Article ID Journal Published Year Pages File Type
5054532 Economic Modelling 2014 7 Pages PDF
Abstract

•We study an endogenous growth model with 3 sectors, calibrated for the US.•We examine three fiscal policy reforms.•Adopting a consumption tax system increases growth and welfare.•Adopting an income tax system decreases growth and welfare.•Eliminating double taxation yields non-negligible growth and welfare gains.

We evaluate the growth and welfare effects of budget-neutral reforms in the US tax system. Large gains in welfare and growth could result from adopting a consumption-based tax system. In contrast, significant welfare and growth losses would follow after implementing an income tax-based reform. Eliminating double taxation of firms' profits would yield non-negligible welfare and growth gains.

Related Topics
Social Sciences and Humanities Economics, Econometrics and Finance Economics and Econometrics
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