Working Paper

Are income taxes destined to rise? the fiscal imbalance and future tax policy

Abstract: We present a model of optimizing government behavior in which a need for increased revenue leads to the introduction of a new revenue source, such as a VAT, accompanied by a reduction in income taxes. We argue that this is a plausible outcome for the United States, in view of international experience and recent fiscal reform proposals, and has important implications for individual investment decisions.

JEL Classification: D78; H24; H68;

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Bibliographic Information

Provider: Federal Reserve Bank of Dallas

Part of Series: Working Papers

Publication Date: 2015-01-01

Number: 1502

Pages: 18 pages

Note: Published as: Saving, Jason L. and Alan Viard (2015), "Are Income Taxes Destined to Rise? Fiscal Imbalance and Future Tax Policy in the United States," National Tax Journal 68 (2): 235-250.