists' knowledge of the magnitude of these effects. We analyze income tax reform, consisting of...
The paper quantifies the gains associated with" reducing the distortion in favor of current consumption rather than future consumption and in" favor of the consumption of owner occupied housing. These tax effects are much larger than the" effect on the demand for money that is generally emphasized in studies of...
This paper examines the desirability and feasibility of replacing the present system of personal and corporate income, sales, excise, capital gains, import and export duties, gift and estate taxes with a single comprehensive revenue neutral Automated Payment Transaction APT tax. In its simplest form, the APT tax consists of a...
This article tries to measure the cost of consumption fluctuations using an approach that does not require the specification of preferences and instead uses asset prices. It measure the marginal cost of consumption fluctuations, the per unit benefit of a marginal reduction in consumption fluctuations expressed as a percentage of...
In a dynamic optimizing model with costly tax collection, a tax cut by one nation creates positive externalities for the rest of the world if initial public debt stocks are positive. By reducing tax collection costs, current tax cuts boost the resources available for current private consumption, lowering the global...
Increases in energy and resource efficiency, together with cleaner technologies and improved products, have resulted in reduced energy and resource consumption and pollution per unit of production and consumption. However, the increased efficiency has generally been offset by even greater increases in overall production and consumption, resulting in continuing increases...
President Bush has proposed ending the double taxation of corporate earnings by eliminating the personal income tax on dividends. To support that worthy goal, an assessment of the absolute and relative costs and benefits of this significant change in our tax structure is presented below. We consider how the specific...
This paper evaluates the central insight of the Consumption Capital Asset Pricing Model CCAPM that an asset's expected return is determined by its equilibrium risk to consumption. Rather than measure the risk of a portfolio by the contemporaneous covariance of its return and consumption growth as done in the previous...
This paper characterizes optimal dynamic consumption and portfolio decisions in the presence of capital gains taxes and short-sale restrictions. The optimal decisions are a function of the investor's age, initial portfolio holdings, and tax basis. These results capture the trade-off between the diversification benefits and tax costs of trading over...
Policy group assails Duke's CO2 tax plan A nonpartisan public policy group has come out strongly against Duke Energy Corp.'s call for a tax on carbon dioxide emissions that would reduce fossil fuel consumption and greenhouse gases. ...
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