Tax Neutrality and Social Welfare in a Comptutational General Equilibrium Framework
This article investigates the effects of distributionally neutral tax changes on equity and efficiency using computational general equilibrium and stochastic dominance techniques. The authors find, for a tax increase, that the constant-tax-share definition is preferred both in terms of efficiency and equity for a wide range of values of the elasticity of labor supply. For a tax decrease, the constant-after-tax-income definition dominates. For low elasticities of labor supply, no general welfare conclusions can be drawn, but under reasonable assumptions the constant-tax-share definition would be approved by a risk-averse median voter.
Year of publication: |
1995
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Authors: | Formby, John P. ; Medema, Steven G. ; Smith, W. James |
Published in: |
Public Finance Review. - Vol. 23.1995, 4, p. 419-447
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Saved in:
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