The Resource Transition strategies in enacting fundamental tax reform

Transition strategies in enacting fundamental tax reform

Label
Transition strategies in enacting fundamental tax reform
Title
Transition strategies in enacting fundamental tax reform
Creator
Subject
Language
eng
Summary
This paper discusses transition strategies that might be used in moving from an income tax to consumption based business taxes in the form of an R (real) base cash-flow tax, an R+F (real plus financial) base tax, or an ACE (allowance for corporate equity) tax. While these three taxes have attractive neutrality properties, moving from the status quo to a new system often involves a difficult trade-off between short-run losses and longrun gains. The authors consider two alternative ways of spreading the gains and costs of reform more evenly across generations. Deficit financing of the large revenue loss that occurs immediately after reform allows the smoothing of wage tax rates over time and the elimination or reduction of short-run income losses. Alternatively, a system of delayed deductions requires firms to carry forward with interest some of the large deductions that are newly available after the enactment of a major tax reform. In shifting tax revenue from the future to the present, such policies are politically appealing, as they trade somewhat reduced future income gains for improved economic performance immediately after reform
Citation source
In: National tax journal. - Washington. - Vol. 65 (2012),
http://library.link/vocab/creatorName
  • Keuschnigg, C
  • Keuschnigg, M
Geographic coverage
North America
Language note
English
http://library.link/vocab/subjectName
  • tax reform
  • business tax
  • cash flow tax
  • allowance for corporate equity
Label
Transition strategies in enacting fundamental tax reform
Instantiates
Publication
Label
Transition strategies in enacting fundamental tax reform
Publication

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