Consumption taxes and redistribution

Isabel Correia

doi:10.1257/aer.100.4.1673

Consumption taxes and redistribution

Isabel Correia^*

^*Corresponding author for this work

Research output: Contribution to journal › Article › peer-review

28 Citations (Scopus)

Abstract

This study considers replacing the current US tax system with only a flat tax consumption tax, showing, in contrast to the literature, that such a reform leads to a decline in inequality and increase in welfare for the welfare-poor. The results are obtained from a simple model that identifies the main channels through which the reform affects the economy. It is shown also that these novel results depend on the distribution of wealth and earnings, and that they hold for the relevant empirical distributions.

Original language	English
Pages (from-to)	1673-1694
Number of pages	22
Journal	American Economic Review
Volume	100
Issue number	4
DOIs	https://doi.org/10.1257/aer.100.4.1673
Publication status	Published - Sept 2010
Externally published	Yes

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10.1257/aer.100.4.1673

Cite this

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Consumption taxes and redistribution

Abstract

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