This paper explores the implications of evaluating income tax preferences, or tax expenditures, under a consumption tax baseline. First it examines the conceptual differences between income and consumption tax baselines. Next, an X-tax prototype of a consumption tax is employed to gauge the...

In recent years, some European countries have relied on elements of an allowance for corporate equity (ACE) in the design of their tax systems. We analyse the effects of ACE-based taxation on rates of return and effective tax rates. Investment neutrality is lost if the imputed interest rate...