A longstanding concern of state and local governments is that a federal value-added tax (VAT) could severely limit their reliance on sales taxes as a major source of revenue. This concern is too narrowly focused; a federal VAT could affect revenues from other sources and spending more than sales

Using data from several sources, we show that the vast majority of corporate income is not double-taxed in the United States. We estimate that the taxable share of U.S. corporate equity has declined dramatically in recent years, from over 80 percent in 1965 to about 30 percent at present. We