Is A Value Added Tax Progressive? Annual Versus Lifetime Incidence Measures
Working Paper 4387
DOI 10.3386/w4387
Issue Date
We measure the lifetime incidence of a value added tax (V AT) using income data from the Panel Study of Income Dynamics (PSID) and consumption data from the Consumer Expenditure Survey (CEX). When annual income is used as a measure of economic well-being, a VAT looks quite regressive. However, the results change significantly when the analysis is done using lifetime income. Using two different measures of lifetime income, we find that a VAT in the United States would be proportional to slightly progressive over the lifetime.
Published Versions
National Tax Journal, 47 (1994): pp. 731-746 citation courtesy of