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Research report

Methodology for Distributing a VAT

Eric Toder, James R. Nunns, Joseph Rosenberg
April 12, 2011
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Abstract

The Tax Policy center has developed a new method for estimating the distributional effects among income groups of a broad-based consumption tax, such as a value-added tax (VAT). The new method provides separate measures of the long-run and transitional effects of introducing a VAT. In the long-run, taxpayers bear the VAT burden in proportion to the sum of their labor compensation, transfer payments, and super-normal returns to capital, but normal investment returns would be exempt. In the transition, an additional burden would be imposed on the spend-down of existing wealth, but indexed transfer payments would be exempt.

Research Area

Individual Taxes Federal Budget and Economy
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Meet the Experts

  • Eric Toder
    Institute Fellow and Codirector, Tax Policy Center
  • James R. Nunns
    Urban Institute Associate
  • Joseph Rosenberg
    Senior Research Associate
Research report

New Evidence on The Effect of The TCJA On the Housing Market

Robert McClelland, Livia Mucciolo, Safia Sayed
March 30, 2022
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