Capital Levies and Transition to a Consumption Tax

Kaplow, Louis

doi:10.2139/ssrn.921437

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Capital Levies and Transition to a Consumption Tax

Harvard Law and Economics Discussion Paper No. 551

30 Pages Posted: 31 Jul 2006

See all articles by Louis Kaplow

Louis Kaplow

Harvard Law School; National Bureau of Economic Research (NBER)

There are 2 versions of this paper

Date Written: June 2006

Abstract

The merits of capital levies depend on the likelihood of repetition, the extent of anticipation, and its effects on distribution. The relevance of these features, which in varying degrees is underdeveloped or underappreciated in pertinent literatures, is elaborated and then considered with regard to the problem of transition to a consumption tax. Other transition issues are distinguished, and specific attention is devoted to rate changes under a consumption tax and whether owners of preexisting capital are effectively compensated through higher net-of-tax returns due to repeal of the income tax. The analysis is also related to literature that examines dynamic models of taxation, particularly work simulating consumption tax transitions and assessing the optimality of capital taxation in the long run.

JEL Classification: H21, H23, H24, H25, K34

Suggested Citation: Suggested Citation

Kaplow, Louis, Capital Levies and Transition to a Consumption Tax (June 2006). Harvard Law and Economics Discussion Paper No. 551, Available at SSRN: https://ssrn.com/abstract=921437 or http://dx.doi.org/10.2139/ssrn.921437