Cover IMF Working Papers
The Relative Impact of Income and Consumption Taxes
Author: International Monetary Fund
Series:
IMF Working Papers
Volume/Issue:
Volume 1988: Issue 024
Language:
English
Publication Date:
01 Jan 1988
DOI:
https://doi.org/10.5089/9781451920888.001
ISBN:
9781451920888
ISSN:
1018-5941
Pages:
27
Keywords:
WP; mn mathvariant
Legal-disclaimer:
IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.
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This paper examines the possibility of ascertaining the welfare changes that occur when a consumption tax replaces an equal-yield income tax. It finds that those with saving/income ratios greater than the social saving/income ratio under the income tax will surely benefit and those with ratios smaller than the social rate under the consumption tax will surely be harmed. These conditions are in each case sufficient to guarantee these results—but not necessary. Some can be better off and others worse off without these conditions holding. It is thus theoretically impossible to predict the welfare effects on many taxpayers of the tax shift from the observable data.
Cover IMF Working Papers
IMF Working Papers
ISSN:
1018-5941
Publisher:
International Monetary Fund