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Sales Taxes, Investment, and the Tax Reform Act of 1986

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  • Joulfaian, David
  • Mackie, James B. III

Abstract

Contrary to the conventional view on consumption taxes, state and local sales taxes extend to the acquisition of capital assets and are especially burdensome on equipment. These taxes partially offset allocational distortions caused by tax provisions present prior to the Tax Reform Act of 1986 (TRA). Consequently, the TRA.s modifications, especially the repeal of the investment tax credit, do less to improve the uniformity of the tax treatment of alternative investments than suggested in earlier work. This makes it less likely that the TRA generated an overall welfare gain.

Suggested Citation

  • Joulfaian, David & Mackie, James B. III, 1992. "Sales Taxes, Investment, and the Tax Reform Act of 1986," National Tax Journal, National Tax Association;National Tax Journal, vol. 45(1), pages 89-105, March.
    • Handle: RePEc:ntj:journl:v:45:y:1992:i:1:p:89-105
    DOI: 10.1086/NTJ41788948
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    References listed on IDEAS

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    Cited by:

    1. Mikesell, John L., 1997. "The American Retail Sales Tax: Considerations on Their Structure, Operations, and Potential as a Foundation for a Federal Sales Tax," National Tax Journal, National Tax Association, vol. 50(1), pages 149-65, March.
    2. Mikesell, John L., 1997. "The American Retail Sales Tax: Considerations on Their Structure, Operations, and Potential as a Foundation for a Federal Sales Tax," National Tax Journal, National Tax Association;National Tax Journal, vol. 50(1), pages 149-165, March.

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