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Growth effects of a flat tax

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  • Steven P. Cassou
  • Kevin J. Lansing

Abstract

A presentation of a quantitative general equilibrium model showing that a revenue-neutral flat tax can permanently boost per capita growth by 0.18 to 0.85 percentage point annually, and that the lower marginal tax rate and the full investment write-off are both important contributors to the increased growth.

Suggested Citation

  • Steven P. Cassou & Kevin J. Lansing, 1996. "Growth effects of a flat tax," Working Papers (Old Series) 9615, Federal Reserve Bank of Cleveland.
    • Handle: RePEc:fip:fedcwp:9615
    DOI: 10.26509/frbc-wp-199615
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    References listed on IDEAS

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    1. Stokey, Nancy L & Rebelo, Sergio, 1995. "Growth Effects of Flat-Rate Taxes," Journal of Political Economy, University of Chicago Press, vol. 103(3), pages 519-550, June.
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    Cited by:

    1. Jang-Ting Guo & Kevin J. Lansing, 1997. "Tax structure and welfare in a model of optimal fiscal policy," Economic Review, Federal Reserve Bank of Cleveland, issue Q I, pages 11-23.
    2. Luigi, Bernardi, 2003. "Tax systems and tax reforms in Europe: Rationale and open issue for more radical reforms," MPRA Paper 18041, University Library of Munich, Germany.
    3. Fehr, Hans, 1999. "Welfare Effects of Dynamic Tax Reforms," Beiträge zur Finanzwissenschaft, Mohr Siebeck, Tübingen, edition 1, volume 5, number urn:isbn:9783161470165, September.
    4. Elizabeth M. Caucutt & Selahattin Imrohoroglu & Krishna B. Kumar, 2000. "Does the progressivity of taxes matter for economic growth?," Discussion Paper / Institute for Empirical Macroeconomics 138, Federal Reserve Bank of Minneapolis.
    5. Stoyan Tanchev, 2016. "The Role of The Proportional Income Tax on Economic Growth of Bulgaria," Economic Studies journal, Bulgarian Academy of Sciences - Economic Research Institute, issue 4, pages 66-77.
    6. Baier, Scott L. & Glomm, Gerhard, 2001. "Long-run growth and welfare effects of public policies with distortionary taxation," Journal of Economic Dynamics and Control, Elsevier, vol. 25(12), pages 2007-2042, December.
    7. Gregory W. Huffman & Evan F. Koenig, 1998. "The dynamic impact of fundamental tax reform part 2 : extensions," Economic and Financial Policy Review, Federal Reserve Bank of Dallas, issue Q II, pages 1-1.

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