Implications of Some Alternatives to Capital Income Taxation

25 Pages Posted: 9 Dec 2012

See all articles by Kartik Athreya

Kartik Athreya

Federal Reserve Banks - Federal Reserve Bank of Richmond

Andrea Waddle

Federal Reserve Banks - Federal Reserve Bank of Richmond

Date Written: 2007

Abstract

In this article, we study the long-run implications of a switch from current U.S. tax policy, which features taxes on labor income, capital income, and consumption, to several alternative systems. These alternatives are revenue-neutral switches to 1) a national sales tax on consumption alone, 2) a pure labor income tax, 3) a combination of consumption taxes and capital income taxes, and 4) a combination of labor taxes and capital income taxes. Our findings suggest that income risk is important to consider when contemplating alternatives to capital income taxes, and that tax reforms may be viewed rather differently by households that differ in wealth and/or current labor productivity.

Suggested Citation

Athreya, Kartik and Waddle, Andrea, Implications of Some Alternatives to Capital Income Taxation (2007). FRB Richmond Economic Quarterly, vol. 93, no. 1, Winter 2007, pp. 31-55, Available at SSRN: https://ssrn.com/abstract=2186654

Kartik Athreya (Contact Author)

Federal Reserve Banks - Federal Reserve Bank of Richmond ( email )

P.O. Box 27622
Richmond, VA 23261
United States

Andrea Waddle

Federal Reserve Banks - Federal Reserve Bank of Richmond

P.O. Box 27622
Richmond, VA 23261
United States

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